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Did you sign an arbitration agreement with your California employer?

Ever since the Armendirez decision in 2000, California courts have had a “bright line” to follow in determining whether or not arbitration agreements are valid. In a nutshell, if you sign an arbitration agreement in California related to employment with a California-connected employer, you may be required to waive or give up your right to a jury trial. This is a BIG deal for us and we fight always to preserve your right to have a jury hear your whistle blower or other dispute.

In the recent case of Serpa vs. California Sur. Investigation, 215 CA4th 695 (3/21/13), an employee brought a lawsuit against her employer for all sorts of badness, such as sexual harassment, employment discrimination, wrongful termination, etc. The defendant asked the court to force the plaintiff to arbitrate. Of interest, the employee handbook contained an agreement to arbitration. the acknowledgement of receipt of the handbook provided that the employer could unilaterally change the rules of the game at any time at their sole discretion.

You would think that would be enough for the court to throw the whole arbitration agreement out as unconscionable. Defendants could abuse that right by changing arbitration panels, or using no panel, putting onerous fee provisions on the arbitration, not allowing discovery, or giving themselves multiple appeal rights (for example, as in a recent case, allowing appeals for only awards over $50,000, which of course the employer would want, not necessarily the employee. End of the line for plaintiff, however: The Court of Appeals ruled that this provision (to unilaterally change the arbitration agreement) would not cause loss of the arbitration since it could be expected that the employer would change rules only after exercising good faith and fair dealing in those changes.

This decision really hurts employees, in that they would be faced with “trusting” their employer not to disadvantage them. It is procedurally unconscionable to force an employee to sign an arbitration agreement prior to beginning work. It is beyond the pale to expect employees to sign a “blank check” for their California employer to fill in after the goods are delivered (ie, the employee has started working). There is no area of California employment law in which arbitration agreements are not used. We’ve seen them in health care, aerospace, finance, transportation, food, etc. In further blogs we’ll talk about the other requirements for arbitration agreements.