The U.S. District Court for the Northern District of California has thrown out an arbitration agreement signed by an employee when he was a minor, finding that he was entitled to disaffirm the agreement under California Family Code Section 6710.
In Lopez v. Kmart, the plaintiff was hired as a cashier in April 2013 when he was 16 years old. Kmart utilized an online training system that was also used to distribute employment policies and agreements, including an arbitration agreement. Employees were required to acknowledge receipt of several employment policies on the website, including the arbitration agreement, by clicking a series of acknowledgements.
Lopez trained on the online system in May 2013 and acknowledged the receipt of the arbitration agreement. Lopez turned 18 in December 2014, and in January 2015, he filed a class action complaint in Contra Costa County Superior Court against Kmart alleging California wage and hour violations. Kmart filed a motion to compel arbitration in federal court.
On May 4, 2015, the federal district court denied Kmart’s motion to compel arbitration, based on the language in California Family Code Section 6710, which states: “…a contract of a minor may be disaffirmed by the minor before majority or within a reasonable time afterwards.” The court ruled that while the Kmart arbitration agreement was valid, Lopez’s filing of the wage and hour complaint one month after he turned 18 constituted a disaffirmation of the arbitration agreement within a reasonable time.
California employers that hire minors and require them to sign any type of agreements where they surrender certain rights to litigate complaints should consult with legal counsel on strategies to enforce these agreements pursuant to the Lopez decision.
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