California Labor &
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Employers Beware - Deadline for Payment of Arbitration Fees Strictly Construed 
Sep 28, 2023

Employers Beware - Deadline for Payment of Arbitration Fees Strictly Construed 

Topics: Arbitration Agreements, Court Decisions

California employers should be extremely cautious about timely paying arbitration fees or could pay the price – waiving their right to arbitrate and having to proceed in court.  

The California Legislature and courts have long been hostile to arbitration agreements. In 2019, the California Legislature amended the California Arbitration Act to include a provision that if the party that drafted an arbitration agreement (almost always the employer) fails to pay the fees or costs required to continue the arbitration proceeding “within 30 days after the due date” the drafting party “is in material breach of the arbitration agreement, is in default of the arbitration and waives its right to compel the employee” to proceed with arbitration. (Cal Code Civ. Proc. 1281.98(a)(1)). Under the Act, that means that when the employer “breaches the agreement” by failing to make payments on time, the employee may withdraw the claim from arbitration and proceed in court. 

A recent California Appellate Court decision shows just how strictly courts may construe the requirement that fees be paid “within 30 days after the due date”. In Doe v. Superior Court of the City and County of San Francisco, (First App. Dist., Div. 3, 9/8/23), the court found that “paid” within 30 days after the due date meant “received by the arbitrator” within 30 days after the due date. (emphasis in original). In Doe, September 1, 2022, was the “due date”, so the fees had to be paid by October 3rd. The employer put a check for the fees in the mail on Friday, September 30th for the full amount due that Monday. However, the payment was not received until October 5th, two days after the 30-day period expired. The court reasoned that “the proverbial check in the mail” does not constitute payment, and the fees are not considered “paid” under the statute until they are received by the arbitrator. 

Practically speaking, employers need to be prepared to pay arbitration fees immediately once arbitration is initiated because the Act also requires that arbitration providers issue invoices as “due upon receipt.” Thus, employers have 30 days from receipt of the invoice to pay and ensure actual receipt by the arbitrator, not 30 days measured from some later due date. 

Given the uncertainty with delivery times with mailing a check, employers may want to use more immediate forms of payment, such as credit cards, electronic checks, or wire transfers, especially if they are cutting it close to the deadline. Even with those more immediate payment forms, employers should be cautious not to wait until the last minute, since it could take time for the arbitration provider to receive the transfer which may vary based on the financial institution involved. 

If you have questions about your arbitration agreements or procedures, or how to manage payment processes to avoid getting your cases kicked out of arbitration, you can contact Candace DesBaillets or your favorite CDF attorney

About CDF

For over 25 years, CDF has distinguished itself as one of the top employment, labor and immigration firms in California, representing employers in single-plaintiff and class action lawsuits and advising employers on related legal compliance and risk avoidance. We cover the state, with five locations from Sacramento to San Diego.

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About the Editor in Chief

Sacramento Office Managing Partner and Chair of CDF’s Traditional Labor Law Practice Group. Mark has been practicing labor and employment law in California for thirty years. His practice has a special emphasis on the representation of California employers in union-management relations and handling federal and state court litigation and administrative matters triggered by all types of employment-related disputes. He is also adept at providing creative and practical legal advice to help minimize the risks inherent in employing workers in California. He recently named “Sacramento Lawyer of the Year” in Employment Law-Management for 2021 by Best Lawyers®.
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