U.S. Supreme Court Upholds Arbitration Agreements

On May 21, 2018, the Supreme Court of the United States settled the contentious class action waiver issue that has riled courts for the past six years. In a 5-4 opinion, the Court upheld class action waivers in arbitration agreements. Relying heavily on the text of the Federal Arbitration Act (FAA) and “a congressional command requiring us to enforce, not override, the terms of the arbitration agreements before us,” the Court ruled that the FAA instructs “federal courts to enforce arbitration agreements according to their terms—including terms providing for individualized proceedings.” The Court also reasoned that neither the FAA’s savings clause nor the National Labor Relations Act (NLRA) contravenes this conclusion. Epic Systems Corporation v. Lewis, Supreme Court of the United States, Nos. 16–285, 16–300, 16–307 (May 21, 2018).

This is great news for employers but it is not a panacea.  Employers should focus on paying employees in accordance with the law and allowing breaks, rest periods, leaves of absence, compliance with ADA and worker’s compensation issues.  All State and Federal labor laws remain in play.  This decision only opens the door to require the  use of Arbitration to settle legal disputes (at your expense).  It also reduces the use of class action law suits started by a dispute with an individual.

We will be discussing this with some of our customers in the near future.  An Arbitration Agreement is not for all employers and may actually create costs you are not ready to pay, so we must be careful in the application of this policy.  I am sure we will be hearing more about this judgement in the days and weeks ahead.


We have been reminding everyone that you only have 24 hours or same day to pay an employee in California if they are fired.  In some other states, you can wait until the end of the pay period, but I say, why wait.  Get them off your property and off your books so there is no problem later.  If the employee quits, in California you only have 72 hours to pay them.

BUT, what if the employee leaves and you can’t give them their last paycheck?  You still have an obligation to attempt payment within the time guidelines.  So, your first try should be to call or text the employee to make arrangements.  IF they say they will come into the office later, don’t believe it.  Get that in writing (texting or something you can bring to court).  If later they sue for not providing the check within the established time, it may cost you thousands of extra dollars!

Your second approach would be to send the check (immediately) to the last known address by certified mail with return receipt.  If they sign for it,  you are done.  If it is undeliverable, it will come back to  you.  NOW WHAT DO I DO?

If you do not have a correct address and you have made attempts to resolve this issue within the guidelines, this is what the labor commission says to do…

Note to Employers:  If you have non-negotiated checks on your books and the checks are made payable to employees who have left your employment and whom you cannot locate, you may send the Labor Commissioner the non-negotiated checks, along with an explanation of your efforts to contact the employee. The Labor Commissioner will try to locate the employee and make payment of the wages. If these attempts are unsuccessful, the checks will be deposited into the State of California Unclaimed Wages Fund. Locate the nearest office of the Labor Commissioner.

This is true for most states and it gets the check out of your hands.

Bottom line…..never let an employee work for you that you have not at the VERY LEAST filled out a W-4 tax form and get their cell phone number.  This way you have a social security number to attach to the paycheck and an address provided by the employee to send the check.  It is better to fill out a full packet before the employee works, but this is the very least when you have a situation where the employee quits the first day.

Remember, the fine for paying late is the full daily wages for each day missed.  So an employee working 10 hours at $11 per hour is getting an extra $110 per day in penalties if you do not get that check to them.  That means a $200 paycheck could be $4000 after one month!  Postage and a little effort are a lot cheaper.