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More loopholes in employee arbitration agreements

Despite recent rulings from the Supreme Court, employee arbitration agreements might not be as rock-solid as some employers believe. In Elijahjuan v. Superior Court (Mike Campbell & Associates), a California appellate court held that a narrowly-tailored arbitration provision did not mandate arbitration of employees’ statutory wage claims.The arbitration provision, found in the plaintiffs’ employment contracts, mandated arbitration of any claims involving the “application or interpretation” of the contracts.This language was much narrower than other arbitration provisions, which typically mandate arbitration of any and all disputes involving the parties.The employees, who had been characterized as independent contractors, brought claims under California state law for unpaid overtime, break payments and other fees and penalties.The court concluded that because the claims arose from wage-and-hour statutes, they were not subject to the arbitration agreement, which again applied only to claims related to the parties’ contracts.In its ruling, the court relied on Hoover v. American Income Life Ins. Co., which previously held that statutory overtime claims are not subsumed by an arbitration provision governing claims “arising out of or relating to” a contract.Litigants should scrutinize arbitration language very carefully, as not all arbitration provisions necessarily apply to all employment-related claims (especially claims arising from federal or state statutes, such as overtime).