Can I Break A Mandatory Arbitration Agreement in an Employment Discrimination Claim in NYC?

You believe you’ve been a victim of unlawful discrimination at your job. It’s a stressful and overwhelming experience. As you consider your options, you review your hiring paperwork and find a clause you don’t remember signing: a “mandatory arbitration agreement.” Suddenly, you’re faced with a new worry. Does this mean you’ve lost your right to go to court?

For countless employees in New York City and across the country, this scenario is all too real. Many companies now require employees to sign these agreements as a condition of employment. But what exactly are mandatory arbitration agreements, and can you get out of one when you have claims of discrimination?

This blog entry will break down what these agreements mean for your rights and explain the potential avenues for challenging them in New York State.

What is a Mandatory Arbitration Agreement?

Simply put, a mandatory arbitration agreement is a contract, or a clause within a contract, where an employee agrees to resolve legal disputes with their employer in a private process called arbitration instead of in a public court. By signing one, you are prospectively waiving your constitutional right to have your case heard by a judge and a jury of your peers.

Arbitration is fundamentally different from a court trial. While employers often frame arbitration as a faster, more efficient process, the reality for employees can be very different. Studies show that employees win less often and receive significantly lower awards in arbitration compared to court. The confidential nature of the process also means that an employer’s patterns of illegal behavior, such as systemic gender discrimination or racial discrimination, can remain hidden from public view if protected well.

General Rule of Thumb: Are Arbitration Agreements Enforceable?

Generally speaking, yes. The Federal Arbitration Act (FAA) establishes a national policy that favors enforcing arbitration agreements. The U.S. Supreme Court has repeatedly interpreted the FAA to mean that these agreements are valid for most types of employment disputes, including workplace discrimination claims.

This federal law is so strong that it often overrides, or “preempts,” state laws that try to prohibit forced arbitration agreements for certain claims. This makes challenging these agreements quite a complex legal task.

#MeToo Game-Changer: The Exception for Sexual Harassment and Assault

The single biggest exception to the FAA’s power came in March 2022 with the passage of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFASASHA). This bipartisan federal law was a landmark moment for employee rights.

In plain language, EFASASHA states that if your case involves allegations of sexual assault or sexual harassment, you now have the personal choice to bypass a pre-dispute arbitration agreement and file your claim in court. The decision is entirely up to you, the employee—the employer cannot force you into arbitration for these specific claims. This is a critical tool for survivors of discrimination in the workplace who want their day in court.

When an Agreement is Unfair: Challenging Other Discrimination Claims

What if your claim involves other forms of discrimination, such as those based on race, religion, national origin, or disability discrimination? In these cases, the primary way to challenge an arbitration agreement is by arguing that it is legally “unconscionable”—meaning it is so grossly unfair that it should not be enforced.

In New York, a court will typically look for two types of unfairness, listed below:

An Unfair Process (Procedural Unconscionability)

This focuses on how the agreement was signed. Was there a true choice? An experienced NYC employment lawyer will investigate questions like:

• Was the agreement presented on a “take-it-or-leave-it” basis as a condition of getting or keeping your job?
• Were you given enough time to read and understand the document, or were you rushed?
• Was the arbitration clause buried in fine print or written in confusing legal jargon that was hard to understand?
• Were you discouraged from or denied the chance to speak with an attorney before signing?

Unfair Terms (Substantive Unconscionability)

This focuses on the content of the agreement itself. Are the terms so one-sided that they “shock the conscience”? Key questions include:

• Does the agreement force you to pay for some or all of the arbitrator’s expensive fees, making it impossible to bring a claim?
• Does it strip away remedies you would have in court, like punitive damages or attorney’s fees?
• Is the agreement one-sided? For example, does it force you to arbitrate all of your claims but allow the company to sue you in court for its claims?
• Does it unfairly shorten the time you have to file a claim compared to what the law allows?

What Should I Do If I’m Facing Discrimination in the Workplace?

If you are dealing with discrimination in the workplace and have signed an arbitration agreement, it is crucial to act strategically.

Don’t Delay. Strict legal deadlines apply to all discrimination claims. Waiting too long can prevent you from ever bringing your case, whether in court or arbitration.

Gather Your Documents. Locate a copy of your employment contract, employee handbook, and any other onboarding paperwork you signed. The arbitration clause is often located in these documents.

Contact an Experienced NYC Employment Lawyer. Navigating the complexities of the FAA, EFASASHA, and the doctrine of unconscionability requires deep legal expertise. An NYC arbitration lawyer can analyze your agreement, investigate the circumstances under which you signed it, and advise you on the best path forward to protect your rights.

Call Us

We at Filippatos PLLC stand in proud solidarity with all workers. While mandatory arbitration agreements have tilted the scales in favor of employers, you are not without options. New laws and established legal principles can provide a path to challenge these unfair agreements and ensure your voice is heard. If you are experiencing discrimination at work and are looking to challenge an arbitration agreement, please give us a call at 888-9-JOBLAW for a free consultation. We will do our utmost to help secure you the justice you deserve.