What it is
An arbitration clause requires you to resolve disputes through private arbitration instead of court. It typically waives jury trial and class-action rights, sets the arbitrator and rules, and allocates fees.
Why it matters
Arbitration favors employers statistically. Studies show employees win less often and recover less when they do. Many clauses also force you to pay a share of arbitration fees — sometimes thousands of dollars per case.
Sample clause language
"Any dispute arising out of or related to this Agreement shall be resolved by binding arbitration. Employee waives the right to a jury trial and to participate in any class or collective action."
What it really means: Class-action waivers compound the harm — they prevent groups of employees from joining together. The 2022 Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act voids these for those specific claims.
Red flags
- Class action waiver
- Employee pays arbitration fees
- Employer chooses the arbitrator unilaterally
- Confidentiality clause prevents discussing the dispute
- No carve-out for sexual harassment / assault (federally void anyway)
Fair / acceptable
- Employer pays all arbitration costs above court filing fees
- Mutual obligation (employer must arbitrate too)
- Neutral arbitration provider (AAA, JAMS) with employee-protective rules
- Carve-outs for injunctive relief, IP, and statutory whistleblower claims
How to negotiate
- Strike class action waivers if possible
- Demand employer pays all arbitration fees
- Insist on AAA or JAMS employment rules
Frequently asked questions
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Not legal advice. For informational purposes only.