On February 24, 2011, in Sonic-Calabasas A, Inc. v. Moreno, the California Supreme Court invalidated an employment arbitration agreement in the context of an administrative wage proceeding. According to the court, requiring an employee to waive his or her right to a formal administrative hearing before the California Labor Commissioner was both “contrary to public policy and unconscionable.” It found that an employee had a right to an administrative wage hearing before being ordered to arbitration.
Two months later, on April 27, 2011, the U.S. Supreme Court decided AT&T Mobility, LLC. v. Concepcion, finding that federal law preempted a different California rule invalidating class action waivers in arbitration agreements. In May, Sonic petitioned the U.S. Supreme Court for review, arguing that Concepcion dictated a different result in its case. On October 31, 2011, the United States Supreme Court vacated the California Supreme Court’s ruling and ordered it to reconsider its decision in light of the Supreme Court’s ruling in AT&T Mobility LLC v. Concepcion. The California Supreme Court now must decide whether wage proceedings before the California Labor Commissioner are inconsistent with the Federal Arbitration Act.