Mediation madness: Employment contract waivers explained

Be aware of your rights when signing a new contract. (Antonioguillem / stock.adobe.com)

You've been working at a nice multidoctor veterinary practice for the last five years and you really like it. The owner is an older gentleman but still sharp, and he keeps up with the latest developments in the field. One morning, he introduces you to the transition staff from PVP (Perfect Veterinary Practitioners, LLC), which, you learn, now owns the clinic.

The new management team explains to you that you'll be asked to sign a new employment contract that is the same, or even a little bit better, than the one you had with your old boss. You decide to give PVP the benefit of the doubt, and you head home to read over the new contract.

The document seems pretty much as advertised. You find a couple of points you want to clarify with the new corporate owners, but aside from that, you're pretty happy.

But wait! What's this? There's one sentence you find very extremely concerning. And why is it written in boldface, large font and italics? It says this:

“By signing this agreement, you acknowledge that disputes hereunder will be resolved by arbitration and you hereby waive your right to a jury trial.”

The hair on the back of your neck is at attention. You think, “OK, so this big company is giving me an extra day of CE and a small bump in pay, but in exchange they want me to relinquish my constitutional rights? No way!”

Don't just quit

Before you decide to reject an otherwise acceptable employment offer from any potential employer, private or corporate, let's go over some fundamental facts about jurisdiction and waiver language in veterinary employment contracts.

First, recognize that I have used the above “corporate” example because, at least currently, associate candidates are far more likely to find a jury trial waiver or a mandatory arbitration clause (or both) in a contract proposed by a corporate hospital chain than one presented by a private partnership.

This isn't because consolidators are trying to pull a fast one. It's probably because corporations are more acutely aware of how the legal process operates. So, what do they know that the average veterinarian doesn't?

Realities of litigation

There are only a few issues that are likely to generate a trial-worthy dispute between an associate veterinarian and her employer. At the top of the list is noncompetition language. One side says it's enforceable; the other says it's overly burdensome.

The second issue is the dispute over compensation. For example, Dr. A is discharged without notice, and PVP says the firing was for cause, so Dr. A isn't entitled to any severance. Dr. A says there was no cause, so she wants the 90 days' severance as called for in the contract. Amount in controversy? Twenty-five percent of a year's pay (say, about $30,000). Not inconsequential. But not exactly a double homicide.

Jury trial fun

An aggrieved associate under contract, or her aggrieved employer, may decide to head to court over one of these two common disputes. Dr. A will likely pay hundreds of dollars per hour to engage a litigation attorney. PVP will spend a lot too, either for outside litigation counsel or perhaps for in-house counsel hourly pay.

Many motions and discovery sessions are scheduled as the case grinds its way forward. If the case is to be tried by a judge, it's very time-consuming. If one of the parties demands a jury be selected, the cost may be more than double.

Meanwhile, how does all this look from the associate's perspective? In the case of the noncompete, she probably won't be able to take a job within the contractually proscribed noncompete region until the case is first approved by a judge to go on the trial calendar and then works its way to the top of that calendar.

And don't forget: That same court likely hears not only contract disputes, but also cases about assault, murder, drug, conspiracy fraud and other criminal matters. And those cases are subject to the constitutional requirement of a “speedy trial.” So PVP and Dr. A just wait in line.

So, what is PVP asking?

Some employment contracts include a simple jury trial waiver. This means that a dispute under the employment contract would be heard by a judge. This waiver can be a disadvantage to either party in a noncompetition dispute. Judges in these cases have a great deal of discretion, and one man's reasonable noncompete might be five miles while another man's reasonable noncompete might be eight. A given judge may be a great believer in employees' rights. But she might also believe that when a person signs an agreement, they should abide by it.

In summary, trials are expensive and take a long time. And neither judges nor juries can be counted on to look favorably on you as “that poor, innocent young DVM who was bamboozled into signing a contract she didn't understand.” So in our example above, PVP has proposed a potentially mutually beneficial alternative.

Alternate dispute resolution

Arbitration is a well-established system for resolving disagreements between parties without the costs in time and money associated with litigation. And it's not just for “little cases,” as the system is frequently used by publicly traded corporations and even foreign corporations and individuals.

An arbitration is carried out by an arbitrator who is usually selected by the parties involved. The selected person is usually an attorney, and he or she is required to follow strict guidelines with respect to fairness, impartiality and fiduciary duty.

The established rules of evidence existing in the jurisdiction where the arbitration is carried out may be more or less followed, but there is more latitude in arbitration than under the rules of evidence in either a state or federal venue.

Courts may still be involved

Even in employment disputes within the framework of a veterinary employment agreement, a judge is sometimes involved. This occurs most commonly in two instances.

First, the parties may not be able to agree on an arbitrator. In that instance, a judge may become involved in appointing a person to fill this role.

Second, and this is most common in the noncompetition realm, the employer may have included language in the associate's contract providing that it retains the right to go to a judge for a temporary restraining order (TRO) to prevent an associate from continuing to violate a noncompetition or nonsolicitation term in the agreement. After issuance of the requested TRO, the final resolution as to whether the associate is or is not in violation of an enforceable noncompetition would be up to an arbitrator.

What's up with the bold type?

Arbitration certainly has its place in resolution of legal disputes. It can save potential litigants, and the court system, a great deal of time and money.

But be aware: Agreeing to give up an important legal right such as a judge or a jury trial of your rights is a big deal. It should be carefully considered in light of the anticipated expense as well as any tactical disadvantage such a waiver might involve.

However, at the same time, consider the worst of all possible worlds: I recently was involved in a noncompete lawsuit in New York that would have involved a jury-except that the judge was so busy and his calendar so backed up that he demanded the parties hold settlement conferences before he would allow the case to go on the trial calendar.

This amounted to the most expensive version of mandatory arbitration on the market today, since the attorneys had no arbitrator and were being paid by the hour to battle. 

Dr. Christopher J. Allen is president of the Associates in Veterinary Law PC, which provides legal and consulting services exclusively to veterinarians. He can be reached via email at info@veterinarylaw.com.