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What is the mandatory arbitration ban?

On Behalf of | Dec 15, 2021 | Mediation & Arbitration

Arbitration is a type of alternative dispute resolution that helps you avoid going to court. It is a very popular option for businesses to include in contracts and agreements because it can save money and time if there is an issue.

The National Law Review explains in California, lawmakers have made a move to ban mandatory arbitration clauses in employment contracts.

Condition of employment

Many employers in the state will include mandatory arbitration clauses in employment contracts. These clauses require that any disputes go to arbitration and prevent employees from seeking other courses of action. Lawmakers determined this is an unfair practice that binds employees’ abilities to exercise their rights under the law by taking away their choice.

Does not prevent arbitration

Despite the law banning mandatory arbitration agreements, it does not prevent arbitration from happening. An employer and employee may enter into arbitration as long as they both agree to do it. The main point is an employer cannot force the employee to do it.

Highly controversial

The ban is controversial. There have been multiple lawsuits fighting it and the many clauses within the law, including the potential punishments against employers who still include these arbitration clauses in employment contracts.

Despite this, the ban remains in place in California. If you notice a clause within your employment agreement that requires you to go to arbitration in the event of any issues arising between and your employer, you should understand it is not legal. Point this out to the employer and refuse to sign the contract until they remove it.