Pulli v. Pony International, LLC, Case No. D059137
On June 20, 2012, the California Court of Appeal held in Pulli that an arbitration clause in an employment contract was enforceable and does not constitute an unlawful “release of a claim or right” under Labor Code section 206.5. The employer exercised its right to arbitration after the employee filed a lawsuit in superior court by filing a motion to compel arbitration.
The enforceability of the arbitration clause was challenged by the employee in the trial court. The employee claimed the arbitration clause constituted a release of his right to jury trial.
After finding the employer had waived its right to have the issue of enforceability decided in arbitration, the court analyzed the legislative history of Labor Code section 206.5 and concluded that the statute did not render the arbitration clause unenforceable. The court explained that the statute merely precludes the employer from obtaining a “release of a claim or right on account of wages due . . . .” The court further held that even if the statute operated to invalidate such a release, it would not provide a defense to the enforcement of an arbitration provision.
Pulli is a welcome decision for employers who utilize employment contracts and rely on arbitration provisions to limit litigation costs.
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