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What Is a Mandatory Arbitration Agreement Under New Jersey Law?

A mandatory arbitration agreement requires an employee to resolve any disputes with their employer through arbitration rather than the court system. Arbitration is a private process in which a neutral third party, an arbitrator, hears both sides and issues a binding decision. Employees subject to these agreements typically give up their right to a jury trial and, in many cases, their right to appeal the outcome.

These agreements are common in employment contracts, offer letters, and employee handbooks, and they are often presented as standard paperwork without adequate explanation. Many employees sign them without fully understanding what they are giving up. New Jersey courts generally treat arbitration agreements as enforceable contracts, but enforceability depends on how the agreement was drafted, presented, and whether it covers the type of claim at issue.

In 2019, New Jersey passed a law that significantly limits mandatory arbitration in employment. An amendment to the NJLAD purportedly made any provision requiring arbitration of NJLAD discrimination, harassment, or retaliation claims unenforceable as against public policy, and prohibits retaliation against employees who refuse to agree to such waivers. However, courts have ruled that federal law may preempt New Jersey law regarding enforceability of such waivers, but the scope of the anti-retaliation protections may depend on the specific circumstances and evolving case law. An employer who fires or refuses to hire an employee for refusing to sign such a provision may be committing a retaliatory act. Anyone presented with such an agreement should carefully review it and seek legal advice.

New Jersey Law Against Discrimination (NJLAD) — 2019 Amendment

A 2019 amendment purportedly made mandatory arbitration of NJLAD discrimination, harassment, or retaliation claims unenforceable, and prohibits retaliation against employees who refuse to sign such waivers. Enforceability may depend on federal law and evolving case law.

Contract Law and Arbitration Statute

Governs the enforceability of arbitration agreements more broadly. An agreement may be unenforceable if it is insufficiently specific, if the employee was not given adequate notice, or if it was obtained through coercion or misrepresentation.

Your Rights and What Your Employer is Required to Do

Under New Jersey law, your employer is not just prohibited from certain conduct. In some situations it cannot require arbitration at all.

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Mandatory arbitration of NJLAD claims may be unenforceable

The 2019 amendment to the NJLAD purportedly made any provision requiring mandatory arbitration of discrimination, harassment, or retaliation claims unenforceable as against public policy. However, courts have ruled that federal law may preempt New Jersey law regarding enforceability of such waivers. Whether a specific provision is enforceable depends on the circumstances and evolving case law."

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You may be protected from retaliation for refusing to sign

The 2019 NJLAD amendment prohibits retaliation against employees who refuse to agree to mandatory arbitration waivers. An employer who fires or refuses to hire an employee for refusing to sign such a provision may be committing a retaliatory act. The scope of these anti-retaliation protections may depend on the specific circumstances and evolving case law.

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Arbitration agreements must meet specific requirements to be enforceable

New Jersey courts have consistently held that an arbitration agreement must clearly and plainly set forth that the parties are choosing arbitration as their only forum for resolving disputes. An agreement that is insufficiently specific, was not clearly disclosed to the employee, or was obtained through coercion or misrepresentation may not be enforceable.

Before You Sign — What You Need to Know

If your employer has asked you to sign a mandatory arbitration agreement, here is what to consider before you do.

Once you sign, your options narrow significantly. A case evaluation before you sign costs nothing and could change your position entirely.

Request a Case Evaluation
Understand what claims the agreement covers

Some arbitration agreements cover only certain types of disputes. Others purport to cover everything. Under New Jersey law, provisions requiring arbitration of NJLAD discrimination, harassment, or retaliation claims are purportedly unenforceable, though federal law may affect enforceability depending on your circumstances. Know what you are and are not actually giving up, and seek legal advice before signing.

Check whether the agreement was clearly disclosed

New Jersey courts require that an arbitration agreement clearly and plainly inform the employee that they are choosing arbitration as their sole forum for resolving disputes. An agreement buried in a handbook or presented without adequate explanation may not meet this standard.

Know that refusing to sign may be protected

Refusing to sign an arbitration agreement that contains unenforceable provisions may be a protected activity under the NJLAD. If your employer threatens adverse action for refusing to sign, speak with an attorney before doing anything.

