Legal Protections for Undocumented Workers in California – Part 1: Undocumented Workers are Covered by California’s Discrimination and Wage and Hour Laws

California has a massive number of undocumented workers, with estimates ranging from around two to three million people (out of a total workforce of around 19 million people). These workers perform critical services across many sectors, including agriculture, construction, and hospitality. They are often subjected to some of the worst working conditions and abuses imaginable. 

California also has some of the strongest worker protection laws in the United States. Workers can employ these laws in court to ensure that they are free from unlawful harassment, discrimination, and retaliation for engaging in protected activity. They can also use these laws to recover wages that they have earned but not been paid.

Part one of this blog post addresses the question of whether undocumented workers are covered by California employment and wage and hour law. This question is important because if the answer is no, then employers will be incentivized to hire undocumented workers whom they can treat unlawfully with impunity.

Part two will address the equally important question of whether employers can use the discovery process in litigation to determine whether the worker bringing the case is documented or not, because, if the answer is yes, then the risk of bringing such cases will be too high for many undocumented workers to take.

Federal Law and the Hoffman Decision

Federal immigration law, as expressed by the United States Congress in the Immigration Reform and Control Act of 1986 (IRCA),[1] makes it unlawful for any employer “to continue to employ [an] alien in the United States knowing the alien is … an unauthorized alien with respect to such employment.” (8 U.S.C. § 1324a, subd. (a)(2).) It also makes it unlawful for employers to knowingly to hire undocumented workers and for employees to use fraudulent documents to establish employment eligibility. (8 U.S.C. § 1324a, subd. (a)(1).)

In Hoffman Plastic Compounds, Inc. v. NLRB (2002) 535 U.S. 137, 148  (Hoffman) the US Supreme Court considered the impact of IRCA on the National Labor Relations Board (NLRB)’s ability to award “backpay” to undocumented workers. (In this context, the term backpay refers to the money that the plaintiff would have earned from the date of his termination until the company learned of his undocumented status.) The plaintiff in Hoffman was laid off from his job mixing chemical compounds after he joined a union organizing campaign. He testified that he was born in Mexico, was not legally authorized to work in the United States, and had used a false birth certificate in order to gain employment.

Chief Justice WIlliam Rehnquist, writing for a 5-4 majority, found that IRCA preempted the NLRB’s ability to award backpay under such circumstances: 

[A]llowing the Board to award backpay to illegal aliens would unduly trench upon explicit statutory prohibitions critical to federal immigration policy, as expressed in IRCA. It would encourage the successful evasion of apprehension by immigration authorities, condone prior violations of the immigration laws, and encourage future violations. However broad the Board’s discretion to fashion remedies when dealing only with the NLRA, it is not so unbounded as to authorize this sort of an award. (535 U.S. at 152.)

Accordingly, the US Supreme Court held that the NLRB could not award backpay to an undocumented worker “for years of work not performed, for wages that could not lawfully have been earned, and for a job obtained in the first instance by a criminal fraud.” (535 U.S. at 149.)

The California Legislature’s Response to Hoffman

Hoffman was decided in 2002. The California Legislature responded to Hoffman that same year by enacting Senate Bill No. 1818. SB 1818 created California Labor Code section 1171.5 (among other statutes), which declared that, “[a]ll protections, rights, and remedies available under state law, except any reinstatement remedy prohibited by federal law, are available to all individuals regardless of immigration status who have applied for employment, or who are or who have been employed, in this state.”

Furthermore,

[f]or purposes of enforcing state labor and employment laws, a person’s immigration status is irrelevant to the issue of liability, and in proceedings or discovery undertaken to enforce those state laws no inquiry shall be permitted into a person’s immigration status except where the person seeking to make this inquiry has shown by clear and convincing evidence that the inquiry is necessary in order to comply with federal immigration law.

This was not an entirely new concept in California. For example, in 1998, in a case called Murillo v. Rite Stuff Foods, Inc. (1998) 65 Cal.App.4th 833, 849, the California Court of Appeal held that the plaintiff, who was undocumented, was entitled to all the protections available under employment law while she was employed. Accordingly, she was not barred from bringing sexual harassment claims against her employer.

Salas v. Sierra Chemical Co.: The California Supreme Court Weighs In

The California Supreme Court considered the question of whether SB 1818 was preempted by IRCA in Salas v. Sierra Chemical Co. (2014) 59 Cal.4th 407, 414.[2] In that case, the plaintiff sued his former employer for failure to accommodate his disability and retaliation for filing a workers’ compensation claim. The employer argued that the plaintiff could not proceed with his lawsuit because it had subsequently learned that he had used a false social security number when applying for work. 

