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Have attorney review arbitration agreements to make sure they’re valid contracts

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in Employment Law,Human Resources

Attention to detail is essential when using arbitration agreements. They are contracts and the ordinary legal requirements for contract formation must be followed.

Recent case: Boris worked for an art college as an instructor for sev­­eral years. At least three times, the school provided him with an arbitration agreement as a condition of employment. The agreements required all employment-related disputes to go to arbitration and Boris signed each one.

However, there was also a clause in the agreement that said it’s only valid if the employee and the president of the school both signed.

Boris sued for an array of violations, including breach of contract, failure to pay for hours worked, failure to pay minimum wages, waiting time penalties, failure to provide accurate wage statements, failure to reimburse business expenses and unlawful business practices.

The school demanded that the court send the case to arbitration. That’s when Boris pointed out that the president of the school had not signed any of the agreements. He argued that made the contract invalid.

The court agreed. If both signatures were specifically called for, then the lack of either signature rendered the arbitration agreement invalid. (Davison v. Stephens Institute, A138953, Court of Appeal of Cali­for­nia, 2014)

Final note: Always have your attorney review arbitration agreements to make sure they are valid contracts. Do so for every state in which you want to use them, as the law of contracts does vary.

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