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Don’t want class-action arbitration? Say so

by on
in Human Resources,Overtime Labor Laws

When claims involve unpaid overtime or misclassification, attorneys representing employees naturally want to handle the case as a class or collective action.

That’s because on an individual basis, wage-and-hour cases may not amount to much—often not enough to warrant the court filing fees and other costs. But if the case can be brought on behalf of all similarly situated employees, past and present, the stakes grow considerably.

Some employers think that if they include an arbitration agreement in their terms and conditions of em­­ploy­­ment, the claim has to go to arbi­­tra­­tion as an individual claim. That’s not necessarily true.

Recent case: When Brian Iversen went to work for Yahoo, he signed an arbitration agreement that stipu­­lated the parties would resolve any employment-related disputes through binding arbitration under the rules of the American Arbitration Asso­­ci­­a­­tion (AAA).

Iversen filed an arbitration demand on behalf of himself and all other similarly situated current or former employees. Among other claims, he alleged he had not received overtime and had not been provided with an itemized wage statement as required by California law.

Yahoo demanded that Iversen drop the class claim, arguing that since the agreement didn’t specify class-action arbitration was allowed, only individual claims were allowed.

The court disagreed, reasoning that silence was not enough. If Yahoo wanted to exclude class-action arbitration, it should have done so. Plus, the AAA rules do allow for class actions. (Yahoo! v. Iversen, No. 11-CV-03282, ND CA, 2011)

Final note: Know what you are signing when presenting an arbitration agreement. Don’t accept boilerplate AAA language without legal guidance. All too often, smaller employers are persuaded to use arbitration agreements by someone involved in the alternative dispute resolution industry—of which the AAA is a part.

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