Employer's Failure to Promptly Compel Arbitration is a Waiver of that Right

On June 13th, 2012, in Hoover v. American Income Life Insurance Co. (California Courts of Appeal– 4th District, No. E052864), the court denied an employer's motion to compel arbitration because the employer waived his right to arbitration by waiting to demand it for 15 months after the filing of the complaint.

In Hoover, Martha Hoover was employed with American Income Life Insurance (AIL) for four months before quitting. Hoover's employment contract contained an arbitration clause, which she signed. Hoover and others filed a class-action complaint against AIL in September 2009 claiming that the company did not compensate employees for business expenditures. A year after the complaint was filed, AIL demanded arbitration, but Hoover refused. It was not until December of 2010 that AIL moved to compel arbitration. When the trial court denied their motion, AIL appealed.

On appeal, the court affirmed the denial of AIL's motion. The court stated that when a deadline for arbitration is not spelled out in an agreement, the right to arbitration is waived by the party who does not demand it within a reasonable time. In addition, the court noted that AIL's delayed responses and their apparent desire to prolong the issue was inconsistent with arbitration, as the purpose of arbitration is to come to a quicker resolution of a dispute, not to draw the dispute out longer. As such, the Courts of Appeal determined that AIL's extreme delay constituted a waiver of the right to arbitrate.

If you have suffered from retaliation, discrimination, or harassment, please do not hesitate to contact a Orange County Employment attorney today.

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