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June 2, 2026 · Benjamin J. Treger
What Cook v. USC Means for California Employers
Arbitration agreements remain one of the most effective tools an employer has for controlling litigation risk. Their single most valuable feature is the class action waiver. A properly drafted agreement keeps employees out of class and collective actions and channels disputes into individual proceedings, which is often the difference between a manageable claim and a bet-the-company case. Arbitration also moves disputes away from a jury, holds proceedings confidential, and usually resolves faster and at lower cost than a courtroom trial. For years, California employers drafted these agreements broadly, on the theory that the wider the net, the better the protection.
A 2024 Court of Appeal decision turned that theory into a liability. In Cook v. University of Southern California, the same broad language that was supposed to protect the employer is what sank the agreement. Plaintiff's attorneys noticed, and they have been citing the case ever since. The good news is that a more recent decision has reined in how far Cook reaches. The better news is that a short audit of your current agreement can close the gaps before anyone tries to exploit them.
Here is what happened, what changed, and what to fix.
When a California court is asked to enforce an arbitration agreement, the question it asks is whether the agreement is unconscionable, meaning so unfair that a court will not hold the employee to it. Unfairness here has two sides, and a court looks for both. The first is substantive unconscionability, which is about the terms of the agreement: are they overly harsh, heavily one-sided, or so unbalanced that they shock the conscience? The second is procedural unconscionability, which is about how the agreement was signed: was the employee handed a form on a take-it-or-leave-it basis, with no real chance to negotiate and important terms buried in the fine print? A court will refuse to enforce an agreement only if both kinds of unfairness are present, but it weighs them on a sliding scale. The more one-sided the terms, the less unfairness in the signing a court needs to see, and the other way around. Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal. 4th 83 (2000).
Armendariz also sets a baseline that any mandatory arbitration agreement must meet when it covers rights an employee cannot be forced to give up, such as the right to sue for discrimination or harassment. To be valid, the agreement has to give the employee a neutral arbitrator, a fair chance to gather evidence, a written decision a court can review, and the same remedies a court could award, and it cannot make the employee pay the special costs of arbitration that he would not face in a courtroom. The agreement also has to cut both ways. If it forces the employee to arbitrate but lets the employer head to court, that imbalance is itself a form of unfairness. And because these agreements are almost always handed to employees as a condition of getting hired, the procedural side is usually satisfied from the start. That is why most fights over enforceability come down to the terms themselves and to whether the agreement treats both sides equally.
What makes the decision in Cook v. University of Southern California, 102 Cal. App. 5th 312 (2024), worth a close look is not the test, which is well settled, but which terms the court found substantively unconscionable, meaning too one-sided to enforce. None of them is unusual. They are the kind of broad, standard language that appears in arbitration agreements across the state, which is exactly why the decision should get every employer's attention.
Pamela Cook sued USC and two coworkers for discrimination and harassment arising out of her employment. USC moved to compel arbitration based on an agreement Cook had signed as a condition of being hired. The trial court denied the motion, and the Court of Appeal affirmed, refusing to enforce the agreement.
On its face, this looked like a routine motion to compel. The agreement was a standard pre-hire arbitration form. That is exactly what makes the decision worth your attention: the provisions the court found fatal are provisions that appear in a great many employer agreements.
The court identified three features that, taken together, made the agreement unconscionable and therefore unenforceable.
Infinite duration. The agreement survived termination and could be revoked or modified only by a writing signed by the President of the University. The court treated that as giving the agreement an effectively infinite life, with no realistic way for the employee to ever escape it.
Infinite scope. The agreement covered all claims, whether or not arising out of the employee's employment. The court found this swept in disputes with no connection to the workplace at all. Given USC's reach as a university and hospital operator, the court observed that Cook could be forced to arbitrate something like a botched surgery years down the line.
Lack of mutuality. The agreement required Cook to arbitrate her claims against USC's related entities, but those entities had no reciprocal obligation to arbitrate their claims against her. The benefit ran one way, and USC offered no justification for the imbalance.
