At a Glance

• The California Supreme Court upheld the arbitration fee payment rule, codified in Code of Civil Procedure § 1281.98, finding the Federal Arbitration Act (FAA) did not preempt the statute.
• The Court rejected an “inflexible” reading that would automatically strip employers of arbitration rights for every late payment.
• Courts must now apply equitable doctrines like excusable neglect and relief from forfeiture to preserve arbitration rights if delays stem from genuine mistakes rather than strategy or neglect.

Case Background

A sanitation employee at Golden State Foods Corporation, signed an arbitration agreement governed by the Federal Arbitration Act (FAA) at the start of his employment. In 2020, after reporting alleged workplace sexual harassment, he was terminated and sued for retaliation, wrongful termination, and Labor Code violations.

The trial court compelled arbitration before JAMS. After an initial deposit, JAMS issued two final-hearing invoices totaling $44,000 in July and August 2022, payable “upon receipt.” The employer did not pay within 30 days. The employee moved to withdraw from arbitration under § 1281.98. The employer paid shortly thereafter, citing the arbitrator’s unavailability and counsel’s paternity leave.

The trial court sided with the employer, but the Court of Appeal reversed, finding the payments untimely and forfeiture of arbitration mandatory. The California Supreme Court granted review to decide whether § 1281.98 is preempted by the...

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