Arbitration Do's and Arbitration Dont's
Posted September 7, 2018

Employers regularly ask us about arbitration agreements – what should it include? What should it exclude? Here is a list of key items to consider based on recent court decisions:

1. DO include a class action waiver provision;
2. DO update your old arbitration agreement – the law on arbitration is constantly in flux; annual updates with qualified employment law counsel are highly recommended!
3. DO properly implement arbitration agreements (a quick reminder – proper implementation is different for current versus new employees);
4. DO include a provision that the arbitrator will rule on enforceability – silence means the court decides.
5. DO include a provision that allows for provisional relief in court without voiding the arbitration agreement, but draft it carefully to ensure its enforceability.
6. DO Include third parties related to your company (staffing agencies, for example);
7. DON’T: When it comes to Labor Commission claims, don’t push arbitration;
8. DON’T include arbitration agreements in the employee handbook;
9. DON’T take translating your agreement into another language lightly, use certified translators;
10. DON’T try to force waiver of Private Attorney Generals Act (PAGA) claims;
11. DON’T sit on your rights to arbitration – if there is litigation and you delay, you risk voiding your rights to enforce arbitration;
12. DON’T use e-signatures, if at all possible.

Implementation of arbitration agreements in California is also a bit tricky. So a couple of quick reminders about arbitration agreements and the implementation process in California:

For new employees, signing an arbitration agreement can be a requirement for beginning work, but only if the employee has had a meaningful opportunity to read and consider it before signing. There is case law suggesting that if the employee is not given the agreement until the first day of employment with the hiring packet, it may not be enforceable because the employee would not have had a meaningful opportunity to consider the agreement sufficiently enough to decide whether they wanted to come to work for your company when they considered and accepted the employment offer. The typical rule is that the employee should be given the arbitration agreement at the offer letter stage, or when the employment application is filled out (we like to include arbitration language notification language in both documents).

For existing employees, employers can request but cannot force them to sign the arbitration agreement. Instead, we recommend incentivizing existing employees to sign the arbitration agreement by giving them a day of vacation on the books (or some other form of meaningful consideration). Otherwise, if they refuse, the employer cannot force them to sign the arbitration agreement and CANNOT retaliate against them for refusing to sign.

If you have any questions regarding arbitration agreements, the implementation process or any other employment law matter, please call LightGabler at 805-248-7208 or email at .

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