Mandatory Arbitration Agreements in Washington: Your Rights

The Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq., generally enforces arbitration agreements in contracts affecting interstate commerce. The FAA preempts state law unless state contract defenses apply equally to all contracts. However, the FAA permits courts to refuse enforcement on grounds such as unconscionability, fraud, duress, or mutual assent defects that would invalidate any contract under general state contract law.

Federal courts recognize that arbitration agreements are valid and enforceable when both parties clearly agree. The U.S. Supreme Court has upheld employer-required arbitration agreements and class action waivers, even in employment contexts. However, federal courts respect state contract law defenses.

The EEOC and DOL do not generally prevent arbitration of employment claims, but the EEOC has taken positions against class action waivers and confidentiality clauses in arbitration agreements. Employees can still file EEOC charges even with an arbitration agreement; the arbitrator typically handles the actual dispute.

Federal law does not require that arbitration agreements be mutual (employer and employee both must arbitrate) or that they carve out certain statutory claims. The FAA permits broad arbitration clauses. However, courts retain authority to enforce state contract defenses that apply equally to non-arbitration contracts.

Washington state law imposes significantly more restrictions on arbitration agreements than federal law. Washington Revised Code § 7.04A.010 et seq. (the Uniform Arbitration Act) establishes the framework, but Washington courts have developed robust unconscionability doctrine that applies specifically to employment arbitration agreements.

(1) Applicable State Statute: Washington RCW § 7.04A.010 et seq. and Washington common law established through cases like Bednar v. Omni Services, Inc. (2014) and other Washington appellate decisions.

(2) Stronger Than Federal: Washington law is substantially stronger for employees. While the FAA favors enforceability, Washington courts scrutinize arbitration agreements for procedural and substantive unconscionability. Procedural unconscionability examines the process of contract formation (is it adhesive, one-sided, lack of bargaining power). Substantive unconscionability examines the terms themselves (are they one-sided, do they prevent vindication of statutory rights, are attorney fees or costs prohibitive).

(3) Employer Coverage: Washington's unconscionability doctrine applies to all employers subject to Washington law, regardless of size. The FAA's interstate commerce requirement does not override Washington contract law defenses.

(4) Unique State Protections: Washington courts have held that arbitration agreements requiring employees to waive access to courts, pay excessive arbitrator fees, or prevent class actions face heightened scrutiny. Washington courts are skeptical of confidentiality provisions that prevent employees from discussing arbitration results. Some Washington courts have suggested that class action waivers in arbitration agreements are disfavored or unenforceable in the employment context, though this issue remains unsettled.

(5) Remedies: If an arbitration agreement is found unconscionable or unenforceable, the employee can pursue claims in court, including before a jury. If the agreement is enforceable, the employee's remedies are determined by the arbitrator (damages, attorney fees, injunctive relief) within the scope of the arbitration clause.

Washington's enforceability of arbitration agreements contains important exceptions and defenses.

Unconscionability: Arbitration agreements that are procedurally or substantively unconscionable are unenforceable. Procedural unconscionability exists when the agreement is an adhesion contract (take-it-or-leave-it), the employee has no real bargaining power, terms are hidden or ambiguous, or the process lacks mutual assent. Substantive unconscionability exists when arbitration terms are one-sided (e.g., employer can arbitrate or litigate but employee must arbitrate), when they strip an employee of substantive statutory rights, when arbitrator fees are prohibitively expensive for the employee, when confidentiality clauses prevent discussion of the arbitration, or when class action waivers prevent group claims.

Lack of Mutual Assent: If the employee did not knowingly and voluntarily agree to the arbitration clause, it is not binding. Arbitration by adhesion (offered as a condition of employment with no negotiation) may be enforceable, but if terms are unclear or the employee was not informed of key provisions, courts may refuse enforcement.

