Arbitration of Employment Claims

Employment agreements often include an arbitration clause in which an employer and an employee agree to resolve their disputes before a private arbitrator. If your employment contract contains such a provision, you may be required to handle your sexual harassment or other claims against your employer through private arbitration rather than by filing a lawsuit. Often, employers will not explain the legal consequences of the arbitration provision in an employment contract, resulting in employees signing away their rights to bring a civil lawsuit without realizing it. However, recent laws have made significant changes to how California treats arbitration clauses. If you have a dispute with your employer and would like to understand how the mandatory arbitration of employment claims can affect your case, you should consult with an El Segundo employment attorney at the Calderone Law Firm.

Arbitration is a form of alternative dispute resolution that is more straightforward than civil litigation. In arbitration, a neutral third party, known as an arbitrator, decides your case. The arbitrator may be a retired judge, a lawyer or another person with specific, relevant experience who is licensed to arbitrate. Employers often prefer arbitration to mediation or litigation because they consider the process to be more efficient and less expensive. However, arbitration may not be the fairest method of dispute resolution when it comes to an employee’s rights.

In an employment law context, disputes may arise with regard to employment discrimination, retaliation, wage and hour, and sexual harassment. The Federal Arbitration Act and the California Arbitration Act are the respective federal and state laws that govern the arbitration of employment claims in El Segundo. When the specifics of these laws differ and conflict with each other, the federal law will prevail.

In California, arbitration agreements need to be conscionable, prepared and signed without fraud or duress, and supported by consideration, which is something tangible and of value. Consideration can be a promotion, a bonus, a raise, added vacation days, or monetary compensation. For example, if an employer asks you to sign an arbitration agreement after you have already started working and offered to promote you to a management position and give you a raise in exchange for signing the arbitration agreement, a court is likely to view that as sufficient consideration to support the arbitration agreement.

Arbitration is a proceeding that has some similarities to a trial but also presents significant procedural differences. While both the employer and employee may retain legal representation and call witnesses in an arbitration, their right to obtain documents is restricted. Since your employer typically has more documentation about the employment relationship in its possession than you do, your employer may prefer the arbitration of employment claims over other forms of dispute resolution that would allow your attorney to get a more complete picture of the dispute and advocate fully for your rights as an El Segundo employee.

Employees who signed an enforceable arbitration agreement or provision in their employment contract before 2020 must abide by their employment agreements and submit disputes to arbitration. Generally, enforceability of an arbitration agreement in California depends on whether: (1) the agreement allows for all the types of relief available in court, (2) the arbitrator issues a written decision, (3) more than minimal discovery is permitted, (4) the agreement mandates that a neutral arbitrator hear your case, and (5) the employee does not have to pay unreasonable costs or arbitrator’s fees or expenses as a form of condition to the arbitration process.

However, as of January 1, 2020, California job applicants and employees may refuse to sign an employer’s arbitration agreement without fear of reprisal. Your employer or prospective employer cannot require you to arbitrate as a condition of hiring you, maintaining your employment or obtaining job benefits. In other words, if you decide not to sign the agreement, your prospective or existing employer is not allowed to retaliate or deny employment to you. However, it’s not clear yet whether federal law, which favors arbitration, will preempt or invalidate this state law.

If your employer in Southern California asks you sign an arbitration agreement, you should discuss your particular situation with a seasoned employment law attorney. This is an area of law that shifts regularly, based on how courts interpret state and federal laws. The Calderone Law Firm counsels and represents employees with employment discrimination, sexual harassment, wage and hour or whistleblower claims in El Segundo, Torrance and Los Angeles and throughout Orange, Riverside, San Bernardino and Ventura Counties. Please give us a call at (424) 348-8290 or complete our online form.