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The Importance of Arbitration Agreements

As an employer, the threat of potential litigation with prospective, current or former employees always looms.  Litigation can be an uncertain and time-consuming process which can drain valuable resources from a company.  This is why many employers have included arbitration agreement provisions in their employment contracts.  But several recent California cases have demonstrated how important it is for employers to include all key terms of an arbitration agreement into the employment contract to ensure that a California court will enforce it. Arbitration vs. Litigation Litigation is the process of bringing a suit in court, in which the court will issue a judgment that that can ordinarily be appealed.  Arbitration is a form of alternative dispute resolution where the disputing parties typically agree to be bound by the decision of one or more neutral arbiters.  There are several advantages to choosing arbitration over litigation: Faster resolution of claims Not as uncertain as a case where jury sentiment may sway a decision adverse to the employer Exclusionary rules of evidence are not as strictly enforced (evidence is  ordinarily admissible if it is relevant and non-cumulative) Confidentiality is required of the arbitrator and can be imposed by agreement on the parties, their experts and attorneys Less exposure to punitive damages Arbitration decision is final and there is no right of appeals to the courts to change the award The Gorlach and Elijahjuan Decisions California Code of Civil Procedure section 1281.2 states that for a court to order the parties to arbitrate the controversy, it must determine that an agreement to arbitrate the controversy exists.  Two recent cases have demonstrated that California courts narrowly interpret arbitration agreements...
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