California Court Upholds Arbitration Agreement

California courts are notoriously hostile to arbitration and zealously protective of workers' access to the courts. They regularly invalidate agreements that require employees or job applicants to arbitrate disputes. And the numerous procedural safeguards that California law requires can make arbitration nearly as complex, expensive and risky as taking a case to court.

But one California appellate court threw employment practitioners a curveball in April when it decided Roman v. Superior Court (Flo-Kem). The court upheld a very simple, pro-employer arbitration agreement and agreed to compel an employee to engage in arbitration rather than taking her dispute to court.

Typically, such an agreement would be doomed. It broke almost every cardinal rule that employment lawyers advise their clients to follow when drafting an agreement. For instance, it was drafted in the first person, making it unclear whether the company was also bound to arbitrate disputes.

The agreement appeared to run afoul of the California Supreme Court's 2000 ruling in Armendariz v. Foundation Health Psychcare Services Inc., which requires numerous procedural safeguards for an arbitration agreement to be enforceable. For example, the agreement must provide for neutral arbitrators, the parties must be entitled to conduct discovery, the arbitrator must issue a written decision, the employee's remedies must not be limited, and the employer must bear the costs of arbitration.

Adele Nicholas

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