An appellate court in California held that where an employment arbitration agreement provides a one-year limitations period for bringing claims, an employee has sufficient time to vindicate his Fair Employment and Housing Act (FEHA) rights even though the FEHA may provide a longer statute of limitations.

In Pearson Dental Supplies, Inc. v. Superior Court, No. B206740, 2008 WL 3867617 (Cal. Ct. App. Aug. 21, 2008), Turcios sued Pearson Dental Supplies (Pearson), his former employer, for age discrimination under the California FEHA.

Turcios’s employment contract with Pearson contained an arbitration agreement, which provided that any claim was waived if a demand for arbitration was not brought within one year after the claim arose. However, the FEHA provides that an employee has one year to file a complaint with the Department of Fair Employment and Housing (DFEH), and, once the DFEH gives the employee a right-to-sue letter, one additional year within which to bring suit.

Turcio obtained the right-to-sue letter and sued Pearson, but not within one year of his termination. Pearson moved to compel arbitration, which the trial court granted, and then moved for summary judgment in arbitration because Turcio did not demand arbitration within one year. The arbitrator agreed and issued an award in favor of Pearson.

Turcio moved to vacate the award, arguing that application of the contractual one-year limitation period violated his FEHA rights because the FEHA gave him two years to file a lawsuit. The trial court granted Turcio’s motion to vacate, holding that because Pearson demanded arbitration, it "waived the contractual time limit and must accept the validity of the arbitration forum for a hearing on the merits." Pearson appealed.

On appeal, Turcio argued that application of the one-year period contravened public policy because it shortened the FEHA limitations period, and thus vacatur was appropriate. The Court rejected Turcios’s argument. Citing Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83, 6 P.3d 669 (2000), the Court held that the framework by which to evaluate such a contractual limitations period is to ask whether the period is "sufficient to protect a plaintiff’s ability to vindicate a statutory discrimination claim?" Thus, the Court held that an arbitral limitation period that is shorter than the FEHA’s is not unconscionable per se.

The Court then held that the "FEHA does not have a true two-year limitation period, but rather a hybrid period," and that the arbitration agreement’s one-year period was comparable to the one-year period that Turcio had to sue after he received his right-to-sue letter from the DFEH. Consequently, the Court held that the one-year arbitral limitation period gave Turcio adequate time to vindicate his FEHA claim in arbitration. As a result, the Court held that the arbitrator did not exceed his power by granting Pearson’s motion for summary judgment and ordered the trial court to confirm the arbitration award.