Motion to Compel Arbitration in California Employment Cases

A California employer enforces an arbitration agreement by filing a motion (technically a petition) to compel arbitration under Code of Civil Procedure section 1281.2 as its first response to the lawsuit. If the court finds a signed agreement that covers the dispute, it must order arbitration unless the employee proves a defense such as unconscionability, or the employer waived the right by litigating first. The motion is usually won or lost on the agreement’s drafting and on how fast the company moves.

What does a California court need to see before it orders arbitration?

The court needs proof that a written agreement exists and that it covers the employee’s claims. Section 1281.2 says the court “shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists,” subject to a short list of exceptions. Waiver is one. Grounds to rescind the agreement are another. A third covers pending litigation with a third party that could produce conflicting rulings.

The court also can’t deny the motion because it thinks the employer’s position in the underlying dispute is weak. The same section says an order to arbitrate “may not be refused on the ground that the petitioner’s contentions lack substantive merit.”

There’s a pleading rule too. Under California Rules of Court, rule 3.1330, the petition must set out the arbitration provision, and “The provisions must be stated verbatim or a copy must be physically or electronically attached to the petition and incorporated by reference.” On a party’s motion, the court stays the lawsuit while arbitration goes forward. Section 1281.4 provides that “If the issue which is the controversy subject to arbitration is severable, the stay may be with respect to that issue only.”

In practice the first fight is often about the signature. Employees say they never saw the agreement, or that an electronic signature isn’t theirs. I’d have the declaration come from the person who actually runs the onboarding system and can explain, step by step, how this employee logged in and signed. A declaration from an HR generalist who only attaches the PDF invites that challenge.

Does the Federal Arbitration Act change the analysis?

It protects the agreement from rules that single out arbitration, but it doesn’t displace ordinary contract defenses. Section 2 of the Federal Arbitration Act (FAA) makes a covered arbitration provision “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” The FAA reaches a written arbitration provision in “a contract evidencing a transaction involving commerce,” and most employment agreements also say expressly that the FAA governs.

In Ramirez v. Charter Communications, Inc. (July 15, 2024, S273802), the Supreme Court of California agreed with an earlier Court of Appeal decision that the FAA “permits courts to declare arbitration agreements unenforceable upon the same grounds as any other contract, including unconscionability.” So the FAA keeps California from treating arbitration worse than other contracts. It won’t save a one-sided agreement.

How do courts decide whether an employment arbitration agreement is unconscionable?

The employee carries the burden, and has to show unfairness both in how the agreement was presented and in its terms. Ramirez states that “The party resisting enforcement of an arbitration agreement has the burden to establish unconscionability.” It also explains that “Both procedural and substantive elements must be present to conclude a term is unconscionable, but these required elements need not be present to the same degree.”

Procedural unconscionability is about formation: a take-it-or-leave-it form handed to a new hire, little time to read it, no copy. Nearly every onboarding agreement has some of this, and courts know it. Substantive unconscionability is about the terms themselves, and that’s where agreements fail.

For claims like those under California’s Fair Employment and Housing Act (FEHA), the agreement also has to meet the five minimum requirements from Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83. As Ramirez summarizes them, the agreement must provide for neutral arbitrators and more than minimal discovery, require a written award, allow every type of relief a court could award, and not make the employee pay unreasonable costs or any arbitrator’s fees as a condition of using the forum.

In Ramirez, the court agreed that a clause requiring whichever party resisted arbitration to pay the other side’s fees “has the potential to result in an unlawful award of attorney fees and is substantively unconscionable,” because FEHA limits when an employer can recover fees from an employee. The court also addressed claim carve-outs that let the employer go to court on the claims it was likely to bring. Absent a justification, it said, courts “must assume” that kind of lack of mutuality is unconscionable.

Format matters too, though not the way many employees argue. In Fuentes v. Empire Nissan, Inc. (Feb. 2, 2026, S280256), the agreement was printed so small and blurry that it was nearly unreadable. The Supreme Court held that format generally doesn’t count toward substantive unconscionability, “but that courts must closely scrutinize the terms of difficult-to-read contracts for unfairness or one-sidedness.” It also held the Court of Appeal “erred in applying a presumption in favor of arbitration” to read the agreement in the employer’s favor. The case went back to the trial court.

