In this guide11 sections
Signing a mandatory arbitration clause usually means agreeing to bring workplace claims before a private arbitrator instead of a judge and jury, and often giving up the right to join a class action. It does not mean signing away your rights under California employment law. In California, an arbitration agreement must still let you win the same remedies you could get in court, and courts can refuse to enforce clauses that are unfairly one-sided.
Key takeaways
- Most California employers can still require arbitration as a condition of employment. A state law that tried to ban this was blocked in court for agreements covered by the Federal Arbitration Act.
- You typically give up a jury trial, a public courtroom, broad appeal rights and, often, class actions.
- You keep your substantive rights: a neutral arbitrator, adequate discovery, the same remedies as in court, and no arbitration-only costs for statutory claims.
- Unfair terms, such as shortened deadlines or tight discovery caps, can make a clause unenforceable.
- Sexual harassment and sexual assault claims can go to court even if you signed (9 U.S.C. §402).
Can your employer make you sign?
In most cases, yes. In 2019 California passed a law, Labor Code §432.6 (known as AB 51), that tried to stop employers from requiring arbitration as a condition of employment. A federal appeals court held in 2023 that the Federal Arbitration Act (FAA) overrides that law, and in January 2024 a federal court permanently blocked it for agreements covered by the FAA, which includes most private-sector jobs. As a result, an employer can generally decline to hire you, or condition continued employment on signing, if you refuse.
Some agreements include an opt-out window, such as 30 days to mail a form saying you don’t agree. If yours does, the deadline matters, so read the agreement as soon as you get it.
What you give up when you sign
- A jury. One arbitrator, usually a retired judge or lawyer, decides your case.
- A public forum. Hearings are private, and awards usually aren’t published.
- Most appeal rights. A court can vacate an award only on narrow grounds such as fraud, corruption, arbitrator misconduct or the arbitrator exceeding their powers (Code Civ. Proc. §1286.2).
- Class actions, often. Many agreements include a class action waiver, and the U.S. Supreme Court held in 2018 that these waivers in employment arbitration agreements are generally enforceable.
- Your individual PAGA claim, in many cases. Since 2022, employers can send the individual part of a Private Attorneys General Act claim to arbitration, though the representative part on behalf of coworkers generally stays in court. See PAGA and class actions.
What you don’t give up
The California Supreme Court held in 2000 that an employer may require arbitration of unwaivable statutory claims, such as discrimination and retaliation under the Fair Employment and Housing Act, only if the agreement provides a neutral arbitrator, more than minimal discovery, a written award, all the types of relief available in court, and no unreasonable costs or arbitrator fees for the worker. In addition:
- California forum and law. If you primarily live and work in California, an employer can’t require you to arbitrate a California claim outside the state or give up the protection of California law. A clause that does is voidable by you (Labor Code §925), unless you had your own lawyer negotiate it.
- Sexual harassment and sexual assault claims. Under the federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, you can choose court for these claims even after signing. See sexual harassment.
- Agency complaints. You can still file a complaint with the California Civil Rights Department or the EEOC. The U.S. Supreme Court has held that the EEOC isn’t bound by a private arbitration agreement.
- A copy of what you signed. Labor Code §432 entitles you to a copy of any document you signed relating to getting or keeping your job, on request.
- The employer’s duty to pay on time. If the employer doesn’t pay the fees to start the arbitration within 30 days after they’re due, you may be able to take your case to court (Code Civ. Proc. §1281.97).
Red flags in an arbitration clause
| Clause | Why it matters |
|---|---|
| A shorter deadline to bring claims, such as six months or one year | Cuts off rights the law gives you; a published California appellate decision struck an agreement with a one-year limit |
| Tight caps on depositions, interrogatories or document requests | Discovery must be adequate to prove your claims; very low caps have been held unconscionable |
| You pay half the arbitrator’s fees | For statutory claims, the employer generally must pay costs unique to arbitration |
| Limits on damages or attorney’s fees | The agreement must allow the same types of relief available in court |
| Arbitration in another state or under another state’s law | Voidable for California-based employees under Labor Code §925 |
| Terms that bind only you, not the employer | One-sided terms weigh toward a finding that the agreement is unconscionable |
A court can refuse to enforce an unconscionable agreement or strike the unfair terms (Civil Code §1670.5). Courts look at both how the agreement was presented, such as a take-it-or-leave-it onboarding packet, and how one-sided its terms are. In one 2025 case, a court refused to enforce an agreement HR misdescribed during a rushed onboarding.
A hypothetical example
On her first day, Jenna is handed a tablet with 25 onboarding documents and told to sign quickly so she can start training. One is a five-page arbitration agreement that requires her to file any claim within six months and limits her to two depositions. Jenna signs. A year later she is fired after reporting harassment. Even though she signed, her lawyer may argue the agreement is unconscionable because of how it was presented and its shortened deadline and discovery limits, and her sexual harassment claims can go to court under federal law if she chooses.
Before you sign
- Ask for time and a copy. Take the agreement home if you can, and keep a copy of everything you sign.
- Look for an opt-out. If there is one, follow its instructions exactly and keep proof you sent it.
- Read the key terms. Check which claims are covered, who pays, any deadlines, discovery limits, class waivers and where the arbitration happens.
- Get answers in writing. Don’t rely on a quick verbal summary from HR. If what you were told doesn’t match the document, save the message.
- Consider a lawyer’s review for a senior role or an unusual agreement.
If you already signed
Signing isn’t the end of the analysis. A lawyer can check whether the agreement is enforceable, whether your claims fall within it, whether your employer paid fees on time, and whether a carve-out like the sexual harassment rule applies. Learn more in what employment arbitration is and how it affects your rights.
What’s changing in 2027
A new California law, AB 2155, takes effect January 1, 2027. According to legal summaries of the bill, it brings federal arbitration exclusions, including those for transportation workers and sexual harassment and assault claims, into California’s own arbitration statute. It is not a general ban on mandatory arbitration. See where forced arbitration law stands in California.
Frequently asked questions
Can I be fired for refusing to sign an arbitration agreement?
For most private-sector jobs, yes, because the California law that tried to ban mandatory arbitration was blocked for agreements covered by the Federal Arbitration Act. Ask whether there’s an opt-out window.
Does an arbitration clause stop me from filing with the CRD or EEOC?
Generally no. You can still file an agency complaint, and you still need a CRD right-to-sue notice before filing FEHA claims in court.
Is a clause in the employee handbook binding?
It depends on the wording and on whether you actually agreed to it. Handbook language that says it isn’t a contract, or that the employer can change at will, can raise questions about enforceability.
Do I have to arbitrate a sexual harassment claim?
No. Under federal law you can choose to bring sexual harassment or sexual assault claims in court, even if you signed a pre-dispute arbitration agreement.
Can I still get a lawyer if my case goes to arbitration?
Yes. You have the right to be represented, and employers almost always bring lawyers to arbitration.
Talk to a California employment lawyer
Employees First Labor Law represents workers exclusively, in court and in arbitration. We offer free virtual consultations to review an arbitration agreement and your claims. Contact us online or call (310) 853-3461.
This article is general information about California law as of 2026, not legal advice for your situation. Reading it does not create an attorney-client relationship.
