Enforceability of Wage Claim Arbitrations Hangs in the Lurch Pending Remand in California Supreme Court’s Sonic II

The tension between an employee’s simple right to receive his wages for work he performed and the U.S. Supreme Court’s favoritism towards employers, is almost palpable in the tortured history of Sonic-Calabasas A, Inc. v. Moreno (Sonic II) ___ Ca.4th ___ (Oct. 17, 2013).

Here the employer imposed an arbitration agreement upon Mr. Moreno. When Mr. Moreno filed a simple Labor Commission claim to collect his vacation pay, the employer refused to attend the Labor Commission (Berman) hearing, and instead moved to arbitrate the claim. I suspect the move was a ploy to make it so expensive and time consuming for poor Mr. Moreno to collect what wasn’t a large amount of money to begin with, that he’d just give up. Lucky for Mr. Moreno, the Labor Commissioner realized the negative implications for all employees just trying to get paid for the work they do, if they can’t go to the Labor Commission.

In 2011 the California Supreme Court held that Mr. Moreno was entitled to his Labor Commission hearing, and that if the employer was dissatisfied with the results of the Berman hearing, it could then move to arbitrate. This was a fairly benign and logical holding.

But I guess this wasn’t enough for the anti-employee U.S. Supreme Court. It vacated the California Supreme Court opinion, and sent the case back to the California courts for reconsideration. Sonic-Calabasas A, Inc. v. Moreno 132 S.Ct 496 (2011). (I blogged about this previously, see entry of November 20, 2011.)

So, now we are back in the California Supreme Court’s “court.” Given that the U.S. Supreme Court held that arbitrations are practically invincible, the California Supreme Court felt forced to recant its prior opinion. Thus, it held that a Labor Commission hearing on the way to an arbitration imposed significant delays and could not be tolerated under the U.S. Supreme Court’s holding on AT&T Mobility LLC v. Concepcion 131 S.Ct. 1740 (2011).

However, the California Supremes held out some hope. They held that the State of California still has the right to evaluate whether the arbitration agreement is unconscionable because it is, for example, unreasonably one-sided in favor the employer. Because the evidence related to that question had not been developed, the California Supremes sent the case back to the trial court to consider.

We can expect a hearing below looking at a variety of factors, including how unfair this is to Mr. Moreno. If Mr. Moreno has to go to arbitration, he’ll need to hire a lawyer to obtain his vacation pay. This is absurd. He’ll be paying more in attorney’s fees than he will receive in his vacation pay! Likewise, if he has to pay the arbitrator to obtain what would have otherwise been a free hearing before the Labor Commission, this will wipe out his vacation pay, and is unconscionable and unreasonable.

And speaking of speed and efficiency – the ostensible values of the U.S. Supreme Court in basically making arbitration practically invincible – how many court hearings and years must pass before Mr. Moreno simply gets a determination of whether he is owed his vacation pay?

Jody LeWitter

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