Court Allows Class Action Waivers and PAGA Representative Claims

California Employment Law Letter

Matthew A. Goodin, a Senior Attorney in the Labor and Employment practice, based in the San Francisco office, wrote an article titled "Court Allows Class Action Waivers and PAGA Representative Claims."

Following is an excerpt:

"What one hand giveth, the other taketh away." That adage appropriately describes a long-awaited decision by the California Supreme Court, which addressed the validity of class action waivers in employment arbitration agreements. Was prior California Supreme Court authority overruled by U.S. Supreme Court rulings that upheld the validity of class action waivers? And could employees be required to waive their right to file representative actions under California's Private Attorney General Act (PAGA)? The ruling was a mixed blessing for employers and employees.

The use of arbitration agreements in employment – and specifically, employers' use of class action waivers in such agreements – has been a hotly contested issue for many years. In 2007, the California Supreme Court held in Gentry v. Superior Court that class action waivers in employment arbitration agreements were unenforceable as a matter of California public policy if enforcing the waiver would "undermine the vindication of the employees' unwaivable statutory rights" under the Labor Code. Therefore, as a practical result, class action waivers have been invalid in California since 2007.