Employment arbitration agreements are broadly enforceable, and the questions now concern the exceptions and the drafting details.
Statutory carve-outs. Federal law makes predispute arbitration agreements unenforceable at the claimant’s election for sexual assault and sexual harassment disputes. Transportation workers engaged in interstate commerce are excluded from the federal arbitration act, and the scope of that exclusion has been litigated repeatedly.
Unconscionability. State law defences apply. Recurring problems include one-sided obligations, shortened limitation periods, cost-splitting that makes vindication impractical, limits on remedies otherwise available by statute, restrictions on discovery so severe as to preclude proof, and arbitrator selection controlled by the employer.
Class and collective waivers are generally enforceable, which is the primary reason employers adopt these programmes.
Consideration and assent. Continued employment suffices in many states; a clear record of assent — signed acknowledgement or auditable electronic acceptance — is what defeats the frequent argument that the employee never agreed.
Costs. Employers typically bear the arbitrator’s fees in employment cases, and failure to pay them on time can result in default under some state statutes and provider rules.
Practical assessment. Arbitration is faster and private, but individual claim volume can rise sharply where mass arbitration filings are coordinated.