Employees Beware: Arbitration Agreements Can Sometimes be Applied Retroactively

Increasingly, employers are asking employees to sign arbitration agreements.  If the arbitration agreement is valid and enforceable, the employee generally waives the right to sue the employer in court and have the case tried before a jury of his or her peers.  Employers typically favor arbitration for a variety of reasons, including privacy, control over arbitrator selection, limited rights to appeal, and the ability to have employees waive the right to bring class action lawsuits.

What happens if an employee has claims against an employer, files a lawsuit and then signs an arbitration agreement?  Can that employee still be compelled to arbitrate his or her claims?  The Court of Appeal for the Fourth Appellate District recently addressed this issue in Franco v. Greystone Ridge Condominium, et al.  The Court of Appeal held that an arbitration agreement that is signed after the employee initiates his lawsuit does not preclude compelling those claims to arbitration.  (Franco v. Greystone Ridge Condominium, et al., No. G056559, filed Aug. 14, 2019, certified for publication on Aug. 27, 2019).

Plaintiff Victor M. Quiroz Franco started working for Greystone in 2000.  In 2018, Greystone gave its employees, including Mr. Franco, an arbitration agreement.  This agreement contained language that related to all aspects of the employees’ employment with Greystone from pre-hire to post-termination.  Mr. Franco consulted with an attorney after receiving the arbitration agreement about employment-related claims that he had against Greystone.  Shortly thereafter, Mr. Franco filed a complaint against Greystone in court alleging discrimination and wage and hour violations.  Two days after the lawsuit was filed, Mr. Franco signed the arbitration agreement and gave it to his employer.  Greystone filed a motion to compel arbitration.

Mr. Franco argued that Greystone’s motion should be denied because the arbitration agreement did not expressly include the claims he filed in court.  The trial court agreed, finding that the arbitration agreement could not be applied retroactively and that Mr. Franco could not be compelled to arbitrate his claims.

The Court of Appeal reversed.  It considered that the arbitration agreement referred to claims that were related to pre-hire issues.  The Court also reasoned that the agreement was “clear, explicit and unequivocal with regard to the claims subject to it and contain[ed] no qualifying language limiting its applicability to claims that had yet to accrue.”  Thus, the arbitration agreement applied to claims that existed before Mr. Franco signed it.

If you are an employee and feel that your employer has discriminated against or harassed you, retaliated against you, or failed to properly pay you, please feel free to call Hunter Pyle Law for a free consultation at (510)-444-4400 or inquire@hunterpylelaw.com.