Contributors

Ryan D. Evans

Principal

For California’s complex employment litigators, 2025’s arbitration rulings have introduced new fault lines in the enforceability landscape—particularly where statutory rights, procedural fairness, and mutuality collide.

If you handle employment disputes in California, 2025 has been a wake-up call. In three recent appellate decisions—Sanchez v. Superior Court, Ramirez v. Charter Communications, and Vo v. Technology Credit Union—the courts have set clearer (and stricter) expectations for what makes an arbitration agreement fair and enforceable. The message is clear: if an arbitration clause is one-sided, confusing, or overly harsh, California courts are increasingly unwilling to enforce it.

Language and cost barriers

Sanchez v. Superior Court illustrates the importance of language accessibility and cost equity in arbitration agreements. The plaintiff, a Spanish-speaking laborer, was required to sign an English-only arbitration agreement that also obligated him to pay substantial arbitration fees. The court found procedural unconscionability due to the language barrier and lack of negotiation, and substantive unconscionability due to the disproportionate financial burden. The court emphasized that Sanchez was illiterate in English, and found the agreement substantively unconscionable because he could not afford the $2,000 filing fee for arbitration with JAMS, and additional arbitration costs would be in the ballpark of $25,000 to $30,000.

The opinion also emphasized that the agreement was presented on a take-it-or-leave-it basis, a hallmark of procedural unconscionability. The court criticized the employer for failing to provide any Spanish-language translation or explanation of the agreement's legal implications, especially given that arbitration would waive the employee's right to a jury trial.

When severance isn’t enough

Ramirez v. Charter Communications

Ramirez v. Charter Communications demonstrates that severance clauses are not a cure-all for flawed agreements. The plaintiff, Ramirez, brought FEHA claims against Charter alleging harassment, discrimination, and retaliation. Charter moved to compel arbitration under an agreement Ramirez had electronically acknowledged during onboarding. The agreement included several provisions the court later deemed unconscionable: a shortened one-year statute of limitations, a broad waiver of representative claims, a fee-shifting clause, and a lack of mutuality in the scope of covered claims.

The court emphasized that the presence of these four unconscionable provisions went to the heart of the agreement. It explained that while Civil Code §1670.5(a) permits courts to sever unlawful provisions, severance is inappropriate when those terms are so integral that they infect the entire agreement. The opinion observed that the employer retained broader access to the courts than the employee, which contributed to the one-sidedness. The appellate court ultimately agreed with the trial court's decision that severance was not an appropriate remedy, and enforcement of the arbitration agreement should be denied.

This case also serves as a cautionary tale about overloading agreements with employer-friendly terms under the assumption that courts will simply sever the offending provisions. In Ramirez, the cumulative impact of the one-sided clauses was sufficient to render the entire agreement unenforceable.

Discovery access and fairness

Vo v. Technology Credit Union

Vo v. Technology Credit Union offers a counterpoint, affirming arbitration where procedural fairness and discovery access were adequately addressed. The agreement incorporated JAMS rules, which allow arbitrators discretion to grant additional discovery, including third-party discovery. The court emphasized that an agreement need not match the full scope of litigation discovery but must permit discovery sufficient to vindicate statutory rights. The court noted that the arbitration rule incorporated into the agreement provided the arbitrator with authority to make available additional nonparty discovery if necessary to allow fair arbitration of statutory claims.

In this case, the plaintiff had argued that he could not properly arbitrate his claims without the ability to depose multiple former coworkers. The court found that the JAMS rules, including Rule 17(e), provided a mechanism by which arbitrators could authorize third-party discovery if necessary — though enforcement of such discovery may require judicial involvement. The court disapproved of earlier, more restrictive and arcane interpretations—such as Aixtron, Inc. v. Veeco Instruments Inc., 52 Cal.App.5th 360 (2020)—that had narrowed the scope of permissible non-party discovery in arbitration, citing its holding in Vo v. Technology Credit Union.

The court reiterated that, consistent with California law, ambiguous arbitration provisions should be interpreted to support enforceability—particularly when institutional rules delegate discovery authority to the arbitrator. Referencing Ramirez, the court reiterated the principle that agreements should be interpreted to allow for a fair process, provided arbitrators have the authority to expand discovery if needed. The California Supreme Court in Ramirez had recently emphasized this point, stating that the unconscionability inquiry must look to the agreement’s potential at the time of formation, not after-the-fact disputes over specific requests or refusals.

The broader implications for arbitration drafting

Collectively, these decisions underscore a heightened emphasis on fairness, transparency, and mutuality in arbitration agreements. They suggest that courts will continue to demand that arbitration be a genuinely fair alternative to litigation—not merely a procedural shield for employers. In the wake of these rulings, the standard arbitration clause that may have passed muster a few years ago now requires meaningful review.

Key takeaways include the need to translate agreements when appropriate, reference well-established arbitration rules such as those from JAMS or AAA, ensure cost structures do not discourage access to arbitration, and eliminate one-sided carve-outs favoring employers. Courts are also more carefully assessing discovery provisions and ensuring employees have the tools necessary to pursue statutory claims like those under FEHA.

Employers and litigators are advised to avoid reliance on severance clauses as a fallback for problematic terms. Instead, arbitration agreements should be carefully crafted to reflect procedural and substantive equity from the outset. Transparency, accessibility, and genuine mutuality must be at the core of any enforceable arbitration contract.

Practical checklist for compliance

To help apply these lessons in practice, here is a non-exhaustive checklist for reviewing or drafting employment arbitration agreements in California:

• Is the agreement presented in a language the employee understands?
• Are all covered claims clearly and symmetrically described for both parties?
• Are arbitration-related costs fully or primarily borne by the employer?
• Are reputable rules (e.g., JAMS or AAA) explicitly incorporated, and is the relevant version made available at the time of signing?
• Does the agreement allow for discovery sufficient to vindicate FEHA and other statutory claims?
• Are any provisions granting exclusive employer remedies or shortened timelines eliminated?

Conclusion

Courts in California remain supportive of arbitration as a dispute resolution tool but are scrutinizing the use of esoteric provisions that obscure fairness or limit employee rights. The 2025 rulings serve as a strong reminder that arbitration must not only be efficient but also equitable. For legal teams, this is an opportune moment to reassess existing arbitration templates and ensure compliance with emerging judicial standards.

For assistance in reviewing or revising your arbitration agreements in light of these developments, or for CLE presentations and firm trainings, please contact our team.