Arbitration Clause

What This Clause Does

An arbitration clause means that if you have a dispute with the company — over wages, wrongful termination, discrimination, or anything else — you give up your right to sue in court. Instead, the case goes to a private arbitrator, whose decision is usually final and difficult to appeal.

Arbitration is often faster and cheaper than litigation, but it tends to favor repeat players (like large companies) over one-time participants (like individual employees). Many arbitration agreements also include a class action waiver, meaning you can't join a group lawsuit even if many employees were harmed in the same way.

What This Looks Like in a Contract

"Any dispute arising out of or relating to this Agreement or Employee's employment shall be resolved by final and binding arbitration administered by [AAA/JAMS] under its then-current Employment Arbitration Rules. Each party waives any right to a jury trial."

Red Flags to Watch For

• Class action waiver included — you can't join group lawsuits
• Company chooses the arbitration provider
• You're required to pay arbitration fees, which can be expensive
• No exception for small claims court or injunctive relief

Negotiation Strategies