I Signed an Arbitration Agreement — Can I Still Sue for Wrongful Termination in California?

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Last updated: July 2026 — Reflects Chamber of Commerce v. Bonta (9th Cir. 2023), Adolph v. Uber Technologies (Cal. 2023), Labor Code § 1102.5, and California Civil Rights Department enforcement guidance in effect as of January 1, 2026. 1000Attorneys.com is a California State Bar Certified Lawyer Referral Service (LRIS #0128), American Bar Association Authorized Program, and LawHelpCA Verified Resource.

The short answer is yes — with important qualifications that most employees who signed arbitration agreements do not know. An arbitration agreement changes the venue for resolving your claim.

It does not eliminate the claim itself, and it does not strip California's substantive wrongful termination law of its force. The analysis of what you can still pursue, what you cannot, and what California law specifically carves out of arbitration entirely is worth understanding before you decide whether to act.

What an Arbitration Agreement Actually Does

An arbitration agreement requires you to resolve covered disputes with your employer before a private arbitrator rather than a judge and jury in Superior Court.

When enforceable, the agreement substitutes one forum for another — the arbitrator applies the same California statutes, the same FEHA protections, and the same damages framework as a Superior Court judge would. Your substantive rights are not waived; the procedural vehicle changes.

The practical differences between arbitration and court are significant: arbitration is typically faster, more private, and conducted without a jury.

The absence of a jury is the most consequential difference for wrongful termination plaintiffs — juries in California have historically awarded more substantial damages in employment cases than arbitrators, and punitive damages tend to be more substantial in jury trials.

These procedural differences explain why employers favor arbitration, why California has repeatedly tried to restrict it, and why understanding the current legal landscape is essential before concluding what your options are.

What California Law Tried to Do — And What Actually Happened

California enacted Assembly Bill 51 in 2019, codified as Labor Code § 432.6, which attempted to prohibit employers from requiring employees to sign mandatory arbitration agreements as a condition of employment.

The statute made it a misdemeanor for an employer to do so. Within days of its January 2020 effective date, a federal court issued an injunction blocking the law.

After years of litigation and an initial Ninth Circuit ruling in California's favor, the Ninth Circuit reversed itself on February 15, 2023 in Chamber of Commerce v. Bonta, 62 F.4th 473, holding that the Federal Arbitration Act (FAA) preempts AB 51 entirely as applied to arbitration agreements covered by the FAA.

A permanent injunction was entered in January 2024 after California stipulated to it. The current legal reality: employers in California can require employees to sign mandatory arbitration agreements as a condition of employment without criminal or civil penalty. AB 51 is unenforceable against FAA-covered agreements.

This is the legal landscape your arbitration agreement exists within. The employer was permitted to require your signature, and the agreement is presumptively enforceable.

What an Arbitration Agreement Cannot Take Away

Despite the FAA's preemption of AB 51, California law preserves four specific avenues that arbitration agreements cannot extinguish.

1. FEHA administrative complaints with the CRD are not subject to arbitration. An arbitration agreement cannot prevent you from filing a complaint with the California Civil Rights Department for discrimination, harassment, or retaliation under FEHA. The CRD's administrative process — which is the required first step before any civil FEHA lawsuit — proceeds regardless of any arbitration clause in your employment contract. The right-to-sue notice the CRD issues after the administrative process is similarly unaffected.

2. PAGA representative claims survive individual arbitration. The California Supreme Court's 2023 decision in Adolph v. Uber Technologies, Inc., 14 Cal.5th 1104, confirmed that an employee whose individual claims are compelled to arbitration retains standing to pursue representative claims under California's Private Attorneys General Act, Labor Code § 2698, in court. If your wrongful termination involved Labor Code violations affecting other employees, the representative PAGA pathway remains available even if your individual claims go to arbitration.

3. The arbitration agreement must be lawful under California contract principles. Even with AB 51 unenforceable, California courts have broad authority to void or limit unconscionable arbitration agreements. An arbitration agreement that imposes prohibitive filing fees, selects a biased arbitrator, truncates discovery beyond what is needed to vindicate statutory rights, waives attorney fees that FEHA provides, or contains class-action waivers combined with arbitrator-selection provisions that favor the employer may be partially or fully void as unconscionable. The FAA's preemption does not override generally applicable California contract law defenses.

4. Whistleblower retaliation claims under Labor Code § 1102.5 proceed through the same substantive framework. An arbitration agreement changes the forum but does not eliminate substantive claims. A whistleblower retaliation claim proceeds under the contributing-factor standard of Labor Code § 1102.5 before an arbitrator, with the same burden-shifting framework that applies in court — the employer must still prove by clear and convincing evidence that it would have terminated you regardless of the protected disclosure.

The Unconscionability Defense — Your Most Powerful Tool

California courts apply a two-part unconscionability analysis to employment arbitration agreements: procedural unconscionability addresses how the agreement was formed; substantive unconscionability addresses what the agreement requires.

Both must be present to void an agreement, but California courts have found procedural unconscionability in virtually every agreement imposed as a take-it-or-leave-it condition of employment — which describes the vast majority of employment arbitration agreements.

