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Employment Arbitration Agreements

  • In Uncategorized
  • 10 November 2015

Many California employers require their employees or new-hires to sign agreements indicating that if any dispute arises between the employee and employer with regard to the employment, it must be submitted to binding arbitration. Typically, these arbitration agreements require the aggrieved employee to file an arbitration petition with the American Arbitration Association.

Employers prefer arbitration for several reasons, including the desire to avoid a court trial where a jury may be empaneled, as well as avoiding the more rigid rules of evidence that are in effect when a party pursues a civil action in a California court of law. Typically, in arbitrations, an arbitrator will receive into evidence any document or writing that has some relevance to the dispute regardless of its hearsay status.

However, there are situations in which an employee may pursue a particular claim against his or her employer even if the employee has signed an agreement requiring arbitration of all disputes.

For example, if an employee wishes to file a claim to collect due and unpaid wages, California Labor Code section 229 provides that a lawsuit may be filed in state court despite a private agreement to arbitrate.

The Federal Arbitration Act, which employers typically rely on to force an employee claim into arbitration, preempts California Labor Code section 229. However, section 1 of the Federal Arbitration Act exempts from the coverage of arbitration any contracts of employment involving, among others, workers engaged in foreign or interstate commerce. Therefore, if an employee can demonstrate that he or she is engaged in a job which involves interstate commerce, such as the transport or shipment of goods between California and other states, the employee may be able to defeat an employer’s effort to force such a claim to be filed before an arbitrator rather than a state court.

For the employee, access to civil courts and the jury system can be advantageous.

Written by Keith Lovendosky @ Bailey & Partners