The PAGA saga: Prepare Your Arbitration Agreements

An arbitration agreement is a legally binding contract that provides for a dispute resolution alternative to civil court litigation.

With that said, if employers want to require California employees to arbitrate individual PAGA claims, the United States Supreme Court has given employers the green light.

But with any green light you should still be vigilant. Be careful not to include a waiver of the employee’s right to bring a representative PAGA action.

Also, since AB 51* is on pause, employers may lawfully require employees to agree to arbitrate employment disputes for now (except for sexual assault and harassment claims). Keep your eye on the case deciding the fate of this law and expect more litigation.

*AB 51 provides that employers can’t, as a condition of employment, require employees to arbitrate violations of the California Fair Employment and Housing Act or the California Labor Code.

Potential benefits of Arbitration:

• Faster than litigation
• Less formal process compared to litigation
• One decision-maker for all issues
• No greater cost to the employee than if they filed an action in court
• Parties participate in choosing an arbitrator