In a rare occurrence, the California Court of Appeal for the Fourth Appellate District vacated an arbitration award in Brown v. TGS Management Co. LLC in October[1] on the grounds that the arbitrator exceeded his authority when he declined to entertain a facial challenge to the employment agreement’s confidentiality provision as a de facto covenant not to compete.
As a result, employers will need to revisit their nondisclosure agreements; employees have a new statutory enforcement tool, and arbitrators must consider all statutory and public policy challenges to the parties’ contractual provisions.