What the agreement tends to do
Most of these agreements say that employment claims will be decided by a private arbitrator instead of a judge or jury. Many also include a waiver of class or collective actions, which the Supreme Court has held enforceable in employment agreements under the Federal Arbitration Act. Courts generally enforce these agreements, but questions come up about whether a valid agreement was formed, whether the employee actually received and accepted it, and whether a particular claim falls within its scope. Some agreements name a provider such as AAA or JAMS and incorporate its employment rules, which affects fees and procedure. Agencies are not bound by a private agreement, so a charge with the EEOC or a state agency can usually still be filed.
Limits worth knowing
Federal law now allows a person with a sexual harassment or sexual assault claim to choose court instead of arbitration, even if they signed an agreement, and courts are still working out how far that reaches when other claims are joined. New York has its own statute restricting mandatory arbitration of discrimination claims, but courts have largely held it displaced by federal law where the Federal Arbitration Act applies. Certain workers in interstate transportation are exempt from that federal act, and their agreements are analyzed differently. If you are an employer drafting one of these agreements, these limits shape how it should be written and rolled out.
Before you sign, or before you file
If you are being asked to sign, read who pays the arbitration fees, where the hearing would take place, whether confidentiality is required, and whether there is a deadline to opt out, which some agreements offer. If you already have a claim, bring the agreement, the offer letter, the handbook acknowledgment, and anything showing how it was presented to you. We look at whether it covers your claim, whether an exception applies, and how arbitration would change the timeline and the cost. Employers bring the agreement, the rollout record, and the provider's rules, and we look at enforceability and drafting gaps.
