Consumer Law

Arbitration agreement signed as a condition of employment requiring waiver of the option of an administrative hearing is unconscionable.

By Richard Alderman

The California Supreme Court, by a vote of 5-4, held an arbitration clause that precluded employee resort to administrative remedies was unconscionable.  In Sonic-Calabasas v. Moreno, the court struck down the provision precluding resort to an administrative hearing, but held that appeal from that decision goes to arbitration rather than the courts. Although the court recognized that it may be permissible to require arbitration even when it denies an administrative, the procedure in the instant case also included additional remedial advantages that could not be precluded by an agreement to arbitrate.  Under California law, employees who prevailed at the administrative hearing receive the following benefits: (1) the award will be enforceable if not appealed; (2) the Labor Commissioner is statutorily mandated to expend best efforts in enforcing the award, which is also established as a court priority; (3) if the employer appeals, it is required to post a bond equal to the amount of the award so as to protect against frivolous appeals and evading the judgment; (4) a one-way attorney fee provision will ensure that fees will be imposed on employers who unsuccessfully appeal but not on employees who unsuccessfully defend their hearing award, or on employees who appeal and are awarded an amount greater than zero in the superior court; (5) the Labor Commissioner is statutorily mandated to represent in an employer?s appeal claimants unable to afford an attorney if the claimant does not contest the Labor Commissioner?s award.

Full post as published by CL&P Blog on March 02, 2011 (boomark / email).