Signs You May Need an Attorney for Your Arbitration Agreement

Scenario 01

You were asked to sign an arbitration agreement covering NJLAD claims

Scenario 02

You were fired or threatened with termination for refusing to sign an arbitration agreement covering NJLAD claims

Scenario 03

You have a dispute with your employer and only now realize you signed an arbitration agreement

Scenario 04

The arbitration clause was buried in a handbook rather than presented as a separate document

Scenario 05

You are unsure whether the agreement you signed is actually enforceable under New Jersey law

Scenario 06

You want representation in an arbitration proceeding against your employer

If any of these sound familiar, you may have a legal claim, even if you're not certain it qualifies. That is exactly what a case evaluation is for.
Request a Case Evaluation

What You Need to Prove to Challenge an Arbitration Agreement

To successfully challenge the enforceability of a mandatory arbitration agreement, you generally need to establish the following, but you don't need to have this all figured out before you call:

report

The agreement purports to require arbitration of NJLAD claims

If the agreement requires arbitration of NJLAD discrimination, harassment, or retaliation claims, that provision may be unenforceable under the 2019 NJLAD amendment, subject to the application of federal law and the specific circumstances of your case.

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The agreement fails to meet New Jersey's enforceability requirements

The agreement was not sufficiently specific about the parties' intent to arbitrate, was not clearly disclosed to the employee, or was obtained through coercion or misrepresentation.

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You did not knowingly and voluntarily waive your rights

You were not given adequate notice that the agreement applied to your employment, or you were misled about its terms or effect.

How Mandatory Arbitration Cases Work in New Jersey

Whether you are challenging an agreement before signing or navigating a dispute under one that already exists, here is what the process looks like.

1
Case Evaluation

An attorney reviews your agreement and your situation and tells you whether the agreement is enforceable, whether it covers your claim, and what your options are.

No commitment required
2
Review and Assessment

The firm evaluates the agreement against New Jersey's enforceability requirements: how it was presented, whether it clearly disclosed the waiver of rights, and whether it covers claims that cannot be arbitrated under state law.

3
Negotiation or Challenge

If the agreement is unenforceable or does not cover your claim, the firm can pursue the matter in court. If the agreement is enforceable, Mark & Kleinfeldt can represent you in the arbitration proceeding itself.

4
Arbitration or Litigation

Mark & Kleinfeldt negotiates from a position of strength whether in arbitration or court, prepared to take a case as far as it needs to go.

5
Resolution

Outcomes depend on the nature of the matter: a court ruling on enforceability, a negotiated resolution, or a decision in arbitration.

Related Claims to Consider

Mandatory arbitration disputes often overlap with other employment claims. If any of the following also describe your situation, you may have more than one issue worth addressing.

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Workplace Discrimination

If your arbitration agreement purports to require arbitration of NJLAD discrimination claims, that provision may be unenforceable. If you also have an underlying discrimination claim, an attorney can evaluate both together.

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Workplace Harassment

The same NJLAD protection that voids mandatory arbitration of discrimination claims also applies to harassment claims. If you have a harassment claim alongside an arbitration dispute, the two should be evaluated together.

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Retaliation

If you were fired or threatened with adverse action for refusing to sign an arbitration agreement containing unenforceable provisions, you may have a retaliation claim under the NJLAD.

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Wrongful Termination

If you were terminated for refusing to sign an arbitration agreement, your termination may be actionable as wrongful termination in violation of public policy.

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Frequently Asked Questions

More FAQs

The answer depends on your specific circumstances. The 2019 NJLAD amendment purportedly made any provision requiring mandatory arbitration of NJLAD discrimination, harassment, or retaliation claims unenforceable as against public policy. However, courts have ruled that federal law may preempt New Jersey law regarding enforceability of such waivers. The scope and continuing application of these protections continues to evolve. If your employer has asked you to sign an arbitration agreement covering NJLAD claims, you should seek legal advice before signing.

Not if the agreement contains provisions that are unenforceable under the NJLAD. In Cator v. WRDC Corp., a New Jersey court upheld an employee's right to refuse to sign an arbitration agreement that would have waived her right to a jury trial under the NJLAD, finding her termination for that refusal was itself a violation of the law.

An arbitration agreement may be unenforceable if it is insufficiently specific about the parties' intent to arbitrate, if the employee was not given adequate notice that it applied to their employment, if it covers claims that cannot be arbitrated under New Jersey law, or if it was obtained through coercion or misrepresentation. New Jersey courts evaluate enforceability on a case-by-case basis.

Potentially. If the agreement covers claims that cannot be arbitrated under New Jersey law, those provisions are void regardless of your signature. If the agreement is otherwise unenforceable, an attorney can evaluate whether it can be challenged. And if the agreement is enforceable, Mark | Kleinfeldt can represent you in the arbitration proceeding itself.

The deadline depends on the nature of the challenge and how it is pursued.

Ready to Understand Your Options Before or After Signing?

Whether you are reviewing an agreement before signing or dealing with one that already exists, a case evaluation can tell you whether it is enforceable, what it covers, and what your options are.