Foiled Again By The Federal Arbitration Act!

Labor Code sections 98 through 98.8, provide an administrative statutory scheme for an employee to seek relief from the Labor Commissioner for a wage dispute. This method of dispute resolution is called a Berman hearing. In Sonic-Calabasas A, Inc. v. Moreno (2011) 51 Cal.4th 659, [247 P.3d 130; 121 Cal.Rptr.3d 58] (Sonic I), the California Supreme Court held it was contrary to public policy and unconscionable for an employer to require an employee to waive the right to a Berman hearing as a condition of employment, and that such hearings are not preempted by the Federal Arbitration Act [FAA]. The U.S. Supreme Court vacated the judgment and remanded the case for the California Supreme Court to consider it in light of AT&T Mobility LLC v. Concepcion (2011) 131 S.Ct. 1740, [179 L.Ed.2d 742].  After reconsidering the matter in light of Concepcion, as directed, the California Supreme Court concluded “that because compelling the parties to undergo a Berman hearing would impose significant delays in the commencement of arbitration, the approach we took in Sonic I is inconsistent with the Federal Arbitration Act. Accordingly, we now hold, contrary to Sonic I, that the Federal Arbitration Act preempts our state-law rule categorically prohibiting waiver of a Berman hearing in a predispute arbitration agreement imposed on an employee as a condition of employment. [¶] At the same time, we conclude that state courts may continue to enforce unconscionability rules that do not “interfere [] with fundamental attributes of arbitration. [Citation] Although a court may not refuse to enforce an arbitration agreement imposed on an employee as a condition of employment simply because it requires the employee to bypass a Berman hearing, such an agreement may be unconscionable if it is otherwise unreasonably one-sided in favor of the employer.” (Sonic-Calabasaa A, Inc. v. Moreno (Cal. Sup. Ct.; October 17, 2013) 57 Cal.4th 1109.