Is it legal for an employment contract to stipulate that all litigation from the employee towards the employer must be in the form of arbitration or do you have the right to litigate in the court system?
2 Answers
The only significant exception to employment arbitration scope in the U.S. is for sexual assault cases under a law that took effect about a year ago (whose effective date language is actively being litigated over what triggers a before or after effective date determination). H.R. 4445, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (the Act), into law on March 3, 2022.
Also, arbitration clauses can't bind non-party government labor law enforcement agencies that aren't parties to the arbitration agreement. Likewise, criminal violations can't be subjected to arbitration (e.g. a criminal prosecutor prosecuted wage theft claim, or involuntary servitude claim).
Limitations on the scope of the substantive remedy in arbitration are not always allowed, but if the necessary substantive remedy is available in arbitration, any employment matter can be subject to arbitration if the parties agree either pre-dispute or post-dispute in the U.S. An arbitration clause isn't supposed to change substantive law in practice, even if it is possible to do so unreviewably in practice on a case by case basis.
At some point, children or other people who lack capacity may be incapable of agreeing to an arbitration clause but the threshold is low and can be met by a fiduciary for the person who personally lacks capacity to contract.
See Epic Systems Corp. v. Lewis, 584 U. S. ____ (2018).
Courts must enforce agreements to arbitrate, even in the employment context. Where an agreement requires arbitration, the only way to avoid this is through "generally applicable contract defenses, such as fraud, duress, or unconscionability."
