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Key Takeaways
- An arbitration agreement requires resolving workplace disputes through private, binding arbitration rather than in court.
- Agreeing to arbitration means giving up rights like a jury trial, public records, broad discovery, appeals, and class actions.
- Arbitration agreements are generally enforceable under the Federal Arbitration Act, although exceptions may apply depending on the claims involved and applicable federal and New York law.
- Employees may be able to opt out of an arbitration agreement or challenge its enforceability, depending on the agreement and the circumstances.
Employment arbitration agreements generally require certain workplace disputes to be resolved through private arbitration rather than in court. These agreements may affect an employee’s ability to have a jury trial, participate in a class or collective action, obtain certain discovery, or appeal a decision. Whether an arbitration agreement is enforceable can depend on the agreement, the claims involved, and applicable federal and New York law.
You’ve just accepted a new job in New York City, and as you flip through the onboarding paperwork, there it is—an arbitration agreement. It seems routine, maybe even harmless. You sign it without thinking twice.
But what you may not realize is that this one provision could determine whether certain disputes with your employer are resolved in court or through private arbitration.
What Is an Arbitration Agreement?
An arbitration agreement is a contract—often included in an employment agreement, onboarding documents, or employee handbook—that requires certain legal disputes with an employer to be resolved through private arbitration rather than in court. Depending on the agreement and the claims involved, this may mean no courtroom, jury trial, or public court record.
Arbitration is a form of alternative dispute resolution that is typically binding. An arbitrator’s decision generally has much more limited grounds for appeal than a court judgment. Arbitration agreements may cover a range of employment disputes, including wage claims, discrimination, harassment, and wrongful termination.
Arbitration may be faster or less costly than litigation in some cases, but it can also involve different procedures and limitations than resolving a dispute in court.
Are Arbitration Agreements Enforceable in NYC?
In many cases, employment arbitration agreements are enforceable in New York under the Federal Arbitration Act (FAA), which generally requires courts to enforce valid arbitration agreements. However, enforceability depends on the terms of the agreement, how it was formed, and the particular claims involved.
That said, there are important exceptions. New York law restricts mandatory arbitration of certain discrimination claims, but federal law can affect whether those restrictions are enforceable. In addition, federal law generally allows individuals alleging sexual assault or sexual harassment to choose whether to pursue their claims in court despite certain pre-dispute arbitration agreements.
Arbitration agreements may also be challenged based on generally applicable contract defenses, such as fraud, duress, or unconscionability. Whether an agreement is enforceable depends on the specific language of the agreement and the circumstances surrounding how it was presented and signed.
Whether an arbitration agreement is enforceable—and whether it applies to a particular employment claim—depends on the agreement, the circumstances, and applicable law.
What Rights Do Employees Give Up in Arbitration?
When an employment dispute is covered by an enforceable arbitration agreement, the employee generally resolves that dispute through arbitration rather than in court. Depending on the agreement, this may involve:
- No jury trial
- No public record of the case or outcome
- Limited discovery, which means less access to documents or witnesses
- Restricted appeal rights—arbitration awards generally have limited grounds for review
- Limits on class or collective actions, depending on the agreement and applicable law
Can You Challenge or Opt Out of Arbitration?
In some cases, an employee may be able to opt out of an arbitration agreement or challenge its enforceability.
Some arbitration agreements provide employees with a limited period to opt out. Employees should review the agreement carefully to determine whether an opt-out provision exists and what steps are required to exercise it.
Federal law also allows individuals alleging sexual assault or sexual harassment to choose whether to pursue certain claims in court despite a pre-dispute arbitration agreement.
When to Speak With an Employment Attorney
If you are facing arbitration or have questions about an arbitration agreement you signed, an employment attorney can help you understand how the agreement may affect your rights. Lipsky Lowe can help you:
- Understand your rights
- Determine whether an arbitration agreement may be challenged
- Explore alternatives to arbitration
- Negotiate better terms or prepare a strong case
Facing arbitration at work or have questions about an employment arbitration agreement? Contact Lipsky Lowe today for a free consultation to discuss your rights and options.