Should employment contracts have an arbitration provision?

An employment contract may provide for arbitration of any employment dispute, in lieu of litigation. A handbook or policy manual may do likewise, but a provision that is not signed by the employee (or acknowledged by his/her as binding) may not be enforced by a court.

An arbitration provision may specify the procedure to be followed in arbitration, and how the costs of arbitration are to be split between the employer and employee. Arbitration provisions may cover most or all employment disputes, including discrimination claims. However, discrimination claims should be expressly included in the written arbitration provision.

It is uncertain at this time whether courts will enforce arbitration of all types of discrimination claims, rather than let an employee take such claims to court despite an arbitration provision.