The precise issues before the California Supreme Court in Salas were (1) was SB 1818 preempted by IRCA; and (2) whether the plaintiff’s use of a false social security number barred his claims under the after-acquired evidence doctrine and the unclean hands doctrine.

Addressing the preemption issue, the California Supreme Court considered each of the various types of preemption (express, field, conflict, and obstacle) and found that none of them applied. The court noted that IRCA did not make it a crime for undocumented workers to engage in work. Rather, IRCA focused on the hiring process. Furthermore, the consequences of holding that SB 1818 was preempted would effectively immunize employers who discriminated against their workers or failed to pay them the wages that they had earned.[3] In a perverse way, that result would incentivize employers to hire undocumented workers because such workers would not be able to sue them to collect unpaid wages or to stop harassment.

Accordingly, the Salas court held that allowing a worker to recover damages for lost wages for the time period prior to the employer discovering that the worker was undocumented was not preempted by IRCA. However, federal law did preempt an award of lost wages for the time period after the employer learned about the worker’s immigration status.

Furthermore, SB 1818’s protections extended “even to those unauthorized aliens who, in violation of federal immigration law, have used false documents to secure employment.” 59 Cal.4th at 426. Thus, “if an employer hires an undocumented worker, the employer will also bear the burden of complying with this state’s wage, hour and workers’ compensation laws.” (Hernandez v. Paicius (2003) 109 Cal.App.4th 452, 460.) 

Turning to the evidentiary doctrines at issue, the California Supreme Court concluded that the after-acquired evidence doctrine did not completely bar the plaintiff’s wrongful termination claims.[4] Rather, it only limited the remedies available to the plaintiff because reinstatement, promotion, and pay for the time period after the employer discovered the plaintiff’s immigration status would be “inequitable and pointless.” (See McKennon v. Nashville Banner Publishing Co. (1995) 513 U.S. 352, 362.) The same was true of the unclean hands defense.[5]

Conclusion

California law provides that undocumented workers can recover backpay both for work actually performed but not compensated and for unpaid wages from the date of termination until the date that the employer discovers the workers’ undocumented status. That rule is not preempted by federal law. 

This common-sense rule protects and promotes the public policies embodied in California’s discrimination and wage and hour laws. It also ensures that employers are not incentivized to hire undocumented workers.

[1]The Immigration Reform and Control Act of 1986 prohibits the employment of undocumented workers in the United States. It requires employers to verify that prospective employees are eligible to work in the United States (8 U.S.C. § 1324a(b)), prohibits employers from hiring those unable to provide documents establishing employment eligibility (id., § 1324a(a)(1)), and compels employers to immediately discharge any unauthorized alien worker upon discovery of the worker’s unauthorized status.

[2] Under the United States Constitution’s supremacy clause (U.S. Const., art. VI, cl. 2), federal law can preempt or supersede state law. Hoffman did not address the question of whether IRCA preempts state law.

[3]  Other courts had previously noted this reality. (See Sure–Tan, Inc. v. NLRB (1984) 467 U.S. 883, 893–894 [recognizing that enforcing labor laws on behalf of undocumented aliens reduces an employer’s incentive to unlawfully hire them]; Reyes v. Van Elk, Ltd. (2007) 148 Cal.App.4th 604, 617 [“Allowing employers to hire undocumented workers and pay them less than the wage mandated by statute is a strong incentive for the employers to do so, which in turn encourages illegal immigration.”]; Farmer Brothers Coffee v. Workers’ Comp. Appeals Bd. (2005) 133 Cal.App.4th 533, 540 [if unauthorized aliens were to be denied state labor law protections, “unscrupulous employers would be encouraged to hire aliens unauthorized to work in the United States, by taking the chance that the federal authorities would accept their claims of good faith reliance upon immigration and work authorization documents that appear to be genuine”].)

[4] The doctrine of after-acquired evidence refers to an employer’s discovery, after an allegedly wrongful termination of employment or refusal to hire, of information that would have justified a lawful termination or refusal to hire. (See, e.g., White & Brussack, The Proper Role of After–Acquired Evidence in Employment Discrimination Litigation (1993) Boston College L.Rev. 49.)

[5] The equitable doctrine of unclean hands may limit the remedies available to a plaintiff who has acted unconscionably, in bad faith, or inequitably.

