Labor Code Section 229 Expressly Provides Wage Claims Were Not Subject To Arbitration.
When state law provides a statutory exemption from arbitration, it’s not enough to assert Federal Arbitration Act preemption: “A party seeking to enforce an arbitration agreement has the burden of showing FAA preemption.” Lane v. Francis Capital Management LLC, 224 Cal.App.4th 676, 687 (2014). That means showing the activities are involved in interstate commerce. Defendant/employer failed to meet that burden in Tito v. Lotus Property Services, Inc., B249999 (2/8 Nov. 21, 2014) (Bigelow, Flier, Grimes) (unpublished).
The Titos, who worked as residential apartment managers for Defendants, alleged numerous Labor Code wage and hour violations against Defendants. Because the Titos had signed a contract with an arbitration provision, Defendants moved to compel arbitration.
Labor Code section 229 expressly provided wage claims such as those alleged by the Titos were not subject to arbitration. “In many case,” the Court of Appeal observed, “parties do not dispute that an agreement at issue involves interstate commerce and that the FAA applies.” But here the Titos did dispute that their employment agreement involved interstate commerce.
The Court of Appeal held that the employer simply did not make a showing, with evidence, that the parties’ contractual relationship involved interstate commerce, as consistent with Lane, supra, and other cases. And so the order denying the motion to compel arbitration was affirmed.