What a Prior Agreement to Arbitrate Can Mean in Your Case

Written by Galen T. Shimoda and Justin P. Rodriguez

One of the most rapidly changing areas of law potentially affecting employees is that of arbitration. Since the United States Supreme Court decided AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011), California courts have struggled to reconcile longstanding precedent regarding what must be included in any employee arbitration agreement for it to remain enforceable. While the requirements for a valid arbitration agreement may be in flux, what arbitration actually is has remained the same. This article aims to provide a basic understanding for the average employee, who has already entered into such an agreement as a condition of employment or is faced with signing one in the near future at the request of their employer.

Arbitration is essentially a privatized court system and trial. Instead of a judge and a jury, there is an arbitrator, who usually is a retired judge or a very senior attorney experienced in the area of law surrounding the dispute. The arbitrator will act as a judge and jury in the case, deciding pre-trial procedural issues, hearing evidence, and making legal and factual determinations for the case. Instead of a courtroom, there will likely be a conference room or a large office rented out in order to handle the actual arbitration. Beyond these two basic elements, it is hard to say, generally, what the arbitration process will be in any particular case. This is because an arbitration agreement is a voluntary agreement between the parties that can contain a variety of different provisions.

One thing employees should know is that, despite what their employer is telling them, arbitration has some very key differences from trial. Many such differences appear in the discovery stage of a case, which is where the parties have the ability to ask questions of each other, witnesses, and experts. Not coincidentally, many arbitration agreements will be purposefully vague on the discovery aspect of arbitration or will use legal jargon like "form interrogatories" or something similar to hide the fact that they are limiting an employee's ability to gather information. This is often the most critical aspect to arbitration because complex discrimination or wrongful termination cases often require extensive discovery to prove the claims.

This is not to say that an employee should avoid signing an arbitration agreement at all costs. Indeed, an employer is, generally, well within its right to fire an employee for refusing to sign an arbitration agreement without triggering a claim for wrongful termination. See, e.g., Lagatree v. Luc, Forward, Hamilton & Scripps, 74 Cal.App.4th 1105, 1127-1128 (1999). But, in our experience, if there is an opportunity to opt out of an arbitration agreement without reprisal, it is better to do so.

If you have already signed an arbitration agreement and are considering bringing a claim, but you're unsure because of some provisions in the agreement, here are some additional things you should consider. There are certain minimum requirements arbitration agreements must satisfy when the claims asserted under the agreement involve fundamental public policies. First, an employee cannot be required to incur any costs they would not have incurred had they brought the action in court. This means an employee does not have to pay the arbitrator's fees, costs for the hearing facility, etc. Second, an employee must be able to obtain any remedies in arbitration that they otherwise would have had if they had brought the matter in court, including attorney's fees where applicable. For many employment law claims there are fee shifting statutes in the employee's favor, e.g. claims for overtime or non-frivolous discrimination and harassment claims. An arbitration agreement cannot change this fact.

If you have questions regarding the enforceability of an arbitration agreement or believe you have claims against your employer, please contact our office to have your claims evaluated.


The Shimoda Law Corp. legal articles should not be construed as legal advice or a legal opinion on any specific facts or circumstances. The contents of these articles are intended for general information purposes only, and you are urged to consult a lawyer concerning your own situation and any specific legal questions you may have.

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