California Arbitration Agreement Enforceability

In 1998, the Federal Court of Appeals, which governs the State of California, issued its decision to Duffield v. Roberts- Stevenson Company (9. 1998) 144 F.3d 1182. The Duffield court ruled that the Civil Rights Act of 1991 prohibited the application of mandatory employment contracts to settle claims under Title VII of the Civil Rights Act of 1964 or state anti-discrimination laws equivalent to those of the California Fair Employment and Housing Act (“FEHA”). In Duffield, the case was a stockbroker who was attempting to charge government and federal discrimination claims against their employer as a result of allegations of sexual discrimination and harassment. The Civil Rights Act of 1991 states: where appropriate and where possible, the use of alternative means of dispute resolution, . . . . . . .

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. . . . . . . . Arbitration is encouraged to resolve disputes arising from federal statutes or provisions that are amended by that title. Despite this language, the court found the status congress`s intention to prohibit mandatory civil rights arbitration of employees. The 9th Circle was the only federal appels court to adopt such a strong attitude against the resolution of labour disputes. As a result, most legal experts concluded that arbitration agreements governing discrimination and related rights were null and void.

When deciding whether an arbitration provision should be included in an employment contract, employers must balance costs and benefits and ensure that the language it contains does not violate California`s strict employment rules. As a general rule, almost all rights arising from a working relationship can be subject to arbitration by appointment. The filing of a right to arbitration must be the subject of a specific decision under the arbitration agreement laws. In California, these laws include the California Arbitration Act (“CAA”) (Code of Civil Procedure Section 1280 ff) and the Federal Arbitration Act (“FAA”) (9 U.S.C. Sections 1-14). These laws are virtually unaffected; However, the FAA outperforms any state law specifically oriented toward arbitration when state law is at odds with federal policy that promotes arbitration. For example, the FAA was selected to submit California Labor Code Section 229, which expressly excludes arbitration applications for unpaid wages. As noted above, we are awaiting a decision from the Court of Justice in the Luce Forward decision, which should determine whether arbitration agreements can include discriminatory Title VII claims in their scope. One of the most important aspects of the flexibility of arbitration is the selection of the referee. Unlike a civil court proceeding in which the parties are in conflict with the judge to whom they are assigned, the arbitration procedure allows the parties to choose an experienced arbitrator in the field of litigation.

However, one drawback is that employers often try to choose arbitrators they find favourable to their case. But the most important consideration in assessing substantive conscionability is reciprocity. “Substantial concepts may take different forms, but they can generally be described as unfairly one-sided.” Arbitration agreements must have at least a minimum of bilaterality in order to avoid a lack of scruples. Armendariz, supra, 24 Cal.4. 119. If only the claims of the weaker party are subject to arbitration proceedings and there is no reasonable justification for this lack of symmetry, the agreement does not have the required level of reciprocity. Id. at 119-120.

As the California Supreme Court recognized in Armendariz, “an arbitration agreement made in a context of colle lack of basic fairness and reciprocity when it requires one of the

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