Legal Protections for Undocumented Workers in California – Part 2: Limitations on the Ability of Employers to Discover Immigration Status in Discovery

California has a massive number of undocumented workers, with estimates ranging from around two to three million people (out of a total workforce of around 19 million people). These workers perform critical services across many sectors, including agriculture, construction, and hospitality. They are often subjected to some of the worst working conditions and abuses imaginable.

California also has some of the strongest worker protection laws in the United States. Workers can employ these laws in court to ensure that they are free from unlawful harassment, discrimination, and retaliation for engaging in protected activity. They can also use these laws to recover wages that they have earned but not been paid.

Part one of this blog post addressed the question of whether undocumented workers are covered by California employment and wage and hour law. This question is important because if the answer is no, then employers will be incentivized to hire undocumented workers whom they can treat unlawfully with impunity.

Part two addresses the equally important question of whether employers can use the discovery process in litigation to determine whether the worker bringing the case is documented or not, because, if the answer is yes, then the risk of bringing such cases will be too high for many undocumented workers to take. The Impact of SB 1818 on Discovery in Litigation

Another issue that arises in the context of undocumented workers is whether an employer can use the discovery process in a lawsuit to garner information regarding the plaintiff’s immigration status. That process allows the litigants in an action to pose questions and request documents pertaining to the case. The resolution of this issue is important because if the answer is yes, then undocumented workers will rarely bring such claims.

As noted above, California Labor Code section 1171.5(b) provides in part that “a person’s immigration status is irrelevant to the issue of liability, and in proceedings or discovery undertaken to enforce those state laws no inquiry shall be permitted into a person’s immigration status unless the person seeking to make this inquiry has shown by clear and convincing evidence that the inquiry is necessary in order to comply with federal immigration law.”

The California Court of Appeal considered the scope of Section 1171.5(b) in Manuel v. Superior Court of Santa Clara County (2022) 82 Cal.App.5th 719, 723. In that case, the plaintiff, who had injured his back at work, sued his employer, BrightView Landscape Services, Inc. (BrightView), after BrightView told him not to return to work. Brightview then sought to compel the plaintiff to provide discovery responses showing that he was legally authorized to work in the United States. The trial court agreed with BrightView, and the plaintiff filed a writ seeking appellate review.

The Court of Appeal reversed the trial court, holding that Section 1171.5(b) barred the discovery that BrightView sought regarding the plaintiff’s immigration status. The court noted that BrightView had not shown that the plaintiff was seeking either reinstatement or backpay for the time period after BrightView had discovered the plaintiff’s true immigration status.

Accordingly, BrightView was not permitted to propound discovery inquiring into the plaintiff’s immigration status absent clear and convincing evidence that the plaintiff was seeking “remedies for wrongful termination in violation of federal immigration law. Conclusion

California law provides that an employer may not inquire about a person’s immigration status by way of discovery in litigation unless it has shown by clear and convincing evidence that the inquiry is necessary in order to comply with federal immigration law. This common-sense rule protects and promotes the public policies embodied in California’s discrimination and wage and hour laws.

When are California Employers on Notice of a Disability for the Purposes of Liability under the FEHA?

A recent decision of the California Court of Appeal clarified that an employer’s knowledge of an employee’s undisclosed disability can only be inferred from the employee’s conduct when the fact of disability is the only reasonable interpretation of the known facts. (more…)

Truck Drivers and California Wage and Hour Law: Payment Plans, Off-the-Clock Work, and Cell Phones

On August 12, 2025, the Ninth Circuit Court of Appeals issued its decision in Williams, et al., v. J.B. Hunt Transport, Inc., which followed a wage and hour trial for California-based truck drivers. Plaintiffs are three California-based truck drivers who were employed by J.B. Hunt beginning in 2019. The plaintiffs in that case alleged that they were not paid properly or reimbursed for their business expenses, including the use of their cell phones.

The trial judge, the Honorable Philip S. Gutierrez of the Central District of California, had granted summary judgment to J.B. Hunt on the following causes of action: (1) a claim that J.B. Hunt had not paid its drivers for all hours worked; (2) a claim that J.B. Hunt was not liable for failing to pay for off-the-clock work; and (3) a claim that J.B. Hunt had violated California’s wage statement law.

The case then proceeded to trial, after which the district court entered judgment in favor of J.B. Hunt for failure to reimburse its drivers for necessary business expenses and awarded costs to J.B. Hunt.

