Employers can start an arbitration program after being sued . . .

. . . if they do it right.

(Part 3 of a four-part series.)

The National Labor Relations Board recently ruled that an employer may impose a mandatory arbitration program with a class or collective relief waiver after a collective action has been filed. The California Court of Appeal anticipated the Board’s ruling last February in Salgado v. Carrows Restaurants. In August, it reaffirmed the same rule in Quiroz Franco v. Greystone Ridge Condominium.

Both of the California decisions held that clear language applying the agreement to "all employment claims" would apply even to claims that had accrued before an agreement was entered. Thus, it is possible that an employer can implement an arbitration program after being sued. This is a particularly valuable option if a class action has been filed. Assuming the Federal Arbitration Act applies to the arbitration agreement, such a program could include an enforceable class relief waiver, effectively preventing class certification.

Prior installments in this California arbitration series:


It is worth noting that the arbitration agreements in these cases were mandatory. After January 1, when AB 51 goes into effect, employment arbitration programs would be vulnerable to the extent that they are mandatory. But AB 51 does not apply to agreements that are governed by the FAA. Moreover, AB 51 does not apply to arbitration agreements that are entered into voluntarily.

California employment laws keep employers up at night, wondering what is coming next. There always seems to be something. From new statutes to new regulations to new court decisions, we will keep you up to date on developments in the areas of wage and hour, discrimination, leaves of absence, retaliation, class actions, PAGA, and arbitration. We’ll also provide you with practical information on how to update your policies and employment practices. Please subscribe to keep current.

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