Arbitration Clauses in Employment Contracts and Your California FEHA Violation Claim

Two actors who accused their employer of maintaining a hostile work environment in violation of the Fair Employment and Housing Act successfully persuaded the California courts not to enforce the arbitration clauses in their employment contracts. While employers can demand arbitration of FEHA claims in some situations, the California Court of Appeal has twice ruled that this employer could not enforce its arbitration clause because it would have forced the employees to pay arbitration fees that they lacked the financial means to afford, which would have closed off all avenues for pursuing their hostile work environment claims.

Both cases involved actors who signed on to a musical theater production, “Beautiful,” performed in the Saban Theatre in Beverly Hills. One action was launched by an actress in the production, Jessica Prince. Another was initiated by Keith Somers, an actor in “Beautiful.” In Prince’s case, she alleged that the owner of the production company and producer of the musical, Mitchell Pletcher, sexually harassed her. She also stated that her employer altered her schedule and reduced her compensation, ultimately replacing her with an understudy.

Prince and Somers each separately sued the employer for violating the FEHA. Prince alleged that, in addition to her sexual harassment, her employer failed to prevent sexual harassment and fostered a hostile work environment. Somers alleged in his case that the employer violated the statute through its failure to prevent sexual harassment and fostering a hostile work environment. In both cases, the employer sought to compel the actors to litigate their disputes in arbitration. The employer asserted in each case that the actor had agreed, as part of the employment contract, to resolve contract disputes, harassment disputes, and discrimination disputes through arbitration.

In both cases, the courts ruled against the employer. The arbitration clauses in the actors’ employment agreements were unconscionable and unenforceable. California law imposes some very clear limitations on arbitration clauses in employment contracts as they relate to FEHA claims. For one thing, a valid and enforceable arbitration clause cannot “limit the damages normally available under the statute.” The law also mandates that the employer must foot the bill for “all types of costs that are unique to arbitration.”

In addition, the law forbids contractual terms that are substantively unconscionable. One way that an employment contract can be substantively unconscionable is if it forces arbitration of FEHA claims onto an employee who lacks the financial means to pursue arbitration. That was the case with both of the “Beautiful” actors. Somers was subsisting on food stamps and could not afford to pay the required fees of arbitration. Prince, who had incurred such a dramatic reduction of her schedule (and commensurate drop in income), also lacked the financial means to pay the fees of arbitration. Courts have consistently held that a contract term that forces an employee to give up the right to sue in favor of an arbitration option that the employee cannot afford because the fees are prohibitively high “effectively blocks every forum for the redress of disputes” and, as a result, is unconscionable and unenforceable.

If you’ve experienced sexual harassment at work or a hostile work environment, you should reach out to competent California legal counsel. The Oakland employment law attorneys at the Law Offices of Stephen M. Fuerch are here and ready to help. Our employment law attorneys have extensive experience helping a wide array of employees who have been victimized by FEHA violations. Contact us through our website or call our office at (925) 463-2575 to schedule your confidential initial consultation today.

More Blog Posts:

Harassment Not Sufficiently Severe, Pervasive to Allow California Spa Worker to Win Case, Oakland Personal Injury Attorney Blog, Sept. 15, 2015

California Supreme Court Says Employers Can’t Recover Costs in Non-Frivolous Discrimination Suits, Oakland Personal Injury Attorney Blog, May 15, 2015

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