Develop Proactive Dispute Resolution and Risk-Reduction Policies
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Well-drafted policies can prevent minor employment disputes from turning into costly litigation – or at least give you a more predictable, controlled forum for resolution. For many tech startups, this means considering agreements such as arbitration clauses, jury trial waivers, and class/collective actions. These agreements can be particularly valuable in industries where a single misstep can spark a high-stakes class action.
BEST PRACTICES:
Work with counsel early to determine whether arbitration agreements, jury trial waivers, or class/collective action waivers are enforceable in your jurisdiction and appropriate for your business model. Laws on these agreements vary by state and change often.
Include clear, plain-language terms that make agreements more understandable and defensible if challenged in court.
Ensure agreements are mutual – binding both the company and the employee – to help with enforceability and fairness.
Use stand-alone agreements (not buried in handbooks) and obtain signed acknowledgments from every covered worker.
Review and update annually to account for changes in state or federal law, and reissue agreements to new and existing employees as needed.
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