Employers regularly rely on agreements to arbitrate in order to manage their workplace risks, but the state of the law is in flux—leaving employers with questions. An arbitration agreement is any agreement for the parties to litigate in private arbitration rather than in court, and agreements can be reached by employers individually with the employees or collectively through a collective bargaining agreement (“CBA”) with arbitration provisions. Arbitration agreements will usually have a class waiver, preventing litigation from becoming a multi-million dollar class action.

Arbitration generally carries the advantages of lowering litigation complexity, avoiding irrational jury verdicts, and limiting exposure to individual claims. Downsides include that employers must foot the expensive bill for arbitration—and arbitrations carry virtually no right to appeal an unfavorable award. Businesses often find the advantages outweigh the downsides.

Both California and federal law strongly favor agreements to arbitrate, but federal law is stronger due to the Federal Arbitration Act (“FAA”). The FAA mandates enforcement of arbitration agreements over employee objections in most instances. Challenges to arbitration agreements under the FAA are limited to very narrow grounds, such as fraud, duress, or unconscionability. Moreover, the FAA strongly favors class action waivers, ensuring the arbitration remains individualized. But this favor does not historically extend to claims under...

Read Full Story: https://www.lexology.com/library/detail.aspx?g=235e3983-c9c4-47ff-a12f-3b1a91...