Employers increasingly include arbitration clauses as mandatory parts of their employment agreements with their employees. These clauses prevent employees from pursing any actions—wage and hour, discrimination, wrongful termination, etc.—against their employers in court. They also prohibit employees from banding together and bringing collective and class actions. This summer the United States Supreme Court is likely to rule on the enforceability of these provisions under labor and employment law, other courts are using more traditional contract rules to evaluate them.
The 10th Circuit is considering a case on behalf au pairs who are challenging the J-1 visa’s cultural exchange program. The District Court held that the arbitration clause in the agreements was unconscionable under California’s unconscionability law. In arriving at this conclusion, the District Court found that the provision was harshly one-sided.
Some of the factors that the District Court considered in coming to this conclusion were the young age of the au pairs, them not being native English speakers, and a “loser pays” provision. Like many employees, the agreement was presented from a strong party to a weaker party on a take-it-or-leave-it basis.
As the au pairs continue their arguments before the 10th Circuit, they are making arguments that affect many employees who are faced with arbitration agreements. Many employees are completely unfamiliar with the concept of arbitration. They do not realize that they are giving up a right guaranteed to them by the Bill of Rights—the right to a trial by jury in civil matters—when they sign these arbitration agreements.
If you have any further questions about whether you are bound by an arbitration agreement with your employer, the Wage Authority Group is awaiting your call.