Arbitration Agreements

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California’s Private Attorneys General Act (PAGA)[1] allows “aggrieved employees” to sue their employers for Labor Code violations to collect civil penalties “on behalf of himself or herself and other current or former employees.” The issue of how to resolve PAGA claims where the employee and employer are subject to a binding arbitration agreement has been hotly contested over the last several years, as reported many times in this blog [see here, here, and here].Continue Reading PAGA Plaintiffs Cannot Avoid Arbitration by Bringing a “Headless PAGA Lawsuit”

Two recent decisions from the California Courts of Appeal could have massive ramifications for employers seeking to enforce arbitration agreements. Specifically, each court each held that the Ending Forced Arbitration of Sexual Harassment Act (“EFAA”) prohibits separating and arbitrating wage and hour claims that are part of the same suit as a sexual harassment claim. These holdings give plaintiffs’ lawyers a new tool try and defeat arbitration agreements and keep cases in litigation. Accordingly, California employers should be prepared for an influx of sexual harassment claims being tacked on to otherwise unrelated wage and hour lawsuits.Continue Reading California Courts Greatly Expand Scope of “Ending Forced Arbitration of Sexual Harassment Act”

On March 12, 2024, the Ninth Circuit published a decision in Ortiz v. Randstad Inhouse Services, LLC, holding that the Plaintiff Adan Ortiz (“Plaintiff”) qualified as a “transportation worker” under the Federal Arbitration Act, and was thus exempted from mandatory arbitration under the FAA. The district court rejected the employer’s arguments that Plaintiff was bound by the arbitration mandate under the FAA because he performed duties on a purely local basis. This case continues to establish that the scope of the “transportation worker” exemption under the FAA is broader than only those workers that physically move goods or people across state lines, such as truck drivers and cargo pilots.Continue Reading Ninth Circuit Finds Shipping Warehouse Employee Qualified as Exempt “Transportation Worker” Under the Federal Arbitration Act

On May 16, 2024, the United States Supreme Court resolved a circuit split regarding whether Section 3 of the Federal Arbitration Act (“FAA”) provides trial courts the discretion to dismiss a lawsuit when all claims are subject to arbitration. In Smith v. Spizzirri, a unanimous Court ruled trial courts do not have discretion to dismiss a lawsuit that involves an arbitrable dispute, and must instead stay the proceedings.Continue Reading Supreme Court Rules Trial Courts Must Stay, Not Dismiss, Lawsuits During Arbitration

On May 10, 2024, the Ninth Circuit decided Yuriria Diaz v. Macy’s West Stores, after the employer appealed the district court’s decision ordering arbitration of both an employee’s individual and non-individual claims under the California Private Attorney Generals Act (PAGA). The Ninth Circuit held that even though the arbitration agreement made no mention of PAGA, an employee’s individual PAGA claim was still subject to arbitration because the parties’ intended to arbitrate all employment disputes between them. However the non-individual PAGA claims were not arbitrable, because the parties did not consent to arbitration of those claims. Continue Reading Ninth Circuit Rules That Only Individual PAGA Claims Can Be Compelled to Arbitration

On February 12, 2024, the Ninth Circuit in Johnson v. Lowe’s Home Centers, LLC, 93 F.4th 459 (9th Cir. 2024) vacated a district court’s dismissal of a former employee’s nonindividual PAGA claims and remanded the nonindividual claims to allow the district court to apply California law as interpreted in Adolph v. Uber Techs., Inc., 14 Cal. 5th 1104 (2023) (“Adolph”).Continue Reading Ninth Circuit Applies Adolph, Vacating Lower Court’s Dismissal of Employee’s Nonindividual PAGA Claims

In the past few months, California Governor Newsom has signed numerous new employment laws affecting California employers of all sizes. Below is a summary of some of the laws going into effect in 2024.Continue Reading Looking Ahead: New California Employment Laws for 2024

On October 10, 2023, California Governor Newsom signed into law S.B. 365, a bill that amends California Code of Civil Procedure Section 1294. The new law provides that when a party appeals an order denying a motion to compel arbitration (an order which is immediately appealable), the trial court is not obligated to stay the action during the pendency of the appeal. The law marks a major shift in California civil procedure law.Continue Reading New California Law Prohibits Automatic Stay of Trial Court Action When Appealing Denial of a Motion to Compel Arbitration

On April 19, 2023, the California Court of Appeal held that an employer’s arbitration agreement was unenforceable because of unconscionable terms found in other documents provided to employees during the onboarding process. The decision was certified for publication on May 10, 2023. In Alberto v. Cambrian Homecare (Apr. 19, 2023, No. B314192) ___Cal.App.5th, the Court of Appeal affirmed the trial court’s decision that a standalone arbitration agreement was unconscionable based on terms contained within the employer’s confidentiality agreement. Because the arbitration and confidentiality agreements were presented to the employee at the time of hire and related to the employee’s employment, the Court found that the employer’s confidentiality agreement was part of the “contract” to arbitrate, and the two agreements must be read together. The Court then reasoned that unconscionable terms in the confidentiality agreement permeated the arbitration agreement rendering it unenforceable. The Alberto decision is an important development for employers utilizing arbitration agreements along with other types of employment-related agreements as it creates a new risk of losing the benefits of arbitration.Continue Reading It Is Time to Check Your Onboarding Documents – Employer’s Confidentiality Agreement Renders Its Arbitration Agreement Unenforceable

The Ninth Circuit Court of Appeals panel that originally decided Chamber of Commerce v. Bonta last fall recently issued an order withdrawing its prior opinion and granting a panel rehearing. The divided panel’s original decision upheld portions of Assembly Bill 51 (“AB 51”), a California law that prohibits employers from requiring that employees sign an arbitration agreement as a condition of employment. The panel’s decision to rehear the appeal is notable because it suggests that the panel may rule that the Federal Arbitration Act (“FAA”) preempts AB 51 in its entirety following the U.S. Supreme Court’s recent decision in Viking River Cruises, Inc. v. Moriana. The Supreme Court in Viking River Cruises held that California law precluding the division of PAGA actions into individual and non-individual claims through an agreement to arbitrate was preempted by the FAA.Continue Reading Ninth Circuit Grants Rehearing on California Law Banning Mandatory Employment Arbitration Agreements

On June 6, 2022, a unanimous United States Supreme Court issued another key decision interpreting the Federal Arbitration Act (“FAA”) that will have a significant impact on certain employers going…

Continue Reading United States Supreme Court Rules Certain Airline Employees Exempt From Federal Arbitration Act