Brenden Begley_retouchIt is no secret that arbitration agreements may greatly reduce the risks that many employers face in disputes with employees.  For example, when used correctly, such agreements can curb exposure to class actions by forcing employees to arbitrate disputes on an individual basis instead of a class basis.  See, e.g., Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014).

However, when such an agreement either contains certain language or fails to include other language, it may result in a class action or a representative action being litigated in front of an arbitrator instead of a court.  This can be problematic for many reasons, not the least of which is that an arbitrator’s hourly charges typically are paid by the employer – and those fees can add up quickly in a complicated matter involving numerous parties.

Thus, instead of decreasing the cost of defending a class action or a representative action, a poorly drafted arbitration agreement could result in greatly escalating such costs.   A pair of recent decisions from the California Court of Appeal for the Fourth Appellate District (in San Diego) underscore the need for employers to use great care in drafting such agreements to avoid such outcomes.
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