Author: WorkCompAcademy

Cross Country Staffing, Inc. is a “comprehensive health care staffing company” that “recruits and places healthcare professionals in virtually every specialty and area of experience in hospitals globally.” Plaintiffs Isabel Silva, Alejandro Garcia, and Janai Velasco are all former or current employees of Cross Country Staffing.

At the time plaintiffs started their employment with Cross Country Staffing, each signed the same two contracts – namely, (1) an “Arbitration Agreement” and (2) an “Employment Agreement.”

In August 2023 plaintiffs filed a lawsuit alleging putative class and representative claims for (1) failure to pay wages (in violation of Labor Code sections 204, 510, 1182.12, 1194, 1194.2, 1197, 1197.1, and 1198), (2) failure to provide meal periods (in violation of Labor Code sections 512 and 226.7), (3) failure to provide rest periods (in violation of Labor Code section 226.7), (4) failure to reimburse business expenses (in violation of Labor Code section 2802), (5) failure to provide accurate itemized wage statements (in violation of Labor Code section 226), (6) waiting time penalties (under Labor Code sections 201 through 203), (7) unfair competition (under Business and Professions Code section 17200), and (8) violations of PAGA (under Labor Code section 2698 et seq.).

Cross Country Staffing filed a motion to compel arbitration. In its moving papers, Cross Country Staffing included only the Arbitration Agreement; it did not include, or make any mention of, the Employment Agreement. Plaintiffs opposed the motion, arguing that the Arbitration Agreement must be read together with the Employment Agreement, and that the Arbitration Agreement when read with the Employment Agreement was unconscionable and hence unenforceable in its entirety.

The trial court issued a 10-page order denying Cross Country Staffing’s motion to compel arbitration. First, the court ruled that it would read the Arbitration Agreement in light of the Employment Agreement because “both [were] executed on a single day as part of the employee’s hiring, and [because] both . . . govern dispute resolution as part of the overall employment relationship. Because the unconscionability rendered the entire Arbitration Agreement unenforceable, the court denied Cross Country Staffing’s motion to compel arbitration.

The Court of Appeal affirmed the trial court’s order in the published case of Silva et al. v. Cross Country Healthcare, Inc. et al. -B337435 CA2/5 (June, 2025).

Cross Country Staffing challenges the trial court’s order denying its motion to compel arbitration. The review on appeal entails three questions: (1) Did the trial court correctly construe the Arbitration Agreement together with the Employment Agreement; if so, (2) did the trial court correctly conclude that the Arbitration Agreement is unconscionable; and if so, (3) did the trial court abuse its discretion in declining to sever the unconscionable terms and, instead, in declaring the Arbitration Agreement unenforceable?

Civil Code section 1642 provides that “[s]everal contracts relating to the same matters, between the same parties, and made as parts of substantially one transaction, are to be taken together.”

“The recent decision in Alberto v. Cambrian Homecare (2023) 91 Cal.App.5th 482, is directly on point. In that case, the plaintiff signed two contracts as part of the hiring process namely, (1) an arbitration agreement, and (2) a confidentiality agreement.”

“Invoking section 1642, the appellate court in Alberto had “no difficulty concluding” that the two agreements “should be read together” because “both [were] separate aspects of a single primary transaction—[the employee’s] hiring” and “both governed, ultimately, the same issue—how to resolve disputes arising between [the employee] and [the employer] arising from . . . employment.” (Id. at pp. 490- 491.) “Failing to read them together,” the court in Alberto continued, “artificially segments the parties’ contractual relationship” and “fails to account for the overall dispute resolution process the parties agreed upon.” (Id. at p. 491.)

“Substantial evidence supports the trial court’s finding that section 1642 applies such that the Arbitration Agreement must be read together with the Employment Agreement.”

“We agree with Alberto, and publish to reject the further defenses raised by the employer in this case to what we view as an indefensible end-run around precedent. We accordingly affirm the trial court’s order finding the employer’s arbitration agreement unenforceable and denying the employer’s motion to compel arbitration.”

Based upon a stipulated Award of May 27, 2015 it was found that while employed on December 19, 2013 as a tower technician by Pearce Services Inc., Andres Hernandez sustained industrial injury to the left knee causing temporary disability from June 23, 2014 to July 6, 2014, permanent disability of 14%, and the need for further medical treatment.

