California Employment Law Blog

In Pamela Cook vs. University of Southern California (2024), the court found USC's arbitration agreement unconscionable due to its infinite duration, overly broad scope, and lack of mutuality, emphasizing the need for employers to review and avoid similar issues in their agreements.

In the case of Dominique Keeton v. Tesla, Inc., the Court of Appeal ruled that Tesla’s failure to pay arbitration fees on time breached its arbitration agreement, allowing an employee to pursue her claims in court. The decision emphasizes the necessity for employers to comply with arbitration agreements and deadlines to avoid unwanted litigation.

In Ramirez v. Golden Queen Mining, the Court of Appeal examined the enforceability of arbitration agreements within employment contracts, emphasizing how crucial it is for employers to ensure that arbitration agreements are properly presented, explained, and signed to withstand legal scrutiny.

The California Court of Appeal's decision in Hernandez v. Sohnen Enterprises clarifies that the FAA preempts California Code of Civil Procedure Section 1281.97, which allows employees to withdraw from arbitration if the employer fails to pay fees on time, when the agreement explicitly states it is governed by the FAA.

In Angel Mondragon v. Sunrun Inc., the California Court of Appeal affirmed the necessity for precise language in arbitration agreements, upholding the exclusion of all PAGA claims from arbitration based on the agreement's explicit terms.

The Ninth Circuit Court of Appeals in Fli-Lo Falcon, LLC v. Amazon.com, Inc. has affirmed the enforceability of arbitration agreements in commercial contracts between businesses, clarifying that the Federal Arbitration Act's "transportation worker exemption" does not apply to business entities.

Ortiz v. Randstad (2024) clarifies the FAA's transportation worker exemption, affirming that warehouse workers involved in interstate commerce are exempt from arbitration, emphasizing the role-specific duties play in determining exemption eligibility.

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.