Arbitration Provisions
Arbitration Provisions: What You Give Up, and What You Don't
Many executive contracts require that disputes be resolved through private arbitration rather than in court. Understanding what that actually means — and where there are real, federally protected limits on what your employer can force into arbitration — matters before you sign, and matters just as much if you’re trying to figure out your options after a dispute has already arisen. For the full picture of how arbitration fits into an executive contract, see our Executive Employment Contract Issues overview.
What Arbitration Actually Changes
Arbitration replaces a courtroom lawsuit, with a judge and potentially a jury, with a private proceeding decided by one or more arbitrators, typically selected from a panel maintained by an arbitration organization. Employers generally favor arbitration because it tends to be faster, more confidential, and more predictable than litigation — advantages that can come at a real cost to the employee on the other side of the dispute:
- Limited appeal rights. Arbitration decisions are very difficult to overturn, even if you believe the arbitrator made a significant legal error. Court review of an arbitration award is far more limited than an appeal of a court judgment.
- Confidentiality that cuts both ways. Arbitration proceedings are typically private, which can protect your own privacy — but also means a pattern of misconduct by an employer stays hidden from other employees, the public, and potential future plaintiffs.
- Different discovery rules. Arbitration often involves more limited discovery (the process of obtaining evidence from the other side) than a court case would allow, which can make it harder to build a strong case.
- Class and collective action waivers. Arbitration agreements frequently include a waiver of your right to join with other employees in a class or collective action — meaning you’d have to pursue a claim entirely on your own, even if many coworkers have the same complaint. The U.S. Supreme Court upheld the enforceability of these waivers in Epic Systems Corp. v. Lewis (2018), rejecting the argument that they violate federal labor law.
An Important Federal Exception: Sexual Harassment and Assault Claims
Regardless of what your contract says, federal law creates a hard limit on forced arbitration for one specific category of claims. The 2022 Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act gives you the unilateral right to bring a sexual harassment or sexual assault claim in court, even if you previously signed a predispute arbitration agreement — for any such claim arising on or after March 3, 2022. See our Sexual Harassment Law overview for the full legal framework behind these claims.
A few specifics about how this works are worth understanding:
- The choice belongs entirely to you, not your employer. You can elect to go to court even if your employer would prefer to arbitrate, and you can also choose arbitration voluntarily if you’d prefer it — the law removes your employer’s ability to force the choice, it doesn’t take away arbitration as an option if you want it.
- A court, not an arbitrator, decides whether this exception applies to your situation — even if your arbitration agreement says an arbitrator should decide questions about the agreement’s validity.
- This creates a real strategic question when a case involves multiple types of claims. Because the law applies to the entire “case” relating to the harassment or assault dispute, not just the harassment claim in isolation, there’s a meaningful legal argument that other claims bundled into the same case — like related retaliation or discrimination claims — may also be freed from arbitration alongside it. This is a developing and sometimes contested area, and how it plays out can depend heavily on how your specific claims are framed.
When Arbitration Agreements Are Enforceable
The starting point matters a great deal here: the Federal Arbitration Act creates a strong federal policy favoring arbitration, and courts are generally required to enforce a valid arbitration agreement according to its terms. The U.S. Supreme Court has interpreted the FAA to preempt state laws that single out arbitration agreements for specifically unfavorable treatment — a state cannot pass a law saying arbitration clauses are disfavored or subject to extra scrutiny just because they’re arbitration clauses, even if the state has legitimate concerns about fairness in employment contracts generally.
In practice, this means the baseline assumption in DC, Maryland, and virtually everywhere else is that a properly formed arbitration agreement will be enforced. Courts do not evaluate whether arbitration is a good idea for you personally, or whether you would have preferred to keep your right to sue in court — an agreement that meets basic contract requirements (an offer, acceptance, and consideration, which continued employment is generally sufficient to satisfy) is enforceable even if you didn’t have much leverage to negotiate its terms.
