California Labor &
Employment Law Blog

Feb. 8 2017

CBA Arbitration Provision Does Not Cover Wage and Hour Claims, Court Holds

Topics: Arbitration Agreements, Court Decisions, Union-Management Relations

This week, a California Court of Appeal issued its opinion in Vasserman v. Henry Mayo Newhall Memorial Hospital, rejecting the hospital’s appeal of a trial court order denying its motion to compel the plaintiff to arbitrate wage and hour claims she brought against the hospital.  The court acknowledged that the applicable collective bargaining agreement included a provision requiring arbitration of claims arising under the agreement, but held that it was not “clear and unmistakeable” from this provision that the parties intended to waive a judicial forum for claims based on statute (i.e. meal and rest breaks, overtime).  As such, the plaintiff could not be required to arbitrate her wage and hour claims. 

Like most CBA’s, the CBA at issue in this case set forth a mandatory grievance process for resolving employment-related disputes.  Here, the CBA defined a grievance as “any complaint or dispute arising out of the interpretation or application of a specific Article and Section of this Agreement during the term of this Agreement or extensions thereof as to events or incidents arising only at the Hospital.”  In other words, any complaint or dispute about anything covered by the CBA had to be resolved through the grievance procedure (the final step of which was binding arbitration) set forth in the CBA.  The CBA had various provisions relating to wages, hours, and working conditions, including an Article setting forth the circumstances under which covered employees would be paid overtime compensation and the formula for such pay, and another Article setting forth the hospital’s agreement to provide meal and rest breaks in accordance with the applicable Industrial Welfare Commission Wage Order and to pay penalties provided for under the Labor Code in the event meal or rest breaks were denied.  This Article further explicitly stated that if an employee was denied penalty pay owed under the terms of the Article, Wage Order, or Labor Code, the employee could file a grievance under the CBA. 

How anyone could read these provisions and conclude that the grievance arbitration procedure (which expressly applies to any all disputes arising under any provision of the agreement) does not apply to claims for overtime or meal and rest breaks (subjects expressly covered by the agreement), is beyond me.  Nonetheless, that’s what the court concluded, thereby allowing a nurse who worked at the hospital for only 3 weeks to pursue class and representative claims against the hospital in court for alleged unpaid overtime and failure to provide meal and rest breaks (she also alleged that the hospital had an unlawful rounding policy, failed to pay for pre-hire “work” time completing paperwork and having a physical exam, and provided inaccurate wage statements, based on allegations derivative of the other wage and hour claims).   

The court applied caselaw holding that where statutory claims are involved, any intention to waive a judicial forum (i.e. an agreement to resolve claims in arbitration rather than in court) must be “clear and unmistakeable” in order to be enforced.  In determining whether there is a sufficiently clear waiver, courts look to the generality of the arbitration clause, explicit incorporation of statutory requirements, and the inclusion of specific contractual provisions.   The test is whether the CBA makes compliance with the statute a contractual commitment subject to the arbitration clause, and whether the CBA makes it clear that covered employees agree to submit statutory employment claims to arbitration.  The court held that the CBA’s provisions did not clearly waive employees’ rights to bring statutory wage and hour claims in court.  The grievance arbitration provision itself did not reference any specific wage and hour statutes, much less expressly state that any claims alleging violations of such statutes would be subject to the grievance arbitration procedure.  The court acknowledged that other provisions of the CBA referenced overtime and meal and rest break requirements (the latter even referencing the Wage Order and Labor Code and stating that an employee could file a grievance if not paid penalties required by the Labor Code), but held that the mere reference to wage and hour requirements and statutes was not enough to bring claims for violations of those statutes within the scope of the grievance arbitration procedure.  In other words, in order for such claims to be covered by the arbitration provision of a CBA, the CBA needs to expressly state, preferably in the grievance arbitration provision itself, that the dispute resolution procedure applies to wage and hour claims, including claims alleging violation of the Labor Code, Wage Orders, or the FLSA.   

Even if a CBA contains a clear and unmistakeable waiver of the right to a judicial forum for resolution of statutory wage claims, this court hinted that it still may not be enforceable, citing caselaw suggesting that a union may not prospectively waive an employee’s right to a judicial forum for resolution of certain statutory claims (discrimination claims).  However, the court did not decide this issue, stating that it did not need to because the waiver was not clear and unmistakeable in any event.  

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Robin Largent represents employers, including major food and retail companies, in all types of employment litigation: wrongful termination, retaliation, breach of contract, wage and hour (California Labor Code) and unfair competition. She also regularly counsels and advises California employers on issues of compliance with California and federal employment laws.
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