Unconscionability Factor	What Courts Look For
Procedural — oppression	Agreement presented as non-negotiable condition of employment with no opportunity to opt out
Procedural — surprise	Key provisions buried in lengthy documents without clear notice
Substantive — fee-shifting	Requires employee to pay arbitration costs that make vindication of rights impractical
Substantive — discovery limits	Restricts discovery below what is essential to prove statutory claims
Substantive — statute of limitations	Shortens filing deadlines below California law minimums
Substantive — fee waiver	Waives attorney fees FEHA mandates under Gov. Code § 12965
Substantive — class waiver only	Prohibits representative PAGA claims (unenforceable under Adolph)

Courts sever unconscionable provisions and enforce the remainder where possible, or void the agreement entirely when the unconscionable provisions are central to the scheme.

What to Do If You Signed One

Step 1 — Locate and read the agreement. You have the right to a copy of your personnel file under Labor Code § 1198.5, including any arbitration agreement you signed. Identify which claims are covered, the fee allocation, how arbitrators are selected, whether there is a PAGA waiver, and which discovery rights you retain.

Step 2 — File with the CRD immediately if you have a FEHA claim. The CRD complaint is not subject to the arbitration agreement and starts the clock on your right-to-sue notice. The three-year FEHA filing deadline under Government Code § 12960 runs from the date of the adverse action regardless of any arbitration agreement. Do not wait.

Step 3 — Have the agreement reviewed for unconscionability. The enforceability of any specific arbitration agreement is a fact-specific legal question. Standard employment arbitration agreements contain terms California courts have repeatedly found unconscionable — but each agreement is different and must be evaluated individually. An employment attorney can assess whether the agreement is enforceable, whether any provisions are void, and whether the arbitral forum provides adequate discovery to build the pretextual evidence your wrongful termination claim requires.

Step 4 — Assess the PAGA angle. If your termination involved Labor Code violations — unpaid wages, retaliation under Labor Code § 1102.5, workers' compensation retaliation under § 132a — a PAGA representative claim may survive the arbitration agreement entirely under Adolph. This is worth evaluating before conceding that arbitration is the only forum available.

The complete wrongful termination proof framework applies in arbitration as it does in court — for that analysis, see our guides on how to prove wrongful termination in California and what evidence you need to prove wrongful termination.

To estimate the underlying claim's value before deciding whether to pursue it in any forum, use our California Wrongful Termination Compensation Calculator. For the full legal framework governing wrongful termination claims, see our California wrongful termination guide.

Frequently Asked Questions

Does an arbitration agreement mean I cannot sue my employer for wrongful termination?

It means you may not be able to sue in Superior Court before a jury — not that you cannot pursue the claim at all. A valid arbitration agreement redirects your wrongful termination claim to a private arbitrator who applies the same California statutes and awards the same categories of damages. You retain the ability to file a FEHA administrative complaint with the CRD regardless of any arbitration agreement, and certain claims — including representative PAGA actions — may survive arbitration entirely under Adolph v. Uber Technologies (2023).

Can my employer require me to sign an arbitration agreement?

Yes, under current California and federal law. California's AB 51, which attempted to prohibit mandatory arbitration as a condition of employment, was permanently enjoined following Chamber of Commerce v. Bonta (9th Cir. 2023). Employers may require new hires and existing employees to sign arbitration agreements covering FEHA and Labor Code claims. The agreement is presumptively enforceable if covered by the Federal Arbitration Act.

What makes an arbitration agreement unenforceable in California?

California courts apply a two-part unconscionability analysis. Procedural unconscionability is almost always present in take-it-or-leave-it employment agreements. Substantive unconscionability requires terms that are unreasonably one-sided — prohibitive filing fees, biased arbitrator selection, discovery limits that prevent vindication of statutory rights, or waivers of FEHA's mandatory attorney fees. When both elements are present, California courts void unconscionable provisions or the entire agreement.

Will my wrongful termination damages be lower in arbitration?

Potentially. The absence of a jury is the most significant practical difference. California juries have historically awarded higher compensatory and punitive damages in employment cases than arbitrators. However, arbitrators apply the same legal standards and cannot cap damages that FEHA leaves uncapped. Some employment attorneys prefer arbitration for the speed and lower litigation costs; others consider the jury waiver a material disadvantage. The right forum depends on the specific facts of the claim.

Can I still file with the California Civil Rights Department if I signed an arbitration agreement?

Yes — unconditionally. The CRD's administrative process is not subject to arbitration agreements. Filing a complaint with the California Civil Rights Department and obtaining a right-to-sue notice are required preconditions to any FEHA civil lawsuit, and no arbitration agreement can remove that right or waive your ability to file administratively.

What if I refused to sign an arbitration agreement and was fired?

Termination for refusing to sign an arbitration agreement could itself be a retaliatory act, depending on the circumstances. Although AB 51's criminal and civil sanctions are enjoined, the analysis of whether the refusal constitutes protected activity under Government Code § 12940(h) or other retaliation statutes is fact-specific and merits consulting an employment attorney.

DISCLOSURE This article is published by 1000Attorneys.com, a California State Bar Certified Lawyer Referral and Information Service, LRIS Certificate No. 0128, accredited by the American Bar Association and established in 2005. The information on this page is for general educational purposes only and is not legal advice. 1000Attorneys.com is not a law firm and does not provide legal representation. For legal advice about your specific situation, consult a qualified California attorney.