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Archive for June, 2012

ARBITRATION CLAUSES: THE GREAT DIVIDE

Posted on: June 14th, 2012 by admin No Comments

Arbitration is an increasingly popular and often cost-effective way to avoid protracted litigation in court, however whether they are equitabile is subject to great debate.  Arbitration provisions are increasingly being considered by employers for inclusion in employment contracts relative to disputes between employers and employees.  There is much controversy between worker’s advocates and management lawyers as to whether such provisions are fair and/or effective.

Arbitration clauses are often used by management to limit defense costs, avoid bad publicity attributable to litigation, circumvent unpredictable juries and skirt precedent setting court opinions.  Employee advocates, outside the realm of labor arbitration, are skeptical to say the least.  They feel that pre-employment Arbitration provisions are unfair and may be unconstitutional as they are negotiated between parties with an imbalance of bargaining power, they limit access to the courts and jury system and are often contracts of adhesion, signed during the rush of the hiring process.

Nonetheless, the Courts have, subject to certain restrictions outlined below, found Arbitration provisions to be mostly enforceable and as such employment agreements in Massachusetts routinely include arbitration clauses, requiring employees to arbitrate their employment-related claims.  Many employers feel that Arbitration affords a lower cost alternative that resolves disputes more efficiently and quickly.  Through Arbitration, the scope of a dispute may be narrowed, discovery can be limited, trial and hearing dates are firm and Arbitrators are usually more accessible than judges. 

Employees frequently fail to carefully review or consider pre-employment Arbitration provisions in the rush of landing a new job.  Even if employees resist Arbitration clauses – their ability to negotiate is compromised by a tough economy and few job alternatives.  Therefore, employees are routinely waiving their right to a jury trial and giving up their right to seek immediate relief in a court of law without fully appreciating the consequences.  Some of the other drawbacks to arbitration include the high price of arbitrators (payment is often required in a lump sum), the lack of objective Arbitrator quality control (Judicial nominations are screened) and the finality of an arbitrator’s decision (since an arbitrator’s decision is difficult to appeal).  It is because of these problems that legislation has been introduced in Massachusetts to outlaw and limit pre-employment Arbitration agreements which, it is argued, effectively closes access to the courts and jury system relative to employment disputes.

Currently, arbitration clauses are generally enforceable (depending upon the type of claim) if there is no foul play at their inception.  In order to invoke an arbitration provision in the event of an employment dispute, the employer must demonstrate that “a valid agreement to arbitrate exists, that they are entitled to invoke the arbitration clause, that the other party is bound by that clause, and that the claim asserted comes within the clause’s scope.”  Campbell v. Gen. Dynamics Gov’t Sys. Corp., 407 F.3d 546, 552 (1st Cir. 2005) quoting InterGen N.V. v. Grina, 344 F.3d 134, 142 (1st Cir. 2003). So long as the parties both signed the agreement, it was drafted in clear and unmistakable terms, and there is no evidence of coercion, deceit, bad faith or unclean hands courts have routinely enforced arbitration clauses.

It remains an open question, and up to our elected officials, whether Arbitration clauses will continue to remain an available option for employers in Massachusetts.  Bennett & Belfort will keep you updated on further developments in this rapidly evolving area of law.

Massachusetts Small Business Employees Entitled to Insurance Continuation Under Mini-Cobra

Posted on: June 8th, 2012 by admin No Comments

The Federal Statute commonly referred to as “COBRA” (the Consolidated Omnibus Budget Reconciliation Act of 1985), gives employees who lose their group health benefits the right to continue benefits at their own cost.  COBRA only covers workers whose employers have twenty or more employees.  However, the Massachusetts “Mini-COBRA” statute (M.G.L. c. 176J § 9) extends that right to Massachusetts employees of small businesses with between two and nineteen employees.

The law, which was enacted in 1996, requires small group health insurers to provide continuation of coverage benefits similar to those required of larger group insurers under COBRA.  Health and dental insurance coverage must be continued when the following events, which otherwise would cause the loss of coverage, occur: death; termination; reduction in work hours; divorce or legal separation; and entitlement to Medicare benefits, among others.  Notably, an employee who is terminated for “gross misconduct” is not entitled to insurance continuation benefits under Mini-COBRA.

An employee who elects continued coverage under Mini-COBRA may be charged up to 102% of the applicable premium cost for their plan, though the applicable premium must be equivalent to the premium cost of the plan for active employees.  The 2% premium is permissible, in order to cover the employer’s administration of the medical insurance continuation process.  An employer’s responsibility to notify an employee of his or her rights under COBRA/Mini COBRA is important because the election for continued coverage under Mini-COBRA must be made within 60 days of either: a) the date of the qualifying event (e.g. separation from employment); or b) the date the notice to elect coverage was sent, whichever is later.

Belfort quoted by MA Lawyer’s Weekly on CORI reform

Posted on: June 7th, 2012 by admin No Comments

We are proud to announce that in the May 28, 2012 issue of Massachusetts Lawyers Weekly, Bennett & Belfort, P.C. partner David E. Belfort was quoted in Dan McDonald’s front page article entitled “Bar Expects Fallout from Cori Reform”.   The final provision of the August 2010 CORI (Criminal Offender Record Information) reform law officially went into effect on May 4th, 2012.  This provision, designed to give employers online access to potential employees’ criminal records, simultaneously restricts what can and cannot be asked on a written job application.  Most notably, employers can no longer inquire on an initial application whether the applicant has ever been convicted of a crime−dubbed the “ban-the-box” provision.   Though many management lawyers criticize this provision of the new law for increasing the risk to employers while protecting convicted criminals, a competing argument is that this provision will help to allow those with criminal records to get past the first hurdle of the employment process without being automatically disqualified based exclusively on their criminal history.  Advocates for those with criminal histories argue that those whom cannot secure employment are far more likely to re-offend.   While the newly enacted Federal law requires individual analysis of whether a criminal background check is job related and based on legitimate business need, Mr. Belfort points out that the new Massachusetts law seems relatively clear and thus may be less prone to litigation. Congratulations to Attorney Belfort on this recognition of his knowledge and experience in the field of employment law.