Contract disputes are often governed by arbitration clauses. The purpose of arbitration is to have a simple, quick, and efficient method to resolve controversies. (Molecular Analytical Systems v. Ciphergen BioSystems (2010) 186 Cal.App.4th 696.) Failing to act promptly, however, may lead to waiver of the parties’ right to arbitration.
Over the past month, the California appellate courts have decided two more cases related to the enforceability of employer’s arbitration agreements. As discussed more extensively below, an agreement that is one-sided or oppressive in nature will be found unconscionable. However, in a positive development for employers, a delegation clause (allowing for the arbitrator to decide the arbitration agreement’s enforceability) will be enforced.
Employers frequently ask employees to sign arbitration agreements covering all disputes arising out of the employment relationship. Recently, the USSC issued rulings enforcing employment arbitration agreements. However, employees would much rather pursue litigation against their employers in court before a jury rather than before an arbitrator. Therefore, when a dispute arises, employees frequently try to get out of the agreement to arbitrate, especially in California where state courts are more likely to void such an agreement.