Retroactive Arbitration Agreement California

Retroactive Arbitration Agreement in California: What You Need to Know

In California, a retroactive arbitration agreement refers to an agreement between an employer and an employee that requires the resolution of any employment disputes through arbitration, even for claims that arose before the agreement was signed. This means that employees would be giving up their right to bring disputes to court and instead must go through the arbitration process.

The legality of retroactive arbitration agreements has been a hotly debated issue in California. In 2018, the California Supreme Court in the case of Vazquez v. Jan-Pro Franchising International, Inc. ruled that retroactive arbitration agreements were not enforceable. The Court reasoned that any waiver of an employee`s right to bring a court action for violations of California wage and hour law is contrary to public policy and unenforceable.

However, in 2019, the United States Supreme Court issued a ruling in Lamps Plus, Inc. v. Varela, which held that the Federal Arbitration Act (FAA) requires courts to enforce arbitration agreements as written, including retroactive agreements, unless there is a clear and unmistakable waiver of the right to arbitrate.

Following the Lamps Plus ruling, some California courts have started to enforce retroactive arbitration agreements. Employers who are seeking to enforce a retroactive arbitration agreement should ensure that the agreement is written clearly, and includes a clear waiver of the right to bring a court action.

It is important for employees to understand the implications of a retroactive arbitration agreement. Employees who sign such agreements waive their right to a jury trial and to sue their employers for violations of the law. Additionally, arbitration proceedings are typically private, so employees may be waiving their right to a public trial.

For employers, retroactive arbitration agreements can provide a way to avoid costly court battles and to resolve disputes more quickly. However, it is important to ensure that the agreement is drafted in a way that is enforceable under California law, and that employees have a clear understanding of the rights they are waiving by signing such an agreement.

In conclusion, retroactive arbitration agreements in California remain a complex and evolving area of law. Employers who are considering using these types of agreements should ensure that they are properly drafted to be enforceable under California law. Meanwhile, employees should be aware of the potential consequences of signing such agreements. As with any legal issue, it is important to seek guidance from an experienced attorney.