An employment arbitration agreement in California is generally enforceable, but not always, and not for every claim. You may be able to stay in court if the agreement is unconscionable under California law, if your claim involves sexual harassment or sexual assault covered by federal law, if your employer fails to pay its arbitration fees on time, or if you are bringing representative PAGA claims on behalf of other workers.
Signing an arbitration agreement does not mean you gave up your rights. It means the forum may change. Below I walk through how these agreements work, the legal rules that limit them, and what to do if you signed one.
What an employment arbitration agreement in California is and why employers use them
An arbitration agreement is a contract in which you and your employer agree to resolve disputes before a private arbitrator instead of a judge and jury. These clauses are often buried in onboarding paperwork, handbooks or electronic acknowledgments that employees click through on the first day.
Employers favor arbitration for a few reasons:
- No jury. Employers worry about juries in discrimination, harassment and wrongful termination cases.
- Privacy. Arbitration is usually confidential, so results do not become public.
- Limited appeal. Arbitration awards are very difficult to overturn.
- Class action waivers. Many agreements require employees to bring claims individually, which can make wage-and-hour class actions harder.
The Federal Arbitration Act strongly favors enforcing these agreements, which is why California cannot simply ban them. But California courts still apply ordinary contract defenses, and those defenses have teeth.
The Armendariz requirements and unconscionability
In its landmark 2000 decision in Armendariz v. Foundation Health Psychcare Services, the California Supreme Court set minimum requirements for mandatory arbitration of statutory employment claims, such as claims under the Fair Employment and Housing Act. An enforceable employment arbitration agreement in California must:
- Provide for a neutral arbitrator.
- Allow more than minimal discovery, enough to vindicate your claims.
- Require a written award that permits limited judicial review.
- Make available all the remedies you could get in court.
- Not require you to pay unreasonable costs or any arbitrator fees or expenses as a condition of access to arbitration. In practice, the employer pays the costs unique to arbitration.
Separately, courts refuse to enforce agreements that are unconscionable. Unconscionability has two parts. Procedural unconscionability looks at how the agreement was presented, such as a take-it-or-leave-it form given as a condition of employment. Substantive unconscionability looks at whether the terms are unfairly one-sided, such as requiring employees to arbitrate their claims while letting the employer go to court for its own, shortening the time to file claims, limiting damages or restricting discovery. Courts weigh both on a sliding scale. The more oppressive the process, the less unfairness in the terms is needed to strike the agreement.
When a court finds unfair terms, it may sever them and enforce the rest, or refuse to enforce the agreement altogether if the unfairness permeates it. In my practice, a careful line-by-line read of the agreement is the first step in every case where arbitration is in play.
Sexual harassment and assault claims: the 2022 federal law
The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act was signed into law on March 3, 2022. It amended the Federal Arbitration Act to give the employee, not the employer, the choice. If your case involves a sexual harassment dispute or a sexual assault dispute, you can elect to bring it in court even if you signed a pre-dispute arbitration agreement or a class or collective action waiver.
Key points:
- The law applies to disputes or claims that arise or accrue on or after March 3, 2022.
- The choice belongs to the person bringing the claim. You can still choose arbitration if you prefer it.
- A court, not the arbitrator, decides whether the law applies, even if the agreement says otherwise.
Courts are still working out how far the law reaches when a lawsuit pairs a sexual harassment claim with other claims, such as wage claims. Pleading the harassment claim carefully matters.
When the employer fails to pay arbitration fees
California Code of Civil Procedure §§ 1281.97 and 1281.98 address a common tactic: an employer forces a case into arbitration and then drags its feet on paying the arbitrator. Under these statutes, if the drafting party does not pay required fees within 30 days after the due date, it is in material breach of the agreement and waives its right to compel arbitration. The employee can then withdraw from arbitration and proceed in court, and § 1281.99 provides for sanctions against the breaching party.
For several years, many Courts of Appeal applied these rules strictly: a payment one day late was enough to lose arbitration. That changed in August 2025. In Hohenshelt v. Superior Court, the California Supreme Court held that the statute is not preempted by the Federal Arbitration Act, but that it does not impose an automatic forfeiture. Under Hohenshelt:
- Late payment still generally counts as a material breach.
- But an employer can seek relief from forfeiture if the nonpayment was a good-faith mistake, inadvertence or other excusable neglect, rather than willful, grossly negligent or fraudulent.
- An employer seeking that relief must act promptly and in good faith, and a court can require it to compensate the employee for harm the delay caused, including reasonable attorney’s fees and costs.
The practical result is that late payment is still a powerful tool for employees, but it is no longer a guaranteed exit from arbitration. The facts of why the payment was late now matter a great deal.
