Many California employees wonder whether they can challenge an arbitration agreement in California after they’ve signed it. Employers often require workers to sign these agreements when they start a job (or even months later) stating that any disputes must go to private arbitration instead of court. Arbitration often puts employees at a disadvantage: it happens behind closed doors, without a jury, with limited discovery, and with rules that favor speed over fairness. That’s why it’s so important to understand when and how these agreements can be challenged.
I’m Matt Ruggles. I’ve practiced employment law in California for decades and have seen every kind of arbitration agreement imaginable. Some are fair, but many are written to protect only the employer. I’ve represented countless employees who were told, “You can’t sue, we have an arbitration agreement.” In reality, that isn’t always true.
Sometimes arbitration agreements are valid and enforceable. Other times they cross the line and become one-sided or coercive. When that happens, California courts will throw them out.
A recent California Court of Appeal decision, Gurganus v. IGS Solutions LLC, confirmed that employees can challenge an arbitration agreement even after signing it. This case is a good example of when arbitration becomes unfair and how California law protects employees from being silenced.
In this blog, I’ll explain:
- What arbitration agreements are supposed to do
- When they can be challenged
- What the Gurganus case decided
- What it means for California employees who have signed one
If you believe your employer is using arbitration to silence you, call the Ruggles Law Firm at 916-758-8058.
What Is an Arbitration Agreement in California and Why Do Employers Use It?
An arbitration agreement is a contract between you and your employer that says if there’s a dispute about your job, such as discrimination, unpaid wages, retaliation, or wrongful termination, you will not take the case to court. Instead, it will be decided in a private process called arbitration.
Arbitration is supposed to be faster and less formal than court. In theory, it allows both sides to resolve disputes efficiently, without the cost and delay of a full lawsuit. The process is handled by a private arbitrator, often a retired judge or attorney, instead of a jury.
That is the idea on paper. But in practice, many arbitration agreements are drafted to protect the company, not the employee. Employers often control who the arbitrator is, what rules apply, and how much information you can gather before the hearing. Some agreements even include confidentiality clauses that prevent you from talking about your case at all.
That is why these agreements end up in court so often. Judges look closely at whether the arbitration process is actually fair or whether it was designed to silence employees and protect the employer from accountability.
If you want to understand how forced arbitration affects workers who experience misconduct at work, read my blog: Forced Arbitration and Sexual Harassment: California Employee Rights.
Can I Refuse to Sign an Arbitration Agreement in California?
You can refuse to sign an arbitration agreement, but it is important to understand what that decision might mean.
In California, most private employers can choose to make arbitration a condition of employment. If they do, refusing to sign could lead to the employer withdrawing a job offer or ending the hiring process. The law allows that, as long as the agreement itself is legal and fairly written.
However, if the employer pressures you to sign after you have already started working, that is different. At that point, the company is trying to change the terms of your employment, and you have more protection. Courts look closely at whether the agreement was presented fairly, whether you had a chance to review it, and whether the company gave you any real choice.
Even if you did sign, the document might not hold up if it was forced on you or written to favor only the employer. Agreements that hide key terms, threaten your job, or take away important legal rights can be ruled invalid.
The safest approach is to read before you sign, ask questions, and keep a copy. If you feel you were pressured or misled, an employment lawyer can review the agreement and tell you whether it can be challenged.
If you’ve recently been terminated and handed a severance agreement, you may have more leverage than you think. Before signing anything, read my blog, How to Maximize Your Severance Offer in California.
How to Challenge an Arbitration Agreement in California After You’ve Signed It
There are several situations where an arbitration agreement can be challenged, even after you have signed it. California courts do not automatically enforce these contracts. Instead, they look at how the agreement was presented and whether it treats both sides fairly.
Here are the most common scenarios where employees succeed in challenging them:
Scenario #1: What Happens If You’re Pressured to Sign an Arbitration Agreement
If you were told you had to sign to keep your job, or you were not given time to review the document, the agreement may be procedurally unconscionable. Courts recognize that employees rarely have real bargaining power when an employer says, “sign this or you are done.”
