Employment Arbitration Agreements (US)

by Practical Law Labor & Employment

A Practice Note that provides guidance for employers and their counsel on the legal framework and practical considerations for using arbitration to resolve employment-related disputes. This Note examines the Federal Arbitration Act (FAA) and its policy favoring arbitration while addressing significant developments that have reshaped the landscape. It covers the Supreme Court's decision in Epic Systems Corp. v. Lewis regarding the enforceability of class and collective action waivers and the resulting trend of mass individual arbitrations. This resource also analyzes the critical impact of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA), which renders certain predispute arbitration agreements unenforceable at the claimant's option. This Note explores the benefits and drawbacks of arbitration, threshold questions of arbitrability, key drafting considerations for creating enforceable agreements, and exceptions to FAA coverage, such as for transportation workers. It also reviews ongoing challenges involving state laws that attempt to restrict mandatory arbitration. It is intended for use by private employers with their nonunionized workforce and is based on federal law, but highlights issues where state law may impose different or additional requirements. For state-specific employment arbitration resources, see State Employment Litigation and Arbitration Toolkit: State-Specific Resources.