Originally from Employment Arbitration - 2nd Edition

Fairness in the Employment Arbitration Contract

Thomas E. Carbonneau

(i) The Ruling in Armendariz

In Armendariz v. Foundation Health Psychcare Services, Inc., the California state Supreme Court reaffirmed the role of arbitration as an alternative to the courts, but also acknowledged that certain minimum requirements were necessary to create a legally enforceable arbitration agreement in the employment context.

In its ruling, the court emphasized that a mandatory arbitration agreement which applied to unwaivable statutory rights, such as those protected by the California Fair Employment and Housing Act (FEHA) (the California equivalent of the federal Civil Rights Act of 1964), was subject to particularly strong judicial scrutiny. The arbitration procedure had to provide the plaintiff with the opportunity to vindicate fully its statutory rights. In analyzing the plaintiff’s arbitration agreement, the court looked to the decision in Cole v. Burns Int’l Sec. Serv., viewing the Cole court’s approach as establishing “minimum requirements” for a lawful arbitration agreement: