Hohenshelt Clarifies Late Arbitration Fees in California Employment Cases

Read the source decision or official decision listing.

When an employer requires arbitration, timely payment of arbitration fees can determine whether the case remains in that forum. In Hohenshelt v. Superior Court, 18 Cal.5th 310 (2025), the California Supreme Court clarified how the state’s 30-day payment rule interacts with the Federal Arbitration Act and ordinary contract law.

The Employment Dispute and Missed Payment

Dana Hohenshelt sued Golden State Foods Corporation on employment claims after the parties had been ordered to arbitration. The arbitrator issued an invoice for fees owed by the employer. Payment arrived after the statutory 30-day period, and the employee sought to end arbitration and return to court under Code of Civil Procedure section 1281.98.

The Statute Is Not Preempted

The Supreme Court held that the Federal Arbitration Act does not preempt section 1281.98. California may require the party that drafted an arbitration agreement and must pay specified fees to do so promptly. The statute protects against a process stalling because the drafting party fails to fund it.

But the Court rejected an entirely automatic rule. Section 1281.98 operates against the background of California statutes and contract principles that may excuse nonperformance in limited circumstances. A late-paying party may seek relief by showing a legally sufficient excuse, and the court may consider whether the delay caused compensable harm.

Not a General Grace Period

The opinion does not make the 30-day deadline optional. The Court emphasized that California law does not excuse every inadvertent or brief delay. The character of the nonperformance, the asserted excuse, the surrounding circumstances, and resulting harm may matter.

The Court remanded for consideration of whether the employer could be excused and whether the employee suffered compensable harm. It did not finally decide which forum would hear the underlying employment claims.

Practical Case Management

Parties should calendar invoices immediately, confirm who must pay, preserve proof of transmission and payment, and raise any problem before the deadline. Employees and employers should also recognize that forum disputes can consume time without resolving the merits.

Key Takeaways

• California’s arbitration-fee statute is not preempted by the FAA.
• Late payment may allow an employee to seek a return to court.
• Limited statutory or contract-based excuses may still apply.
• The ruling concerns forum and procedure, not the merits of the employment claims.