When an employer moves to compel arbitration in a California court, it should also ask for a stay. Code of Civil Procedure section 1281.4 says the court “shall” stay the lawsuit, on a party’s motion, while the arbitration motion is pending and, if arbitration is ordered, until it’s complete. In federal court, the Supreme Court held in 2024 that the Federal Arbitration Act requires a stay rather than a dismissal when a party asks. A stay keeps the employer from litigating the same dispute on two fronts at once.
What does section 1281.4 require?
A stay on request. Code of Civil Procedure section 1281.4 provides that when a court has ordered arbitration of a controversy that is an issue in a pending action, the court “shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.”
The second paragraph covers the gap before a ruling. If an application to compel arbitration is “undetermined,” the court must also stay the action on motion until that application is decided. That lets an employer pause discovery while the arbitration motion is briefed.
Can the stay cover only part of the case?
Yes. The last sentence of section 1281.4 says: “If the issue which is the controversy subject to arbitration is severable, the stay may be with respect to that issue only.” Courts often stay non-arbitrable claims too, when the arbitration may decide issues those claims share. A common example is a representative PAGA claim left in court while the employee’s individual claims go to arbitration.
| Situation | Rule | Effect for the employer |
|---|---|---|
| Motion to compel pending | CCP § 1281.4, para. 2 | Pauses court proceedings during briefing |
| Arbitration ordered | CCP § 1281.4, para. 1 | Court case waits for the award |
| Federal court, arbitrable claims | 9 U.S.C. § 3 | Stay required on request |
What did the Supreme Court decide in Smith v. Spizzirri?
That federal courts can’t dismiss instead of staying. In Smith v. Spizzirri (2024) 601 U.S. 472, delivery drivers sued for wage violations, and the trial court compelled arbitration and dismissed the case. The Supreme Court reversed, holding that when a court “finds that a dispute is subject to arbitration, and a party has requested a stay of the court proceeding pending arbitration, the court does not have discretion to dismiss the suit on the basis that all the claims are subject to arbitration.”
The Court explained: “When § 3 says that a court ‘shall . . . stay’ the proceeding, the court must do so.” A stay matters to an employer because an order compelling arbitration generally isn’t immediately appealable, while a dismissal would be.
Should an employer always ask for a stay?
Usually. A stay keeps the court case open to confirm the award, resolve fee disputes, or handle a breakdown in the arbitration. It also stops the employee from pursuing discovery in court that the arbitration rules wouldn’t allow. The main reason to think twice is timing: an employer that waits too long to move to compel may face a waiver argument, so the motion and the stay request should come early.
What should an employer do when an arbitrable claim is filed in court?
Move quickly and ask for everything at once.
- Preserve the signed arbitration agreement, the onboarding records showing how it was presented and signed, and any opt-out records.
- Calendar the response deadline on the summons, and avoid filing anything on the merits that could support a waiver argument.
- Identify which claims are arbitrable and which, such as representative PAGA claims, will stay in court.
- Pull the arbitration fee rules and confirm the employer can pay on time.
- Talk to counsel about filing the motion to compel and the stay request together.
Motions like these are part of moving employment claims into arbitration. The motion itself is covered in the firm’s post on motions to compel arbitration.
Stay pending arbitration questions employers ask
Does a stay stop discovery?
A stay of the action generally stops court-supervised discovery. Discovery in the arbitration follows the arbitration agreement and the arbitral rules. If the court stays only the arbitrable issues, discovery on the remaining claims may continue, so the scope of the stay order matters and should be drafted carefully.
What happens to the court case after the award?
The stayed case stays on the docket. A party can petition the same court to confirm, correct, or vacate the award, and any claims that were stayed rather than arbitrated can then proceed, often shaped by what the arbitrator decided.
Is the section 1281.4 stay mandatory?
The statute uses “shall,” and courts treat the stay of arbitrable claims as mandatory once arbitration is ordered and a party moves for it. Staying non-arbitrable claims is more discretionary, which is why the request should explain how the arbitration may affect them.
If an employee has sued despite an arbitration agreement
If a current or former employee has filed in court on claims covered by an arbitration agreement, the timing of the motion to compel and the stay request usually decide how much litigation the employer faces in the meantime. Rosenberger + Kawabata represents employers defending employment lawsuits and claims through its business litigation practice, including claims subject to arbitration agreements. Contact Rosenberger + Kawabata online for a confidential consultation, or call (310) 894-6921.
Sources
The statutes are Code of Civil Procedure section 1281.4 and 9 U.S.C. § 3. The federal stay case is Smith v. Spizzirri (2024) 601 U.S. 472.
This post is general information about California and federal employment law as of November 7, 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.