Employment Contracts, Arbitration Clauses, and Your California Wrongful Termination Lawsuit

When you start a new employment position, it is often an exciting time filled with a sense of accomplishment (at landing the job) and anticipation (of potential future career growth and advancement). You’re probably not thinking about all of the “fine print” in the employment agreement paperwork you’re signing. That fine print, however, can be very important, especially if it includes a mandatory arbitration clause. Sometimes, though, you may be able to sue in court and avoid arbitration in your wrongful termination case, even if your contract had an arbitration provision. If you’re been a victim of a wrongful termination, it is important to contact a skilled California employment attorney right away, especially if an arbitration clause is involved.

A recently decided case demonstrates how you can get past an arbitration clause in your wrongful termination case. The case involved Khrysta, who worked for a rent-a-car agency. In September 2015, the employer terminated Khrysta after nearly four years on the job. The employee sued for wrongful termination. Based upon the arbitration policy the employer had instituted (and that the employee had acknowledged by signing a copy of it), the agency asked the court to order the parties to arbitration.

Arbitration, of course, can be a very useful alternative means of resolving a dispute. The key, of course, is to use arbitration only if you think it will be helpful. There are many reasons why you might prefer a court trial to an arbitration hearing. If you and your legal counsel believe court is the best place to resolve your dispute, you should make sure you don’t get improperly forced into arbitration.

In Khrysta’s case, both the trial judge and the court of appeal sided with her. The appeals court ruled that the employee was entitled to a ruling in her favor because the arbitration policy that the employer had instituted was unenforceable. Some contracts are unenforceable because they are “unconscionable,” which, in this context, means that one party lacked a meaningful choice in signing, and the contract contained very one-sided terms in favor of the other party.

Specifically, the arbitration policy was something the law calls a “contract of adhesion.” This type of contract happens when, like Khrysta, an employee has no meaningful opportunity to negotiate the terms of the deal. Khrysta’s only choices were either sign the paper or lose her job. That made Khrysta’s contract procedurally unenforceable.

Contracts like arbitration policies can also be what the law calls “substantively unenforceable.” This can happen if the agreement’s terms are too one-sided. The arbitration policy Khrysta’s employer created barred employees from seeking awards of punitive damages, prohibited them from asking for injunctions, and additionally said employees could not recover their attorneys’ fees or costs. The policy, however, made the employer exempt from mandatory arbitration and gave it the option to go to court if it desired on claims of unfair competition and disclosure of trade secrets. This was sufficiently one-sided to qualify as an example of substantive unconscionability.

In other words, there are multiple different ways that the law says that you can bring your wrongful termination lawsuit in court, even if you signed an agreement consenting to arbitration. Some of them may focus on how the agreement was negotiated, and others may focus on the content within the arbitration clause. Either way, it is important to make sure that you have counsel who can help you clear this important hurdle in your case. The Oakland employment attorneys at the Law Offices of Stephen M. Fuerch have been zealously representing workers for many years in their wrongful termination and workplace discrimination cases. To learn more about how we can help you, contact us through our website or call our office at (925) 463-2575 to schedule your confidential initial consultation today.

More Blog Posts:

California Medical Office Worker Revives Wrongful Termination Claim After Winning Appeal Challenging Employer’s Alleged Acts of Age Discrimination, Oakland Personal Injury Attorney Blog, Sept. 15, 2017

When Your Employer Can (and Can’t) Force You to Arbitrate Your California Wrongful Termination Case, Oakland Personal Injury Attorney Blog, Nov. 15, 2016

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