Can a court strike the bad clauses and still enforce the agreement?

Yes, and after Ramirez there is no rule that two bad clauses sink the whole agreement. The court clarified “that no bright line rule requires a court to refuse enforcement if a contract has more than one unconscionable term,” and that “the appropriate inquiry is qualitative.” It quoted the principle that the “strong legislative and judicial preference is to sever the offending term and enforce the balance of the agreement.”

The court did set limits. A court refuses to enforce the agreement if its central purpose is tainted, if fixing it would require adding terms instead of removing them, or if, in the court’s words, the defects show “a systematic effort to impose arbitration on the weaker party not simply as an alternative to litigation, but to secure a forum that works to the stronger party’s advantage.” A severance clause helps: under Ramirez, the court “should take it into account as an expression of the parties’ intent” that a curable agreement be enforced.

My view is that Ramirez rewards employers that can show good faith in drafting. An agreement with one outdated fee clause and a severance provision is a strong candidate for severance. An agreement that carves out every claim the employer might bring, caps discovery hard, and shifts fees is the kind of document the court described as a systematic effort, and severance is unlikely to save it.

Can an employer lose the right to arbitrate by waiting?

Yes. In Quach v. California Commerce Club, Inc. (July 25, 2024, S275121), the Supreme Court dropped the old rule that an employee had to show prejudice before a court would find waiver. Now “a court should apply the same principles that apply to other contracts to determine whether the party seeking to enforce an arbitration agreement has waived its right to do so.” Waiver must be shown by clear and convincing evidence, and the court said it can be shown by conduct “so inconsistent with an intent to enforce the contractual right as to lead a reasonable factfinder to conclude that the party had abandoned it.” In Quach the employer answered the complaint, served discovery, and took the plaintiff’s deposition, then moved to compel 13 months after the suit was filed.

Fees are the other trap. Under section 1281.97 and section 1281.98, an employer that doesn’t pay required arbitration fees “within 30 days after the due date” is in material breach, and the employee can take the case back to court. In Hohenshelt v. Superior Court (Aug. 11, 2025, S284498), the Supreme Court held the FAA doesn’t preempt section 1281.98, but read it to cost the employer arbitration only when nonpayment is “willful, grossly negligent, or fraudulent.” That’s real relief for an honest mistake, but I’d still treat every arbitration invoice as a hard deadline. Arguing excusable neglect is a fight you don’t need.

What happens to a PAGA claim when the employee signed an arbitration agreement?

The employee’s own PAGA claim can usually go to arbitration, but the claims for coworkers usually stay in court. PAGA, the Private Attorneys General Act, lets an employee sue for civil penalties on the State’s behalf for Labor Code violations against the employee and coworkers.

In Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639, the United States Supreme Court held that the FAA preempts California’s rule against splitting a PAGA action, so the employer could compel arbitration of the employee’s “individual” claim. The Court also said that “PAGA provides no mechanism to enable a court to adjudicate non-individual PAGA claims once an individual claim has been committed to a separate proceeding.”

The Supreme Court of California disagreed on that state-law point. In Adolph v. Uber Technologies, Inc. (July 17, 2023, S274671), it held that “an order compelling arbitration of the individual claims does not strip the plaintiff of standing as an aggrieved employee to litigate claims on behalf of other employees under PAGA.” The court accepted that the trial court may stay the coworker claims while the individual claim is arbitrated, and that if the arbitrator finds the plaintiff isn’t an aggrieved employee and that finding is confirmed as a judgment, the plaintiff loses standing for the rest. So a well-drafted agreement splits the case, and the individual arbitration can decide what’s left in court.

One open question: whether a plaintiff can file a PAGA case that leaves out the individual claim. The Supreme Court placed Leeper v. Shipt, Inc. (S289305) on its November 3, 2026 oral argument calendar to decide it.

Sexual harassment claims are a separate carve-out. Under the federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, a predispute arbitration agreement is unenforceable “at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute.”

What happens if the court denies the motion?

