Not so fast: Arbitration agreements won’t necessarily block class-action suit — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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Not so fast: Arbitration agreements won’t necessarily block class-action suit

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in Employment Law,Human Resources

The idea behind arbitration agreements is that handling workplace disputes in arbitration instead of court is easier, less expensive and less time consuming.

But don’t think that having arbitration agreements in place will automatically block lawsuits in federal court.

Recent case: Daniel and several other drivers for a chauffeur service sued their employer, alleging that they should have been paid for waiting time between rides.

The employer, Ready to Roll Trans­­portation, asked the court to throw out the case because most of the drivers had signed arbitration agreements and should not be part of the collective action lawsuit. It also argued that since only nine drivers hadn’t signed the agreements, there were too few class members to justify a collective action.

The trial court agreed and dismissed the case.

But now an appeals court has ­reinstated the lawsuit. It said that the putative class members who signed agreements weren’t automatically excluded—and should have a chance to argue that the agreements aren’t binding. The court also said that even if they end up excluded, a class of nine is adequate. (Hendershot v. Ready to Roll Transportation, No. B247730, Court of Appeal of Cali­­fornia, 3rd Appellate District, 2014)

Final note: Arbitration may seem like a simpler and easier way to resolve disputes, but be prepared for headwinds. Make sure that your arbitration agreements are drafted to meet all local contract requirements. Get expert help.

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