Should You Sign an Arbitration Agreement with Your Employer?

Understanding California’s Arbitration Laws for Employees

The average person doesn’t spend much time thinking about contracts—especially when they’re excited about landing a new job. But one document that could seriously impact your future rights is the arbitration agreement.

Whether it’s included in your onboarding paperwork or handed to you later, many employers ask workers to sign an arbitration agreement. But should you sign an arbitration agreement with your employer? And what rights might you give up if you do?

Below, we break down what arbitration agreements really mean, how they’re handled under California law, and why it’s worth pausing before you sign.

What Is Arbitration?

Arbitration is a form of alternative dispute resolution. Instead of going to court, both parties agree to have a private arbitrator hear and resolve any future disputes.

In the workplace, arbitration agreements are typically buried within employment documents—often presented as a “standard” form to sign. But they’re anything but standard when it comes to your rights.

While arbitration can be faster and cheaper than court, it also usually benefits employers. That’s because:

• Employers often choose the arbitrator.
• The discovery process (exchange of evidence) is limited.
• There is no jury.
• Decisions are final and cannot be appealed.
• You may be forced to give up rights like class action participation or seeking certain types of damages.

Under California law, employers must pay the arbitration costs—but that doesn’t mean the process is balanced in your favor.

How Arbitration Works Under California Law

In California, workplace arbitration is governed by both the California Arbitration Act (CAA) and the Federal Arbitration Act (FAA). Most employment-related claims can be resolved through arbitration if a valid agreement exists, including:

• Sexual harassment
• Wage and hour disputes
• Wrongful termination
• Retaliation and discrimination claims

If you’ve signed an enforceable arbitration agreement, you typically cannot sue your employer in court. Your only recourse is arbitration—even for serious legal claims.

Example:

Stephanie works at a printing supply company and is repeatedly harassed by her boss. After filing a complaint, she considers a lawsuit—only to learn she signed a mandatory arbitration agreement. That means her sexual harassment claim must go through arbitration instead of the court system.

What Is California’s AB 51 Law?

To protect employees, California passed Assembly Bill 51 (AB 51) in 2019, which went into effect January 1, 2020. The law:

• Prohibits employers from requiring job applicants or employees to sign arbitration agreements as a condition of employment or benefits.
• Forbids retaliation (such as firing, demotion, or refusal to hire) against those who decline to sign.
• Still allows employers to offer arbitration voluntarily—but signing must be your choice.

However, AB 51 only applies to agreements signed on or after January 1, 2020. If you signed before that date, your agreement may still be enforceable.

⚠️ AB 51’s legal status is still under review in the courts. While it remains in effect for now, employers and courts are watching closely for updates.

Should I Sign an Arbitration Agreement?

This is the question many employees ask—and the answer depends on your comfort level with giving up certain legal rights.

In most cases, it is not in your best interest to sign an arbitration agreement with your employer. Here’s what you might be giving up:

• Your right to a jury trial
• The ability to gather full evidence during discovery
• The ability to appeal an unfair decision
• The right to subpoena witnesses
• The right to file a class action lawsuit
• Certain types of compensation and damages

Employers prefer arbitration for good reason—it protects them more than it protects you. Many employees don’t realize the consequences until it’s too late.

What Should You Do Before Signing?

If you’re presented with an arbitration agreement:

• Don’t sign it right away. You have the right to ask for time to review it.
• Read it carefully. Look for waivers of class actions, jury trials, and appeal rights.
• Consider negotiating. Some employers may allow modifications.
• Consult an attorney. An employment lawyer can review the agreement and help you understand your options.

Final Thoughts: Know What You’re Signing

If you’ve ever wondered, “Should I sign an arbitration agreement with my employer?”—the safest answer is often no, unless you’ve fully reviewed the agreement and understand what rights you’re waiving.

While California’s AB 51 offers some protection, many employees are still vulnerable—especially if they unknowingly sign away legal options.

Talk to an Attorney Before You Sign Away Your Rights

At Odell Law, we help California employees understand their legal protections and negotiate fairer terms when possible. If you’ve been asked to sign an arbitration agreement—or if you’re dealing with an employment dispute now—we can help.

📞 Call 949-771-8173 or
📩 Email rob@odelllaw.com for a free consultation.