A trial court lacked authority to rule on the enforceability of an arbitration agreement when the parties had contracted to delegate questions about the agreement’s enforceability to the arbitrator, the California Court of Appeal has ruled, reversing the denial of arbitration in a wrongful discharge action. Tiri v. Lucky Chances, Inc., No. A136675 (Cal. Ct. App. May 15, 2014).
Articles Discussing Human Resource Issues In California.
Arbitration, Confidentiality Agreement with Car Wash Workers was Unenforceable, California Court Rules
An arbitration and confidentiality agreement provided to car wash workers was unconscionable and unenforceable, the California Court of Appeal has ruled, denying arbitration in a class action for alleged California wage-hour law violations. Carmona v. Lincoln Millennium Car Wash, Inc., No. B248143 (Cal. Ct. App. May 9, 2014).
California Court of Appeal Holds Employers Must Establish Interstate Commerce for FAA Preemption
In Lane v. Francis Capital Mgmt. LLC (Cal. Ct. App. Mar. 11, 2014), a California Court of Appeal held a former employee’s claim for unpaid wages were exempted from arbitration by California Labor Code section 229.
Arbitration Agreement Enforceable, Except as to Unpaid Wage Claim, California Court Rules
Even though American Arbitration Association rules were not attached to an arbitration agreement and the agreement did not expressly provide for discovery, the California Court of Appeal has found a former employee’s arbitration agreement with his employer was valid and reversed the trial court’s denial of the employer’s motion to compel arbitration as to the employee’s claims wrongful termination and Labor Code violations. Lane v. Francis Capital Mgmt. LLC, No. B245661 (Cal. Ct. App. Mar. 11, 2014). The Court ruled the former employee’s claim for unpaid wages, however, may proceed in court.
Arbitration Agreement Not Unconscionable, California Court Orders Arbitration
Sending a former employee’s wrongful termination claim to an arbitrator, the California Court of Appeal has ruled that his employment arbitration agreement was not unconscionable and deserved to be enforced. Sanchez v. CarMax Auto Superstores of California, LLC, No. B244772 (Cal. Ct. App. Mar. 4, 2014). The Court found that the agreement’s limitations on discovery and on “just cause” terminations, among others, were not substantively unconscionable, and so reversed a lower court order denying arbitration.
Employer’s Arbitration Policy Unconscionable, Unenforceable under California Law, Ninth Circuit Rules
A grocery store’s arbitration policy was so one-sided that it “shocked the conscience” under California law and was unenforceable, the U.S. Court of Appeals for the Ninth Circuit has ruled, citing in part a provision requiring employees to split the arbitrator’s fees down the middle. Chavarria v. Ralphs Grocery Co., No. 11-56673 (9th Cir. Oct. 28, 2013). The Court affirmed the denial of the employer’s motion to compel arbitration and returned the case to the district court for further proceedings.
FAA Preempts California Rule Barring Arbitration of Certain Claims for Injunctive Relief, Federal Court Rules
The Federal Arbitration Act (“FAA”) preempted the California Supreme Court’s rule exempting claims for “public injunctive relief” from arbitration (known as the “Broughton-Cruz” rule), the U.S. Court of Appeals for the Ninth Circuit has ruled, reversing an order denying arbitration. Ferguson v. Corinthian Colleges, Inc. et al., No. 11-56965 (9th Cir. Oct. 28, 2013). The Court found the Broughton-Cruz rule was “clearly irreconcilable” with the U.S. Supreme Court’s recent decisions on the FAA. The Ninth Circuit returned the case to the district court, directing it to order arbitration.
Through the Lens of Concepcion: California Supreme Court Revisits the Validity of Agreements Requiring Employee Waiver of Wage Claim Administrative Processes
Almost one year after the U.S. Supreme Court summarily vacated the original 2011 Sonic-Calabasas opinion (Sonic I1), the California Supreme Court issued its opinion on remand in Sonic-Calabasas A, Inc. v. Moreno (Sonic II2).
