by Julie Ann Giammona and Michelle R. Ferber

Employers across the nation received a green light from the United States Supreme Court in Epic Systems Corp. v. Lewis (May 2018) to include class action waivers in arbitration agreements. The Court specifically concluded that arbitration agreements which provide for individualized arbitration preventing class actions do not violate the National Labor Relations Act (NLRA).

The decision was the result of three separate cases wherein plaintiffs claimed wage and hour violations under the Fair Labor Standards Act. Plaintiffs had signed arbitration agreements, executed as a condition of employment, barring class actions but argued that such a provision infringed upon their rights of “concerted activity” pursuant to the NLRA. The court concluded otherwise and determined that the NLRA “concerted activities” section was directed only to the right to bargain or organize unions collectively, not the right to a collective action proceeding, such as a wage and hour class action under the Federal Arbitration Act.

The decision resolves a split amongst the federal circuits, and actually confirms what had already been state law in California. Recall that in 2014, the California Supreme Court upheld express class action waivers in the context of employee-employer relationships by concluding that such waivers do not violate public policy (Iskanian v. CLS.Transp. Los Angeles, LLC). However, the, Iskanian court specifically excluded from its ruling representative actions brought under the Private Attorneys General Act of 2004 (PAGA). The holding in Epic Systems does not change the fact that class action waivers are still unenforceable as applied to PAGA actions in California. Unfortunately, we can expect to see a continued increase in the rate of filing of PAGA actions.

As always, the California wage and hour labyrinth continues its web of intricate twists and turns. If you are considering instituting an arbitration agreement as a condition of employment, or need review of a current agreement, please consult an attorney at Ferber Law who will provide expert advice in this area.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.