Photo Credit: istock.com/Devonyu
Written by Jeremy Mittman
California employers received mostly good news this past month on the arbitration front, with a trio of pro-employer arbitration-related rulings. The California Supreme Court’s recent ruling invalidating an employer’s arbitration agreement (discussed below) is a notable exception.
California Supreme Court Invalidates Employer’s Arbitration Agreement As Unconscionable.
In OTO LLC v. Ken Kho, the California Supreme Court ruled that an Oakland Toyota dealership’s arbitration agreement with a former employee was unenforceable and was so unfair and one-sided that it was procedurally and substantively unconscionable. “Arbitration is premised on the parties’ mutual consent, not coercion, and the manner of the agreement’s imposition here raises serious concerns on that score,” the majority opinion said. (more…)
California High Court Finds Another Exception to Enforcing Arbitration Agreements As Written
April 13, 2017
By Suzanne Steinke and Mazen Khatib
Many employers enter into pre-dispute arbitration agreements with their employees so that any future claims or disputes between the employer and the employee get resolved through binding arbitration, rather than a court of law. The United States Supreme Court has traditionally favored the enforcement of such arbitration agreements as written. This has included approving agreements that contain a waiver of the right to bring a class action in any forum, meaning that an employer and an employee must resolve all disputes in arbitration and on an individual, not class-wide, basis. This class action waiver is significant for employers because an employee is stopped from bringing any claim in court or arbitration to benefit and on behalf of any employees other than herself.
California courts have been reluctant to fully embrace pre-dispute arbitration agreements, even though they are generally required to follow U.S. Supreme Court pronouncements in this area. Although California’s highest court has finally accepted that class action waivers in arbitration agreements are enforceable, with its recent decision in McGill v. Citibank, it once again shows its willingness to find exceptions to avoid fully enforcing these agreements as written. (more…)