arbitration agreement

What is an Arbitration Agreement?

In the employment arena and beyond, an arbitration agreement is typically a contractual promise between parties that if any dispute arises between them while they are under contract, they will waive their right to sue and instead settle the matter through arbitration. 

Seeking to avoid the costs of a protracted lawsuit, organizations sometimes require their employees to sign an agreement to arbitrate. In a 2018 Economic Policy Institute report, Alexander J.S. Colvin estimated that at least 55% of nonunion, private-sector U.S. employees—approximately 60 million—have signed an agreement to arbitrate that prevents them from suing if their legal rights are violated. For companies with more than 1,000 employees, about 65% mandate arbitration. 

When employees sign such agreements, they typically lose the ability to sue employers for alleged violations of federal and state statutes regarding employment discrimination and sexual harassment, disability protections, maternity- and medical-leave guarantees, and entitlements to minimum wages and overtime, writes Colvin. In 1991, the U.S. Supreme Court upheld the enforceability of mandatory employment arbitration agreements and, in 2011, enabled employers to shield themselves from employees’ class-action lawsuits as well.

The following items are tagged arbitration agreement: