What will happen if I do not sign my employer's arbitration agreement?

By , J.D.

Question: After a long application and interview process, I was recently offered a position at a technology company. I sat down with the HR rep on my first day to go over paperwork. The company wants me to sign an arbitration agreement, giving up my right to sue in court for anything illegal that happens during my employment. Do I have to sign this? Can the company rescind my offer or fire me if I refuse to sign?

Answer: You don't have to sign the agreement, but the consequences of refusing to sign could be severe.

Many employers ask new hires to sign an arbitration agreement: a contract in which the employee agrees to bring any legal disputes with the employer to arbitration, rather than to court. Arbitration is a legal proceeding that is less formal than a lawsuit. Disputes are heard more quickly, the rules about evidence and testimony are more relaxed, and decisions are made by an arbitrator rather than a judge.

Employers typically want disputes heard in arbitration because they believe employees don't fare as well there. Arbitrators, who are typically retired judges or business people, are thought to be less likely to be swayed by emotion or sympathy than jurors might be, and therefore less likely to award huge damages for things like pain and suffering. Arbitration also costs less than a lawsuit for both sides.

The idea that an employer could require you to give up your right to use the legal justice system is shocking to many employees. However, courts have almost uniformly upheld an employer's right to ask employees to sign these agreements. And, employers almost certainly have the right to fire, or refuse to hire, an employee who won't sign.

You might have a stronger argument if the arbitration agreement is biased in favor of your employer. For example, courts have questioned or struck down arbitration agreements that require employees to pick up too much of the cost, limit the damages available, put significant restrictions on the employee's right to present evidence, and so on. These decisions vary from state to state, however. Your best bet is to schedule a quick consultation with a local employment lawyer, who should be able to quickly review your employer's agreement and tell you whether it will pass legal muster. If it will, your choices are to sign the agreement or to possibly lose your job.

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