Understanding Your Rights: What Happens When an Employer Delays Paying Arbitration Fees in California?

In recent years, an increasing number of employees in California have found themselves bound by arbitration agreements. An arbitration agreement requires that employment-related disputes be settled through private arbitration instead of court proceedings. However, when a dispute arises, you are entitled to a fair process without unnecessary delays. Unfortunately, some employers use delay tactics to stop a case from moving forward. One tactic that employers use is dragging their feet and failing to pay the required arbitration fees on time. Fortunately, California law offers clear protections when employers stall or fail to pay arbitration fees. A recent California Court of Appeal decision sheds light on this issue. 

In this recent case, a former employee, whom for purposes of this article we will refer to as M.Y.S. filed a class and representative claim against her former employer, Edward D. Jones & Co., L.P. many other California employees, M.Y.S. had signed an arbitration agreement with her employer, which requires any employment-related disputes to be resolved through arbitration. However, when a hearing date was set, Edward Jones failed to pay the required arbitration fees within the 30-day deadline set by California law.

California Code of Civil Procedure section 1281.98 is specifically designed to prevent such delays. According to this law, if an employer fails to pay arbitration fees within 30 days of the payment-due date, the worker has the legal right to withdraw from arbitration and return the case to court. The law considers failure to make timely payment a “material breach” of the arbitration agreement. This levels the playing field for employees by ensuring that delays don’t harm the process and the outcome. 

In M.Y.S.’s case, she asked that the trial court vacate the order compelling arbitration and allow the claims to go to court. The trial court initially agreed, but after reviewing arguments from the employer, it reversed the decision. The trial court concluded that the state law conflicted with the Federal Arbitration Act (FAA). However, the Appellate Court disagreed with the lower court. The court ruled that, by imposing a 30-day time limit to pay arbitration fees, section 1281.98 does not undermine the goal of the FAA, which is to enforce arbitration, but instead complements it by encouraging a prompt and fair arbitration. The Appellate court granted the employee the right to proceed in court instead of arbitration.

What Does This Mean for You?

This case passes across a crucial message: an arbitration agreement does not give your employer the right to delay your case or stop it from moving forward. When arbitration is required, your employer must follow through with timely payment and not delay the process. If they do not pay the required fees on time or cause unnecessary delays, you have the right to withdraw from arbitration and take your case to court. 

Contact a California Employment Lawyer

For more guidance or if an employer is unfairly delaying the arbitration process, contact a California employment lawyer near you.