Before a Court Sends Employment Claims to Arbitration, It Must Decide Which Law Applies

The Ninth Circuit's June 9, 2026 opinion in In re Rebecca Orr is a useful reminder for California workers: before a court sends employment claims to arbitration, it has to identify the legal authority that lets it do so.

In late 2023, Rebecca Orr worked as a Seasonal Support Driver on a temporary basis for United Parcel Service, Inc. (UPS). The nature of Orr’s job was to support deliveries in areas with “increased holiday volume” and required her to pick up packages from other UPS drivers and deliver them to their final destinations. UPS initially advised Orr that she would work eight-hour shifts, six days a week. Instead, she faced constant, last-minute route cancellations on the morning of her scheduled shifts. For the remainder of her employment period, Orr did not receive additional assignments, which then prompted her to file a complaint in the Superior Court of California alleging five state law claims against UPS, including allegations that UPS failed to pay Seasonal Support Drivers their required “reporting time pay.”

UPS moved to compel arbitration in accordance with the employment agreement Orr signed when she applied for the position. The district court ordered arbitration, but it did not decide whether the Federal Arbitration Act (“FAA”) applied or whether California Arbitration Act (“CAA”) arbitration law supplied the authority for the order. The court’s reasoning was that Orr’s claims must proceed to arbitration regardless of the applicable statute, so it need not determine whether the FAA or CAA governed the agreement.

That missing step mattered. The district court basically left the contractual question to the arbitrator, which is not permissible.

Orr then petitioned the Ninth Circuit for a Writ of Mandamus – a remedy wherein a higher court orders a lower court or government official to perform their legal duty, without abuse of discretion. The Ninth Circuit granted Orr’s petition and directed the district court to decide whether the FAA or CAA supplied its authority to compel arbitration.

As espoused in New Prime Inc. v. Oliveira, the district court, not an arbitrator, must decide whether the contracts of employment exclusion 9 U.S.C. § 1 applies to an agreement before ordering arbitration. 586 U.S. 105, 111, 139 S.Ct. 532, 202 L.Ed.2d 536 (2019).

Why does it matter whether a case is sent to arbitration under FAA or CAA?

Because the rules change entirely depending on the legal framework used. State law and the FAA are not identical.

Section 1 of the FAA excludes “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce” from the FAA's coverage.

On the other hand, Section 229 of the California Labor Code provides that actions “for the collection of due and unpaid wages claimed by an individual may be maintained without regard to the existence of any private agreement to arbitrate.”

Looking at these two important provisions of law, a district court must decide whether FAA’s Section 1 exclusion applied before ordering arbitration because if the contract of employment was excluded from FAA’s coverage, employees - like Orr in this case - have a statutory right to sue for due and unpaid wages directly in court, bypassing arbitration agreements.

When the district court did not identify which law applied, it was essentially letting an arbitrator decide which law governed, which was a clear error of law.

What the opinion did not decide

Note, however, that the opinion did not decide whether Ms. Orr's claims ultimately must stay in court. It did not decide the merits of her wage claims. It did not hold that all employment arbitration agreements are unenforceable.

Instead, the opinion required a procedural reset. The district court must decide the governing arbitration authority first.

That distinction is important for public understanding. A worker can obtain an important procedural ruling even when the court has not decided the underlying employment claims.

Why employees should pay attention

Arbitration agreements often appear during hiring, onboarding, promotion, or continued employment. Workers may not remember when they signed the agreement or whether they had an opt-out right. The legal effect can depend on the agreement, the job duties, the claims being brought, and the law that applies.

Transportation and delivery workers should pay particular attention when an employer relies on the FAA. The section 1 exclusion can be fact-specific, and courts may look closely at the worker's role, routes, and relationship to interstate commerce.

Wage-and-hour claims deserve the same care. If a worker is pursuing unpaid wages, overtime, meal breaks, rest breaks, reimbursement, or related class claims, the legal basis for arbitration can affect what claims and procedures survive.

Records that may matter

Employees who are asked to arbitrate workplace claims should preserve:

1. the arbitration agreement and any handbook or onboarding documents;
2. opt-out forms, emails, electronic acknowledgments, and signature pages;
3. job descriptions, route information, delivery records, schedules, and pay records;
4. wage statements, time records, reimbursement records, and messages about pay or hours;
5. communications about discrimination, harassment, retaliation, termination, demotion, reduced hours, discipline, or worse assignments; and
6. any court or agency papers related to the dispute.

These records can help an attorney evaluate the arbitration agreement, the claims, the worker's job duties, and the best forum for the dispute.

When to seek legal guidance

You may want legal guidance if your employer is trying to enforce an arbitration agreement against California employment claims, especially claims involving unpaid wages, overtime, meal or rest breaks, reimbursement, workplace discrimination, sexual harassment, harassment, retaliation, wrongful termination, or other workplace rights.

Every case depends on the facts. Java & Jebreil can review the agreement, the claims, and the procedural posture so workers understand what issues may need to be raised before claims are sent to arbitration.

Sources

• United States Court of Appeals for the Ninth Circuit - In re Rebecca Orr, No. 25-2330