California Supreme Court: Federal Arbitration Act Preempts State Labor Hearing Waiver Rule
The Federal Arbitration Act (“FAA”) preempts California law prohibiting the waiver of an administrative hearing before the California Labor Commissioner in an employment arbitration agreement, the California Supreme Court ruled in a 5-2 decision. Sonic-Calabasas A, Inc. v. Moreno, No. S174475 (Cal. Oct. 17, 2013).
New California Laws Restrict the Discretion Employers Have to Inquire Into and Use Criminal Record Information
On October 10, 2013, California joined the growing list of states with expanded protections for individuals with prior criminal records when Governor Jerry Brown approved a bill (SB 530) amending the California Labor Code.1 Effective January 1, 2014, SB 530 amends Labor Code section 432.7 to include an additional prohibition for public and private employers related to pre-employment inquiries, and adds section 4852.22 to the Penal Code shortening the waiting period to receive a Certificate of Rehabilitation. Governor Brown also signed AB 218, which, effective July 1, 2014, will bar public sector employers from asking about criminal records on employment applications (a so-called “ban the box” law).
Arbitration Agreement Valid, Even Without AAA Rules Attached, California Appeals Court Rules
An arbitration agreement was not procedurally unconscionable because the employer failed to attach a copy of the relevant arbitration rules to the agreement, the California Court of Appeal has ruled. Peng v. First Republic Bank, No. A135503 (Cal. Ct. App. Sept. 26, 2013). The Court also ruled that the agreement was not substantively unconscionable because it provided that the employer may unilaterally modify the agreement. The Court reversed the trial court’s order denying the employer’s request for arbitration of the employee’s discrimination and wrongful termination claims.
Arbitration Agreement in Employee Handbook Enforceable, California Court of Appeal Rules
An arbitration agreement contained in an employee handbook was not invalid simply because the employer could change the handbook in its discretion, the California Court of Appeal has ruled. Serpa v. California Surety Investigations, Inc., No. B237363 (Cal. Ct. App. Apr. 19, 2013). Reversing an order denying the employer’s motion to compel arbitration, the Court held that the implied covenant of good faith and fair dealing limited the employer’s right to alter the agreement unilaterally; thus, the agreement was not illusory or unconscionable for lack of mutuality, as the plaintiff argued.
Lack of Signed Arbitration Agreement Means HR Director Cannot Be Forced to Arbitrate Claims, California Court Rules
A human resources director who never signed her employer’s arbitration agreement, concealed that fact from her employer, and resigned her job could not be required to arbitrate her claims for wrongful termination and sexual harassment, the California Court of Appeal has ruled. Gorlach v. The Sports Club, No. B233672 (Cal. Ct. App. Oct. 16, 2012). The Court affirmed the denial of the employer’s motion to compel arbitration.
Drivers’ Independent Contractor Status beyond Scope of Arbitration Agreement, California Court Rules
Owner-operator truck drivers were not required to arbitrate whether they were misclassified as independent contractors in violation of the California Labor Code, where each of the parties’ arbitration agreements applied to any dispute that arose “with regard to its application or interpretation,” the California Court of Appeal has held. Elijahjuan v. Superior Court, No. B234794 (Cal. Ct. App. Oct. 17, 2012). The Court found the drivers’ statutory claims fell outside of the agreements’ scope and reversed the trial court’s order compelling arbitration. The dissenting Justice took issue with the majority’s narrow reading of the arbitration agreements, noting that it “ignored well-settled law favoring arbitration.”
What’s In YOUR Personnel File? California Greatly Expands Employee Access and Creates Employer Penalties
In its first change to the state statute on inspection of personnel files since the law was enacted a dozen years ago, the California Legislature passed, and Governor Jerry Brown signed on September 30, a bill that significantly changes the rights of current and former California employees, and the obligations of employers, concerning employees’ personnel files. The bill, Assembly Bill (A.B.) 2674,1 becomes effective January 1, 2013.