It has been recently held by the Supreme Court of California that written agreements requiring workers to waive their right to bring wage claims before California's labor board are unenforceable. In February, 2011, the Supreme Court of California ruled in its decision in Sonic-Calabasas A, Inc. v. Frank Moreno that these agreements, which frequently show up in employment contracts and typically force employees seeking unpaid wages into "closed door" arbitration proceedings. Most employees, in executing their employment contracts, do not understand why such clauses are inhibiting their rights. However, by invalidating these agreements, the decision allows employees access to a more expedient process before the California Labor Board, rather than these closed door arbitration proceedings. 

    A Berman hearing is an informal hearing before the State's Labor Commissioner that a worker is entitled to for unpaid wages. Protecting the right to a Berman hearing is important, because these hearings are afforded to employees who do not need an attorney to attend. This is critical for most of California's workers, who may not proceed further in the face of a lawsuit which requires an Attorney, because of an inability to pay the fees. Furthermore, when an employee wins at a Berman hearing, the employer must post a bond ensuring that the employee will be paid even if the company has gone out of business. This is also critical due to the fact that many employees suffer from employers who do not pay their wages when the business is in danger of going out of business. 

    However, an arbitration in an employment clause may still be enforceable. If the Berman hearing is completed, and the employer appeals the decision to a trial court, the appeal can then be moved into arbitration if there is an arbitration clause in the agreement. This is yet another case in the power struggle between employment contracts, arbitration clauses, and fair labor rights to all employees. 

    For more information, please see Sonic-Calabasas A, Inc. v. Frank Moreno, opinion available at http://scocal.stanford.edu/opinion/sonic-calabasas-inc-v-moreno-33953. See also Catherine Ho, "Workers Notch Win In Arbitration Fights," Los Angeles Daily Journal, February 25, 2011. 

Cordially,

Meghan E. George, Esq.

Hartnett Law Group