Should I Sign an Employee Agreement with an Arbitration Clause in It?

If you’ve started a new job recently, chances are that you signed some documents that you didn’t fully read. Somewhere in that stack of onboarding papers, there may have been a mandatory arbitration agreement.

And let me guess. No one at HR sat you down and explained what this clause actually means, right? That’s not by accident. It’s by design.

A mandatory arbitration clause requires you to resolve any future employment disputes with your employer through a private arbitration process. This often means that you’re giving up your right to a lawsuit with a jury trial.

Employers don’t ask you to sign these agreements because arbitration is faster or friendlier for you. Employers ask for arbitrations because arbitrations overwhelmingly favor employers.

Arbitration proceedings are private. There will be no public record of an employer’s alleged wrongdoing. Discovery is typically much more limited than in court. The arbitrator may get repeat business from the same employer. Thus, the arbitrator may be inclined to retain a positive relationship with the corporate entity.

Moreover, there is an intrinsic asymmetry in arbitrations, one that negatively impacts workers. An employee typically arbitrates a dispute once in a lifetime. A large employer, on the other hand, may have mandatory arbitration clauses running across an entire workforce.

This generates case after case, year after year. These matters often go through the same arbitration provider. Thus, employers and their attorneys accumulate detailed system knowledge. In other words, the party that writes the contract has a better read on how the referee calls the game.

This structural asymmetry leaves individual workers with no comparable insight and no leverage to shape their case’s outcome. Arbitration clauses strip away the venue where worker protections are stronger: open court, with a jury of peers, and a public record that can deter future employer misconduct.

Before you sign an employment agreement with an arbitration clause, read the arbitration section closely. Check for an opt-out provision. Some arbitration agreements may allow you to opt out in writing without it affecting your employment.

Don’t assume the clause is non-negotiable. Talk with one of our Texas employment attorneys if you’re unsure. A quick consultation before you sign can clarify what rights you’d be giving up if you did sign and how you might negotiate internally.

What if you already have an existing arbitration agreement? That doesn’t automatically mean you have no options. Depending on how it was drafted, when it was sent to you for signature, and the nature of your claim, there may be room to assert that the agreement is unenforceable, doesn’t apply, or was procured unfairly. This is a fact-specific analysis. You can consult with an employment attorney on this issue, too.

Do your best to understand what arbitration agreements really are. Reviewing employment agreements thoroughly before you sign will help protect your rights.