Arbitration clauses in employment contracts prevent employees from filing claims against their employers in court. Instead, the dispute with the employer must be decided through a process called arbitration, which is generally less favorable for employees than court.
By law, many types of claims are automatically exempt from arbitration. For example, claims for sexual harassment or sexual battery cannot be arbitrated, and if the employee’s arbitration agreement includes those claims, the agreement is illegal and cannot be enforced. It is also illegal for an employer to force a California employee to agree not to file representative claims under California’s Labor Code Private Attorneys General Act (PAGA). If an arbitration agreement bars such claims, one or more provisions in that agreement cannot be enforced.
Arbitration agreements that require claims to be arbitrated before the financial service industry’s self-regulatory organization called FINRA might also be unenforceable. FINRA does not permit most forms of discovery and therefore prevents employees from proving their claims. California courts might prevent employers from enforcing arbitration agreements that require arbitration before FINRA.
If you have signed an illegal arbitration agreement of if your employee handbook contains an illegal arbitration clause, you might be entitled to recover penalties or damages.
It’s essential to understand your employee rights and know when a California employment attorney should review these contracts or challenge their legitimacy. An attorney can also represent you during the process of arbitration.
Clapp & Lauinger LLP has fought for employee rights for 30 years in Carlsbad and throughout the Southern California area. We can review arbitration agreements that have already been signed to determine if the contents are unfair or if the contract is otherwise unenforceable. We advocate for the most favorable solution and work to get you the compensation you deserve for wage and hour violations, retaliation, wrongful termination, or other employee rights violations.
At Clapp & Lauinger LLP, we have experience in negotiation and litigation with individual cases and class-action claims. Our varied experience enables us to successfully take on your case. We proudly serve employee rights and fight for your interests.
Arbitration is a way to settle a legal dispute outside of court. The final decision is made by a private arbitrator, which is then enforced by the court. An arbitrator is a professional third party who listens to evidence and testimony from both sides before making a final decision. Because it is not a decision made by the courts, there is no way to appeal it except in extreme situations, and the judgments are final.
A valid contract that includes an arbitration agreement means that the employee relinquishes their right to civil litigation and a jury trial if any legal claims should arise. The employee would be required to address potential claims directly with their employer through the arbitration process. These types of civil claims include:
Arbitration clauses are often included within an employment contract or employee handbook, and most employees are unaware of the clause until it’s too late.
If you are not represented, your employer may select an arbitrator they believe will favor their side in the dispute. That’s why it’s always in your best interest to work with an employment attorney to effectively protect your rights.
Arbitration is a less formal way to settle a legal dispute without the expensive and lengthy process of litigation. It is a type of alternative dispute resolution, like mediation or settlement negotiation. Like litigation, arbitration includes:
Instead of a judge, the process is done in front of an arbitrator. Additionally, the discovery process may be more limited.
As of 2020, employers can’t require that employees or potential employees give up their right to file a claim to be hired, keep their employment, or receive benefits. This means that arbitration clauses cannot be a condition of employment. An employer can’t retaliate against an employee or potential employee for refusing an arbitration agreement. Employees can voluntarily agree to sign an arbitration agreement.
If an employee has signed an arbitration agreement for their employer, before 2020, the law does not invalidate the agreement. Employees are still be held to valid agreements.
Arbitration clauses must follow the requirements of any contract in California to be enforceable. If the agreement doesn’t follow state and federal laws for enforceability, the employee will be allowed to file a claim against their employer without arbitration. The most common reason an arbitration agreement may be considered enforceable is:
A contract must be conscionable, or fair, to be considered valid. If one side of the agreement is favored significantly more, and terms are unfair to the other party, it will likely be unconscionable. The unfairness of a contract is also based on whether one party has more bargaining power than the other or if one party may have had a hard time understanding the agreement’s terms. The court may void the contract, or only void the unconscionable parts of the contract.
Under state law, arbitration agreements must follow certain requirements in addition to complying with contract law. These requirements include:
To determine whether your arbitration agreement adequately meets the requirements and is enforceable, it’s important to have an employment attorney review it. If you have a claim against your employer, it is essential to work with an attorney to ensure that the process is handled correctly.
If you are entering arbitration against your employer, it is in your best interest to work with an experienced employment attorney. Your employer has significant resources, including an attorney. If you don’t work with an attorney, you will have to argue your interests to the arbitrator against an experienced attorney who is defending your employer’s interests. In unfortunate circumstances, the arbitrator may already prefer your employer’s side in the dispute. An employment attorney can protect your rights as an employee and your personal interests throughout arbitration while fighting for the most favorable outcome to your case.
Additionally, when you begin working with an attorney before your case is arbitrated, the attorney can review your agreement to determine whether it’s legally binding. If it is not, you could have the right to file a direct claim against your employer.
At Clapp & Lauinger LLP, we can defend your basic rights as an employee. Whether you have faced discrimination, wage and hour violations, or another dispute, you deserve compensation and back pay. Contact us today to see how our attorneys can help with your case.