Background: The Thirty-Day Arbitration Fee Rule
In 2019, the California legislature amended the California Arbitration Act (CAA) to require the party who drafts an arbitration agreement to pay all required arbitration fees within thirty days of receiving the invoice, unless the agreement provides a different deadline. A company’s failure to timely pay arbitration fees is treated as a material breach and default that allows the employee or consumer to withdraw from the arbitration and proceed in court. Code of Civil Procedure section 1281.97-1281.98. In other words, if the employer is late in paying arbitration fees it forfeits the right to require arbitration of claims.
California appellate courts have strictly interpreted and enforced the timely payment requirement with harsh results for employers. See Doe v. Superior Court, 95 Cal.App 5th 346 (2023) (arbitration forfeited when payment was mailed with 30-day period, but arrived 2 days late); Colon-Perez v. Security Industry Specialists, Inc., 108 Cal.App.5th 403 (2025) (arbitration forfeited when counsel was caught in a natural disaster and payment was 6 days late).
The Hohenshelt Decision
In its August 11, 2025 decision in Hohenshelt v. Superior Court, the CA Supreme Court held that California’s requirement for timely payment of arbitration fees is not preempted by the Federal Arbitration Act (which prohibits state laws that disfavor arbitration agreements). The Court noted that timely payment of arbitration fees encourages the speedy resolution of matters in arbitration.
At the same time, the Court rejected the strict interpretation of the timely payment requirement and the idea that any delay, no matter how small or for what reason, must result in forfeiture of arbitration. The Court identified several reasons that may excuse the late payment of arbitration fees.
An employer may be relieved from forfeiture of arbitration when:
- Timely payment was “impossible, illegal, or impracticable” because of extreme and unreasonable difficulty, expense, injury, or loss involved (Civil Code section 1511);
- The late payment was not “willful, fraudulent, or grossly negligent” and the employer fully compensates the employee for any losses resulting from the delay (Civil Code § 3275); or
- The late payment was the result of “mistake, inadvertence, surprise, or excusable neglect” (Code Civ. Procedure § 473(b)).
Why It Matters
The Hohenshelt decision moderates what had become a rigid and draconian rule. Employers remain responsible for paying arbitration fees on time, but not every late payment will automatically result in forfeiture of arbitration. A lapse or delay in payment that is excusable, unintentional, minor, or due to an understandable oversight might not jeopardize the right to proceed in arbitration.
Best Practices for California Employers
- Continue paying arbitration fees promptly. Timely payment remains a best practice and critical for preserving arbitration rights.
- Consider revising your arbitration agreement to extend the deadline for paying arbitration invoices.
- Implement / review your arbitration invoice procedures, such as calendaring, invoicing, and internal handoff, to reduce risks of delay.
- Train legal and administrative staff to flag and address invoices quickly and to track due dates closely.
- If payment is late, document the reason(s) clearly. Courts will now consider whether the delay was excusable, especially if it stems from a good faith mistake or oversight.
- For multistate employers, consider whether to implement California-specific arbitration agreements.
*Special thanks to CDF law clerk Victor Weber for his contributions to this article.
