Why Signing an Arbitration Agreement Could Come Back to Haunt You
Think Carefully Before Signing Away Your Right to Sue
You just got hired—and you’re thrilled about your new job. But when you receive your new employee packet, tucked in there with the rest of the documents you have to sign is an arbitration agreement. It says you can’t take your employer to court.
Should you sign it? And what will the ramifications be if you do—or don’t?
What is an arbitration agreement?
Asking new employees to sign an arbitration clause is a growing trend. When you sign one, you’re essentially signing away your right to sue your employer over issues such as breach of contract, discrimination, or wrongful termination.
Under most agreements, if you have a conflict with your employer, you have to settle it in arbitration rather than at court. This might not sound so bad—until you realize that there are several reasons why this puts employees at a disadvantage.
One reason is that the arbitration process isn’t decided by a jury. It’s decided by a third party—usually a retired judge or legal professional.
This is not always as favorable for employees, as juries are frequently made up of rank-and-file employees themselves who tend to sympathize with the employee in the case. In arbitration, the employee is often less likely to win.
In addition, under arbitration, you have less power to get documentation from the other side than you have in a traditional court. This can make it hard to prove your case, as your employer may be holding onto documentation you need.
Additionally, you can’t appeal an arbitration. If you believe the decision was unfair, you’re left without recourse.
How your employer can get you to sign—even without your knowledge
Employers often put arbitration agreements in among the documentation you’re supposed to sign at the start of a new job.
This can make you feel especially pressured to sign. You might feel you need the job, and you may not envision the need to sue at this point—after all, you’re new to the company, and you haven’t had any negative experiences yet.
But you may not even realize you’ve signed an arbitration agreement—as it may be buried in stacks of paperwork or hidden in an employee handbook. This is a very common scenario.
Bear in mind that when you sign these documents, you’re agreeing to all the terms, even if you aren’t aware of all of them. Be sure to read everything carefully.
Can you be fired for refusing to sign?
Your employer can fire you for refusing to sign an arbitration agreement. If you’re at the start of the hiring process, the employer is within their rights to take back the job offer.
You may have leverage, however, if your employer wants to bring you on board badly enough. They may be willing to renegotiate the terms of the agreement so it’s fairer to you.
What if you’ve already signed an arbitration agreement?
Let’s say you signed an arbitration agreement back when you were hired—and then your employer violates your rights. Do you have any recourse?
One thing to keep in mind is that the arbitration agreement only applies to you—not to outside agencies. So one thing you can do in this situation is get in touch with a government agency such as the Equal Employment Opportunity Commission (EEOC).
They can decide to work on your behalf—even taking your employer to court. It’s rare for the EEOC to take this action, however.
Talk to a Knowledgeable Pennsylvania Employment Lawyer
If your employer is asking you to sign an arbitration agreement and you’re not comfortable with it, you should talk to a lawyer.
An experienced employment lawyer can assess the document, advise you on its consequences, and help you negotiate a fairer and more equitable agreement.
The information provided here does not constitute legal advice. It is intended for general purposes only. If you have questions about a specific legal issue, you should speak to an attorney.