When Arbitration Agreements Are Not Enforceable
Despite this strong presumption, arbitration agreements can still be challenged and found unenforceable — most commonly under the doctrine of unconscionability, which requires showing both of the following:
- Procedural unconscionability: focuses on how the agreement came about — was it presented on a take-it-or-leave-it basis with no real opportunity to negotiate or even review it carefully, did it involve unequal bargaining power, or was there an element of unfair surprise (for example, an arbitration requirement buried in a lengthy handbook or onboarding portal you had to click through without a genuine chance to read it)?
- Substantive unconscionability: focuses on whether the actual terms are unreasonably one-sided — for example, an agreement that requires you to arbitrate your claims against the company but preserves the company’s right to sue you in court, imposes arbitration costs far beyond what you’d pay to file a lawsuit, unreasonably shortens the time you have to bring a claim compared to the applicable statute of limitations, or limits the remedies or damages you could otherwise recover.
Most courts require some degree of both procedural and substantive unconscionability to strike down an agreement, often using a sliding scale — the more one-sided the actual terms are, the less procedural unfairness needs to be shown, and vice versa. An agreement that’s merely inconvenient, or that you wish you hadn’t signed, is not enough on its own; the terms or the process generally need to be genuinely unfair, not just unfavorable to you in hindsight.
Who Decides Whether an Agreement Is Enforceable?
This is a subtlety that surprises a lot of people. Ordinarily, a court — not an arbitrator — decides threshold questions about whether an arbitration agreement is valid and enforceable. But some arbitration agreements include a “delegation clause” that specifically assigns even that threshold question to the arbitrator instead. Where a valid delegation clause exists, a challenge to the arbitration agreement as a whole — including arguments about unconscionability — may need to be decided by the arbitrator, not a judge, unless you’re specifically challenging the delegation clause itself as invalid.
What Happens If Part of an Agreement Is Found Unenforceable
If a court finds that specific provisions of an arbitration agreement are unenforceable, it doesn’t necessarily void the entire agreement. Many arbitration clauses include a severability provision allowing a court to strike the offending terms (an excessive fee-shifting provision, for example) while still enforcing the rest of the agreement and sending the underlying dispute to arbitration. However, if the unenforceable provisions are numerous or deeply embedded throughout the agreement — sometimes described as an agreement “permeated” with unconscionability — a court may decline to sever anything and refuse to enforce the agreement at all.
What Arbitration Agreements Cannot Do, Regardless of Drafting
Beyond the general unconscionability framework, certain terms are considered categorically problematic no matter how the rest of the agreement is drafted: requiring you to pay excessive arbitration fees, imposing an unreasonably short time limit to bring a claim, or requiring arbitration in a location that makes it practically impossible for you to participate are the kinds of terms most likely to draw a successful challenge on their own.
What to Look for in an Arbitration Clause
- Does it clearly exclude, or at least not attempt to override, your rights under the sexual harassment and assault carve-out described above?
- Who pays the arbitration fees, and are they reasonable compared to what you’d pay to file a lawsuit in court?
- Does it include a class or collective action waiver, and if so, do you understand that you’d be pursuing any claim entirely on your own?
- What organization and rules govern the arbitration, and does the clause specify a location that would be practically difficult for you to attend?
Talk to an Arbitration Attorney
Whether you’re evaluating an arbitration clause before signing, or trying to understand your options after a dispute has already arisen, Wilkenfeld Law Office can help you understand what’s actually enforceable — including whether the sexual harassment and assault exception applies to your situation.
Or call 301.245.3035 · Intake@WilkenfeldLO.com
This article provides general information and is not legal advice. Contacting us does not create an attorney-client relationship.
Reviewed by Ari Wilkenfeld, Esq. (DC Bar No. 461063; MD Bar No. 9806240300). Ari has over 27 years of experience litigating in federal and state courts, and before the U.S. Equal Employment Opportunity Commission (EEOC), the U.S. Merit Systems Protection Board (MSPB), and various arbitration panels. Ari has been recognized by Esquire Magazine as “a famously determined Civil Rights lawyer” and by the New York Post as “a high powered DC Lawyer.” Last updated: August 28, 2026.