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Have attorney draft class-action waiver so it’s enforceable in court

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in Compensation and Benefits,Human Resources

Employers naturally want to stay out of court. That’s one reason so many organizations have their employees agree to arbitrate claims rather than take them to federal or state court.

But if those arbitration agreements aren’t carefully worded, they may be useless. As the following case shows, an arbitration agreement that forbids class actions of wage-and-hour claims won’t be enforced in California.

Recent case:
Octavio Sanchez worked for Western Pizza as a delivery person. He was paid slightly above minimum wage, plus 80 cents per delivery regardless of how far away the delivery was. This, he claimed, meant he often earned less than minimum wage after subtracting auto expenses.

He said the practice violated California’s Labor Code, and he tried to sue on behalf of himself and all other similarly situated drivers.

Western Pizza wanted to send the case to arbitration because Sanchez had signed an arbitration agreement that also barred class actions. The court said the agreement was unconscionable because it severely restricted the ability of employees to collect the wages they were owed since they would not be able to band together. (Sanchez v. Western Pizza, No. B203961, Court of Appeal of California, 2009)

Final note:
It’s essential to have an attorney experienced in California law draft or review any arbitration agreements. He or she can write one that will likely stand up in court. There is no point in having an agreement if a court will toss it out.

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