Arbitration/Employment/Waiver: Employer Did Not Waive Right To Enforce An Arbitration Agreement By Waiting Until Employee’s Wage Claim Had Been Heard In A Berman Hearing

 

Employer Did Not Waive Its Right To Arbitrate Wage Claim And So Trial Court’s Order Denying Employer’s Motion To Compel Arbitration Is Reversed

     Fremont Automobile Dealership, LLC, A137266 (1/2 July 23, 2014) (Richman, Kline, Brick) (unpublished) addresses the still somewhat murky relationship between the interaction of an arbitration agreement and the statutory right to a Division of Labor Enforcement hearing under Labor Code section 98 – a so-called “Berman Hearing.”  “As an alternative to an ordinary civil action for unpaid wages, an employee may file a wage claim with the Labor Commissioner pursuant to Labor Code section 98, et seq.  This is commonly known as the ‘Berman’ hearing procedure.” Fremont Automobile Dealership, n.2.

     The issue here was that employee’s claim was successfully resolved in favor of employee through a Berman hearing, with the employer, just before the hearing, seeking to enforce an arbitration agreement.  The Court of Appeal seemed to think that the employee had not preserved the issue of “waiver” of the employer’s right to arbitration below.  However, even if waiver was an issue that had been preserved for the appeal, a critical issue in determining whether the right to compel arbitration has been waived is the presence or absence of prejudice.  Because Kim’s employer Fremont Toyota “was entitled to a de novo review by the trial court of Kim’s claim” pursuant to Labor Code section 98.2(a), the Court of Appeal found that the employer “did not gain any advantage for the arbitration that it would not hav e had in the trial court’s de novo review.”  No prejudice, no waiver here. 

     The trial court’s order denying employer’s petition to compel arbitration was reversed.