California Appellate Decision Raises New Considerations for Arbitration Agreements
A California appellate court recently denied a motion to compel arbitration, finding the agreement unconscionable in part because it (1) applied to all claims rather than just those arising from employment, (2) was unlimited in duration, and (3) lacked mutuality by requiring the employee to arbitrate claims against the employer’s affiliates and agents but not requiring those parties to arbitrate claims against the employee. Such provisions are common in arbitration agreements, and the court’s decision is highly questionable in light of prior decisions from the Supreme Court of the United States and other courts. Nonetheless, in light of this new ruling, employers with arbitration agreements, especially in California, may want to update their agreements.