You’ve taken the right steps. You prepared and rolled out an enforceable arbitration agreement to your employees. Not surprisingly in California, you were sued. The Plaintiff, by force or voluntarily, agreed to arbitrate. You selected an arbitrator. The arbitrator sets a due date for payment. The benefits of arbitration are at your fingertips. All you have left to do is pay the arbitrator’s fee within 30 days of the due date. You mail the check on the 27th day – after all, that’s within the grace period, right? WRONG! Don’t throw away your competitive edge by making a simple mistake. The arbitrator must receive the payment within 30 days of the due date. Under Code of Civil Procedure Section 1281.98(a)(1), an arbitrator must “paid within 30 days after the due date” or else arbitration may be forfeited. Simply sending a check within 30 days doesn’t cut it.
Mailing a check, even within the 30-day period, is not sufficient if the arbitrator does not receive payment within 30 days after the due date. In the case of Jane Doe v. Superior Court of the City and County of San Francisco, Jane Doe brought a motion to compel arbitration against her employer. The trial court granted the motion and sent the parties to arbitration. Jane Doe’s deadline to pay the arbitrator’s fee was October 3, 2022 (30 days after the September 1, 2022, due date). Jane Doe mailed her check on the preceding Friday, September 30—five days before it was due. However, the arbitrator did not receive the check until October 5—two days after the deadline. The plaintiff asked the trial court to vacate the order compelling the parties to arbitration and to require them to litigate in court. The trial court denied the request, and Plaintiff appealed.
The Court of Appeal “strictly” enforced the 30-day grace period and vacated the trial court’s order—forcing the parties back to court. The Court of Appeal rejected “that the proverbial check in the mail constitutes payment” and held that an arbitrator must receive payment within 30 days after the due date.
The Takeaway This is a harsh ruling for California employers trying to do the right thing but a good reminder to ensure the arbitrator receives payment within 30 days after the due date. Be sure to calendar the due date of arbitrator’s fees and pay by the deadline. Calendar a reminder at least a week in advance to get the payment out. Make sure to pay extra for tracking or guaranteed delivery. Of course, consider paying through online payment portals or by wire. For the critical task of enforcing your arbitration agreement, do not rely on the USPS’ regular mail.