On April 1, 2026, the Ninth Circuit issued an important decision for California employers in O’Dell v. Aya Healthcare Services, Inc. The court ruled that plaintiffs cannot use a few mixed decisions about arbitration agreements to knock out arbitration for an entire class of employees.
In other words, just because an employer loses on arbitration with some employees does not mean every other employee can avoid arbitration too. The Ninth Circuit said that would go against the Federal Arbitration Act (“FAA”), which strongly favors enforcing arbitration agreements as they are written.
This is good news for California employers. It confirms that arbitration agreements usually must be looked at one employee at a time, even in a class action. It also helps prevent a few bad arbitration rulings from being used to wipe out arbitration for everyone else in the case.
Key Facts
Former employees of a travel nursing agency filed a class action claiming wage-and-hour violations. The employer’s arbitration agreements also said that the arbitrator, not the court, would decide certain issues about whether arbitration applied.
At first, the district court sent the four named plaintiffs to arbitration. But the arbitrators did not all reach the same result. Two decided the agreements were enforceable, and two decided they were unconscionable.
Later, 255 more plaintiffs joined the case. The employer again asked the court to compel arbitration. This time, the district court said no. It relied on the earlier rulings against the employer and applied a doctrine called non-mutual offensive collateral estoppel.
Put simply, that doctrine allows a new plaintiff to use an issue that was already decided against the same defendant in an earlier case, even if the new plaintiff was not part of that earlier case.
What the Ninth Circuit Said
The Ninth Circuit reversed the district court’s decision. It explained that the FAA allows only basic contract defenses, like fraud, duress, or unconscionability, to defeat arbitration. It does not allow courts to use a procedural rule like collateral estoppel to block arbitration for a large group of employees.
The court also stressed that arbitration is supposed to be based on the parties’ actual agreement. By using a few earlier arbitration rulings to stop arbitration for hundreds of additional plaintiffs, the district court replaced the parties’ agreement with something more like a classwide court process. The Ninth Circuit said that is not how arbitration works.
What California Employers Should Take Away
- Each arbitration agreement should be reviewed on its own.
- Losing a motion to compel arbitration for one employee does not automatically mean the employer loses for everyone else.
- If an employer loses a motion to compel arbitration, it may be time to review and revise the agreement with counsel.
- If the case is in federal court, the employer may be able to appeal right away and get an automatic stay during the appeal.
- Employers should make sure their arbitration agreements clearly say who decides arbitrability issues, whether that is the court or the arbitrator.
For California employers, this decision is a helpful reminder that well-drafted arbitration agreements can still provide strong protection in wage-and-hour class actions. DPA Attorneys at Law works with business owners and managers to review arbitration agreements, defend employment claims, and help protect their businesses throughout California, including Orange County, Los Angeles County, San Diego County, Riverside County, San Bernardino County, and Ventura County.
If you have questions about your company’s arbitration agreement or your wage-and-hour defense strategy, contact DPA Attorneys at Law at info@dpalaw.com or 760-372-0007.
