CaliforniaTwo recent cases serve to illustrate that employment arbitration continues to be an active area of the law.

In Iskanian v. CLS Transportation Los Angeles, LLC, the California Court of Appeal upheld an employment agreement provision compelling arbitration of the employee's wage and hour claims and dismissing the employee's class action claims.  The plaintiff in this case, Arshavir Iskanian, was a former employee of CLS.  As a condition of his employment with CLS, Iskanian signed an arbitration agreement providing that any and all claims arising out of his employment were to be submitted to binding arbitration.  The arbitration provision also contained a class action and representative action waiver.  On August 4, 2006, Iskanian filed a class action complaint against CLS, alleging various wage and hour violations, even though he had entered into the arbitration agreement with class and representative waivers.

CLS filed a motion to compel arbitration which was granted by the trial court.  Iskanian appealed the ruling.  The Court of Appeal upheld the trial court's ruling, stating that the recent United States Supreme Court decision of AT&T Mobility LLC v. Concepcion thoroughly rejected the concept that class arbitration procedures should be imposed on a party who never agreed to them.  The Appellate Court held that the trial court correctly found that the arbitration agreement and class action waivers were effective, and ruled appropriately in granting the motion to compel arbitration and dismissing Iskanian's class action claims.

In Pulli v. Pony International, LLC, the California Court of Appeal upheld a portion of an employment agreement provision, signed six months after the employee's employment began, compelling arbitration of the employee's wrongful termination claim.  Plaintiff Kyle Pulli sued his former employer Pony International, LLC, claiming wrongful termination.  Pony filed a motion to compel arbitration of the dispute based on an arbitration provision contained in Pulli's employment agreement.  Pulli opposed the motion arguing that the employment agreement was void and that the arbitration provision was therefore unenforceable.  He claimed that Pony presented him with the employment agreement six months after he had already been working for Pony and that Pony threatened to withhold earned wages unless he signed the employment agreement.  Pulli contended that at the time Pony presented him with the employment agreement, he was owed $7,000 in earned wages that he would forfeit if he refused to sign. 

Based on these alleged facts, Pulli argued that the employment agreement was void under  Labor Code section 206.5, which prohibits an employer from requiring an employee to execute "a release of a claim or right on account of wages due... ."  The trial court ruled in favor of Pulli and denied Pony's motion to compel.  Pony appealed the ruling claiming that Labor Code section 206.5 applies to releases regarding claims for wages and not to a release of jury trial rights.  The California Court of Appeal agreed with Pony stating that Labor Code section 206.5 merely prohibits an employer from requiring an employee to execute a release of a claim for wages due, and places no limitations on the enforceability or arbitration provisions, and reversed the order denying the motion to compel arbitration.  The Court of Appeal emphasized that it was only considering the question of whether Labor Code section 206.5 prohibits an employer from giving an employee the choice of either agreeing to an arbitration provision and releasing his right to a jury trial or forfeiting wages that the employee has earned, and not expressing an opinion on whether an employer might be precluded from requiring an employee to make such an election under other principles of law.

The Iskanian and Pulli decisions may have favorable implications for those employers that desire to have arbitration provisions in their employment agreements; however, legal challenges to mandatory employment arbitration continue.  Employers should regularly review their employment agreements to assess whether any revisions are necessary or beneficial as employment laws constantly change.  If employers do have arbitration provisions in their employment agreements, they should exercise caution in how they present the agreements to their employees.  Finally, although arbitration may provide the benefits of cost-effectiveness, speed, privacy, and informality, this may not always be the case.  Therefore, employers should conduct an analysis of the pros and cons of arbitration to determine whether arbitration is a viable option.


mary-headshot-web-name-Reyna-M-headshot-web-name-newFeel free to contact the authors with any questions: 

Managing Partner
Mary Watson Fisher at This email address is being protected from spambots. You need JavaScript enabled to view it.  

Senior Associate
Reyna E. Macias at This email address is being protected from spambots. You need JavaScript enabled to view it.

Or any WFBM attorney with whom you are working.