Employment Agreements Can Limit Time for Action
By law, an employee has one year to file an action with the Department of Fair Employment and Housing (DFEH) if he is claiming discrimination. But what if an employment agreement contains an arbitration provision, and that agreement also provides that the notice of arbitration must be served within one year? Is that provision invalid since it could interfere with State law?
That was the issue presented in Pearson Dental Supplies, Inc. v Superior Court (Turcios). Plaintiff signed an arbitration agreement, but when he felt he was the victim of age discrimination, he filed a complaint with the DFEH. After the DFEH closed the file and issued the "right-to-sue letter," the plaintiff filed an action in Superior Court. Defendant employer argued that the case was barred by the arbitration provision, and since plaintiff had failed to make the arbitration claim within one year, he had waived any right to sue.
The Court of Appeal agreed, and ruled that under these specific facts the employee's age discrimination claim was barred for failing to make a demand for arbitration.
Moral of the story? If your company has decided to utilize arbitration agreements, be sure to insert a deadline for filing such claims. Your company is best served by speed in employment claims, as opposed to trying to justify an employment decision years later. An employee has a year to file a claim with the DFEH, which typically takes nine months to investigate the claim and issue a right-to-sue letter (if the employee has not retained counsel and asked for the right-to-sue letter to be fast tracked). Then, the employee has another year to file the action in court. All told, almost three years can pass before the action is filed in court. By inserting a time limitation in your arbitration agreement, you can be assured such cases will present themselves for decision within one year.
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