Bill Undermines Contractual Relationships
Connecticut employers are concerned with legislation weakening arbitration agreements.
HB 5381 undermines legitimate contractual relationships between employers and employees by allowing third parties to bring lawsuits.
Whether it’s an employment contract or a contract for services, the parties involved often include a clause that says disputes should be settled via arbitration rather than through litigation.
Agreements to arbitrate disputes are mutually beneficial to both parties and provide an increased level of predictability.
Agreeing to arbitrate disputes saves significant time and financial resources for both parties when compared to litigation.
The fairness of arbitration agreements is also controlled by the courts.
Class Action Threat
In the past, courts have invalidated agreements that are too biased in favor of employers.
Connecticut’s Attorney General and state enforcement agencies, including the Department of Labor, already have the power to file suits or claims on behalf of a party to an employment or services contract.
The bill also exposes employers to the threat of class action style lawsuits filed by third parties seeking to further personal or political goals.
“Connecticut businesses are looking to lawmakers to start providing more predictability before they will begin to take on the risk of creating and growing more jobs here,” CBIA’s Eric Gjede said.
“Turning over the powers of the state’s attorney general to labor organizations, and nullifying existing legal contracts voluntarily entered into by two or more parties does little to provide that needed predictability.”
The bill awaits action in the legislature’s Labor and Public Employees Committee.
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