Last May we were pleased to report on the United States Supreme Court decision in Epic v. Lewis Corp., 138 S.Ct. 1612. In that case the court confirmed that the Federal Arbitration Act requires courts to enforce arbitration agreements according to their terms. The court also validated the use of class action waivers in arbitration agreements.
A class action waiver prevents an employee from suing on behalf of others. This is a formidable tool for employers. In my opinion, the most common lawsuit of the day is the wage and hour claim. An employee asserts that (s)he was not paid all wage, missed meal or rest periods, was not reimbursed for business expenses and other related claims. Regardless of the merit of the claim, the employee seeks class action status to sue on behalf of all employees. A class action waiver can help stop this abusive practice, the primary purpose of which is to line the pockets of lawyers.
Via Assembly Bill 3080, California legislators attempted to negate the ruling in Epic by preventing employers from compelling employees to sign arbitration agreements. Recognizing that AB 3080 is clearly unlawful, the governor vetoed the bill. This means that employers can use arbitration agreements, with or without class action waivers. We encourage employers to confer with legal counsel to determine the best way of implementing arbitration agreements in their workplaces.