Recently, courts across the country have given wide latitude to arbitration agreements, upholding those agreements even when the employee may have been tricked into signing the agreement. See McCumbee v. M Pizza, Inc.,2023 U.S. Dist. LEXIS 55466 (N.D. W.V. March 30, 2023).
However, the California Supreme Court recently issued a decision invalidating several arbitration clauses in employee contracts. See Ramirez v. Charter Communications Inc. , 2024 Cal. LEXIS 3696 (Cal. July 15, 2024). Under California law, courts must find both procedural and substantive unconscionability to void a contract term. Id. at *3. In its recent decision, the court found some procedural unconscionability existed because the employment contract at issue functioned as a contract of adhesion. In other words, it was a contract that was created without the opportunity for the other party to negotiate terms.
Additionally, the Court found that several of the arbitration provisions were substantively unconscionable: (1) allocating more employee-initiated claims (e.g. discrimination or wage violations) to mandatory arbitration while preserving the employer’s right to pursue more traditionally employer-initiated claims in court; (2) timing restrictions placed on employees for initiating an arbitration, which were shorter than the statute of limitations for many employment claims; and (3) a grant of interim attorney fees for the party that successfully compels arbitration.
If your employer presents you with an arbitration agreement, you wish to preserve your right to pursue employment-related claims against your employer in court, make sure you, make sure to read it carefully so you know what rights you are giving up by signing the agreement. Additionally, sometimes, the arbitration agreements have an option to “opt-out” of the arbitration agreement. There is usually a deadline by which the employee must submit the request to “opt-out.”
Our firm handles employees’ cases against their employer whether or not the employer has forced the employee to sign an arbitration agreement. If you believe you have not been paid fairly by your employer, contact our office for a free intake process. Remember, there are time limits within which actions must be brought—don’t miss your chance to recover wages you’ve already earned.
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Past results obtained by Biller & Kimble, LLC are no guarantee of future results. Each case or matter is different and must be judged on its own merits.