California employers that seek to enforce arbitration agreements with their employees may feel like they are playing the game of “Whack-A-Mole.” For those unfamiliar, the game of “Whack-A-Mole” is played on a machine with a table-like play area top, an elevated display screen and a large, soft mallet. Five to eight holes in the play area top are filled with small, plastic, cartoonish moles, or other characters, which pop up randomly throughout the game. Points are scored by, as the name suggests, rapidly whacking each mole with the mallet as soon as it appears from its hole. As soon as one mole retreats into its hole, another mole emerges, and this continues until time is up. California employers may feel like they are playing this game in the sense that they are constantly responding to new legislative or court created rules against enforcement of arbitration agreements. Although certain rules against enforcement have been invalidated based on preemption by the Federal Arbitration Act (“FAA”), California courts have continued to recognize new defenses against enforcement.
The recent decision by the California Court of Appeal in Phan v. Knight Sacramento SU Inc., ___ Cal.Rptr.3d __ (2026) is illustrative of employers’ recent “Whack-A-Mole” experience. The case also serves as a reminder that employers should regularly review their arbitration agreements, and, if necessary, revise their arbitration agreements to avoid potential grounds for courts to invalidate the...
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