The Ninth Circuit’s review of the district court’s actions provides insight into how to litigate these claims moving forward. Here are some of the most significant takeaways:

1. Truck Drivers and Piece-Rate Pay

2. Truck Drivers and Off-The-Clock Work

3. Truck Drivers and Wage Statements

4. Truck Drivers and Cell Phones

The final substantive issue addressed by the Ninth Circuit was the Plaintiffs’ claim that they had been required to use their cell phones for work, and that J.B. Hunt was therefore required to reimburse them for the costs of those phones under California law. On this claim, the plaintiffs sought to introduce the testimony of other drivers to support their claim. However, the district court barred the plaintiffs from doing so, and the Ninth Circuit found that that was not an abuse of discretion.

The Ninth Circuit also found that it was not an abuse of discretion for the district court to bar the plaintiffs from mentioning that after it was sued, J.B. Hunt began paying a stipend to its drivers to cover their cell phones. The court rejected the plaintiffs’ argument that they were seeking to introduce such evidence to demonstrate “the feasibility of precautionary measures” under Federal Rule of Evidence 407.

Finally, the Ninth Circuit addressed the issue of what jury instruction should have been provided as to the cell phone claim. It agreed with the district court had given the proper instruction:

To establish a claim under California Labor Code § 2802 claim, Plaintiffs must prove (1) that they incurred expenditures in direct consequence of the discharge of their job duties for J.B. Hunt; (2) that the expenditures were reasonable and necessary; (3) that J.B. Hunt failed to reimburse Plaintiffs the full amount of the expenditures; and (4) the amount of the expenditures that J.B. Hunt failed to reimburse Plaintiffs. 

If you are a California truck driver and have questions about your rights, please feel free to contact the attorneys at Hunter Pyle Law, PC. We have represented other drivers in a number of individual and class cases. We can be reached at inquire@hunterpylelaw.com or (510) 444-4400.

California Sick Leave Basics

California Employees Entitled to Paid Sick Leave

California law^[1] generally requires employers to provide their employees^[2] with at least three paid sick days per year.

When and how can I use my paid sick leave?

To receive this benefit, employees must have worked in California for the same employer for at least 30 days in a one-year period. (Labor Code § 246, subd. (a).) Employees are entitled to use accrued paid sick days beginning on the 90th day of employment. (Labor Code § 246, subd. (c).)

Employees can decide how many hours of sick leave they want to use, though employers can set “a reasonable minimum increment” of time that must be used to measure the leave. However, employers cannot make the increment larger than two hours. (Labor Code § 246, subd. (k).)

Employees can use paid sick leave for preventative care, or for diagnosis, care, or treatment of an existing health condition. They may use sick leave to care for their own health or the health of a family member. (Labor Code § 246.5, subd. (a)(1).)

If the need for paid sick leave is foreseeable, employees must provide reasonable advance notice to their employers. If the need for paid sick leave is unforeseeable, the employees must notify their employers as soon as they can. (Labor Code § 246, subd. (m).)

Employees must pay out sick leave on or before the next scheduled pay date after the sick leave was taken. (Labor Code § 246, subd. (n).)

How do I accrue paid sick leave?

Employees must accrue at least one hour of sick leave for every 30 hours worked. Employers may use a different accrual method as long as employees accrue paid sick leave on a regular basis and so that employees have at least 24 hours of sick leave by their 120th day of employment. (Labor Code § 246, subd. (b).)

How will I know how much sick leave I have?

Employers must provide employees with written notice that explains the amount of paid sick leave available, either on a wage statement or on a separate document provided on pay day. If the employer has an unlimited sick leave or PTO policy, the employer must write “unlimited” on the wage statement or separate notice. (Labor Code § 246, subdivision (i).)

Does paid sick leave carry over or expire?

Generally, paid sick time carries over to the following year.

However, employers do not have to allow sick time to carry over to the following year if they provide employees with a lump sum of 40 hours or five days of sick leave at the start of a new year. (Labor Code §246, subd. (d).)

Can employers cap my sick leave?

Employers may cap the accrual of paid sick leave at 80 hours or ten days. (Labor Code § 246, subd. (j).)  

Employers may cap the use of sick leave at 40 hours or five days per year. (Labor Code § 246, subd. (d).)

Can I cash out my sick leave when I leave my employment?

Employers are not required to pay out unused paid sick days when employees resign, are terminated, retire, or have any other separation from employment. (Labor Code § 246, subd. (g)(1).)

However, if an employee is rehired within a year, then the employer must reinstate the employee’s previously accrued and unused paid sick time. (Labor Code § 246, subd. (g)(2).)

What happens if my employer does not provide me paid sick leave or does not let me use it?

