What Happens If I Sign an Arbitration Agreement After Suing My Employer?
California employers often try to keep labor disputes out of court by requiring their employees to sign binding arbitration agreements. Normally, these agreements are signed before a dispute arises, such when the employee starts work. But it is also possible to sign an arbitration agreement after an employee has already filed a lawsuit or otherwise taken legal action against the employer. Do such agreements also cover the preexisting dispute?
California Courts Issue Series of Decisions Favoring Employers Over Employees
In a series of recent decisions, California’s appeals courts have in fact held that preexisting claims are covered by arbitration agreements. One of these decisions is Alanis v. Leonard Roofing, Inc., an opinion issued by the California Second District Court of Appeal in Los Angeles on March 30, 2020. The plaintiff in this case worked as a roofer for the defendant. In February 2017, the plaintiff stopped reporting for work and filed a class action complaint against the defendant, alleging various wage and hour violations under California law.
The plaintiff returned to work in September 2017. He also amended his lawsuit to add an additional claim. About a month later, the defendant asked the plaintiff to sign a binding arbitration agreement. Among other provisions, the agreement waived the plaintiff’s right to maintain or join a class action. Immediately after the plaintiff signed the arbitration agreement, he was fired.
The defendant then turned around and moved to compel arbitration against the plaintiff’s preexisting lawsuit. The trial court declined to enforce the arbitration agreement, holding its language was “ambiguous as to whether it would cover a then pending lawsuit known to the employer.” And any ambiguity in the agreement should be construed against the employer, meaning it did not cover the plaintiff’s claims.
But the Second District reversed. It explained that following the trial judge’s decision in this case, the Second and Fourth District courts of appeal issued separate rulings reaching the opposite conclusion. In one of these cases, Salgado v. Carrows Restaurants, Inc., the Second District said that an agreement to arbitrate “all disputes which may arise out of or be related in any way to my application for employment and/or employment,” covered any lawsuit brought by the employee, regardless of when it was filed. Similarly, the language of the arbitration agreement in the present case “does not exclude existing claims or lawsuits.” So the trial court erred in refusing to enforce the arbitration agreement on those grounds.
That said, the Second District said further proceedings in the trial court were necessary to resolve other issues related to the arbitration agreement. The plaintiff alleged that, notwithstanding his signature, the arbitration agreement itself was “unconscionable” and therefore unenforceable under California law. While this is a question of law, the appeals court noted, the trial court must first make certain factual findings on this issue.
Speak to a Lawyer Before Signing an Employment Arbitration Agreement
Anytime an employer demands that you sign an arbitration agreement, you should be suspicious. At the very least, you should take the time to read and fully understand all terms of the agreement. And if you need additional advice or counsel, consult with an experienced California employment law attorney.