Arbitration agreement enforcement continues to take up California court space. Recently, a wave of cases highlights for the restaurant and food service industry and other employers the importance of timely payment of arbitrator and arbitration fees, particularly in California, to avoid an ejection from arbitration and return to court.
Often, and certainly in California, employer arbitration agreements require employers to pay most, if not all, employment arbitration fees. A failure to pay such fees timely in California may result in a waiver of the right to proceed in arbitration and a court may order that the case proceed in court—perhaps even on a class basis—rather than in arbitration on an individual basis.
California Code of Civil Procedure Section 1281.98 requires that arbitration fees be paid within 30 days of the due date. The arbitration provider must issue an invoice identifying the fees owed and stating the date fees are due. Often, professional arbitration services’ invoices state that the fees are due on the date of the invoice.
Importantly, under Section 1281.98, a late payment of fees constitutes a material breach of the arbitration agreement, which results in a waiver of the employer’s right to proceed in arbitration. Indeed, in recent decisions, state Courts of Appeal have ruled that employers waived their right to arbitrate when fees were paid even one day late and even when such nonpayment was not intentional. These opinions have held that there is no...
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