Forced Into Arbitration? Two Powerful Workarounds Every California Worker Should Know

Quick answer:Most California workers have signed arbitration agreements — often on day one, buried in onboarding paperwork — sending disputes into a private, employer-friendly forum with no jury and no public record. But two major exceptions have reshaped the landscape: (1) sexual harassment and sexual assault claims can no longer be forced into arbitration under federal law, and (2) PAGA claims proceed on behalf of all affected workers even when the individual worker signed an arbitration agreement.

Why employers love arbitration
Arbitration is private, so other employees never learn what happened. There's no jury of working people — a single arbitrator, often selected from a pool that depends on employers for repeat business, decides everything. Awards tend to run lower, appeals are nearly impossible, and each worker must fight alone. For a company with a policy that shortchanges hundreds of employees, one-at-a-time confidential arbitrations are a rounding error. That's the point.

Workaround #1: Sexual harassment cases go to court (EFAA)


The federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021gives survivors the choice: no pre-dispute arbitration agreement is enforceable against a claim involving sexual harassment or sexual assault — at the plaintiff's election. The survivor decides the forum, not the company.

California courts have applied the law broadly. When a case includes a sexual harassment claim, courts have held the entire case — including related retaliation, discrimination, and wage claims arising from the same dispute — stays in court rather than being carved up between forums. The result: a public courtroom, a jury, and accountability the employer can't hide behind an NDA-lined private process.

Workaround #2: PAGA — the claim you can't be forced to give up


The Private Attorneys General Act (Labor Code § 2698 et seq.) deputizes employees to sue on behalf of the State of California for Labor Code violations affecting them and their coworkers — unpaid overtime, missed breaks, inaccurate wage statements, misclassification, and more.

Here's why it survives arbitration: a PAGA plaintiff stands in the shoes of the state, and the state never signed your arbitration agreement. Under California Supreme Court precedent, even if your individual claim is sent to arbitration, the representative claims on behalf of your coworkers proceed in court. Representative PAGA actions cannot be waived.

Under the 2024 PAGA reforms, workers now keep 35% of civil penaltiesrecovered (up from 25%), with 65% funding state enforcement — and penalties accrue per employee, per pay period.

Why collective action changes employer behavior — and single arbitrations don't


A confidential arbitration over one worker's missed breaks costs an employer little and changes nothing. A PAGA action covering every affected employee across every pay period is a different conversation entirely: it forces the company to confront the full, aggregated cost of an unlawful policy — and to fix it. Settlements routinely include policy changes precisely because the exposure is systemic, and every PAGA settlement requires court approval and notice to the state, so there's public accountability built in.

That is what arbitration was designed to prevent, and what PAGA restores: the economics of enforcement. When violations are cheap, they continue. When they're expensive at scale, policies change — for you and for everyone hired after you.

Frequently asked questions

I signed an arbitration agreement. Is it hopeless? No. Beyond the two workarounds above, arbitration agreements can be challenged as unconscionable, and employers who drag their feet paying arbitration fees can forfeit the forum entirely under California law.

I don't remember signing anything. The employer bears the burden of proving an agreement exists. "You must have signed it" isn't evidence.

Does PAGA cover me if I was called an independent contractor? Misclassified workers are among PAGA's most important beneficiaries — see our article on Labor Code § 226.8 penalties.

Buchsbaum & Haag, LLP litigates PAGA and harassment cases throughout Long Beach, Los Angeles County, and Orange County. Free consultations: 562.733.2498. This article is attorney advertising and general information, not legal advice.