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California employers: Should you consider arbitration agreements?

When employers and employees are at odds, it can be nearly impossible for the two sides to come to any type of resolution on their own. Under these circumstances, the case may need to be resolved by a third party. In situations involving allegations of employee rights violations, that third party will be the courts.

However, even that can be a source of friction when the two sides disagree on the method of resolution, whether that is arbitration or litigation. For instance, recently, a man who has accused his former employer of wrongful termination tried to circumvent the company's arbitration agreement by filing a lawsuit.

According to this report by Bloomberg, the dispute centers on a man's allegations that his former employer, the owners of the popular social media app Snapchat, fired him unlawfully. He says that he was fired for refusing to misrepresent information the company presented to investors.

While Snapchat denies the allegations, it also argues that the man's lawsuit violates the arbitration agreement it had with the man. 

Arbitration agreements are legal documents that specify rules for how disputes between the employer and employee will be resolved. More specifically, they limit dispute resolution efforts to arbitration, as opposed to litigation.

By filing his lawsuit, the man would be violating this agreement, argues Snapchat. The company has requested that the lawsuit be dismissed.

Employers across California may benefit from arbitration agreements. By requiring disputes to go through arbitration and not litigation, companies can protect themselves from a public dispute, which can be damaging to their image and reputation even if the allegations are false. They can also result in faster, less expensive resolutions.

While arbitration certainly has its benefits, there are situations in which litigation is preferable or simply unavoidable. Therefore, it is best to be prepared for both scenarios. Any business owner who has questions about arbitration agreements or litigation procedures will want to consult an experienced employment law attorney.

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