A recent court decision held that an employee in California has the right to file a wage claim and to have a hearing on that claim before the Labor Commissioner, even if the employee has signed an arbitration agreement.
In California, employees who are not paid what they are owed can file wage claims (see Wage Claims – Nasty but [Sometimes] Necessary). Because the employee need not retain legal counsel, and because the Labor Commissioner may help the employee, a wage-claim hearing provides to the employee benefits and leverage that are not available in other venues, such as litigation or arbitration.
Some employers, in the interest of reducing their exposure, require that employees agree to arbitration of all employment-related clams. (See Arbitrating Employment Disputes: Pro and Con.) In Sonic-Calabasas A v. Moreno, the California Supreme Court decided that an employee has a right to a wage-claim hearing despite an arbitration provision. Specifically, the court held that:
- A provision in an arbitration agreement that the employee enters into as a condition of employment requiring waiver of wage-claim hearings is contrary to public policy and unconscionable.
- However, the appeal from such a hearing may be made, pursuant to a valid arbitration agreement, in front of an arbitrator rather than in court.
The significance of this case for employers: Pay employees what they are owed – you don’t want to be defending a legitimate wage claim.
Dana H. Shultz, Attorney at Law +1 510 547-0545 dana [at] danashultz [dot] com
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