It can be months or years of administrative hearings to decide how much you are obliged to pay terminated employees. That’s one reason the Court of Appeal of California has begun advocating arbitration as a legal alternative to hearings.
Recent case: When Frank Moreno began working at Sonic, an auto dealership, he signed an agreement that required both parties to submit any employment disputes to arbitration. The terms of the agreement said it would be governed by the Federal Arbitration Act and the California Arbitration Act.
After leaving Sonic, Moreno claimed the company owed him money for 63 days’ worth of earned, unused and unpaid vacation wages. He filed an administrative wage claim for the money with the California Labor Commissioner.
Sonic argued he had to take the case to private arbitration.
The Court of Appeal of California agreed. It said that the agreement met all the strict requirements for an enforceable contract under California law, and took away no substantive rights. (Sonic-Calabasas v. Moreno, No. B204902, Court of Appeal of California, 2nd Appellate Division, 2009)
Final notes: The court also made it clear that employers must pay employees for unused vacation time. Simply put, vacation pay constitutes wages. Second, note that the employer in this case had made sure that the arbitration agreement complied with the latest Supreme Court and state court rulings. Ask your attorney to review your arbitration agreement to make sure it complies.