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Beware relying on arbitration agreements: They’re California courts’ pet peeves

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in Discrimination and Harassment

You may have heard that arbitration agreements are a great way to avoid lengthy and potentially costly employment discrimination lawsuits. But before you decide to use an arbitration agreement, remember that California courts don’t like them very much.

As the following case shows, courts often conclude that arbitration agreements are unconscionable and therefore not worth the paper they’re written on.

Recent case: Thomas Ku was one of three Asian employees let go from his job with Tekni-Plex. He sued, alleging that he had really been fired because of his race and that his supervisors had favored white and Hispanic employees.

He described how Asians were never invited to lunch or other company events, and were routinely left out of important meetings.

The company asked the court to send the case to arbitration because Ku had signed an agreement requiring arbitration of all employment-related claims.

The court looked at all the details in the arbitration agreement and concluded it was largely unconscionable. The court particularly cited the fact that the agreement was offered on a take-it-or-leave-it basis. It also required employees to bring claims to arbitration earlier than the time limits for filing a normal lawsuit established by state statutes. The court also said the agreement was one-sided, with many more rights accorded the employer than the employees.

The court refused to enforce the arbitration agreement and decided to hear Ku’s case instead. (Ku v. Tekni-Plex, No. B223194, Court of Appeal of California, 2nd Appellate District, 2011)

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