Originally from Dispute Resolution Journal

In recent years, employers have more frequently adopted ADR programs that impose arbitration agreements on their employees as a condition of employment or continued employment. This is not surprising, since employers perceive the arbitration forum to be quicker and, for that reason, less expensive. Many probably also believe that arbitrators are likely to eschew the high damages that juries sometimes award.

However, an employer who intends to impose a mandatory arbitration program must avoid overreaching, since the effectiveness of mandatory arbitration depends on to how the agreement has been drafted. This is particularly true in California. In the California Supreme Court’s decision in Armendariz v. Foundation Health Psychcare Services,1 and in other cases, the standards for enforceability of an arbitration agreement applicable to statutory discrimination claims have been clearly stated. These standards should not be ignored.

Mandatory arbitration clauses imposed as a condition of employment have come under increased scrutiny because they are adhesion contracts; employees have no bargaining power to resist their imposition while at the same time obtaining or retaining employment. For that reason, the courts have closely examined the clauses to ensure that they treat employees fairly. Courts have frequently stated that employees should not be required to relinquish important rights as a result of a change of forum from court to arbitration.