PAGA representative claims after Viking River and Adolph
The Private Attorneys General Act lets an employee recover civil penalties for Labor Code violations on behalf of the state and other employees. In Viking River Cruises v. Moriana (2022), the U.S. Supreme Court held that an arbitration agreement can require the employee’s individual PAGA claim to be arbitrated.
The California Supreme Court responded in Adolph v. Uber Technologies (2023). It held that an employee whose individual PAGA claim is sent to arbitration still has standing to pursue the non-individual, representative PAGA claims on behalf of other employees in court. Typically, the court case is paused while the individual arbitration proceeds. PAGA was also reformed in 2024; our article on PAGA reform in 2024 explains what changed for employees.
Why California’s arbitration ban was struck down
California tried to stop employers from requiring arbitration as a condition of employment. Assembly Bill 51, which added Labor Code § 432.6, made it unlawful to force employees to sign arbitration agreements. In February 2023, in Chamber of Commerce v. Bonta, the Ninth Circuit held that AB 51 is preempted by the Federal Arbitration Act, and the law was later permanently enjoined. As a result, California employers can still require arbitration agreements as a condition of hiring. The protections that remain come from the contract-law rules, statutes and federal law described above.
What to do if you signed an employment arbitration agreement
If you signed an employment arbitration agreement in California, here are the practical steps I recommend:
- Get a copy. Request your personnel file and any signed agreements. In California, employees can request their personnel records and signed instruments under Labor Code §§ 1198.5 and 432. Check whether you actually signed it, and how. Electronic signatures can be challenged when the employer cannot prove you were the one who signed.
- Do not assume you are stuck. Have a lawyer review the agreement for Armendariz defects and one-sided terms.
- Identify claims that may stay in court. Sexual harassment and assault claims, and representative PAGA claims, may not be subject to forced arbitration.
- Track every fee deadline. If the case goes to arbitration, your lawyer should calendar the employer’s payment deadlines from the arbitration provider’s invoices.
- Watch your filing deadlines. An arbitration agreement does not stop the clock on administrative charges or limitations periods.
- Prepare as if it will be tried. Arbitration is still a trial, just without a jury. The same preparation that drives results in court drives results in arbitration.
Arbitration is not always bad for employees. Some cases move faster and resolve sooner in arbitration, and many arbitrations settle at mediation. As a neutral with AMAJ, I see both sides weigh the same risks whether the case is headed to a jury or an arbitrator. See our page on mediation for how that process works.
Talk to a lawyer before arbitration locks in
An employment arbitration agreement in California is often the first fight in a case, and the decisions made in the first few months can determine where the case is heard. Whether to challenge the agreement, invoke federal law, or move ahead in arbitration is a strategic call that should be made early.
If you signed an arbitration agreement and believe you were wronged at work, contact Jonathan LaCour for a free consultation at 310.853.3461. Our team at Employees First Labor Law handles employment cases on contingency, so there is nothing to pay up front. You can also read how to choose an employment lawyer in California.
Frequently asked questions.
Are employment arbitration agreements enforceable in California?
Generally yes. The Federal Arbitration Act favors enforcement, and the Ninth Circuit struck down California's AB 51 ban in 2023. But California courts refuse to enforce agreements that are unconscionable or that fail the Armendariz minimum requirements, and federal law lets employees bring sexual harassment and sexual assault claims in court despite an arbitration agreement.
Can I refuse to sign an arbitration agreement at work in California?
You can refuse, but because AB 51 was held preempted by federal law, a California employer can generally make arbitration a condition of employment. If you are asked to sign, read it carefully, keep a copy, and note whether it includes an opt-out window. Signing does not prevent you from later challenging unfair terms.
What happens if my employer does not pay the arbitration fees?
Under Code of Civil Procedure sections 1281.97 and 1281.98, an employer that fails to pay within 30 days after the due date is in material breach and the employee may withdraw to court. After the 2025 Hohenshelt decision, an employer can seek relief if the late payment was a good-faith mistake or excusable neglect, but may have to compensate the employee for the delay.
Do I have to arbitrate a sexual harassment claim if I signed an arbitration agreement?
No, not if the claim arose or accrued on or after March 3, 2022. The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act lets the employee choose court instead of arbitration, and a court, not an arbitrator, decides whether the law applies. You can still choose arbitration if you prefer it.
Can PAGA claims be forced into arbitration?
Partly. After Viking River Cruises v. Moriana, an employer can require your individual PAGA claim to be arbitrated. But under Adolph v. Uber Technologies, you keep standing to pursue representative PAGA claims on behalf of other employees in court, which is usually paused while the individual arbitration proceeds.