The employer can appeal, but the case keeps moving. Section 1294(a) allows an appeal from an order denying a petition to compel arbitration, and since January 1, 2024 it adds that “the perfecting of such an appeal shall not automatically stay any proceedings in the trial court during the pendency of the appeal.” An employer that wants the trial court case paused has to ask for a stay. That’s one more reason to build the strongest record on the first motion, since the employer may be litigating discovery while the appeal is pending.

What should an employer do once an arbitrable claim is filed?

Before the response deadline, work through these:

1. Put a litigation hold on the employee’s personnel file, payroll and time records, emails and texts, and every version of the handbook and policies, along with the onboarding system’s records showing when and how the arbitration agreement was signed.
2. Calendar the response deadline on the summons, pull the arbitration agreement, and check whether an employment practices liability (EPLI) policy requires prompt notice to the carrier.
3. Identify the managers involved and the HR or IT person who can authenticate the signature, and make sure nobody takes further action against the employee that could look like retaliation.
4. Read the agreement against Armendariz and Ramirez before filing: who pays the arbitrator, what discovery it allows, which claims it carves out, and whether it has a severance clause.
5. Talk to a lawyer before answering, serving discovery, contacting the employee or the employee’s lawyer, or offering anything to settle, because each of those can affect waiver.

The firm’s page for employment defense attorneys in California explains how arbitration agreements fit into the defense of wage and hour and discrimination claims.

Arbitration questions California employers ask

Does filing an answer waive the right to compel arbitration?

Not by itself, but it’s a step in the wrong direction. Under Quach, waiver depends on whether the employer’s conduct as a whole is inconsistent with an intent to arbitrate. An answer that raises arbitration as a defense, followed promptly by a motion to compel, is far safer than an answer followed by months of discovery. The cleanest course is to file the motion to compel as the first response to the complaint.

Can we make arbitration a condition of employment in California?

California tried to restrict that through Labor Code section 432.6 (Assembly Bill 51). In Chamber of Commerce of the United States v. Bonta (9th Cir. 2023) 62 F.4th 473, the Ninth Circuit held “AB 51 is preempted by the FAA” and affirmed a preliminary injunction against enforcing it. A take-it-or-leave-it agreement carries some procedural unconscionability, which puts more weight on whether the terms are fair.

Who decides whether a sexual harassment claim stays in court?

A judge. The federal statute says its applicability and the enforceability of the agreement “shall be determined by a court, rather than an arbitrator,” even if the agreement tries to delegate those questions to the arbitrator. So a delegation clause won’t send that fight to arbitration. The election belongs to the person alleging the harassment, and the court decides whether the dispute qualifies.

Should we update our agreement if an employee has already sued?

Updating the form for future hires is usually wise. Rolling out a new agreement to current employees in the middle of a dispute is riskier, and riskier still for the employee who sued, because it can look like an attempt to affect pending litigation. Revise the template now and get advice before presenting it to anyone involved in a pending claim.

If an employee’s lawyer is fighting your arbitration agreement

If a former employee has sued in court despite an arbitration agreement, the signed agreement, the onboarding records, and the speed of the company’s first response usually decide whether the case is arbitrated. Rosenberger + Kawabata represents employers defending employment lawsuits and claims through its business litigation practice, including claims involving arbitration agreements and PAGA. Contact Rosenberger + Kawabata online for a confidential consultation, or call (310) 894-6921.

Sources

The statutes are Code of Civil Procedure section 1281.2, section 1281.4, section 1281.97, section 1281.98, and section 1294; 9 U.S.C. § 2; and 9 U.S.C. § 402. The court rule is California Rules of Court, rule 3.1330. The decisions are Ramirez v. Charter Communications, Inc. (2024) S273802, Fuentes v. Empire Nissan, Inc. (2026) S280256, Quach v. California Commerce Club, Inc. (2024) S275121, Hohenshelt v. Superior Court (2025) S284498, Adolph v. Uber Technologies, Inc. (2023) S274671, and Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639, and Chamber of Commerce of the United States v. Bonta (9th Cir. 2023) 62 F.4th 473. The Leeper issues are on the Supreme Court’s November 3, 2026 calendar.

This post is general information about California and federal employment law as of November 5, 2026. It is not legal advice, and reading it does not create an attorney-client relationship. Employment statutes, regulations, and court decisions change often, and the outcome of any claim depends on its facts. Past results do not guarantee future outcomes.