Any Requirement that Employers Attach the Applicable Rules to Arbitration Agreements Will Be Unworkable
Some of the more recent cases to strike down workplace arbitration agreements complained that the agreements didn't include a copy of the applicable arbitration provider’s rules. One of these, Wisdom v. AccentCare Inc. (pdf), is awaiting review by the California Supreme Court. Another, Mayers v. Volt Management Corp. (pdf), is the subject of a pending petition for review. While we wait to see whether employers in California will be required to attach a copy of the arbitration provider’s rules to every arbitration agreement, let me explain why any such requirement is unreasonable and unworkable.
As a practical matter, requiring that the arbitration rules be attached to an agreement prevents the parties from agreeing in advance to use the rules in effect at the time the dispute arises (since future versions obviously can’t be attached). This is important because California and federal laws defining the requirements for an enforceable arbitration provision in the employment context have undergone continuous evolution.
Like other arbitration providers, the American Arbitration Association has modified its rules repeatedly in response to changes in the law. As one example, before 1997, the AAA rules did not say how the arbitrator’s fees were to be borne between the parties. In 2000, the California Supreme Court in Armendariz held that the employer must bear most of the fees. In response, AAA revised its rules to limit the employee’s contribution to $175. Any agreement attaching the AAA rules from before that change would have been rendered unenforceable once the state supreme court decided Armendariz.
That’s just one example. More recently, AAA issued new employment arbitration rules in 2006, in June 2009, November 2009, and in 2010. Insisting that the parties agree to use the AAA rules in effect when the agreement is executed puts the employer in the impossible position of having to either anticipate future legal developments or face the likelihood that the rules in effect when the agreement is signed (frequently near the time of hire) will be rendered invalid by later changes in the law.
I’m not talking about the situation in some older cases where the rules referenced were blatantly one-sided and all but inaccessible. This is 2012. We have the internet. Use of a reputable arbitration provider and a link to its rules on its website adequately protects employee rights. Any contrary holding demonstrates that state courts are merely paying lip service to the principle that arbitration agreements stand on an equal footing with other contracts.