Court of appeal creates certain Supreme Court showdown

The employer and employee signed an arbitration agreement and agreed thereafter that their dispute should be resolved in arbitration. As we have seen so many times before, the employer was a few weeks late paying the arbitration fee, and the employee exercised a new statutory right to end the arbitration and return to court because of the late payment. Numerous courts have approved that right in decisions over the last two years—will the result here be any different?

New law prohibits slow-walking arbitration process

In 2019, the California Legislature added three sections to the California Arbitration Act (CAA) to assist consumers and employees who find themselves in “procedural limbo” because they are required to submit a dispute to arbitration, but the entity enforcing the arbitration agreement hasn’t paid the arbitration fees required to proceed. One section provides that “if the fees or costs to initiate an arbitration proceeding are not paid within 30 days after the due date[,] the drafting party is in material breach of the arbitration agreement, is in default of the arbitration, and waives its right to compel arbitration.”

Several recent cases have all held that the statute means exactly what it says, and that if an employer compelling arbitration is late paying arbitration fees and costs, the employee has a right to end the arbitration and return the matter to court.

Initial round of arbitration halted by late fee payment