Yes, California employers may require arbitration agreements as a condition of employment, subject to legal limitations.
To be enforceable, a mandatory arbitration agreement must:
- Comply with the Federal Arbitration Act (FAA)
- Provide a neutral arbitrator
- Allow adequate discovery
- Permit recovery of statutory remedies
- Avoid unfair cost-shifting
- Not be procedurally or substantively unconscionable
While California law has evolved significantly in this area, properly drafted arbitration agreements remain enforceable in many circumstances.
However, defective arbitration agreements are frequently challenged in court. Careful drafting and periodic review are critical.
