Are mandatory arbitration agreements legal?

Q. We require, as a condition of employment, that our employees agree to resolve all disputes by binding arbitration, rather than going to court. One of my friends said a lot of the government agencies don't like those kinds of arbitration policies and one agency even decided that they were illegal. I know lots of employers have binding arbitration, so I don't think that could be right, but thought I better check. —S.T.