Mandatory arbitration is legal in California. However, there are a few issues to look for to ensure your arbitration agreements are enforceable. These include:
- If you have an opt-out, it is no longer necessary and should be removed;
- If you have multiple entities, you should confirm that your agreement is in the name of the correct entity (the same employer listed on your Labor 2810.5 notice).
- Translate the agreement especially if other employment documents and policies are translated.
- Many plaintiffs challenge their signatures or electronic signatures, so double check that any electronic signatures are traceable back to the employee only.
- Ensure the agreement clarifies that it is governed by the FAA (“Federal Arbitration Act”).
- Update your class action waiver section to reflect new developments in PAGA reform.
- Consider expanding carve outs due to the federal “Ending Forced Arbitration and Sexual Harassment Act”.
- If you have provisions in your agreement about confidentiality of the arbitration beyond the applicable JAMS or AAA rules, you might want to revisit that area since it is an area plaintiffs’ counsel like to challenge.
- Make sure a viable company representative signs it.
If you are going to have an arbitration agreement, take these steps to ensure it is enforceable. We suggest you send your arbitration agreements for revision to your business attorney.
The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.
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