Waiving Arbitration Goodbye: When Does an Employer Waive the Right to Compel Arbitration, and Who Decides?

By Joel M. Grossman

Joel M. Grossman is a mediator and arbitrator with JAMS in Los Angeles. He has been selected four times as one of the Top Neutrals in California by the Daily Journal. For more information please contact www.grossmanmediation.com.

Many current or former employees who are subject to an arbitration agreement nevertheless initially file a lawsuit against their current or former employer in court. Should the employer wish to exercise its right to arbitrate the dispute, it is then up to the employer to file a motion to compel arbitration. If the arbitration agreement is deemed by the court to be enforceable, the court will probably grant the motion.

What happens, however, if the employer delays invoking the arbitration agreement? What if the employer sends the court complaint over to its outside counsel, who doesn’t know about the arbitration clause and thus begins to defend the action in court? Then suppose that the employer remembers to tell outside counsel about the arbitration clause. At what point is it too late, that is, at what point has the employer waived its right to enforce the arbitration agreement and try the case before an arbitrator instead of in court? The short answer is that at almost any point—even after years of court litigation—absent a showing of prejudice, the employer is not deemed to have waived the right to compel arbitration, and the motion to compel will likely be granted.