California Appellate Courts Diverge on Arbitration Agreements 

California

From JDSupraMichelle Roberts Gonzales and Tao Leung discuss two cases involving arbitration clauses in California. In the first case, the court enforced the arbitration clause because the employee’s continuing employment amounted to acceptance of the agreement. In the second case, the court did not enforce the agreement because of deficiencies in the terms of the arbitration agreement. Michelle and Tao write:

In Subcontracting Concepts (CT), LLC v. De Melo (First Appellate District Case No. A152205), the company sought to compel into arbitration an independent contractor who brought an administrative claim through the Department of Labor.

The Court of Appeal held that arbitration could not be compelled, however, because the take-it-or-leave-it agreement was presented only in English (a language the plaintiff was not fluent in), referred to the American Arbitration Association without specifying or providing the rules, required the plaintiff to share arbitration costs (precluding a relatively inexpensive administrative forum), limited damages to actual monetary damages, and barred Private Attorney General Act (“PAGA”) actions.

The company argued that the agreement should not be reviewed under standards applicable to employment arbitration agreements because the plaintiff was an independent contractor, but the Court disagreed. It noted that the plaintiff brought a misclassification claim and was alleging he was an employee and that the power imbalance between the parties was akin to an employment relationship.

Read the full story at California Appellate Courts Diverge on Arbitration Agreements | Hogan Lovells – JDSupra

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