What is an Arbitration Clause? | Bantle & Levy



What is an Arbitration Clause?

One thing that employers never want to deal with is a lawsuit, but unfortunately, that’s not always the reality. For them, the next best thing is to be able to handle the lawsuit privately behind closed doors. The problem with this is that it’s much easier for them to intimidate employees and force them into settlements that don’t best serve the employee. This process is called arbitration, and employers are able to do this through what is called an arbitration clause. They add these to employment contracts, and if your employer had you sign one, you need to know what it entails.

What Do Arbitration Clauses Do?

Arbitration clauses are written proof that the parties involved are waiving their rights to file class action lawsuits, participate in jury trials, and sometimes disclose one’s private affairs regarding actions at the company. Arbitration has drawn considerable controversy for being a way for corporations to silence lawsuits and negative press. 

The argument for arbitration is that it provides privacy and a speedy trial process, but many know it is for the company’s benefit and their benefit alone. Through legislation, there are certain indiscretions and events that cannot be settled in arbitration if the plaintiff does not want to. This means if the employee who wishes to file a lawsuit does so for one of a few certain reasons, the arbitration clause in their employment contract becomes null and void. 

For What Reasons Can a Corporation Not Force Arbitration?

As recently as 2022, President Joe Biden signed H.R. 4445 into law. Corporations cannot force arbitration on an employee who signed an arbitration clause when they wish to file class action lawsuits or otherwise report cases of sexual assault and/or harassment in the workplace. 

This doesn’t stop employers from asking for arbitration or employees from agreeing to it. It prohibits employers from claiming an employee broke the contract by not agreeing to arbitration.

This is one of the most recent examples of laws protecting employees from arbitration, but sexual assault and sexual harassment are not the only issues an employer cannot force arbitration for. 

  • You can still blow the whistle on illegal activity, despite signing an arbitration agreement. In cases of whistleblowing, the government files a lawsuit against the corporation, which does not involve arbitration agreements. 
  • New York State law prohibits forced arbitration in cases of discrimination. This rule came with the passing of C.P.L.R. 7515 which, like the most recent law passed by the president, made previous arbitration clauses null and void. Corporations can offer arbitration in cases of discrimination, but they cannot force it.

Are There Ways to Get Out of an Arbitration Clause?

If you file a lawsuit after signing an arbitration clause, your employer may file a motion to force the suit to be settled in arbitration. Unless the lawsuit involves one of the three previously mentioned issues, the court will likely abide by the contract, unless you can prove that the contract is invalid.

For the contract to be invalid, your employment law attorney must argue that you were not unaware of the arbitration clause and everything it entailed. We can do this by arguing that you were not mentally fit to sign the contract, your employer hid the fine print, or the wording of the contract is purposely misleading. If we can successfully do this, the court will allow the case to go to a jury trial, but you can still settle if offered a settlement you feel comfortable with.

If You’ve Signed an Arbitration Clause and Need Help, Contact the New York Employment Law Attorneys at Bantle & Levy

Arbitration clauses have been used by large corporations as weapons for decades. Thankfully, with recent laws and new ones over the horizon, more and more indiscretions in the workplace will not be protected by arbitration. You don’t have to suffer at the hands of your employer if you have experienced discrimination, sexual harassment, or have been exposed to illegal activity. 

If you need help defending your right to refuse arbitration, or to learn if you can circumvent an arbitration clause you signed, contact the New York employment law attorneys at Bantle & Levy today.

Bantle & Levy
Bantle & Levy

Lee Bantle is a partner at Bantle & Levy LLP. He has extensive legal expertise, admitted to the bars of the U.S. District Court and the U.S. Court of Appeals. With a distinguished academic background and clerkship experience, he has been recognized as a top-rated civil rights attorney and esteemed lawyer. In addition to his successful career, he has actively contributed to various legal organizations and serves as a faculty member for NYU's Annual Workshop on Employment Law for Federal Judges.


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