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Statutory Wage and Hour Claims May Be Compelled to Arbitration Under CBA
Sep 7, 2017

Statutory Wage and Hour Claims May Be Compelled to Arbitration Under CBA

Topics: Union-Management Relations

Last week, a California Court of Appeal held that a unionized employee’s statutory wage and hour claims (meal and rest breaks, overtime) had to be arbitrated pursuant to the grievance-arbitration provisions of the applicable collective bargaining agreement (CBA).  The employee had filed claims in court on behalf of a class of similarly situated employees alleging meal and rest break violations, overtime violations, and failure to timely pay wages on termination of employment.   The employer moved to compel arbitration pursuant to an arbitration provision in its collective bargaining agreement with the employee’s union.  The employee argued that the CBA’s arbitration provision did not apply to his statutory wage and hour claims.  The  court disagreed, citing United States Supreme Court precedent (Penn Plaza LLC v Pyett) holding that a union may waive an employee’s right to a judicial forum (and require an arbitral forum instead) for statutory claims (claims that arise because of a statutory right rather than a contractual right created only by the CBA) so long as the waiver is “clear and unmistakeable.” The court considered whether the CBA clearly and unmistakeably required arbitration of the employee’s claims and concluded, with the exception of one claim, that it did.  The CBA explicitly stated that the grievance/arbitration provisions applied to claims arising under the applicable Industrial Welfare Commission Wage Order.  Based on this language, the court held that the employee’s claims for overtime and meal and rest breaks were covered by the arbitration provision because those rights originate from the Wage Order’s provisions.  On the other hand, the court held that the employee’s claim for waiting time penalties for the employer’s alleged failure to timely pay wages on termination of employment did not arise from the Wage Order and thus was not clearly and unmistakeably covered by the arbitration provision.  The court’s reasoning was that the Wage Order does not address timing of payment of wages on termination of employment.  This topic instead is covered only by a Labor Code provision (section 203) and the CBA did not mention claims brought under the Labor Code (it only mentioned claims arising under the Wage Order). 

The court also addressed whether the employee could bring class claims in arbitration and concluded that the answer was “no.”  The court reasoned that parties may only be compelled to arbitrate claims that they agreed to arbitrate (since arbitration is a matter of contract).  Citing United States Supreme Court precedent (Stolt-Nielsen v. AnimalFeeds International), the court held that because this CBA did not contain language revealing that the parties contemplated class claims in arbitration, that silence could not be interpreted as an agreement to allow class claims.  The court rejected the employee’s argument that disallowing class claims violates employees’ rights to engage in collective, concerted action under the National Labor Relations Act.

This case is favorable for employers with unionized workforces who would prefer to have wage and hour claims arbitrated rather than being decided in court.  It reinforces the validity of contractual arbitration provisions – even those contained in CBAs – and the fact that such a provision can be drafted to apply to statutory wage and hour claims.  However, in order to succeed in compelling arbitration of a statutory claim, the arbitration provision in the CBA must clearly and unmistakeably state that the specific types of claims at issue are intended to be covered by the arbitration provision.  This case demonstrates just how clear and explicit the language must be and that vague language may result in some claims being covered and others not covered.  The case is Cortez v. Doty Bros. Equipment Co.

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