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Take-it-or-leave-it arbitration clause is fine if the underlying agreement is fair

by on
in Employment Law,Human Resources

The Court of Appeal of California has handed a significant victory to employers that use arbitration agreements as a condition of employment.

As long as the underlying terms of the agreement are fair and the arbitration process impartial, the court will send a case to arbitration even if the employee had no choice but to sign the agreement.

Recent case: When Jennifer Hicks was offered a job at a Hilton spa in San Diego, she quit her job in Minnesota, sold her possessions and moved west. When she arrived in California, her new employer presented her with a take-it-or-leave-it arbitration agreement buried in an employment application. She was told she had to accept all the terms to start work.

Years later, Hicks sued over alleged pregnancy discrimination. She claimed she was told she would lose her job if she took time off for post-partum depression.

Hilton asked the court to send the case to arbitration. Hicks argued that the way she had to sign the arbitration agreement was unconscionable.

The court disagreed, concluding that as long as the actual arbitration would be fair and impartial, it didn’t matter if Hicks signed under duress. (Hicks v. Mission Bay Management, No. D058683, Court of Appeal of California, 4th Appellate District, 2011)

Advice: Have your attorney review arbitration agreements and the way in which they are presented. Lawyers know how to determine whether the agreement is fair and defensible.

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