CA Court Issues Decision Upholding Arbitration Agreement

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An Arbitration agreement is a common part of many employment contracts. These clauses keep employers from having to fight court and generally save larger companies a substantial amount of money. However, these clauses are not necessarily good for employees. By signing an arbitration agreement, the employee gives up most of his or hers rights to file a lawsuit in court and agree to pursue all claims in arbitration instead.

There are many disadvantages to arbitration for employees. First, there is no jury in an arbitration, and juries are usually sympathetic to individuals who were harassed or discriminated against by their employers. Next, the arbitration process frequently limits the amount of discovery available to each side. This often works against the employee, who has less access to the employer’s documents, emails, and other files. Finally, the decision made by the arbitrator is usually not appealable – if the employee disagrees with the decision, there is little recourse.

On March 28, 2016, the California Supreme Court decided the case of Baltazar v. Forever 21, involving an arbitration agreement between an employee and a clothing company. In the case, Maribel Baltazar signed an arbitration agreement as part of her employment contract with clothing store Forever 21. Baltazar quit her job after alleging that she experienced racial and sexual discrimination and harassment. When she attempted to file a lawsuit against the company, Forever 21 enforced the arbitration clause of her employment contract.

Baltazar fought against the arbitration clause by arguing that it was unenforceable. She took issue with the language of the clause, which seemed to allow the employer more access to the court system. The arbitration clause allowed both parties to go to court (and skip arbitration) in order to ask for an injunction or other provisional remedy. Baltazar argued that Forever 21 was much more likely to seek an injunction in court, and based her argument on a similar case decided in 2010.

In 2010, the First Appellate District decided the case of Trivedi v. Curexo Technology Corp., 189 Cal. App. 4th 387. Trivedi held that arbitration agreements which exempted provisional remedies like injunctions were more likely to be used by employers rather than employees, and the discrepancy rendered the arbitration clause unconscionable and unenforceable.

The California Supreme Court disagreed with both Baltazar and the Trivedi court. The court held that even if Forever 21 was more likely to be able to use the court system, California Code of Civil Procedure ยง 1281. 8 allowed either party to an arbitration agreement to use the court system for provisional remedies. Since the arbitration clause did nothing but re-state established law, the California Supreme Court found that the arbitration clause was valid and enforceable. The court also rejected multiple other arguments made by Baltazar.

The Supreme Court’s decision is important because it reverses a recent trend of courts finding arbitration agreements unconscionable for technical or minor reasons. After this ruling, lower courts may be less likely to throw out an arbitration agreement, and employees may have no choice but to submit to arbitration.

If you have a conflict with your employer, and are unsure if you will have to go to arbitration, call the Law Offices of Michael L. Carver today and learn more about your options.

Concerned Over Employer Arbitration Agreement?

ArbitrationMany employers want their employees to sign “arbitration agreements” requiring disputes that arise in the workplace be resolved through arbitration rather than in the courts. Arbitration is decided by a neutral third person, often a retired judge, who makes the decision as to the dispute. This means a jury will never hear your case.

This kind of agreement in the workplace have become commonplace. Employers use these agreements, because they believe the agreement will prevent disputes from going to the courts and result in more favorable treatment of employers. It is widely believed that arbitration is less expensive than courtroom litigation; however, that question is up in the air.

In the course of normal litigation, a lawsuit is filed by an employee. The employer typically pays out thousands of dollars to their attorneys to defend the court action brought by the employee. At some point the case may go to arbitration hearing unless it is settled along the way. In a California employment arbitration setting, the employer must pay most of the case costs and in many cases, the costs are more than the employer would pay in the courts.

The risk to employers is potentially greater in arbitration than in the courts. Particularly in cases involving nonpayment of overtime, the prevailing employee can recover attorneys’ fees, but the prevailing employer does not usually recover their attorneys’ fees. Worse for the employer, if they get an unfavorable decision against them by the arbitrator, the decision is usually non appealable.
There may be many reasons why employers want employees to sign arbitration agreements. The advantage for an employer in the this setting is that there is no jury, which is good because juries are unpredictable. While some studies indicate that employees win larger awards in a court trial, there is little evidence that the employers would have done better in arbitration.

There are some advantages to the employee in arbitration. Arbitrations are less formal than the court process and usually take less time than it would take to get to trial. If you’re required to sign such an agreement to obtain or keep your employment, you may want to have an attorney review the agreement and give you advice as to whether or not you should agree to the provision.