Is My Employment Arbitration Agreement Binding?
An arbitration agreement can severely restrict what you can do after your employer violates your workplace rights. Federal law covering these agreements is generally interpreted very broadly, making it difficult for employees and ex-employees to prevent their enforcement. Just because such an agreement binds you doesn’t necessarily mean you cannot enforce your rights.
If you have questions about an arbitration agreement you’re asked to sign or have issues with your employer but signed an arbitration agreement and don’t know how it will impact you, talk to a skilled MJB Law Group Tustin employment discrimination attorney. Call us for a FREE consultation at (949) 266-0880 or complete our confidential contact form today.
What is Arbitration?
Arbitration is the process of resolving a conflict where an arbitrator decides your case and not a jury. It’s a way to resolve an issue without going to state or federal court. Employers want these agreements and prefer to be in arbitration, because they believe it is a more favorable forum for them and do not want a jury of your peers to decide your case.
Arbitration is less formal and structured than a jury trial. There are fewer requirements for the parties, and employers claim the process is usually less expensive and time-consuming than a trial, which is false. Arbitrations can be extremely expensive and take just as long as a case in court, if not longer. Employers will pay exorbitant arbitration fees on top of their own lawyer’s fees to have your case decided where they want it to be decided. Employers know there are fewer legal protections for employees in arbitration and, with very few exceptions, there is limited ways to appeal an arbitration decision through the court system. Employers also like that arbitrations are not public, so they prevent the public from learning about claims their former employees are bringing against them.
The issues would be decided by an arbitrator or panel of arbitrators, who make decisions of fact and law. One danger of arbitration is an arbitrator who is biased toward employeees. Normally, the parties choose among a group of arbitrators. The more employer-friendly decisions a person makes, the more attractive an arbitrator may be to an employer. Arbitrators are normally attorneys or retired judges. In situations involving employment disputes, particularly those concerning discrimination or wrongful termination, seeking guidance from an experienced employment law lawyer in Tustin can provide invaluable insights into whether you can contest the enforceability of an arbitration agreement you signed in order to stay in court and have your case decided by a jury of your peers.
What is an Arbitration Agreement?
An arbitration agreement states that if the parties can’t negotiate an end to their conflict, they agree to resolve their disputes through arbitration, not the courts. This agreement may be a “stand-alone” document or part of a longer employment contract. It may make an arbitration decision that is binding on the parties or not. The agreement may also require the parties to attempt settlement through mediation before using arbitration.
Virtually any legal dispute between an employer and employee could be a topic of arbitration. It could be anything from wage and hour disputes to contract claims, discrimination allegations, or a failure to provide family or medical leave. While the agreement may prohibit filing lawsuits, it can’t prohibit an employee from filing a complaint with a local, state, or federal agency that enforces an applicable law.
When is an Arbitration Agreement Binding?
The enforceability of an arbitration agreement in California employment cases depends on several factors. It must be enforceable under state law, so:
- The parties must exchange something of value (consideration)
- Its terms can’t be unconscionable (too extreme, one-sided, or require a party to break the law or public policy)
- There can’t be any fraud or coercion by the employer
- The employee must have the mental capacity to decide whether to accept or not
- The parties signing can’t be younger than 18
- There mustn’t be a major mistake involved, and both parties consent to the terms
- The potential remedies must be adequate (it’s what a court may award after a trial)
- The arbitrator must be neutral and unbiased
- The arbitration process must have at least basic procedures to ensure a fair hearing
A California law passed in 2019 sought to prevent agreeing to an arbitration agreement from being required before a person could work. Its enforcement was mainly limited by a federal appeals court in 2023, and a lower court decision earlier this year issued a permanent injunction against the state to stop it from enforcing essential sections of the law.
The federal courts ruled because state law was seen as in conflict with the Federal Arbitration Act (FAA). Generally, if state and federal laws cover the same issue and contradict each other, the federal law is usually given priority. The FAA is interpreted as providing parties broad rights when requiring issues be brought to arbitration instead of going to a trial in a court.
Contact a Tustin Employment Law Attorney
If you have questions about arbitration agreements or believe one may be preventing you from protecting your legal rights, speak with an experienced Costa Mesa employment lawyer at MJB Law Group Tustin employment law lawyer. We will explain your legal rights, assess your situation, and fight for your future. Call us today at (949) 266-0880 or fill out our confidential contact form for a FREE case evaluation and consultation to discuss your options.
