229. Actions to enforce the provisions of this article for the collection of due and unpaid wages claimed by an individual may be maintained without regard to the existence of any private agreement to arbitrate.
Of course that law is preempted by the Federal Arbitration Act. The U.S. Supreme Court has said as much.
The catch is that preemption applies only if the Federal Arbitration Act applies to the agreement to arbitrate. The Federal Arbitration Act applies only to arbitration agreements made by employers in "interstate commerce." So, technically, the employer looking to enforce an arbitration agreement in spite of section 229 has to establish FAA jurisdiction, or section 229 will apply and no wage claim arbitration will be permitted.
When Martin Lane sued Francis Capital Management over wage-hour and other issues, Francis petitioned to compel arbitration. Lane invoked Labor Code section 229, arguing it precluded arbitration. The Court of Appeal decided Francis did not establish it was subject to the Federal Arbitration Act:
Seeking to avoid application of section 229 to Lane's third cause of action, FCM contends that in the instant case, section 229 was preempted by the FAA. {Slip Opn. Page 13} (See Perry v. Thomas (1987) 482 U.S. 483, 492 [where FAA applies, it preempts section 229].) In the trial court, FCM's only mention of FAA preemption came in a footnote, and the court's rejection of the argument was predicated on FCM's failure to develop a factual record in support of preemption. Assuming the argument was preserved for appeal, we agree that FCM neither sought to nor succeeded in presenting facts sufficient to support a finding of FAA preemption.
So, lawyers, do not assume that a court will find that an employer is involved in "interstate commerce" within the meaning of the Federal Arbitration Act.
Anyway, this case seems like it's anti-arbitration, but it's not. The court rejected the trial court's conclusion that the arbitration agreement was void because it did not attach the American Arbitration Association's rules. The court also held that section 229 applied to just one of the causes of action and the others would be arbitrated. The court obviously can sense the winds of change in arbitration law. (The California Supreme Court will rule on the continuing viability of its arbitration jurisprudence within the next four months).
This case is Lane v. Francis Capital Management and the opinion is here.
