Some employers favor arbitration agreements as a way to cut down on expensive and time-consuming litigation and avoid rogue juries that often sympathize more with workers than big, bad employers.
But the reality is that arbitration agreements often cause more litigation, not less. That’s because the law is still in flux on whether and what sort of arbitration agreements are enforceable and legal. California law and federal law sometimes conflict. Plus, some federal agencies have taken steps to discourage arbitration agreements.
And when one party or the other challenges an arbitration agreement’s scope or legality, that can add years to cases that might normally have been settled or gone to trial.
Recent case: Arshavir worked for CLS Transportation and signed an arbitration agreement that limited his ability to sue in state or federal court and banned class-action claims in arbitration. He was terminated and sued, claiming he could represent all similarly situated employees who had not received overtime pay and rest breaks they were entitled to.
CLS pushed the case into arbitration. Several rounds of appeals led the case to the California Supreme Court, which concluded that the agreement was invalid because it limited class actions. CLS then took the case to court.
Meanwhile, the U.S. Supreme Court said California was wrong; it ruled that class actions could be limited via an arbitration agreement.
The case went back to arbitration, and Arshavir again fought against arbitration in California state courts. Recently, the case was again sent to arbitration, where the parties will continue to fight it out.
The case began in 2005 and no end is in sight. (Ishanian v. CLS Transportation, No. B235158, Court of Appeal of California, 2012)