Hunton Employment & Labor Perspectives

In a recent case, Correia v. NB Baker Electric, Inc., the California Court of Appeal held that employers cannot require employees to arbitrate their representative claims under the California Private Attorney General Act of 2004 (“PAGA”), Labor Code § 2699 et seq., without the State’s consent.

In Correia, two former employees sued their employer, NB Baker Electric, Inc. (“Baker”), alleging wage and hour violations and seeking civil penalties under PAGA. Baker petitioned the trial court for arbitration pursuant to the parties’ arbitration agreement, which provided that arbitration would be the exclusive forum for any dispute and which prohibited employees from bringing “any class action or representative action” in any forum.

On June 4, 2012, the California Court of Appeal held that class-action waivers in employment arbitration agreements are enforceable under the Federal Arbitration Act (“FAA”).  In Iskanian v. CLS Transportation Los Angeles LLC, the appeal court affirmed an order to compel arbitration of wage-and-hour claims in light of the 2011 United States Supreme Court case AT&T Mobility LLC v. Concepcion.  As a result, Iskanian provides employers with the necessary ammunition to argue for the enforceability of employment contract provisions providing for arbitration of claims and waiver of class-action lawsuits.