Scenario #2: When Arbitration Agreements Are One-Sided and Unfair to Employees
An arbitration agreement must be fair to both sides. If it requires only the employee to use arbitration but lets the employer take its own claims to court, it is substantively unconscionable and can be thrown out.
Scenario #3: Arbitration Agreements That Take Away Your Legal Rights in California
Agreements that take away rights protected by California law, such as the right to recover attorney’s fees, seek punitive damages, or use discovery to collect evidence, are invalid. Employers cannot use arbitration to strip away statutory rights under the Fair Employment and Housing Act (FEHA) or the Labor Code.
To understand in more detail how the FEHA protects California employees from discrimination, retaliation, and harassment, read my blog, FEHA: How It Protects California Employees.
Scenario #4: Arbitration Clauses That Silence California Employees
Some arbitration agreements include confidentiality or nondisclosure clauses that stop you from talking about your case or even speaking with witnesses. Courts have ruled that these provisions interfere with an employee’s ability to prove their claims and violate public policy.
Scenario #5: Hidden Arbitration Agreements and How California Courts View Them
If the arbitration agreement was buried in a stack of new-hire forms, mislabeled as something else, or presented online without clear notice, it can be invalid. Employers must make sure employees understand what they are signing and that arbitration means giving up the right to a public jury trial.
Scenario #6: Arbitration Agreements Introduced After You Begin Work
If the employer suddenly introduces an arbitration policy months after you began work, as happened in Gurganus v. IGS Solutions LLC, the court may view it as coercive. Once you are already employed, your continued work cannot automatically be treated as “agreement” to new terms.
When these conditions exist, California courts often find that the arbitration agreement is unenforceable.
If you’re looking for another way to get out of arbitration when your employer isn’t playing fair, read my blog: Employers’ Failure to Pay Arbitration Fees Can Let Employees Take Their Case to Court.
California Case Example: Gurganus v. IGS Solutions LLC (2025)
A recent California Court of Appeal decision, Gurganus v. IGS Solutions LLC (2025), gives employees a clear example of how and when an arbitration agreement can be challenged. The ruling came from the First District Court of Appeal, and it reaffirmed that employers cannot use unfair or one-sided arbitration clauses to block employees from having their day in court.
What the Court Decided and Why It Matters to California Employees
Sarah Gurganus began working for IGS Solutions and, several months into her job, the company asked her to sign new forms online. Hidden in the digital paperwork were an arbitration agreement, a “voluntary dispute resolution policy,” and a confidentiality and nondisclosure agreement.
When Gurganus later filed a lawsuit for disability discrimination and retaliation under the Fair Employment and Housing Act (FEHA) and the California Family Rights Act (CFRA), IGS tried to force her into private arbitration. The court refused.
The Court of Appeal found that the agreements were both procedurally and substantively unconscionable i.e. unfair in how they were presented and in what they required. Here is what the court said:
- Not truly voluntary: Even though the agreement said she could opt out, she had already been working there and needed her job. The “choice” to sign was not real.
- One-sided terms: The agreement required employees to arbitrate all claims but allowed the company to go to court for its own disputes.
- Gag rule: The confidentiality clause stopped employees from speaking with witnesses or sharing information about their case, which made it harder to prove wrongdoing.
- Too unfair to fix: Because the agreement had multiple unfair provisions, the court refused to enforce any part of it.
The decision allowed Gurganus to keep her case in court and proceed under California’s anti-discrimination laws.
If your employer is using an arbitration agreement to shut you down, call me at the Ruggles Law Firm at 916-758-8058. I’m available.
Key Takeaways: Challenging Arbitration Agreements in California
The Gurganus ruling reinforces several important principles that protect California employees:
- “Voluntary” does not always mean voluntary. Courts will look at whether an employee really had a choice when signing.
- Agreements must be mutual. If an arbitration clause only benefits the company, it likely violates California law.
- Confidentiality clauses can go too far. Employers cannot use privacy rules to silence employees or block evidence.
