California Almost Goes Along on Class Waivers

The California Supreme Court has ruled that class action waivers in employment arbitration agreements are enforceable – with one gaping exception. Iskanian v. CLS Transportation Los Angeles, L.L.C., S204032 (Cal. June 23, 2014). California law is now consistent with the United States Supreme Court’s 2011 holding in AT&T Mobility L.L.C. v. Concepcion. However, the ruling carves out one exception. Employees cannot waive their right to bring representative actions under California’s Private Attorneys General Act (PAGA), which allows employees to sue their employer for alleged Labor Code violations on behalf of the state. The California Supreme Court explained that such waivers would be contrary to public policy, as disputes under PAGA are really between the employer and the state. California employers should review and update any employment arbitration agreements. Consider also whether to require PAGA claims to proceed in court or with an arbitrator.