I have some good news for California employers seeking to enforce arbitration agreements. The California Supreme Court just held that non-payment of arbitration fees does not automatically waive the right to arbitrate. Employers still cannot engage in the strategic nonpayment of arbitration fees. However, when the nonpayment is the result of a good faith mistake, inadvertence, or excusable neglect, then the right to arbitrate is not automatically extinguished. This is great news for California companies who want to keep employment claims in arbitration.
In the past, a simple calendaring error, or a bill that came in late and got lost in the shuffle, could trigger a motion by opposing counsel asserting a violation of California Code of Civil Procedure Section 1281.98, and essentially a waiver of the right to arbitrate. In fact, we blogged on this risk. Thankfully, the California Supreme Court ruled that a more fact-based inquiry was required, and as long as the mistake was genuine, and not gamesmanship, then a simple error would not waive the right to arbitrate.
This ruling makes sense. An inadvertent mistake should not punish the party seeking to arbitrate. Whew!
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