What kinds of provisions in arbitration agreements will cause the courts to invalidate them? The Court of Appeal in the recent case of Baxter v. Genworth North America Corporation analyzed and rejected several of them, in upholding the denial of a motion to compel arbitration of an employee’s wrongful termination and discrimination claims. Baxter v. Genworth North America (October 26, 2017) --- Cal.Rptr.3d ----.
Genworth required employees to sign an agreement upon being hired that they participate in a four-step process before asserting any claims, including a meeting with the company’s managers and a mandatory mediation. Further, if the employees ultimately filed a lawsuit the agreement required that they do so within a period of less than the one-year statute of limitations under the Fair Employment and Housing Act. The court found the one-sided terms under the agreement as “substantively unconscionable” and unenforceable.
First, the arbitration guidelines in Genworth prohibited employees and their attorneys from obtaining information outside the formal discovery process, which meant that employees were prohibited from interviewing witnesses to gather information to evaluate their claims. According to the court, this one-sided prohibition interfered with the right of employees to full and fair discovery of their claims under the state anti-discrimination law. The agreement also limited parties to only ten interrogatories, five requests for documents, and two depositions for a total of no more than eight hours, which the court found insufficient to enable the employee to vindicate their claims. The court found the provisions to be invalid and that employees’ ability to prove their claims would be frustrated even though the agreement provided that the arbitrator could provide greater discovery.
Arbitration remains a useful tool to avoid the time and expense of litigation, but arbitration agreements must be carefully crafted to avoid one-sided terms such as the one identified in Genworth. Employers who adopt agreements that seek to force an employee into an inferior forum, as opposed to one with only a substitute for the judicial forum, face the invalidation of their agreements as in Genworth.
- Of Counsel
Ronald Novotny has been representing employers in labor and employment matters in federal and state courts and administrative agencies in California since 1981. He has extensive experience involving union and employer unfair ...
- Partner
Jonathan Judge advises employers in various labor and employment law matters, including drug testing, mass layoffs (WARN), disparate impact analysis, immigration compliance, trade secrets, privacy, technology in the ...
Other AALRR Blogs
Recent Posts
- President Biden’s Administration Halts Department of Labor’s Final Rule for Worker Classification
- Rotational Employees Can Have Their “On” And “Off” Weeks Counted Against Their FMLA Leave Entitlement
- Ninth Circuit Issues Important Decision on Per Diem Pay
- Ninth Circuit Upholds Victory for Trucking Industry: California Meal and Rest Break Rules Preempted by Federal Law as to Commercial Drivers
- They Say Never Discuss Politics In Polite Company, But How Can Employers Handle Impolitic Off-Duty Conduct?
- DOL Permits Back-of-the-Restaurant Staff to Share in Servers’ Tips
- Can California Employers Be Liable For Failure To Prevent Something That Never Happened?
- Employer’s Delay is Fatal to Enforcement of Arbitration Agreement
- California Employers: The federal Department Of Labor’s Final Rule For Worker Classifications Does Not Eliminate The Requirements Under California’s ABC Test
- Court Holds California Law Applies to Offshore Workers on Oil Platforms
Popular Categories
- (43)
- (40)
- (135)
- (22)
- (6)
- (6)
- (31)
- (26)
- (22)
- (14)
- (5)
- (6)
- (4)
- (3)
- (3)
- (14)
- (9)
- (2)
- (2)
- (1)
- (3)
- (1)
- (3)
- (1)
- (1)
- (2)
- (1)
- (1)
- (1)
- (1)
- (1)
- (1)
- (1)
Contributors
- Christopher S. Andre
- Cindy Strom Arellano
- Sarkis A. Atoyan
- Alicia A. Belock
- Eddy R. Beltran
- Rex Darrell Berry
- William M. Betley
- Brigham M. Cheney
- Michele L. Collender
- Kevin R. Dale
- Scott K. Dauscher
- Alexandria M. Davidson
- William A. Diedrich
- Alfonso Estrada
- Lauren D. Fierro
- Paul S. Fleck
- Robert Fried
- L. Brent Garrett
- Carol A. Gefis
- Kieran D. Hartley
- Amber S. Healy
- Jonathan Judge
- David Kang
- Nate J. Kowalski
- Joshua N. Lange
- Catherine M. Lee
- Thomas A. Lenz
- David M. Lester
- Martin S. Li
- Mia A. Lomedico
- Jorge J. Luna
- Michael J. Morphew
- Ronald W. Novotny
- Michael J. O'Connor, Jr.
- Aaron V. O'Donnell
- Shawn M. Ogle
- Sharon J. Ormond
- Justin R. Peters
- Chesley D. Quaide
- Todd M. Robbins
- Irma Rodríguez Moisa
- Casandra P. Secord
- Jon M. Setoguchi
- Lauren B. Shelby
- Ann K. Smith
- Amber M. Solano
- Susana P. Solano
- Ethan G. Solove
- Susan M. Steward
- April Szabo
- Jay G. Trinnaman
- Jonathan S. Vick
- Robert L. Wenzel
- Brian M. Wheeler
- Glen A. Williams
- Kimberley A. Worley
- Lisa C. Zaradich
Archives
2021
2020
- December 2020
- October 2020
- August 2020
- July 2020
- June 2020
- May 2020
- April 2020
- March 2020
- January 2020
2019
- December 2019
- November 2019
- October 2019
- September 2019
- August 2019
- June 2019
- May 2019
- April 2019
- March 2019
- February 2019
2018
- December 2018
- November 2018
- October 2018
- September 2018
- August 2018
- July 2018
- June 2018
- May 2018
- March 2018
- February 2018
- January 2018
2017
- December 2017
- November 2017
- October 2017
- September 2017
- August 2017
- June 2017
- May 2017
- March 2017
- February 2017
2016
- December 2016
- November 2016
- October 2016
- September 2016
- August 2016
- July 2016
- June 2016
- May 2016
- April 2016
- March 2016
- February 2016
2015
- December 2015
- October 2015
- September 2015
- August 2015
- July 2015
- June 2015
- May 2015
- April 2015
- March 2015
- February 2015
- January 2015
2014
- November 2014
- October 2014
- September 2014
- August 2014
- July 2014
- June 2014
- May 2014
- April 2014
- February 2014
- January 2014
2013
- October 2013
- September 2013
- July 2013
- June 2013
- May 2013
- April 2013
- March 2013
- February 2013
- January 2013
2012
- October 2012
- September 2012
- August 2012
- July 2012
- June 2012
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
2011
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- January 2011