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Arbitration Clauses in Employment Agreements

In Falls v. 1CI, Inc., the Court of Special Appeals has held that a company’s former CEO is required to arbitrate his claim that the company violated Maryland’s Wage Payment and Collection Law by failing to pay him a bonus. The CEO’s employment agreement stated that “any dispute, claim, or controversy arising out of or relating to this agreement shall be settled by arbitration” and that arbitration fees would be “divided 50-50” between the parties. The Court rejected the CEO’s argument that the arbitration clause did not encompass statutory claims. It also rejected his argument that the provision requiring him to pay 50% of arbitration fees rendered the arbitration requirement substantively unconscionable, reasoning that the CEO had failed to submit evidence that arbitration would be more expensive for him than litigation.