What To Know Before Signing an Arbitration Agreement in California

Pasadena, United States – July 8, 2026 / D.Law /

Arbitration agreements are becoming more and more common across California’s labor market, especially after the state’s attempts to ban them were deemed preempted by the Federal Arbitration Act (FAA). When employees are given arbitration agreements, either upon accepting a new position or as part of their current employment, understanding their terms and implications is key.

Should you sign an arbitration agreement with your employer? D.Law, a California-based employment law firm, often helps clients explore their options before signing these contracts. Workers who need help maintaining employee rights during workplace investigations, reviewing employment agreements, or taking a stand against discrimination can contact the firm for assistance.

Understanding Arbitration Agreements in California

Arbitration agreements are contracts that require employees to resolve legal and workplace disputes through third-party arbitrators rather than the traditional court process. This means that workers may not have access to all the same rights and protections they would have in the civil court process.

Arbitrators are often retired judges or attorneys who hear cases and render binding decisions. The arbitrator would have control over which evidence and key information are permissible in the case, and their decisions are generally difficult to overturn on appeal. While arbitrators are neutral third parties, they often receive payment from the employer, which could lead to biased outcomes in some cases.

Arbitration agreements also typically include class action waivers, which mean an employee would waive their right to file a class action lawsuit after illegal actions affect them and a large group of their coworkers. Unlike a civil lawsuit, arbitration does not produce a public record and is generally easier to keep private, which is often beneficial to employers.

Should You Sign an Arbitration Agreement With Your Employer in California?

When deciding whether to sign an arbitration agreement, it’s important to know that such contracts are often viewed as more favorable to employers than employees. However, a person can generally be legally fired or passed over for employment if they choose not to sign an arbitration agreement, which means workers often sign them out of obligation.

There are a few times in which signing an arbitration agreement may make sense for workers:

The worker wants to keep the dispute resolution process private.
The employer has agreed to cover all arbitration costs, thereby minimizing the employee’s legal expenses.
The agreement includes an “opt-out” window, during which time the worker could review it more closely and decide whether to back out of signing it.

The attorneys at D.Law recommend that California workers have an employment lawyer review this agreement before signing it. This ensures the worker fully understands the terms and can make an informed decision about signing.

About D.Law

D.Law is an employment law firm that represents workers across California through claims involving employment discrimination, harassment, wage disputes, wrongful termination, and more. The firm can help clients understand whether they should sign an arbitration agreement with their employers and uphold their rights as California workers.

Those interested in a legal consultation can contact D.Law at 818-275-5799.