Weekly Law Resume - July 21, 2011: Employer's Arbitration Agreement is Unenforceable Where it is Both Procedurally and Substantively Unconscionable

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Sharon Elizabeth Zullo v. The Superior Court of Santa Clara County Court of Appeal, Sixth District (July 12, 2011)

Employers have the right to require employees to sign arbitration agreements as a condition of employment. Courts, however, have placed certain restrictions on those agreements, without which the agreements may be unenforceable. In this case, the court found that the arbitration agreement was unenforceable.

In 2004, Inland Valley Publishing Co. ("Inland"), the publisher of a weekly newspaper, hired Sharon Zullo. She sued Inland for wrongful termination in violation of California's Fair Employment and Housing Act ("FEHA"), alleging that her supervisor discriminated against her based on her race and national origin, and that her termination occurred after complaining about the treatment. Inland petitioned to compel arbitration based on an arbitration policy in its Employee Handbook. The policy stated that disputes arising out of employee termination, or claims for discrimination, must be submitted to binding arbitration. Ms. Zullo argued that the arbitration agreement was unconscionable and, therefore, unenforceable. However, the trial court granted the motion to compel arbitration.

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