- Courts can strike down the whole agreement. Judges are not required to rewrite a bad contract. They can void it entirely if it is unfair in multiple ways.
- Timing matters. Agreements introduced after employment begins are often viewed as coercive.
What the Gurganus Decision Means for Employees Who Signed Arbitration Agreements in California
If you have signed an arbitration agreement, this case shows that it may still be challenged. California courts will not enforce contracts that are forced, one-sided, or designed to limit your legal rights.
Employees who have experienced discrimination, retaliation, unpaid wages, or wrongful termination should not assume they are stuck in arbitration. You may still have the right to file a lawsuit in court.
Before you give up or sign away your rights, have an employment lawyer review your agreement. A lawyer can determine whether the document is fair, enforceable, or something that can be challenged, just as Sarah Gurganus successfully did.
FAQs About Challenging Arbitration Agreements in California
Can I Challenge an Arbitration Agreement in California After I Signed It?
Yes. You can challenge an arbitration agreement in California even after signing it if the agreement is unfair, one-sided, or forced on you without a real choice. Courts often strike down agreements that limit employee rights under the Fair Employment and Housing Act (FEHA) or the Labor Code. The recent Gurganus v. IGS Solutions LLC case is a good example of how employees can win these challenges.
Are Arbitration Agreements Always Enforceable Under California Law?
No. While some arbitration agreements are enforceable, many are not. California courts will refuse to enforce an arbitration agreement that violates public policy, hides important terms, or takes away rights guaranteed by law. If the agreement favors only the employer or was presented under pressure, it may be invalid.
How can I get out of an arbitration agreement with my employer in California?
You can get out of an arbitration agreement if you prove it was unconscionable or obtained unfairly. That can include being told you had to sign it to keep your job, not being given time to review it, or discovering the employer can still sue in court while you cannot. A lawyer can evaluate your document and help you file a motion to challenge the arbitration clause.
What Makes an Arbitration Agreement Unenforceable in California?
An arbitration agreement may be unenforceable if it:
- Requires only employees to arbitrate disputes
- Limits your ability to collect evidence or recover damages
- Prevents you from talking to witnesses
- Was hidden in onboarding paperwork or misrepresented
Courts look at whether the process was procedurally unfair and whether the terms were substantively one-sided.
Can My Employer Fire Me for Refusing to Sign an Arbitration Agreement in California?
An employer can make signing an arbitration agreement a condition of new employment, but they cannot retaliate against you for asking questions or wanting to review it. If you are already employed, forcing you to sign after the fact may not be legal. In those cases, you can often challenge the arbitration agreement later.
What Should I Do If My Arbitration Agreement Is Illegal or Unfair in California?
If you believe your arbitration agreement is illegal or unfair, do not assume you are stuck. Save a copy of the agreement and contact an employment lawyer who understands California arbitration law. An attorney can review the contract and tell you whether you can challenge the arbitration clause or take your case to court instead.
Final Thoughts on Arbitration Agreements in California
Arbitration agreements are not automatically unfair, but many are written to protect employers, not employees. California law steps in when those agreements cross the line, when they silence workers, limit legal rights, or create an uneven playing field.
If you signed an arbitration agreement, do not assume it can’t be challenged. Courts look at how it was presented, what it says, and whether it takes away protections guaranteed by law.
If you believe your agreement is being used to block your rights, call me at the Ruggles Law Firm at 916-758-8058. I’m available to review your situation and help you understand where you stand.
Contact the Ruggles Law Firm at 916-758-8058 to Evaluate Your Potential Lawsuit
Matt Ruggles has a thorough understanding of California employment laws and decades of practical experience litigating employment law claims in California state and federal courts. Using all of his knowledge and experience, Matt and his team can quickly evaluate your potential claim and give you realistic advice on what you can expect if you sue your former employer.
Contact the Ruggles Law Firm at 916-758-8058 for a free, no-obligation evaluation.
Blog posts are not legal advice and are for information purposes only. Contact the Ruggles Law Firm for consideration of your individual circumstances.
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