How Small Business Owners In California Can Use Arbitration To Quietly Resolve Workplace Conflicts

In this article, you will discover:

• Benefits of arbitration for small business owners in California
• Types of workplace disputes best suited for arbitration resolution
• How to introduce arbitration agreements to employees

What Are The Key Benefits Of Arbitration For Small Business Owners In California?

Key benefits of arbitration for small businesses include:

• Privacy

The primary benefit is that arbitration removes the decision-making process from a jury and places it before a private arbitrator, typically a retired judge. Instead of having a public jury trial with a jury not likely to be a jury of your peers, you have a bench trial. The arbitration and its results, unlike a jury trial, are private.

• Impartiality

The arbitrator is less likely than a jury to rule based on passion and prejudice. Instead, they are more likely to follow the law and adopt a conservative approach to applying it to the facts.

• Class Action Waiver

Another significant benefit to business owners in California is that employers can include a class action waiver in their arbitration agreements. This waiver compels the employee to sue the employer on an individual basis rather than as a representative of a class.

Essentially, a class action waiver would eliminate class action liability and exposure to class action damages. With a class action waiver, you can compel one employee with a $10,000 wage claim to arbitration rather than having 100 employees with a $10,000 claim each in court on a class action basis.

• PAGA Arbitration Bifurcation Doctrine

The final benefit relates to the Private Attorney General Act (PAGA). With the proper language in an arbitration agreement, an employer can require a “PAGA representative,” an aggrieved employee suing on behalf of other aggrieved coworkers, to arbitrate their labor code claims before proceeding to arbitration. The court claim is stayed pending the outcome of the individual’s claims for labor code violations.

If the employer prevails in arbitration, meaning the employee was unable to prove labor code violations, the PAGA aspect of the court case is also shut down. The aggrieved individual no longer has standing to sue on behalf of their coworkers because, according to the arbitration ruling, they suffered no labor code violation.

The scenario typically begins with the employee suing their employer in court first. The employer’s counsel (the defendant) would let the employee’s counsel (the plaintiff) know that there’s a binding arbitration agreement with a class action waiver and a PAGA waiver.

The employee’s counsel either voluntarily agrees to go to arbitration (which they typically don’t) or forces the employer to file a petition or motion to compel arbitration. If the arbitration agreement is well-drafted, the case will be compelled to arbitration.

Attorney Scott Shibayama is a seasoned lawyer based in Roseville, CA, who has helped numerous clients just like you navigate the complexities of employment law. With decades of experience, he is prepared to represent your small business in your workplace arbitration so you can avoid the prohibitive costs and damages of class action and PAGA suits.

Still have questions? Ready to get started? Contact Vision Law® today to schedule an initial consultation.

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What Types Of Workplace Disputes Are Best Resolved Through Arbitration In California?

Potential class action lawsuits and potential PAGA claims are best “resolved” through arbitration simply because the individual class representative or aggrieved employee can be forced to arbitrate their claim on a one-on-one basis only.

Beyond that, any typical employment claims that could be brought in court before a judge and jury, such as wrongful termination, prohibited harassment, discrimination, leave of absence or retaliation claims, might benefit the small business more if handled through arbitration.

Can California Employers Ensure Confidentiality When Using Arbitration To Resolve Conflicts?

Binding arbitration is a private process typically conducted by companies such as the American Arbitration Association (AAA) or Judicial and Mediation Services (JAMS). Both the hearing and results are private, as opposed to a court, where the proceedings and rulings are public.

How Should California Employers Introduce Arbitration Agreements To Existing Employees?

Roll out or implement an arbitration agreement when you update other policies and practices in your employee handbook. If you plan to update your handbook annually, it’s best to send your updated employee handbook along with your brand-new mandatory binding arbitration agreement.

Let your employees know that there’s an employee handbook update, and you’re also implementing an arbitration policy. Ask them to review the policy and return the signed agreement by the deadline. If you don’t want to wait for an annual employee handbook update, you can roll out the arbitration agreement as a standalone document.

Notes From The Field: Can You Share An Example Where Arbitration Helped A California Business Resolve A Workplace Conflict Quietly?

Typically, when there’s a properly drafted arbitration agreement with a class action waiver and a PAGA waiver, we’ve been successful in resolving a case outright simply because the plaintiff’s case is gutted. If a class action and PAGA action are eliminated, and it’s just a one-on-one case, the value of that case is dramatically reduced.

We’ve been able to successfully resolve matters for much less money than would be the case if it were a class action or PAGA case.

Still Have Questions? Ready To Get Started?

For more information on workplace arbitration in California, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (855) 534-5908 today.