Arbitration Agreements Employment California: What You Need to Know

In recent years, arbitration agreements have become increasingly common in the employment context. These agreements require employees to resolve any employment-related disputes through arbitration rather than in court. California is one of the states that has been at the forefront of the debate over the use of arbitration agreements in employment, and courts have issued a number of decisions addressing the enforceability of these agreements.

What is an Arbitration Agreement?

An arbitration agreement is a contract between an employer and an employee that requires any disputes related to the employment relationship to be resolved through arbitration rather than in court. Arbitration is a form of alternative dispute resolution where an impartial third party, known as an arbitrator, is appointed to hear both sides of the dispute and issue a binding decision.

Why Use an Arbitration Agreement?

Employers commonly use arbitration agreements for a number of reasons. One of the primary reasons is to avoid the cost and uncertainty of litigation. Arbitration is often faster and less expensive than going through the court system. Arbitration proceedings are typically confidential, which can help protect an employer`s reputation.

However, some employees argue that arbitration agreements are disadvantageous to them, as they may not have the same rights and protections that they would have in court. For example, the rules of evidence may be more relaxed in arbitration than in court, making it more difficult for an employee to prove their case.

Enforceability of Arbitration Agreements in California

In California, arbitration agreements are generally enforceable if they meet certain requirements. For example, an arbitration agreement must be voluntary and not the result of coercion, undue influence, or fraud. Additionally, an arbitration agreement must provide for a neutral arbitrator and a fair process.

However, there have been several court decisions in California that have limited the enforceability of arbitration agreements. For example, in Armendariz v. Foundation Health Psychcare Services, Inc., the California Supreme Court held that arbitration agreements must provide for certain minimum procedural safeguards, such as a written decision by the arbitrator and the right to a court review of the award.

Recently, in 2019, the California legislature passed AB 51, which prohibits employers from requiring employees to waive their right to sue or seek public enforcement of their rights as a condition of employment. However, the legality of AB 51 is currently being challenged in court.

Conclusion

Arbitration agreements in the employment context are a contentious issue in California and across the United States. While the use of arbitration agreements can provide benefits to employers, employees may feel that they are disadvantaged by these agreements. If you are an employer in California, it is important to consult with an experienced attorney to ensure that your arbitration agreement is enforceable and complies with California law.