Originally from Dispute Resolution Journal

COMMERCIAL- EMPLOYMENT CONTRACT U.S. ARBITRATION ACT -PREEMPTIONSUPREMACY CLAUSE

The Federal Arbitration Act, which mandates enforcement of arbitration agreements, preempts a state statute authorizing employees to maintain an action for wages despite the existence of an agreement to arbitrate. In connection with his application fo r employment at Kidder, Peabody & Co., Thomas signed an agreement containing an arbitration clause. A dispute subsequently arose regarding Thomas' claim for commissions on the sale of securities. Thomas brought an action against his employer and two of its employees, alleging breach of contract, conversion, civil conspiracy, and breach of fiduciary duty. The defendants moved to compel arbitration. Thomas opposed the motion, relying on section 229 of the California Labor Code, which provides that actions for the collection of wages may be maintained "without regard to the existence of any private agreement to arbitrate." A California superior court denied the motion to compel arbitration, relying on Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Ware, 414 U.S. 117 (1973), in which the U.S. Supreme Court rejected a Supremacy Clause challenge to section 229. The California appellate court affirmed, ruling that a claim for unpaid wages brought under section 229 was not subject to compulsory arbitration, notwithstanding the existence.