California Anti-Arbitration Law Held Up by Federal Injunction

A recent California law that would have made it illegal to put mandatory arbitration clauses in employment contracts has been held up by an injunction from a federal court. The new anti-arbitration law faced a great deal of controversy, as employers have made arbitration agreements an increasingly common part of their employment contracts. The injunction was issued as part of a lawsuit by employers attempting to prevent the law from coming into effect, as it would have this year.

Mandatory arbitration clauses, sometimes referred to simply as arbitration clauses or arbitration agreements, are contractual agreements that require the parties to the contract to resolve any legal disputes that arise between them in private arbitration. Employers like to use arbitration clauses in their employment agreements because private arbitration tends to be cheaper and less time-consuming than going to court, and because arbitration decisions are very difficult to overturn. However, employee rights advocates have targeted arbitration clauses for limiting employees’ access to the court system, noting that arbitration clauses allow employers to select which arbitration agency they use, making it easier for them to manipulate the process by selecting a favorable agency.

The primary issue in dispute revolves around the California anti-arbitration law’s conflict with the Federal Arbitration Act (FAA), as interpreted in the decision in Epic Systems Corp. v. Lewis. In Epic Systems, the United States Supreme Court held that mandatory arbitration clauses must be upheld, regardless of other laws that might provide otherwise. The decision in the case could have an impact on similar legislation throughout the country, including attempts to ban arbitration agreements in New York.

If you are an employee in a dispute with your employer over your employment contract, give the Law Office of Steve Sack a call. Steven Mitchell Sack, the Employee’s Lawyer, is a New York employment lawyer who has considerable experience in handling the many aspects of labor and employment law. To schedule a consultation with New York City employment lawyer Steve Mitchell Sack, call (917) 371-8000.

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