In a recent case, the California Court of Appeal interpreted Section 1281.98 of the California Arbitration Act, emphasizing the 30-day deadline for receiving arbitration fees. The court ruled that fees must be both sent and received within 30 days after the due date, highlighting the importance of timely payments to avoid material breach of arbitration agreements under California law.
Unconscionability renders contracts unenforceable due to unfairness, involving procedural and substantive elements. In employment arbitration, as seen in Hasty v. AAA, unconscionability is crucial for validity, necessitating the need for conscionable drafting by California employers to ensure legal compliance.
Under section 1281.97, if an employer fails to pay arbitration fees within 30 days of the due date, it constitutes a "material breach," leading to the forfeiture of arbitration rights. In Suarez v. Superior Court (2024), an employer sought to evade section 1281.97 through alternative filing requirements. The Court of Appeal dismissed the employer's arguments, emphasizing the importance of timely payment for employers to uphold arbitration agreements.
In Demarinis v. Heritage Bank of Commerce (2023), employees, initially under an arbitration agreement, grappled with complexities tied to PAGA, arbitration waivers, and "poison pill" clauses. This case emphasizes the need for meticulous drafting of arbitration clauses, underscoring the importance of specificity in waiver provisions, as the inclusion of a "poison pill" can lead to an entire arbitration contract being deemed unenforceable.
This past Tuesday, Gavin Newsom signed into law SB 365, a California bill which allows cases to continue in court even if a defendant appeals a denial of arbitration. Proponents argue it protects workers and consumers, while critics worry it may harm job prospects and could conflict with federal arbitration law.
Adolph v. Uber clarifies that employees compelled to arbitrate individual PAGA claims can still pursue non-individual claims, affirming their rights to enforce labor laws.
Many Employers in California have relied, and continue to rely, on arbitration agreements with employees in order to avoid the great expense of wage and hour class actions. In 2011, the United States Supreme Court ruled in ATamp;T Mobility v. Concepcion that Californias anti-arbitration rule (...
Last week the California Court of Appeal held that an employer's mandatory arbitration policy was unenforceable because it was unconscionable (i.e. too one-sided and unfair to be enforced). The opinion is a good reminder that simply having an arbitration agreement does not need mean it will be enforceable when a dispute arises.
Employers are increasingly using arbitration agreements as a strategy to mitigate the risks of potentially costly litigation. Generally speaking, there are several benefits for employers to consider when deciding whether to adopt an arbitration policy. A few of these benefits, and their limitations, are described in this blog post.