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Page 16 of 19 |
Are employment disputes covered by arbitration in the securities industry? |
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In the securities industry, most employers insist upon employment agreements with their employees that contain a very broad arbitration clause. The clause states that all disputes between the employee and the brokerage firm are to be resolved by binding arbitration under the rules of a stock exchange or the NASD, rather than in court.
Even if the issue involved sexual harassment, brokerage firms (and insurance companies whose personnel are sometimes licensed to sell securities) took the position that the matter had to go to arbitration, even if it had nothing to do with securities per se, and could not be taken to court. Although many courts had upheld that interpretation, a May 8, 1998 decision of the United States Court of Appeals for the Ninth Circuit in San Francisco held otherwise. It found that the Civil Rights Act precludes an arbitration clause from denying a claimant's rights to have access to the courts. Tune in for a possible "appeal" to the United States Supreme Court. |
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