CA Supreme Court Rules Class Action Waivers in Arbitration Agreements Enforceable

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Employers with arbitration agreements in place or

employers considering implementing arbitration agreements

EFFECTIVE

Immediately

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The California Supreme Court has recently ruled that class action waivers contained in arbitration agreements are enforceable.  These arbitration agreements with class action waivers create guidelines where an employer would only engage in individual arbitration with each employee bringing a claim against the employer, rather than employees banding together to bring one class action suit against the employer.

In the case of Iskanian v. CLS Transportation, the Court affirmed a Fifth Circuit Court of Appeal precedent.  This precedent, established by the U.S. Supreme Court in AT&T Mobility LLC v. Concepcion and American Express Co. v. Italian Colors Restaurant, determined the Federal Arbitration Act prevented a state from refusing to enforce a class action waiver contained in an arbitration agreement.  Prior to this precedent, the National Labor Relations Board (NLRB) had attempted to rule that a waiver of class action violated a worker’s protected right to band together.  However, the Fifth Circuit Court of Appeal’s ruling determined the NLRB did not have the authority to make such a ruling.

These recent cases have established a legal precedent which suggests employers should include class action waivers in their arbitration agreements.

A careful review of arbitration agreements should be performed to determine if these are already in place.  Employers questioning whether to include a class action waiver in arbitration agreements should seek legal counsel for advice.

 

Action Items:

  1. Carefully review existing arbitration agreements, including employment applications, to determine whether there are class action waivers in place.
  2. HR On-Call subscribers should call (888) 378-2456 if they have questions about regulations concerning arbitration agreements.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.

© 2014 ManagEase, Incorporated.

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