Defendant employer appealed an order of the Superior Court of Los Angeles County (California), which denied the employer’s motion to compel arbitration in an action brought plaintiff employee for breach of an employment contract.

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Overview

The employee, after leaving his position as a corporate officer, alleged that he was owed a large profit-sharing bonus and a severance payment under the terms of his employment agreement. The employer sought to enforce an arbitration clause in the employment agreement. The court held that the arbitration clause was governed the Federal Arbitration Act, 9 U.S.C. § 1 et seq., because the employer had significant interstate activities and the employee made business trips outside California and dealt with out-of-state lenders. Thus, the employment contract involved interstate commerce within the meaning of 9 U.S.C. § 2, and the employee’s right to a judicial forum for his unpaid wages claim under Lab. Code, § 229, was preempted. Although the right to a judicial forum for wage claims ordinarily could not be waived, the court concluded that case law pertaining to overtime and minimum wage payments did not apply because the employee’s claim involved large amounts of money. The arbitration clause was not ambiguous in providing that all of the employer’s affiliated entities were bound it. The arbitration clause was not unconscionable under Civ. Code, § 1670.5, subd. (a).

Outcome

The court reversed the order that had denied the motion to compel arbitration and remanded with directions to enter a new order granting the motion in its entirety.