Should I Sign an Arbitration Agreement at Work?

Wondering if you should sign an arbitration agreement, or class action waiver at work? Don’t do it…unless you absolutely must.

It might feel like just another form to sign when you're starting a new job or being onboarded into a new role, but it's crucial to understand what you're agreeing to. You're giving up a lot more than you might realize.

What Are Arbitration Agreements and Class Action Waivers?

First, let's break down what these terms actually mean.

What are arbitration agreements?

An arbitration agreement is a clause that requires you to resolve any disputes with your employer outside of court, typically through a private process known as arbitration. It sounds straightforward, right? But here's the catch: arbitration is very different from going to court.

What are class action waivers?

A class action waiver, on the other hand, is a clause that prevents you from joining other employees in a group lawsuit against your employer. Instead, you're forced to go it alone, even if many others have experienced the same wrongdoings.

Why Shouldn't You Sign an Arbitration Agreement?

Now, let’s talk about why signing these agreements might not be in your best interest.

1. Limited Legal Recourse

When you sign an arbitration agreement, you're effectively waiving your right to a trial by jury. This is a big deal because, in a courtroom, you have a judge, a jury of your peers, and a public record of proceedings. This transparency helps ensure fairness and accountability.

Arbitration, however, is a private affair. The arbitrator (who is often chosen by the employer, and in California, paid for by the employer) has significant control over the process, and their decision is usually final. There’s no jury, and you often can't appeal the decision. You’re basically rolling the dice on whether the arbitrator will side with you. It’s a kangaroo court, and look how judgmental that kangaroo at the top is.

2. Bias Toward Employers

Let’s be honest here: arbitration often favors employers. Why? Because the arbitrators are usually chosen by the companies or have a long-standing relationship with them. These arbitrators want to keep getting hired, and that means they might not always be neutral. Even if they try to be fair, there's still an inherent bias toward the party that picks them, and the party that pays them.

Think of it this way: if you're an arbitrator who frequently gets selected by big companies, you might not want to make decisions that are too unfavorable to them. It’s a system that often puts employees at a disadvantage.

3. Hidden Costs

Arbitration can also come with hidden costs. While companies often argue that arbitration is cheaper than going to court, this isn’t always true. Sometimes, arbitration fees can be exorbitant, and there are instances where employees are even required to split these fees with the employer. In California, employers must pay the arbitrator’s fees, but arbitrators have sneaky ways of adding up costs for employees, like insisting employees use certain court reporters, who often overcharge, because they’re either kicking back to the arbitrator, or gouging because they know you don’t want to upset the arbitrator’s favorite court reporter. This can be a huge financial burden, especially if you’re already dealing with a dispute over wages, discrimination, or wrongful termination.

4. Secrecy and Lack of Transparency

One of the biggest issues with arbitration is that it lacks transparency. Unlike a court case, which is part of the public record, arbitration proceedings are private. This means if an employer has wronged you, there’s no public record of it. The lack of public accountability can enable employers to continue bad practices because there’s no pressure from the public or potential employees to change their ways.

Imagine a scenario where a company has a pattern of discrimination or harassment. If all those cases are settled in arbitration, no one else ever hears about it, and the company doesn’t face any public backlash. Other employees might face the same issues, never knowing there’s a pattern.

5. No Class Actions

By signing a class action waiver, you’re giving up your right to join forces with other employees who have faced similar issues. This is a significant loss because there’s strength in numbers. It’s much harder for an employer to ignore or dismiss a group of employees standing together than it is to deal with one employee at a time.

Class action lawsuits are powerful tools for employees. They can bring systemic issues to light, and they often lead to meaningful changes in company policies and practices. By signing away your right to participate in such lawsuits, you’re not just limiting your ability to fight back; you’re also limiting the ability of your coworkers to fight back as a group.

6. Feeling Isolated and Disempowered

When you sign these agreements, you might feel isolated and powerless. If something goes wrong at work, you’re left to handle it alone. There’s no option to band together with your colleagues, no chance to have your day in court with a judge and jury. It’s just you, facing down a process that’s often designed to favor the employer.

This can be incredibly disheartening. But remember, knowledge is power. Understanding the implications of what you’re signing can help you make better decisions about your employment.

7. Violation of the Seventh Amendment

Arbitration agreements violate the Seventh Amendment of the U.S. Constitution, which guarantees the right to a jury trial in civil cases. When employees sign arbitration agreements, they waive their right to have disputes resolved by a jury, instead agreeing to settle conflicts through a private arbitration process. This means that, rather than having a dispute heard and decided by a jury of their peers, employees are often subjected to a process that is controlled by arbitrators who may favor employers. The lack of a jury trial and public proceedings in arbitration can undermine the fundamental rights protected by the Seventh Amendment, as it removes a crucial check on power and limits access to fair and impartial justice. This raises concerns about whether employees are truly receiving their constitutional right to a jury trial in civil disputes involving their employment.

So, What Should You Do Instead of Signing An Arbitration Agreement?

If you're presented with an arbitration agreement or class action waiver, don't just sign it without a second thought. Take your time to read it carefully. Consider seeking advice from a lawyer, especially if the document is filled with legal jargon.

Ask yourself if you’re comfortable giving up your right to a public trial or to join a class action. Remember, you have more power than you think. Companies need good employees, and many are willing to negotiate terms. Don’t be afraid to push back and ask for the clause to be removed, unless you absolutely must keep this job.

And if you’re already working somewhere and are asked to sign a new agreement, know that you’re within your rights to ask why the company is requesting this now and what it means for you. And if you’re already working somewhere, and have already signed an arbitration agreement, know that you’re within your rights to ask about backing out of the arbitration agreement.

Empower Yourself

Ultimately, the decision to sign an arbitration agreement or class action waiver is up to you. But being informed means you’re making that choice with your eyes wide open. Don’t let anyone pressure you into giving up your rights without understanding what you’re potentially sacrificing.

Stay empowered, and remember that your rights as an employee matter. You deserve fairness and transparency, and you have the right to stand up for that.