Arbitration of representative claims

When an employee sues on behalf of other employees can the employer force arbitration to determine whether the suing employee’s rights were violated?

Employees can sue on behalf of themselves and other employees in what are known as representative actions. The Second District Court of Appeal recently addressed the question of whether an employee can be forced to arbitrate the issue of whether she suffered violations of workplace laws when she files a representative action in court.

In Williams v. Superior Court (Cal. App. 2d Dist. June 9, 2015) 2015 Cal. App. LEXIS 497, Mr. Williams had signed an agreement with his employer, Pinkerton Governmental Services, Inc., to arbitrate any disputes. The agreement also included a waiver of class actions and representative actions. Mr. Williams sued Pinkerton alleging it failed to provide him and other employees rest breaks. Mr. Williams’s suit is a representative action under the Private Attorney General Act (PAGA), which allows individuals to recover penalties previously available only to the Attorney General.

Pinkerton sought to enforce the arbitration and waiver agreement. The trial court decided that Pinkerton could not force Mr. Williams to arbitrate his PAGA claim. This was based on the California Supreme Court’s decision, in Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, that arbitration agreements cannot be enforced for PAGA claims. But the trial court also decided that Mr. Williams’s case had to wait while an arbitration determined whether he, as an individual, was wrongfully denied rest breaks.

Mr. Williams sought review in the court of appeal. The appellate court rejected Pinkerton’s argument that the Iskanian rule did not apply because the arbitration agreement was not a condition of Mr. Williams’s employment. The court in Williams agreed with another court of appeal (Securitas Security Services USA, Inc. v. Superior Court (2015) 234 Cal.App.4th 1109) that PAGA claims cannot be forced into arbitration, regardless of whether the arbitration agreement is mandatory or voluntary.

Pinkerton also contended that the agreement was enforceable because it was made after the dispute. But, as the court of appeal noted, Mr. Williams sought relief for rest breaks he missed only after he signed the agreement. As a result, the appellate court concluded that the waiver of representative claims is unenforceable.

The court in Williams then addressed the trial court’s decision that Mr. Williams had to first submit to arbitration the question of whether he suffered rest break violations. The appellate court found that there were no prior court decisions that supported such an approach. Indeed, Mr. Williams’s case had only one claim, which was a representative one concerning himself and other employees. The court of appeal concluded that Mr. Williams’s case could not be split into one portion for arbitration while the other portion remained in court.

While the courts are looking more favorably upon arbitration agreements, this decision strengthens an exception for PAGA claims.

Posted by deanroyerlaw