California Arbitration Agreement Law

The Federal Arbitration Act does not have such an exception. Arbitration agreements are subject to certain rules to be enforceable under federal and California law. If an arbitration agreement does not meet these requirements, it may be considered unenforceable. This means that a staff member cannot take legal action instead of being required to arbitrate under the contractual agreement. On the other hand, federal law is not currently clear as to the applicability of agreements requiring the reconciliation of rights to discrimination in Title VII. The source of the dispute in the Ninth Court of Appeal concerns the validity of the Duffield Court`s 1998 decision against Robert Stephens & Co. In Duffield, the court ruled that the Civil Rights Act of 1991 excluded mandatory arbitration for Title VII claims. However, under this new law, existing arbitration agreements between employees and employers remain valid.5 And if candidates or employees refuse arbitration, the employer cannot under any circumstances retaliate (e.g. B dismiss or disqualify).

There are many reasons why employers prefer arbitration to civil proceedings. First, arbitration is a less expensive procedure than a civil lawsuit. They tend to go much faster and are therefore cheaper because they save a lot on attorney fees. The law expressly states that “nothing in this section is intended to invalidate any written arbitration agreement that is otherwise provided for in the Federal Arbitration Act (9 U.S.C Sec. 1 et seq.) “It`s applicable.” This reservation appears to have been added in order to allay the concerns of former Governor Jerry Brown, who vetoed earlier, almost identical versions of the law (AB 3080 and AB 465) because of the FAA`s preventative effect. Brown explained that “[AB 3080] is based on a theory that the [FAA] only regulates the enforcement and not the initial formation of arbitration agreements and that California is therefore free to prevent the formation of binding arbitration agreements from the outset. The Supreme Court has made it clear that this approach is inadmissible. (Highlighted only here.) It remains to be seen whether AB 51 can survive attacks based on FAA preemption. On July 27, 2003, the legislature sent AB 1715 for signature to Governor Davis. The bill seeks to invalidate FEHA rights reconciliation agreements where such agreements are necessary as a precondition for employment or the maintenance of employment.

The bill also burdens an employer who wishes to impose arbitration to prove that the employee knowingly and voluntarily signed the agreement. It remains to be seen whether California`s AB-51 will ultimately be maintained, but for now, the binding arbitration agreements covered by the FAA in California will have another day. Employers with questions about arbitration agreements should speak to an experienced work and labour advisor. The FAA generally makes arbitration agreements “valid, irrevocable, and enforceable” and was explicitly developed to reflect a national policy in favor of arbitration. According to the FAA, no state can enact or enforce laws that affect, limit, treat, or discriminate against arbitration. Beginning in 1715, if the governor signs it, it will likely be suppressed under the precedent of the FAA and the Supreme Court of the United States….