Many employers use arbitration agreements with their employees as a means of providing a more streamlined process than court actions for resolution of disputes. Companies using these agreements with California employees need to be aware of a unique California law that allows an employee to move their claims into court if an employer does not timely pay invoices from the arbitration service provider. California Code of Civil Procedure section 1281.98 provides that an employer must pay arbitration fees within 30 days after the due date specified by the arbitration service provider. If the employer does not pay invoices within this time period, the employer is deemed to be in material breach of the arbitration agreement and the employee may then elect to withdraw the claim from arbitration and instead proceed in court. This rule has been very strictly interpreted by California courts, which have allowed employees to proceed in court on their claims against the employer where the employer has delayed payment of one or more invoices – even by as little as two days beyond the deadline.
All employers arbitrating employment disputes in California need to be mindful of this law and ensure that they timely pay all arbitration fee invoices to avoid the possibility of the arbitration being thwarted.