While it is becoming more and more common for employers to require potential employees to sign employment contracts that include a “binding arbitration” clause, recent court decisions serve to remind employers of requirements necessary to make those clauses enforceable. In February 2012, two California appellate courts invalidated arbitration agreements contained in employment contracts; one that seemingly contained all of the required elements.
In the first case, Ajamian v. CantorCO2E, the court was presented with a rather poorly drafted arbitration provision representing an example of what employers should avoid. In the subject arbitration clause: the fees provision favored the employer; punitive and statutory damages were precluded; the arbitrator was to be chosen by the employer; and the arbitration was to occur in New York, despite the fact the employee lived and worked on the west coast, thus imposing a travel hardship on her. Additionally, the employee was not provided with a copy of the arbitration rules.