Could someone confirm that this is legal?

[Orrex]

I got a look at a standard employment application for a local fast food company, and I was rather taken aback by this little passage near the end of the document:

Because of the delay and expense of the court systems, Company Name and I agree to use confidential binding arbitration for any claims that arise between me and Company Name, its related companies, and/or their current or former employees. Such claims would include any concerning compensation, employment (including, but not limited to any claims concerning sexual harassment), or termination of employment. Before arbitration, I agree: (i) first, to present any such claims in full written detail to Company Name; (ii) next, to complete any Company Name internal review process; and (iii) finally, to complete any external administrative remedy (such as with the Equal Employment Opportunity Commission). In any arbitration, the then prevailing rules of the American Arbitration Association (and, to the extent not inconsistent, the then prevailing rules of the Federal Arbitration Act) will apply.

I confess that I know nothing about the American Arbitration Association, so maybe I'm reacting to nothing, but this sounds to me like an attempt to circumvent legitimate legal remedy in the case of employee grievance. I take particular note of the company's explicit desire to avoid legal costs.

I would greatly appreciate your thoughts and insights.

[Coyote_Bandit]

1. In many states

it is legal. It is simply a contractual agreement as to how disputes will be resolved.

Under the rules of the American Arbitration Association each party to a dispute is entitled to name an arbitrator and the two arbitrators then mutually agree on the selection of a third arbitrator.

Legal costs for companies to defend employment related suits can be quite high. Plaintiffs are generally able to find an attorney who will represent them on a contingency fee basis. Defendants generally pay an hourly rate plus costs. I personally have seen legal fees and costs for a company in a single suit top $1 million - and the company prevailed in both non-binding arbitration and in the litigation that followed. Meanwhile the plaintiff bore no cost to pursue the claim.

[2Design]

2. you are agreeing not to use the legal system if there is a problem

In other words you are giving up your rights. This is what credit card companies have been getting people to sign in the last 5 years too. This way people can't use bankruptcy court or anything else to protect themselves is the way I read it.

Probably would not work for a place that wanted to take away my legal rights, what are they up to?