Employers cannot change arbitration agreement after complaint made by employee.

In a recent case, the California Appellate Court ruled that an arbitation agreement between an employer and employee cannot be modified after the employer believes the employer may file a lawsuit, even if the arbitration agreement expressly allows the employer to modify the arbitration agreement. The Court held that allowing the employer to make changes to its arbitration agreement after the employer learns of a complaint by its employee makes the agreement illusory, and thus unenforceable. As the Court stated, ..."Were it otherwise, the employer could amend the contract in anticipation of a specific claim, altering the arbitration process to the employee‘s detriment and making it more likely the employer would prevail." See Amir Peleg v Neiman Marcus Group, Inc.

(by Attorney Angelo F. Campano at acampano@campanolaw.com)