Carefully draft arbitration agreements to ensure enforceability

Under California Labor Code Section 229, an employee may maintain a claim for unpaid wages in court even if she signed an arbitration agreement with her employer. A California appellate court recently ruled an employee's claim for unpaid wages was properly compelled to arbitration even though the arbitration agreement included a California choice-of-law provision.

Employee agreed to arbitrate 'any dispute or controversy'

The old adage "words matter" is especially true when it comes to legal documents. Former AmeriHome Mortgage Company, LLC, employee Sylvia Nixon found out as much.

As part of the onboarding process with AmeriHome, Nixon signed an employment and confidentiality agreement that included an agreement to arbitrate any dispute or controversy that arose out of her employment. In the agreement, AmeriHome included the following California choice-of-law language:

This Agreement, and all questions relating to its validity, interpretation, performance and enforcement, as well as the legal relations hereby created between the parties hereto, shall be governed and construed under, and interpreted and enforced in accordance with, the laws of the State of California notwithstanding any California or other conflict of law provision to the contrary[,] and any dispute or controversy arising out of or relating to this Agreement . . . will be settled exclusively by arbitration. . . . Either Party may . . . compel arbitration . . . to the extent authorized by the Federal Arbitration Act or the California Arbitration Act.