A California appeals court ruled that employees can still participate in class-action wage-and-hour lawsuits even if they signed arbitration agreements waiving their rights to those kinds of suits as a condition of continued employment. The court said such agreements are unconscionable and therefore not enforceable.
Recent case: Lisa Murphy, who was a retail manager for a Check ’n Go branch, signed an arbitration agreement in June 2004. The company distributed the agreement via interoffice memo and required all employees to sign it. Murphy said the company did not give her a chance to negotiate the terms. In addition, she claimed that no one at the company explained the agreement to her.
Two years later, she sued Check ’n Go on behalf of herself and all others with her job title, claiming wage-and-hour violations. Check ’n Go asked the court to send the case to arbitration. The court refused and let the class action go forward. It ruled that a class-action waiver in the arbitration agreement was unconscionable and an unenforceable contract of adhesion. (Murphy v. Check ’n Go of California, No. A114442, Court of Appeal of California, First Appellate Division, 2007)
Final note: The state of arbitration agreements in California is in flux. Before having employees sign such agreements, make sure you have qualified counsel review it. An experienced attorney is best situated to know the latest in this complicated area and can help you draft an agreement with the greatest chance of sticking.