Washington U. in St. Louis, Olin Business School, United States
The use of mandatory ADR clauses, which restrict employees' rights to resolve labor disputes through litigation, has grown rapidly in recent decades. However, little is known about their effects on employees. We begin by documenting the prevalence and impact of ADR clauses. Using a revealed preference survey experiment, we also estimate that workers are willing to forgo 2.2\% of their salary to avoid ADR clauses. Members of protected groups, including female and Black workers, exhibit a higher willingness-to-pay to avoid these clauses. Workers are generally inattentive to ADR clauses, with WTP nearly tripling when clauses become salient.
