Career Advice

Should I Sign an Arbitration Agreement with my Employer?

You’ve done it. The peppy human resources rep from that dream job you finally landed just pushed a thick packet of paperwork in front of you to sign: mission statement, dress code, PTO, holidays, working hours, how you must sign away your right to resolve any conflict with a jury trial, how overtime is paid, the worker’s compensation policy and so on.

Wait — sign away my what?

That’s right. Most U.S. employers expect new employees to sign mandatory arbitration agreements before starting their job or even in the middle of employment. Many employers make this a condition of employment in states where that’s allowed. No signature, no job.

But there are ways you can protect your both state and federal Constitutional right to a civil trial before a jury of your peers.

It’s a lopsided agreement

If you sign an arbitration agreement, most work-related legal disputes you claim will be decided not by a jury of your peers but before an independent arbitrator, generally hired and fully paid for by the employer.

It’s been estimated by the Economic Policy Institute that by 2024, about 80 percent of all American workers will be required to sign one as a condition of employment. Arbitration agreements often eliminate your jury trial rights for all kinds of employment-related claims, including violations of Title VII of the Civil Rights Act, the Family Medical Leave Act and the Fair Labor Standards Act.

Here’s why that’s important: If you’ve been cheated on your wages, fired without cause, injured, or even retaliated against for complaining about racial discrimination, arbitration agreements empower just one person – often a retired judge – to hear from both sides and, alone, render a binding decision. Your employer usually gets to pick who that is and likely has hired him before. Arbitrators are paid between $40,000 to $60,000, at a minimum, for their services.

Over the years employers have become savvy at hiding these agreements. We frequently find them stuffed into another agreement, such as a non-disclosure agreement, or bound into the employee handbook – you’re asked to sign that you’ve received the handbook, but the signature deceptively attempts to cover the arbitration agreement, too. In California, there was a ruling that the arbitration agreement can’t be hidden, so employers have just started bold-facing that section.

What’s at stake?

It’s essential to understand how this imbalance of power is used against employees. 

Studies show that employees are generally awarded less, and receive smaller damages, in arbitration than in court for nearly identical claims. If you’ve been wrongfully terminated after complaining about a hostile work environment or discrimination, an arbitrator generally awards less than a jury of your peers.  

Another disadvantage is that arbitration agreements limit discovery, which is the fact-finding part of a lawsuit. Your ability to uncover emails, policies and other evidence to support your side is thwarted. And since arbitration decisions often require confidentiality, if a manager previously discriminated against another employee, you may not know.

Remember, when an attorney is presenting your case, he or she tells the jury to focus on what a reasonable person would think of the situation. That’s the entire point of a jury, so your peers can weigh the testimony, and put themselves in your shoes. You need different viewpoints to arrive at a just and fair decision, not one person’s opinion — the arbitrator’s.

Understand your legal options

So what do you do when you’re told to sign that arbitration agreement or you don’t get the job? It’s a tough decision. 

Remember, if you don’t sign and they withhold the job, you may have a lawsuit if the employer retaliated for your exercising your Constitutional right. Problem is, if you face this decision, you probably just want the job and not a fight that will have you looking for another job. Some tips:

  • If you absolutely do have to sign such an agreement, document that you opposed it but they made it a condition of employment, and keep the note for your records. You can also usually write that statement on the document itself. Make sure there’s a paper trail. Otherwise it turns into a circumstantial employment he-said, she-said case.
  • You could also write your new employer an email saying, “I’m not comfortable with waiving my right to a jury trial, but because I have to feed my family, I have been forced to sign it.” Keep a record of your communication. Be mindful of your employer’s rules regarding use of company computers, phones or other devices, and their document retention policies.  The employer’s missteps don’t necessarily license yours.
  • Oftentimes at bigger companies, no one reviews the documents to ensure that the arbitration agreement has been fully signed; should something happen, the record will show that you didn’t sign. If the employer does not make your signature to the arbitration agreement a condition of your employment or does not force you to sign it, then don’t sign it.  
  • You could cross out the arbitration clause in the agreements or documents, initial next to your redaction, sign the bottom and keep a copy.
  • Or you could revise the agreement: Add that the employer will pay for the entire arbitration and that your signature is contingent upon any arbitration adhering to the same discovery and deposition rules as a civil trial.

Hope is out there – but don’t hold your breath

Will employees, or prospective employees, ever reclaim equal footing as employers when it comes to waiving this considerable right? There are a few glimmers of hope.

The #MeToo movement has, in some states, wiped out the companies’ ability to make sexual harassment victims adhere to non-disclosure agreements. And the Kentucky Supreme Court in October all but effectively banned any and all binding pre-employment arbitration contracts.

A bill making its way through Congress, the Restoring Justice for Workers Act, would prohibit pre-employment arbitration contracts altogether, but it has a long way to go.

For now, recognize what your new employer wants but stand your ground.

Kamran Shahabi is the managing partner of Valiant Law. He represents clients in complex employment, insurance, general liability and business litigation. The views expressed in this article are solely those of Kamran Shahabi.