SB 707: CA- Strict Enforcement and Penalties for Failure to Comply to Arbitration Agreements

SB 707: is an arbitration agreement enforcement provision that creates strict penalties for failure to comply with the agreement, particular the timely payment of any arbitration fees and costs. Specifically, it provides that any drafting party to an arbitration agreement that fails to pay the fees needed to commence or continue arbitration, within 30 days after such fees are due, is held to have materially breached the agreement and, as such, is in default and waives its right to compel arbitration.

SB 707 further provides remedies to employees for such a material breach of the arbitration agreement. In particular, it enables the employee to remove the matter to court or move to compel arbitration. For instance, if the drafting party fails to pay the required arbitration fees to continue an arbitration that is currently in progress, the employee can move the matter to court; seek a court order compelling payment of the fees; continue the arbitration and permit the arbitrator to seek collection of their fees; or pay the costs and fees and seek them from the drafting party at the conclusion of the arbitration regardless of the outcome of the arbitration. SB 707 also provides for the tolling of the statute of limitations with regard to all claims brought in the arbitration.

SB 707 also imposes mandatory monetary sanctions on any drafting party found to be in default of an arbitration through such a failure to pay the arbitration fees and costs. Most notably, it also allows the court or arbitrator to impose evidentiary, terminating or contempt sanctions. Lastly, SB 707 requires private arbitration companies to collect and report aggregate demographic data of all arbitrators.

Accordingly, employers should pay careful attention to timely pay any arbitration fees and costs in order to preserve its right to arbitration and avoid any potential sanctions.

This information provided on this website is meant to provide general information and does not constitute as legal/ medical advice.