Arbitration, Employment: Arbitrator’s Failure To Consider Unwaivable Fee Request Under Labor Code Section 226(e)(1) For Prevailing Employee Was Erroneous

Employee Won $4,000 For Employer’s Failure To Issue Accurate Itemized Wage Statements.

               In Sanzone v. DCH Korea Imports, LLC, Case No. G063483 (4^th Dist., Div. 3 July 3, 2024) (unpublished), an arbitrator awarded an employee $4,000 on a Labor Code failure to issue accurate itemized wage statements, after denying several other Labor Code claims, and ordering each side to bear their own fees (even though employer had to pay the costs of the arbitration).  Employee appealed, among other issues, the denial of attorney’s fees, claiming that he had an unwaivable statutory right to fees and costs under Labor Code section 226(e)(1), which is a plaintiff one-way favorable fee-shifting statute, such that the arbitrator exceeded his powers.

               The 4/3 DCA agreed, in an opinion authored by Justice Motoike.  Applying a de novo standard of review, it found an employee has unwaivable statutory rights under section 226(e)(1), a paramount concern ignored by the arbitrator and the lower court in confirming the award (and denying the employee’s vacatur request).  The panel understood that there were decisions under Civil Code section 1717 where arbitrators did not have to follow the 1717 mandate, but found that the reasoning in Pearson Dental Supplies, Inc. v. Superior Court, 48 Cal.4^th 665 (2010) apt because employee was denied the opportunity to be heard on the merits of the fee request.

               BLOG OBSERVATION—If we read this case correctly, the appellate court was concerned that the arbitrator did not even consider the request, not that a merits determination after considering it would be treated the same way.