New California Cases on the Use of Arbitration Agreements in Employment

Introduction

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Two recent California Court of Appeal decisions make the use of arbitration agreements stronger for employers. These rulings from early 2026 clarify key issues around arbitration making it easier to handle disputes without expensive court battles. They focus on common problems like PAGA claims (those group penalty actions under the Private Attorneys General Act ("PAGA")) and the use of multiple onboarding forms, which may contain inconsistent language or contain the agreement to arbitrate in parts.

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Sorokunov v. NetApp, Inc. (March, 2026):

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Winning in Arbitration Can End PAGA Claims

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In this case, an employee sued NetApp, Inc. for multiple violations of the Labor Code relating to pay and commissions. He brought both individual claims and a representative "PAGA action" on behalf of others. The court sent his individual (non-PAGA) claims to arbitration. The arbitrator ruled fully for the employer, holding that no Labor Code violations occurred. The employer then asked the court to dismiss the remaining PAGA representative claims, arguing the employee was no longer an “aggrieved employee” with standing.

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The First District Court of Appeal agreed. They held that the arbitrator’s findings carry over through what is called “issue preclusion.” Since there were no violations for that employee, he could not pursue penalties for others. That issue has been fully reviewed by the arbitrator and ruling "settled" the issue. This provides businesses a clear strategy: move individual claims to arbitration if possible, win on the facts there, and it will often shut down the bigger PAGA case.

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This is a big win for California businesses facing PAGA exposure. It lets you resolve core issues efficiently in arbitration and potentially end the whole lawsuit. Review your agreements to make sure they clearly cover individual Labor Code claims. Good record-keeping helps you defend claims effectively in arbitration.

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Santana v. Studebaker Health Care Center, LLC (April, 2026):

 

Multiple Onboarding Forms that Contain the Arbitration Agreement May Be Acceptable

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In this case, an employee signed three different arbitration-related documents during onboarding at a nursing facility. When he later sued for wage issues and PAGA penalties, the employer wanted to send the individual claims to arbitration. The lower court said no, pointing to small differences in the documents (like arbitrator selection) and calling the agreement unclear or unfair.

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The Second District Court of Appeal reversed. They said the overall intent was clear: both sides agreed to arbitrate most employment disputes. Minor differences did not cancel the agreement. The court also found no real unfairness (unconscionability), especially with a severability clause that lets courts remove bad parts while keeping the rest enforceable.

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For your business, this is good news. It means your standard onboarding packet with a few forms won’t automatically fail in court. Use clear language showing everyone agrees to arbitrate individual claims, and add a strong severability clause. Keep things simple and transparent so employees understand what they’re signing. Best practice, though, is to have one clean, integrated arbitration agreement to avoid any confusion.

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​​​​​For more information, contact us:
 

Email: paul@amanteHR.com

Tel.: (714) 309-9677

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This article is for informational purposes only. It is not intended to be, nor shall it be construed as legal advice or guidance.

Consult with a professional for appropriate advice and guidance.