If an employer violates California’s paid sick leave laws, employees may be entitled to reinstatement, backpay, pay for sick days unlawfully withheld, and penalties up to $4,000. (Labor Code § 248.5, subd. (e).)

If you have questions about your employer’s sick leave policy or think your rights may have been violated, give us a call at 510-444-4400 or schedule an intake.

[1] This law was introduced as the Healthy Workplaces, Healthy Families Act of 2014.

[2] Some employees covered by collective bargaining agreements and some public employees may not fall under California’s Healthy Workplaces, Healthy Families Act of 2014. (See Labor Code Section 245.5.)

Do California’s Whistleblower Protections Apply to Elected Officials?

California has some of the strongest whistleblower protection laws in the nation. These laws are available to employees who seek to expose wrongdoing in the workplace. But do they apply to elected officials? According to a recent decision of the California Supreme Court, the answer to that question is “no.”

In Brown v. City of Inglewood (July 7, 2025) S280773, the plaintiff was the elected treasurer of the City of Inglewood. She raised concerns about the mayor misappropriating public funds. After that, she faced a series of punitive acts including (1) losing her seat at city council meetings; (2) being excluded from several committees; and (3) reduction of her investment authority.

Ms. Brown then sued the city for retaliation under Labor Code section 1102.5. The city countered that elected officials were not protected by 1102.5. The California Supreme Court ultimately agreed with the city, for the following reasons:

First, Section 1102.5 prohibits employers from retaliating against employees who blow the whistle. Section 1106 provides that the term “employee”:

“includes, but is not limited to, any individual employed by the state or any subdivision thereof, any county, city, city and county, including any charter city or county, and any school district, community college district, municipal or public corporation, political subdivision, or the University of California.”

However, Section 1106 does not state whether the term “employee” includes elected officials. Furthermore, other statutes vary on this issue. Accordingly, the California Supreme Court considered other interpretive aids to reach its holding.

After a long and complicated analysis, the Court found that the context and history of the term “employee” in Section 1106 was meant to exclude elected officials. Notably, that statute does not reference elected officials or officers.

The Court further held that this conclusion was supported by public policy. Moreover, the Court rejected Ms. Brown’s attempt to rely on the common law definition of “employee” as articulate in cases including Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341. The Court noted that that test is not always appropriate outside of the context of torts in which the employer’s vicarious liability is at issue.

If you are a whistleblower who has questions about your rights at work, please feel free to make use of the free and confidential case intake process offered by Hunter Pyle Law, PC. We can be reached at (510) 444-4400 or inquire@hunterpylelaw.com.

Unpaid Wages? You may also be owed Penalties and Interest

California Labor Code section 1194.2 applies to lawsuits and Labor Commissioner claims in which an employee sues to recover wages “because of the payment of a wage less than the minimum wage.” As a practical matter, that language applies to any claim where the employee was not paid anything for the work performed because, in such situations, the employee was clearly not paid the minimum wage.

California Labor Code section 1194.2(a) provides that employees who prevail in such cases are entitled to recover penalties known as “liquidated damages.” These penalties are equal to the unpaid wages plus interest. In other words, if an employee shows that they were not paid anything for the work performed, and that they are owed $10,000 in unpaid wages and $1,000 in interest, that employee can also recover an additional $11,000 in liquidated damages.

However, California Labor Code section 1194.2(b) provides that employers may have a defense to a claim for liquidated damages “if the employer demonstrates to the satisfaction of the court or the Labor Commissioner that the act or omission giving rise to the action was in good faith and that the employer had reasonable grounds for believing that the act or omission was not a violation of any provision of the Labor Code relating to minimum wage, or an order of the commission, the court or the Labor Commissioner may, as a matter of discretion, refuse to award liquidated damages or award any amount of liquidated damages not exceeding the amount specified in subdivision (a).”

In Iloff v. LaPaille, the California Supreme Court addressed the question of what an employer must show to avoid liquidated damages under Labor Code section 1194.2(a). The Court first reviewed the history of section 1194.2 and the purpose of the statute. The Court then held that to establish the good faith affirmative defense, an employer must show that it made an attempt to determine what the law required. The Court further held that the form and extent of the required attempt would vary depending on the context. However:

“[T]he burden is on the employer to show it made an attempt to determine what the law required that was reasonable under the circumstances and a good faith effort to comply with the requirements of the law.”

The Court noted that while liquidated damages may serve to both punish bad behavior and to deter future violations, they are also “damages” that are paid directly to the employees. In this sense, liquidated damages serve to compensate the employees for damages caused by the violations that would otherwise be too hard to calculate.