On August 13, 2015, defendant sent applicant a notice that permanent disability payments were ending because the full amount of the stipulated Award had been paid. The notice sent contained all the information required by Administrative Rule 9812(d). (Cal. Code Regs., tit. 8, § 9812, subd. (d).)

Applicant apparently continued to be provided medical care for his injury on an industrial basis and underwent surgery on October 30, 2018. Defendant reinitiated temporary disability benefits commencing November 3, 2018. On November 14, 2018, defendant sent a notice of resumed temporary disability benefit payments pursuant to Administrative Rule 9812(b) (Cal. Code Regs., tit. 8, § 9812, subd. (b)). Defendant then determined that applicant was entitled to temporary disability benefits at a higher rate pursuant to Labor Code section 4661.5 and sent the appropriate notice on November 28, 2018 pursuant to Administrative Rule 9812(c) (Cal. Code Regs., tit. 8, § 9812, subd. (c).)

On December 17, 2018, defendant sent applicant a notice that temporary disability benefits were ending pursuant to Labor Code section 4656(c)(2) which states that, save exceptions not applicable to the current case, temporary disability indemnity is payable only within five years of the date of injury. Defendant sent applicant a notice that complied with Administrative Rule 9812(d) (Cal. Code Regs., tit. 8, § 9812, subd. (d).)

Additionally, along with the notice that temporary disability was ending, defendant sent a notice pursuant to Administrative Rule 9812(e) (Cal. Code Regs., tit. 8, § 9812, subd. (e)) that applicant’s condition was not yet permanent and stationary and that: “[I]t is too soon to tell if you will have any permanent disability from your injury. I will be checking with your doctor until your condition is permanent and stationary. At that time, your doctor will determine whether you have any permanent disability and if there will be a need for future medical care. I expect to have my information by 3/16/19. I will notify you of the status of permanent disability at that time.”

On February 19, 2019, Hernandez filed a Petition to Reopen alleging that he underwent surgery of his left knee in October of 2018 and that his condition had significantly worsened since the issuance of the stipulated Award. On December 23, 2019 the WCJ found that Hernandez’s Petition to Reopen was barred by the five-year statute of limitations contained in Labor Code section 5410.

After filing a Petition for Reconsideration, the WCAB affirmed the WCJ’s decision in the case of Hernandez v Pearce Services Inc. -ADJ9972218 (May 2025).

Applicant argues that that the statute of limitations should be tolled because he was “misled” by defendant’s claims examiner into not timely filing a petition to reopen. In other contexts, the mere furnishing of benefits without an unequivocal denial in and of itself tolls the statute of limitations.

For instance in McDaniel v. Workers’ Comp. Appeals Bd. (1990) 218 Cal.App.3d 1011 [55 Cal.Comp.Cases 72], the Court of Appeal held that when a defendant provides medical treatment benefits knowing of a potential claim for workers’ compensation benefits, the provision of treatment tolls the one-year limitation period of Labor Code section 5405(c) and triggers the five year period of Labor Code section 5410, running from the date of injury. Only after an explicit unequivocal denial of liability does the statute revert to one year from the denial.

The WCAB noted however that “while McDaniel and similar cases find that the mere furnishing of benefits tolls the one-year statute of limitations found in Labor Code section 5405 for the initial claim of benefits, these claims still remain subject to the five-year statute found in section 5410. While the liberal rules of pleading and construction of the workers’ compensation system militate in favor of tolling of the one-year statute, once five years from the date of injury has elapsed the initial interest favoring an injured worker’s right to present their case on the merits must also be balanced against the interest in finality.”

“As the Supreme Court explained in Nickelsberg v. Workers’ Comp. Appeals Bd. (1991) 54 Cal.3d 288, 299 [56 Cal.Comp.Cases 476], section 5410 does ‘not express a mere concern for barring stale claims. The statute[] express[es] legislative concern for certainty and finality in the determination of compensation benefit obligations.’ “

“Here, there was no legal obligation to inform applicant of the upcoming five-year statute, and, in any case, there was no evidence that the claims representative intentionally withheld this information. Defendant merely paid the legally required benefits and provided the legally required notices.”