California’s Rules Regarding Mandatory Arbitration

Arbitration is when a dispute between two parties, such as an employer and employee, submit their differences to ultimately be decided in court. A mandatory arbitration refers to an arbitration agreement that an employer requires new employees to sign as a condition of employment or requires existing employees to sign as a condition to continue their employment.

California’s rules on mandatory arbitration are often referred to as the Armendariz standards, based on the name of the leading court decision. Under these standards, an arbitration agreement must be mutual, not one sided, and not impose any added costs or fees on an employee that would not have applied in litigation.

As mentioned by the Society of Human Resource Management, the California Supreme Court’s new decision states that “a provision in an arbitration agreement isn’t enforceable if it waives the right to seek public injunctive relief in any forum. Public injunctive relief is meant to prohibit activities that “threaten future injury to the general public” and allows a plaintiff to ask the court to prevent a defendant from engaging in allegedly unlawful practice in the future.”