Arbitration Agreements/Employee Handbooks – Update Yours
Arbitration Agreements/Employee Handbooks – Update Yours
A new case (Ford v. The Silver F, Inc.) highlights how California employee handbooks with outdated arbitration language can undermine an employer’s ability to require arbitration of employee claims, even when the legal landscape shifted in the employer’s favor in 2022 with the U.S. Supreme Court ruling in Viking River that allows employers to compel arbitration of employee individual claims. In the Silver F case, the California Court of Appeal ruled that the employer’s pre-2022 arbitration language in the employee handbook prevented the employer from compelling arbitration of individual Private Attorney General Act (“PAGA”) labor/employment claims.
The Silver F employer effectively snatched defeat from the jaws of the Viking River case ruling victory by failing to update the employee handbook. Instead of having employee Ford’s individual PAGA claims resolved efficiently through arbitration, the employer now faces potentially lengthy and expensive court proceedings for all PAGA claims. Any employer’s outdated agreements risk the same missed opportunity to significantly reduce litigation costs and exposure.
Updated arbitration provisions in employee handbooks may allow for:
1. Separation of individual employee PAGA claims in arbitration from representative claims in court, which may discourage the individual employee from bringing the claim in the first place;
2. Reduction of litigation costs through streamlined procedures in arbitration;
3. Reduction of monetary exposure from individual rather than representative claims and penalties;
4. More predictability of the potential outcome of claims.
California employers should update the employee handbooks to clearly define individual vs. representative PAGA claims, require arbitration of individual PAGA claims that sever individual from representative claims, and require a stay of any court proceedings until after individual claim arbitrations are completed. If you need assistance, please see our website or contact dawn@eppscoulson.com.
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