LEGAL GUIDE
Written by attorney Angelo Felice Campano | Mar 14, 2011

Is your arbitration agreement enforceable?

Generally, in California, if there is an agreement, an employee can be required to arbitrate claims they may have against an employer. Arbitration is a substitute for a jury trial because, in arbitration, you do not get a jury to hear your case and usually your case cannot be appealed, if you lose. In a recently published California Supreme Court case, however, the state Supreme Court ruled in favor of the employee and found that there are certain claims that an employer cannot force first into arbitration, even if the employee agreed to arbitrate. In Sonic-Calabasas A, Inc. v. Frank Moreno, the employee claimed his employer owed him unpaid wages. The employee had an arbitration agreement where it was agreed that any employement problems would be arbitrated instead of heard in court. Despite the arbitration agreement, the employee made a claim to the California Labor Board to get his unpaid wages paid. The labor board is an adminstrative agency that is much more informal than court. The employer opposed the labor board hearing the case, and argued that the employee agreed to have any disputes or claims arbitrated. After winding its way through the court system, i.e. appeals (timely and costly), the California Supreme Court agreed with the employee and held that it is a violation of public policy to force an employee to arbitrate his employment claims and not have the claim initially heard before the Labor Board. The Supreme Court, however, provided some relief to the employer and ruled that if there is an appeal made from what ever the labor board decides, that appeal can be arbitrated. So, after a reading of the case, a reasonable interpretation is that an employee can have their claims for unpaid wages heard before the state labor board and not in arbitration. However, if an appeal is made from that labor board's decision, the employee may be required to have the appeals done through arbitration. What's important for the employee is to know what you are signing before you sign it. What's important for the employer is to review your arbitration agreements to avoid it violating the rights of employees. Having an attorney review the agreement can save you time and money by not having to have the California Supreme Court decide if your agreement violates the law or not.

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