Finally, the Court noted that trial courts could reduce or eliminate liquidated damages under section 1194.2 only if the employer had met its burden of proof as to the good faith affirmative defense. When an employer fails to meet that burden, trial courts cannot reduce the liquidated damages.

What about the Naranjo Decisions?

The holding in Iloff is notably different from the California Supreme Court’s decisions in the Naranjo v. Spectrum Security Services, Inc. cases, handed down in 2022 and 2024. In the first Naranjo decision, the Court concluded that extra premium pay for missed meal and rest breaks breaks (Lab. Code, § 226.7) is wages that must be reported on wage statements (Lab. Code, § 226) and paid in a timely manner when an employee leaves a job (Lab. Code, § 203). (Naranjo I.)

However in Naranjo II, the Court held that Naranjo was not entitled to recover penalties for wage statement violations because the defendant’s violations were not “knowing and intentional” (Lab. Code, § 226(e). Furthermore, Naranjo was not entitled to recover waiting time penalties for late payment of final wages because it did not act “willfully” (Lab. Code, § 203). Put another way, an employer that has a reasonable and good faith belief that it is complying with the law, even it if is mistaken, is not liable for penalties under either Labor Code section 203 or Labor Code section 226.

However, the Naranjo decisions analyzed requirements that are not present in section 1194.2. Specifically, section 1194.2 does not require a showing of willfulness, or that the actions were “knowing and intentional” for an employee to prevail. Rather, it requires that an employer show that its actions were taken in good faith and that the employer had reasonable grounds for them. The Naranjo standards therefore do not apply.

Please feel free to contact the experienced wage and hour attorneys at Hunter Pyle Law, PC if you have questions about your right to unpaid wages under California law. We can be reached at inquire@hunterpylelaw.com or (510) 444-4400.

Failure to pay Arbitration Fees: What’s left after Hohenshelt v. Superior Court?

More and more employers are forcing workers to sign arbitration agreements that prevent the workers from suing in court. Instead, the workers are forced into arbitration, where they are much less likely to prevail, and, even if they do prevail, their awards tend to be lower than jury verdicts.

The Problem: Employers not paying Arbitration Fees

Arbitration also creates another problem: In California, employers are required to pay for the costs of the arbitrators. Some employers realized that if they stopped paying the arbitrator, the arbitrator would stop working. This created a nightmare situation for workers who were then caught in limbo: unable to sue in court and unable to proceed in arbitration.

In 2019, the California Legislature passed Senate Bill No. 707 in response to “a concerning and troubling trend” in consumer and employment arbitrations: “employers are refusing to pay required fees to initiate arbitration, effectively stymieing the ability of employees to assert their legal rights.” (Sen. Judiciary Com., Analysis of Sen. Bill No. 707 (2019–2020 Reg. Sess.) as amended Apr. 11, 2019, p. 6 (Senate Judiciary Committee Analysis); Sen. Rules Com., Off. of Sen. Floor Analyses, 3d reading analysis of Sen. Bill. No. 707 (2019–2020 Reg. Sess.) as amended May 20, 2019, p. 4 (Senate Rules Committee Analysis).)

In so doing, the Legislature documented instances in which companies faced large numbers of individual arbitration demands and then failed to timely pay arbitration fees, thereby frustrating adjudication of their employees’ claims. (Sen. Judiciary Com. Analysis, supra, at pp. 6–7.) To give just one example of this phenomenon, 2,800 Chipotle workers filed a class action against Chipotle in 2013 and were ordered to individually arbitrate their claims. Chipotle then frustrated the efforts of its employees to have their claims adjudicated by failing to pay its share of the applicable filing fees. Six years later not a single claim had been heard.

The Solution: Senate Bill 707

Senate Bill 707 added certain provisions to the California Arbitration Act. For example, it provides that where “an employment or consumer arbitration … requires … the drafting party” to “pay certain fees and costs,” those fees or costs must be “paid within 30 days after the due date.” If the fees are not timely paid, an employee may then return their claims to court and require the defendant to pay their attorneys’ fees and costs.

Hohenshelt and Beyond

Employers immediately challenged Senate Bill 707, claiming that it was preempted by the Federal Arbitration Act. In August 2025, the California Supreme Court addressed this argument in the case of Hohenshelt v. Superior Court (2025) 18 Cal.5th 310.

