It is interesting to note that national and federal law differ with respect to the rights that may be included in the arbitration process. In 2000, the California Supreme Court ruled Armendariz against the Foundation Health Psychcare Services, Inc. In Armendariz, the Court held that discriminatory claims under the Fair Employment and Housing Act (“FEHA”) in California may be subject to binding arbitration proceedings. This remains the law in California state courts until today. For example, in March 2002, circuit City Stores, Inc. v. Ahmed said the company could impose arbitration as part of its agreement because the agreement was not procedurally unacceptable. A “reasonable opportunity” was offered to the employee to opt out of the arbitration program and the terms of the agreement were clearly stated in written documents and a presentation of the videotape. In addition, the employee was encouraged to consult a lawyer before signing the agreement and gave 30 days to decide whether to participate in the program. California is not the only state to have attempted to ban mandatory arbitration agreements, nor is it the only state to have been shut down for pre-emption reasons.
Just two years ago, the U.S. Supreme Court overturned an anti-arbitration decision of the Kentucky Supreme Court. There, the Kentucky court attempted to invalidate by jury the arbitration agreements on the basis of the state Constitution`s statement on the right of access to the court and the “sacred” and “inviolable” nature of the trial. The U.S. Supreme Court overturned the State Court`s decision, reinforcing its long-standing precedent for the application of arbitration agreements under the FAA. But the most important consideration in assessing substantive conscionability is reciprocity. “Substantial concepts may take different forms, but they can generally be described as unfairly one-sided.” Arbitration agreements must have at least a minimum of bilaterality in order to avoid a lack of scruples. Armendariz, supra, 24 Cal.4. 119. If only the claims of the weaker party are subject to arbitration proceedings and there is no reasonable justification for this lack of symmetry, the agreement does not have the required level of reciprocity.
Id. at 119-120. As the California Supreme Court in Armendariz recognized, “an arbitration agreement in a context of glue lacks basic fairness and reciprocity when it requires one party, not the other, to settle all claims arising from the same trade or event, or a series of transactions or events.” Id. at 120. As the court recognized, “the lack of reciprocity can manifest itself in the same way as what the agreement does not provide for only by what it does.” Id. A positive aspect of worker conciliation is that California law requires employers to pay for arbitration costs. That`s a good thing, because arbitration is generally cheaper than civil litigation, it can still extend into the tens of thousands of dollars in some cases. Many employers require workers to sign hours of waiver of legal action for wages and classes of hours as part of the arbitration agreement. This requires an employee to have heard his action on a single basis, and the employee cannot participate in a group effort to take legal action or to mediate. The first question to be answered is whether the determination of arbitration includes insurmountable public rights (usually statutory rights, such as minimum wage, overtime and discrimination rights) or wailable private rights (such as confidentiality agreements and ownership of labour products created during employment).