California Arbitration: Your Guide to the Basics of Arbitration in California
Understanding the basics of California arbitration is no easy task. At least, it wasn’t until our arbitration organization went into effect. Our experts help both California employers and individuals succeed with disputes. California employers often consider if they should require employees to arbitrate. This refers to the concept of mandatory arbitration through an arbitration contract or agreement. These employers must consider the many benefits (and some risks) of arbitrating. Plus, companies have to keep in mind how to enforce arbitration agreements. Visit Mandatory Arbitration Clauses.
California has some of the strictest laws about arbitration in the country. But do not despair. Our organization is here to assist you right now. Please read below to find out how arbitration in California functions. If you have any questions, do not hesitate to call our experts at (844) 554-0444. Read about Arbitration Clause Meaning.
Arbitration Agreements in California
So, what is an arbitration agreement? It functions as a legal agreement between two entities. Oftentimes, these are employers and their employees. Companies wish to resolve differences through a private arbitrator. They prefer this over dealing with a lawsuit in a California civil court. You can find arbitration agreements in your average employee’s paperwork. The new-hires must sign agreements before they can start working. Oftentimes, an employer doesn’t tell an employee that he or she’s bound to arbitration. (Only if some form of legal dispute takes place.) In fact, your average California employee does not know what arbitration even means. What is Alternative Dispute Resolution Processes.
Recent Changes to California Arbitration Laws
2020 was an important year for arbitration in California. A new California law went into effect across the state. The law’s called AB 51. It permits employees to decline signing an employer’s arbitration agreement. (This also applies to job applicants.) Say that a new-hire declines to sign an agreement to arbitrate. A California employer cannot retaliate in any manner. In fact, that employer can’t deny that person employment. This law does not apply to workers with preexisting arbitration agreements.
They still have to honor each agreement to arbitrate. Arbitration’s governed by more than California state laws. There are also federal laws that apply toward arbitration. This has resulted in a bit of a problem. California laws often conflict with federal laws about arbitration. Plus, changes to state arbitration laws keep taking place. Visit Conciliation Process.
You might wonder why so many companies and people prefer arbitration. It’s considered more efficient, cheaper, and faster than US court litigation. But some people feel that employee rights get left behind. These individuals think that arbitrators often side with employers. But there is an ongoing debate about employees taking part in arbitration. Some believe that arbitration is best for California workers. Others think that US court litigation before a judge functions better. What is Final Offer Arbitration?
What Is an Arbitration Agreement?
Most arbitration agreements refer to employment arbitration. But any two parties can enter into an agreement to arbitrate. An arbitration agreement serves as a legal contract. It gets signed between two entities. Oftentimes, an employer and employee sign an agreement. This way, a potential dispute between parties will get held in front of a private arbitrator. That arbitrator takes the place of a California court. Most arbitration agreements get found inside large agreements and contracts. It’s rare to see an arbitration agreement that stands as its own separate document. Agreements for arbitration are often short and to-the-point. That’s why they can stay hidden within a larger document. Read about Full Scale Arbitration Services.
How Does the Arbitration Process Function?
Arbitration is a popular form of alternative dispute resolution. It is simple and more streamlined of a process compared to civil court litigation. Arbitration is often cheaper than litigating in a California courtroom. That’s the key reason why so many employers across the state prefer it. Do not assume that arbitration and litigation are very different processes. They both function the same way. After all, you can hire lawyers for representation in both litigation and arbitration. Plus, parties can exchange information and call their own witnesses. A hearing will always take place before the arbitrator reaches a binding decision. Visit also Binding Arbitration Definition.
There are key differences between arbitration and court proceedings to keep in mind. The major difference is that the right to secure legal documents can seem more limited. Also, arbitration hearings never take place in a state or federal courtroom. Instead, the hearings almost always happen inside a conference room. Many arbitrators operate as retired judges. But not all. Sometimes they are lawyers or someone with relevant experience to the dispute. Do you need to find a licensed arbitrator in your local California area? If so, please contact our organization today. Must visit Arbitration vs Mediation vs Litigation.
How Does Arbitration Take Place in California?
California’s arbitration process is not that different from arbitration in other states. California arbitration laws give parties the right to arbitrate conflicts and disputes. In fact, arbitration is a legal, private process for resolving disputes. You do not get involved with courts when arbitrating. The arbitrator will reach a binding decision once the hearings conclude. A decision gets based on what the parties present before the arbitrator. Then, the arbitrator issues an official arbitration award. That award has legal binding status and cannot get appealed.
