California Court Compels Arbitration After Employee Allegedly Forced to Sign Arbitration Agreement While Lawsuit Pending

An alarming decision from a California appeals court highlights the importance of reviewing any paperwork related to a potential employment claim. In that case, an employee filed a California employment lawsuit against her employers in April 2019. While the case was pending, in December 2019, the employers allegedly told the employee to sign some paperwork at work. The employee claims that her employers told her that the paperwork related only to “updates to ‘expired’ paperwork.” She also alleged that her employers said that she would be fired, and her paychecks would be withheld if she failed to sign the paperwork. She claimed she was not permitted to consult with her attorney before doing so. She signed the paperwork, which included an arbitration agreement. Her employers then used the agreement to compel arbitration in the lawsuit.

The arbitration agreement stated that the employee agreed to resolves any disputes related to her employment in arbitration. It also included a delegation clause, which stated that the arbitrator would have the exclusive authority to resolve disputes related to the “interpretation, applicability, enforceability or formation of this agreement, including the assumption that this agreement is unenforceable.”

In court, the employee argued that the arbitration agreement was unenforceable due to fraud, duress, and un-conscionability. However, the California court found that it could not rule on the validity of the agreement because of the delegation clause. In 2010, the U.S. Supreme Court held that if a delegation clause is “clear and unmistakable,” a court has to enforce it. This means that unless no agreement between the parties took place, the arbitrator must decide any questions related to the agreement’s validity. The court found that the delegation clause in the agreement clearly and unmistakably assigned the issues of validity of the agreement to the arbitrator.

The court further explained that under California law, no agreement exists if a contract is void due to fraud in the execution. Yet, there is an agreement if a contract is only voidable due to fraud in the execution. The court found that there was no fraud in the execution of the arbitration agreement under California law in this case. The employee claimed that her employers misrepresented the nature of the documents and that she was not given time to consult with her lawyer before signing. The court found that these claims did not amount to fraud in the execution. The court held that a party’s negligent reliance on another party’s representations does not absolve a party that fails to read a written agreement before signing it. It also noted that the employee signed a version of the agreement in Spanish and that she was only told she had to sign it that day, and thus she had the opportunity to read the contract before signing. Therefore, the court found that in this case, taking the allegations as true, the contract was only voidable. Thus, any issues concerning the validity of the agreement must be decided by the arbitrator.

Contact a California Workplace Rights Lawyer

If you believe your employer has taken advantage of you, talk to an experienced California employment lawyer. At The Nourmand Law Firm, we can help by advising you of your rights and representing you in a dispute with your employer. We have over 20 years of experience handling matters such as employment discrimination, sexual harassment, wrongful termination, retaliation, and wage and hour violations, and we only represent employees, so you know where our loyalties lie. Call us today at 800-700-WAGE (9243) or contact us through our online form.