The Hohenshelt Court concluded that Senate Bill 707 was not preempted. However, to reach this conclusion, it rejected the plaintiff’s argument that Senate Bill 707’s language had to be read strictly. Instead, Senate Bill 707 was to be read in harmony with background statutes and principles that allow relief from forfeiture where nonperformance is not willful, fraudulent, or grossly negligent. 

In light of this holding, the Hohenshelt Court directed the Court of Appeal “to remand the matter to the trial court for consideration of whether [the employer] may be excused for its failure to timely pay arbitration fees, such that the stay of litigation should not be lifted and the parties should be returned to arbitration, and whether the delay resulted in compensable harm to [the employee].”

So what is left after Hohenshelt? To start with, an employee does not have to show that they were prejudiced by an employer’s failure to timely pay arbitration fees to prevail on a motion under Senate Bill 707. The California Supreme Court rejected that argument in 2024 in the case of Quach v. California Commerce Club, Inc. (2024) 16 Cal.5th 562.

However, that employee will have to show that the employer acted willfully, fraudulently, or with gross negligence. An example of this would be an employer willfully withholding the fees necessary to proceed in arbitration. “But short of such wrongful conduct, a breaching party may be relieved from forfeiting its right to enforce an arbitration agreement based on the circumstances….” Hohenshelt, 18 Cal.5th at 346.

The fallout from Hohenshelt can be seen in the case of Wilson v. Tap Worldwide, LLC (Cal. Ct. App., Sept. 22, 2025, No. B334533) 2025 WL 2802617, at *2, as modified (Oct. 2, 2025). In that case, the trial court had found that the employer was late in paying the arbitration fees, vacated the order compelling arbitration, and awarded over $300,000 to the plaintiff’s attorneys. However, after Hohenshelt the Court of Appeal asked for supplemental briefing. The Court of Appeal then reversed the award of attorneys’ fees because, as a matter of law, the defendant’s untimely payment was not willful, grossly negligent, or fraudulent.

If you have questions about your rights at work, please feel free to contact Hunter Pyle Law, PC, to make use of our free and confidential intake process. We look forward to hearing from you.

The Transportation Worker Exemption and Warehouse and Distribution Center Workers

This blog post contains important information for people are warehouse and distribution center workers, as well as other workers who are involved in interstate or international commerce.

It is the third in a series of blog posts regarding the Transportation Worker Exemption (TWE), which exempts certain workers from the Federal Arbitration Act (FAA). The TWE is important because the FAA has been found to invalidate many laws and doctrines that, before they were struck down, protected employees and consumers from unfair arbitration agreements.

However, if an employee falls within the TWE, then the FAA does not apply. That means that the laws and doctrines that protect employees and consumers are not preempted by the FAA, and the employee is free to make use of them.

The Transportation Worker Exemption and Warehouse Workers

After the United States Supreme Court’s decision in Southwest Airlines Co. v. Saxon (2022)  596 U.S. 450, there is no question that workers who are actually engaged in foreign or interstate commerce fall within the TWE. That is true even if they work for a company that is not, strictly speaking, a transportation company. See Bissonnette v. LePage Bakeries Park St., LLC (2024) 601 U.S. 246. It is also true even if they are designated as “independent contractors” or “contractor drivers.” See New Prime Inc. v. Oliveira (2019) 586 U.S. 105.

However, workers who are “intimately involved” with interstate commerce, but do not themselves cross state or national borders, may also qualify for the TWE. In California, that may include warehouse and distribution center workers.

For example, in Ortiz v. Randstad Inhouse Services (9th Cir. 2024) 95 F.4th 1152, the court held that warehouse workers who transported Adidas products to and from storage racks within a warehouse were subject to the TWE. Ortiz is an important case because it clarifies that the workers at issue do not need to move goods out of a facility to fall within the scope of the TWE. To the contrary, such workers can play a direct and necessary role in the interstate commerce of goods. However, importantly, the workers in Ortiz actually handled the goods “near the very heart of their supply chain. In each case, the relevant goods were still moving in interstate commerce when the employee interacted with them, and each employee played a necessary part in facilitating their continued movement.”

Ortiz therefore torpedoes the reasoning in an earlier district court case, Lopez v. Nordstrom, Inc. (C.D. Cal. 2024) 2024 WL 3464170 (finding warehouse distribution center employee was not a transportation worker because his work “appear[ed] to focus most on handling [ ] garments, either packing them into boxes, sorting them, or hanging them up”). After Ortiz, such a worker would probably qualify for the TWE.