Class Action Waivers: Washington courts have shown skepticism toward class action waivers in employment arbitration agreements, particularly when the individual claim is small or when arbitration fees would be prohibitive. Some Washington courts have suggested these are disfavored.

Vindicating Statutory Rights: Arbitration agreements that prevent employees from vindicating federal or state statutory employment rights (discrimination, wage and hour, whistleblower protections) face heightened scrutiny. If arbitration would effectively prevent a statutory right from being exercised, courts may refuse enforcement.

Confidentiality: One-way confidentiality clauses (employee must keep results confidential but employer does not) may be unenforceable under Washington law. Washington recognizes that employees have First Amendment and statutory rights to discuss wages, working conditions, and arbitration outcomes.

At-Will Employment Exception: Arbitration agreements do not override the at-will employment doctrine or create additional protections. An employee can still be terminated at-will; arbitration merely changes the forum for disputes.

Step 1: Document Everything. Before or immediately after being asked to sign an arbitration agreement, save the agreement itself and any communications regarding it. Document the date, time, and context in which you were asked to sign. Note whether you had time to review it, whether it was discussed with you, and whether you asked questions. Take screenshots of the agreement if it was presented electronically. If you already signed, do not sign any modified version without understanding the changes.

Step 2: Internal Challenge and Negotiation. Politely request clarification about the arbitration agreement from HR or management. Ask for time to review it before signing (legally, you have the right to do so, though an employer can condition employment on accepting it). You can propose modifications (e.g., mutual arbitration, carve-out for certain claims, reasonable fee-splitting). Document any requests in writing (email). If you believe the agreement is unconscionable or unfair, raise concerns in writing to HR. This creates a record and may show the company's awareness of fairness issues.

Step 3: Consult an Employment Attorney Before Signing. Contact a Washington employment law attorney (not a mediator or arbitration group). Explain the arbitration clause and your employment context. The attorney can advise whether the clause is likely enforceable in Washington, whether it protects your rights, and what claims might be excluded. Many employment attorneys offer free initial consultations. If you cannot afford an attorney, contact the Northwest Justice Project (1-888-529-5277, free legal aid for low-income Washingtonians) or the Washington State Bar Association Lawyer Referral Service (206-443-3350).

Step 4: Challenging Enforceability After a Dispute Arises. If you sign an arbitration agreement and later have a workplace dispute (discrimination, wage theft, retaliation), you have options: (A) Comply with the arbitration clause and proceed to arbitration, but include arguments that the clause is unconscionable (procedurally or substantively), lacks mutual consent, or prevents vindication of statutory rights. The arbitrator will decide enforceability as an initial matter. (B) Do not comply with the arbitration clause and file a lawsuit in Washington state court or EEOC charge, then raise the agreement as an issue if the employer moves to compel arbitration. (C) File an EEOC charge even though you signed an arbitration agreement; the EEOC will investigate regardless, and the arbitration agreement typically does not prevent EEOC involvement (though it may prevent EEOC from filing suit on your behalf).

Step 5: Arbitration or Litigation Process. If the arbitration agreement is enforceable, the dispute proceeds in arbitration (typically administered by JAMS, AAA, or another provider). You will present evidence and arguments to a neutral arbitrator. Costs: Some arbitration agreements require the employer to pay arbitrator fees; some require cost-splitting; some require the employee to pay. If the agreement requires you to pay significant fees, argue this makes arbitration economically infeasible and is therefore unconscionable. The arbitrator will issue a decision, typically final and binding.

If the arbitration agreement is unenforceable, you can file a lawsuit in Washington Superior Court or an EEOC charge. For EEOC charges, contact the Seattle EEOC office (206-220-6883, www.eeoc.gov). You have 300 days from the alleged violation to file (Washington is a deferral state; the state agency WDLI has first opportunity to investigate, but EEOC also accepts charges). For lawsuits, consult an attorney on filing deadlines (typically 3 years for contract claims, 2 years for many tort claims, 3 years for wage claims under RCW § 49.52.090).