The court did not simply strike the offending clauses and enforce the rest. It found the agreement permeated by unconscionability and declined to sever the bad provisions. The practical consequence was the worst case for an employer: USC was left with no enforceable arbitration agreement and headed to a jury.
A great many employer arbitration agreements share at least one of the features the court criticized: a duration clause that survives forever, a scope clause reaching any and all claims, or a related-entity provision that protects affiliates without binding them. Cook handed plaintiff's counsel a ready-made template for opposing motions to compel, and they have used it. If your agreement was drafted before 2024 and has not been reviewed since, assume opposing counsel will run the Cook argument against it.
In Ayala-Ventura v. Superior Court, No. F089695 (Cal. Ct. App. Mar. 17, 2026), the Fifth District Court of Appeal upheld a broadly worded arbitration agreement used by a janitorial services company, even though the agreement contained scope and duration language similar to USC's. It is the first published decision to directly contrast with Cook.
The Fifth District held that Cook should be read in its own context and does not state a blanket rule that applies to ordinary employment relationships. An agreement covering claims unrelated to employment is not automatically unconscionable; context, industry, and the realistic reach of the language all matter. The court emphasized that USC's unusual breadth as a university and hospital system drove the result in Cook, and that a typical employer does not present the same problem.
Ayala-Ventura narrows Cook without overruling it. Expect future fights to turn less on labels like overbroad or infinite and more on the specific employer, the specific agreement, and the realistic consequences of the words used. That is helpful, but it is not a reason to relax. The way to stay out of the fight entirely is to make sure your language does not invite it.
Look at how your agreement can be changed or ended. If the only way to revoke or modify it is a signature from a single high-level officer, you have recreated the duration problem from Cook. Build in a reasonable mechanism for the agreement to end or be revised, and avoid language that makes it perpetual and effectively irrevocable.
Tie coverage to the employment relationship. Language requiring arbitration of all claims, whether or not arising out of employment, is the exact phrasing that drew fire in both Cook and Ayala-Ventura. Limit the agreement to claims arising out of or relating to the employee's employment, and you remove the most common attack.
If your agreement extends its protection to parents, subsidiaries, affiliates, officers, or agents, that protection has to run both ways. Either drop the extension or add a reciprocal obligation requiring those entities to arbitrate their claims against the employee on the same terms. A benefit that flows only to the employer side is the mutuality defect that helped sink the USC agreement.
While the agreement is on your desk, three more provisions deserve a look.
EFAA carve-out. The federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act lets an employee elect to take sexual harassment and sexual assault claims to court regardless of an arbitration agreement. Your agreement should acknowledge this rather than purport to compel arbitration of those claims, which a court will not enforce.
PAGA structure. After Viking River Cruises, Inc. v. Moriana, 596 U.S. 639 (2022), and Adolph v. Uber Technologies, Inc., 14 Cal. 5th 1104 (2023), the handling of Private Attorneys General Act claims requires care. An agreement should address individual PAGA claims without overreaching on the representative piece in a way that gets the whole provision struck.
Armendariz compliance. Under Armendariz, an enforceable employment arbitration agreement must provide a neutral arbitrator, adequate discovery, a written decision, and all remedies otherwise available, and it cannot saddle the employee with arbitration-unique costs. A shortened limitations period for claims under the Fair Employment and Housing Act, or a one-sided fee-shifting provision, can each sink an agreement on its own. That is what happened in Ramirez v. Charter Communications, Inc., 16 Cal. 5th 478 (2024), where the court found the agreement's central purpose tainted by an effort to favor the employer.
Cook is not the end of employment arbitration in California, and Ayala-Ventura confirms that courts will look at your actual agreement rather than apply a slogan. But the employers who lose motions to compel are the ones still using a form they adopted years ago and never revisited. The duration clause, the scope clause, and the related-entity clause are the three places where old language quietly turns into a present-day liability. A short review now costs far less than litigating whether your agreement is enforceable at the start of every case. If you have not had yours reviewed since 2024, that review is overdue.
This post is for informational purposes only and does not constitute legal advice. Consult with a qualified employment attorney about your specific situation.