Similarly, in Nair v. Medline (9th Cir. 2024) 2024 WL 4144070, the Ninth Circuit Court of Appeals found that workers who packaged, moved, loaded, unloaded, and shipped medical supplies to interstate customer qualified for the TWE. The plaintiff in Nair alleged that she alleged that she worked every day in the “shipping dock” where she “spent 100% of [her] time stacking pallets and wrapping them in saran wrap to load onto trucks.” She also alleged that she loaded the delivery trucks every day with pallets that were prepared for shipping to destinations in and outside of California. The court found that because she packaged and loaded goods that traveled in interstate commerce, the plaintiff fell within a class of worker that plays a direct and necessary role in the free flow of goods across borders.

However, a 2024 district court case reached the opposite conclusion. In Villasenor v. Dollar Tree (C.D. Cal. 2024) 2024 WL 4452853, a judge in California’s Central District found that workers who merely provide administrative support at a warehouse do not fall within the scope of the TWE. In that case, the defendant presented evidence that the plaintiff staffed the front desk, answered the phone, and handled paperwork. It was undisputed that she did not physically handle any of the merchandise that was stored in the warehouse.

In light of those facts, the court found that the plaintiff belonged to a class of workers who provide administrative support, and that the relationship between such workers and the distribution of goods was not sufficiently close to establish that their work played a tangible and meaningful role in the progress of such goods in interstate commerce.

California warehouse workers may qualify for the transportation worker exemption, including workers who are designated as “independent contractors.” If you have questions about your rights at work, please feel free to contact Hunter Pyle Law, PC.

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The Transportation Worker Exemption and Last-Mile Drivers

This blog post contains important information for truck drivers, delivery drivers, and other workers who are involved in interstate or international commerce.

It is the second in a series of blog posts regarding the Transportation Worker Exemption (TWE), which exempts certain workers from the Federal Arbitration Act (FAA). The TWE is important because the FAA has been found to invalidate many laws and doctrines that, before they were struck down, protected employees and consumers from unfair arbitration agreements.

However, if an employee falls within the TWE, then the FAA does not apply. That means that the laws and doctrines that protect employees and consumers are not preempted by the FAA, and the employee is free to make use of them.

The Transportation Worker Exemption and Last-Mile Drivers

After the United States Supreme Court’s decision in Southwest Airlines Co. v. Saxon (2022)  596 U.S. 450, there is no question that workers who are actually engaged in foreign or interstate commerce fall within the TWE. That is true even if they work for a company that is not, strictly speaking, a transportation company. See Bissonnette v. LePage Bakeries Park St., LLC (2024) 601 U.S. 246. It is also true even if they are designated as “independent contractors” or “contractor drivers.” See New Prime Inc. v. Oliveira (2019) 586 U.S. 105.

However, workers who are “intimately involved” with interstate commerce, but do not themselves cross state or national borders, may also qualify for the TWE. In California, that includes truck drivers and delivery drivers.

For example, in Rittman v. Amazon (9th Cir. 2020) 971 F.3d 904, the Ninth Circuit Court of Appeals found that Amazon’s “last-mile” delivery drivers qualified for the exemption even if the drivers themselves did not cross state lines. That is because there was no suggestion that those drivers only delivered packages that originated in the states in which they were delivered. Rather, as Amazon drivers, they carried goods that moved from one state to another and were in the stream of interstate commerce.

The Ninth Circuit reached a similar conclusion in Romero v. Watkins and Shepard Trucking, Inc. (9th Cir. 2021) 9 F.4th 1097. There, the court found that a truck driver who delivered furniture that often came from out of state was subject to the TWE even though he never crossed state lines.

Finally, in Carmona Mendoza v. Domino’s Pizza (9th Cir. 2023) 73 F.4th 1135, the Ninth Circuit found that drivers who transported ingredients from a supply center in California to pizza restaurants also in California fell within the scope of the TWE. That is because those ingredients were not modified at the supply center. Instead, they were merely repackaged. For that reason, the Carmona case was distinguishable from other TWE cases in which the goods were transformed. Cf. A.L.A. Schechter Poultry Corp. v. United States (1935) 295 U.S. 495; Immediato v. Postmates, Inc. (1st Cir. 2022) 54 F.4th 67.

Because the TWE applied to the drivers in these cases, they were not bound by the arbitration agreements that they had signed. Accordingly, they could proceed with their class and collective actions.

California truck drivers and delivery drivers have rights that other employees do not enjoy. That includes drivers who are designated as “independent contractors” or “contractor drivers.” If you have questions about your rights at work, please feel free to contact Hunter Pyle Law, PC.