Arbitration Agreements: FAA by Choice
Belief: if the work happened entirely in California, the employer can’t rely on the Federal Arbitration Act unless it proves interstate commerce.
That belief drives bad drafting and bad motion practice. A recent California appellate decision reinforces a practical reality: if the parties’ arbitration agreement clearly states that the FAA governs, courts may apply the FAA based on the contract choice—without forcing the employer to litigate a separate ‘interstate commerce’ mini-trial about the employee’s day-to-day work.
This matters because arbitration disputes often become a fight about the forum before anyone argues the merits. When the agreement is unclear about governing law, the motion becomes slower, more expensive, and more vulnerable to procedural attacks. Clear drafting narrows the fight.
Another recurring issue is class claims. When an agreement expressly prohibits class, collective, or representative proceedings, courts may dismiss those claims while compelling the individual claims to arbitration. That changes leverage. It also changes how quickly a dispute resolves.
The operational failure mode is copying a template and assuming it will hold. Employers often have onboarding packets that were assembled across years, vendors, and prior counsel. The arbitration language may not clearly state the governing law, may not clearly address the scope of claims, and may not clearly address what happens to class claims. Then the first time the agreement is tested is in litigation, under pressure, with a record that was never designed to be defended.
A defensible arbitration program is boring: clear governing-law language, clear scope, clean signature and acknowledgement proof, and a workflow that matches what the contract says. That is what reduces the ‘forum fight’ and keeps the dispute focused on the underlying facts.
This post shares general information based on common patterns I see in California workplaces. It is not legal advice, does not create an attorney-client relationship, and outcomes depend on specific facts — no lawyer can guarantee a result. Past results do not guarantee or predict future outcomes. AI may have been used to create this post. All content reviewed by a CA attorney before publication. This post may be attorney advertising.
Michael Trust Law, APC, 703 Pier Avenue, Ste. B367, Hermosa Beach, CA 90254: michaeltrustlaw.com