Why Do California Employers Want Employees To Sign Arbitration Agreements?
There are many factors that make California employers prefer arbitration. The key reason is to avoid civil litigation in court. That’s because arbitration is cheaper than almost all civil litigation. Plus, the arbitral process proceeds faster. Since it’s fast, arbitration becomes the cheaper option. Employers love that they can save a lot of money on attorney fees. A fast pace also applies to the discovery process during arbitration. This means that parties exchange information in an efficient manner. Know about Arbitration Decision Process.
Limited document exchange abilities also makes arbitration faster. Why? Because there are fewer documents to review and consider. Beginning in 2020, big-time changes to California arbitration laws took place. Employers can no longer create mandatory arbitration agreements for new-hires. In California, signing a mandatory agreement is not a condition of employment. Check out Types of Arbitration.
Who Selects the Arbitrator?
One crucial aspect of the flexible nature of arbitration is selecting an arbitrator. This process differs from that of a civil court case. When it comes to court, parties get stuck adhering to an assigned judge. But arbitration is different. Parties can choose any arbitrator. The arbitrator should have relevant experience in the area of legal dispute. But there is one drawback to this open selection format. Employers often attempt to pick certain arbitrators. They’re arbitrators that companies feel will show favor to their legal case. But a high-quality arbitrator remains unbiased throughout the arbitral process. Visit Sample Arbitration Clauses.
Who Pays the Arbitration Fees?
Here is one very positive aspect of California arbitration for employees. Through California law, employers must pay the costs of arbitration. This is very good for employees. Why? Well, it’s true that arbitration is cheaper than our litigation. But that doesn’t mean that arbitration is always cheap. Some arbitration cases can cost tens of thousands of dollars. Now, say that a legal dispute in California doesn’t involve an employer and employee. In this case, parties often split arbitration fees in a 50/50 manner. Visit Arbitral Tribunal Services.
Which Laws Govern California Arbitration Agreements?
There are two major laws that govern the arbitration process across California. The California legislature created one of the laws. The other law serves as a product of the United States federal government. The state law’s known as CAA: the California Arbitration Act. The federal law’s called FAA: the Federal Arbitration Act. There are many specific terms within these two arbitration laws. Please contact our organization if you need exact information. Keep in mind that there are often conflicts between FAA and CAA terms. But US federal law always outweighs almost any California state law. When it comes to inconsistencies among laws, judges will rule in favor of federal laws. Visit Interest Arbitration Services.
AB 51: The Ban on Mandatory Arbitration in Employment Across California
Arbitration functions as a private legal process. Parties have to resolve any legal dispute away from court litigation. That’s why many companies will draft a mandatory arbitration provision. The arbitration provision makes parties handle all disputes through arbitration. Say that two parties sign a mandatory arbitration agreement. These parties volunteer to give up the right to go to court. What are the Advantages of Arbitration?
Many legal experts state there’s nothing wrong with mandatory arbitration agreements. (As long as the parties operate on an equal playing field.) Of course, not all sides in a legal dispute have the same resources and level of power. Many California lawmakers think that forced arbitration agreements harm employees. They believe the agreements only favor the interests of employers. That’s why AB 51 went into effect in January of 2020. California lawmakers designed it to address the issue of fairness for workers. Check out Arbitration vs Litigation.
More About AB 51 & Mandatory Arbitration in California
AB 51 inserted a brand-new section inside the California Labor Code. This section limits the use of mandatory arbitration agreements. It applies to both formal and informal employment agreements. (But only those that go into effect on or after January 1, 2020.) Here are some crucial provisions featured in the new state law. An employee or job applicant doesn’t have to waive any FEHA rights. This refers to the California Fair Employment and Housing Act. An employee/applicant also doesn’t have to waive rights within the California Labor Code. (These rights apply to any condition of employment.) As part of AB 51, an employer can’t threaten or retaliate against anyone refusing to sign. This way, a new hire or employee never has to sign a mandatory arbitration agreement.
Do You Want To Learn More About California Arbitration Rules & Laws? Contact Us Today
About our Arbitration Agreement Association. Our organization is number one in the state of California when it comes to help with arbitration. We supply tools, resources, and information to hundreds of Californians every day. Why? So that we can empower all individuals and businesses to succeed through a dispute. If you’d like to learn more about us, do not hesitate to browse our website. Or, you’re welcome to pick up the phone and call us at (844) 554-0444. We look forward to becoming your go-to resource for arbitration in California. Learn The Difference Between Mediation and Arbitration.