Employment guide

Mandatory Arbitration & Class-Action Waivers at Work

A mandatory arbitration clause sends your future disputes to a private forum and often waives class actions — but a federal law carves out sexual-harassment and sexual-assault claims.

Last reviewed: May 26, 2026 by the BizLeaseCheck Editorial Team

General information, not legal advice.

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Overview

Many employment agreements require you to arbitrate disputes individually rather than sue in court, and to waive participation in class or collective actions. These clauses are generally enforceable under the Federal Arbitration Act, with an important recent exception.

Understanding what you are agreeing to — and what the law still preserves — helps you weigh the clause.

Topics to check

What a mandatory arbitration clause doesHigh confidence

It requires covered disputes to be resolved by a private arbitrator instead of a court, usually individually. The Federal Arbitration Act makes written arbitration agreements broadly enforceable, and the Supreme Court has upheld class/collective-action waivers in employment arbitration agreements. Arbitration can be faster and private but limits discovery, appeal rights, and the leverage of a class action.

Check what disputes are covered, who pays the arbitration costs, where it occurs, and which arbitration rules apply.

Federal Arbitration Act (Cornell LII Wex)

The EFAA carve-out for harassment and assault claimsHigh confidence

The federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (2022) provides that, at the election of the person bringing the claim, a pre-dispute arbitration agreement and a pre-dispute joint-action waiver are not valid or enforceable for a sexual-harassment or sexual-assault dispute. So a broad arbitration clause cannot force those specific claims into arbitration if the worker chooses court.

This is a meaningful limit on otherwise-enforceable arbitration clauses, and a point to understand rather than be misled about.

Ending Forced Arbitration Act — 9 U.S.C. § 402 (Cornell LII)

Protected concerted activity still appliesHigh confidence

Separate labor law protects employees’ right to engage in "protected concerted activity" — including discussing wages and working conditions with co-workers — and an arbitration or confidentiality clause cannot lawfully bar that. Watch for clauses that try to silence collective discussion of pay or conditions.

Weigh the trade-offs: arbitration is private and can be quicker, but you give up a public court process and, often, the class mechanism.

NLRB — Concerted Activity

Key takeaways

Mandatory arbitration sends disputes to a private arbitrator, usually individually.
Arbitration clauses and class-action waivers are generally enforceable under the FAA.
The EFAA lets a worker void pre-dispute arbitration of sexual-harassment/assault claims at their option.
Arbitration limits discovery, appeals, and the leverage of a class action.
Labor law still protects discussing wages and working conditions with co-workers.

Official resources

Covenant not to compete (Cornell LII Wex) FTC — Noncompetes: What You Should Know Employment-at-will doctrine (Cornell LII Wex) EEOC — Waivers of Discrimination Claims in Severance Agreements Defend Trade Secrets Act — 18 U.S.C. § 1836 (Cornell LII)

Legal-review notes

Guide confidence marker: Medium confidence.

Arbitration enforceability and exceptions depend on the wording and current law; the EFAA and state laws can affect coverage.
Whether a specific clause is enforceable in your situation is a question for a licensed attorney.

Frequently asked questions

Is a mandatory arbitration clause enforceable?

Generally yes. The Federal Arbitration Act makes written arbitration agreements broadly enforceable, and the Supreme Court has upheld individual arbitration with class/collective-action waivers in employment. There are exceptions, most notably the EFAA for sexual-harassment and sexual-assault claims.

Can I be forced to arbitrate a sexual harassment claim?

No, not if you do not want to. Under the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, at the claimant’s election a pre-dispute arbitration agreement and joint-action waiver are not enforceable for sexual-harassment or sexual-assault disputes, so you can choose court.

Does arbitration stop me from discussing my pay with coworkers?

It should not. Federal labor law protects employees’ right to engage in protected concerted activity, including discussing wages and working conditions with co-workers. A clause that tries to bar that collective discussion can be unlawful.