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If it’s carefully crafted, you can make an arbitration agreement stick

by on
in Employment Law,Human Resources

Good news for employers that want to settle employment-related disputes through arbitration instead of risking a jury trial. The Court of Appeal of California has upheld an arbitration agreement that was presented to all employees when they were hired.

Recent case: Valerie took a job with a bail bond company after acknowledging that most employment-related claims would be handled through arbitration. (There were exceptions for matters required to be handled by administrative agencies, such as workers’ compensation and unemployment compensation claims.) The agreement appeared in the employee handbook, was set out as a separate agreement requiring her signature and included a provision that each party would pay its own legal fees.

Valerie tried to sue in state court over alleged sexual harassment and discrimination. Her employer argued the case should go to arbitration rather than a jury, based on the agreement.

The appeals court said the agreement—with the exception of a pro­­vision requiring each side to pay its own attorneys’ fees regardless of who won—was valid. That was true even though the agreement was included in an employee handbook that included a statement that said the employer could change the handbook and workplace terms and conditions at any time it chose. (Serpa v. California Surety Investigations, et al., No. B237363, Court of Appeal of California, 2nd Appellate District, 2013)

Final note: The agreement in­­cluded a so-called severability clause stating that if any part of the agreement were judged invalid, the rest would still be binding.

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