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Calfornia court upholds arbitration clauses for employee claims

Los Angeles employees may be interested in a recent Supreme Court of California decision that may affect their right to collectively sue their employers. The decision is in line with recent U.S. Supreme Court decisions regarding arbitration clauses.

Arbitration is an out-of-court dispute resolution process that involves each side arguing before one or a panel of decision-makers. Their determination on the issue is usually binding on the parties. Many advocates claim that the process is biased toward businesses, due to the fact that those businesses are repeat customers for the arbitrators. Many employment arbitration clauses had previously been invalidated by California courts as being too one-sided against the employees. However, a U.S. Supreme Court decision in 2011 overrode various state laws striking down arbitration clauses, which led to many employers requiring by contract that workplace-related disputes use individual arbitration rather than class action lawsuits.

Now, the Supreme Court of California has ruled that employers may enforce these individual arbitration clauses and limit collective legal action by employees. This could result in fewer class action lawsuits for work-related claims. A separate unanimous decision by the Court has upheld the right of employees to use class action lawsuits in the enforcement of California labor laws, however. The penalties from these labor lawsuits are divided between the state and the employees, with the employees receiving 25 percent of the award as well as attorneys fees if successful.

In situations where an individual arbitration is mandatory, an attorney may be able to help an employee argue its case before the decision-maker. The attorney may also be able to assist with a lawsuit alleging unpaid overtime and other state labor law violations.

Source: SF Gate, "Arbitrate pay disputes, California Supreme Court says", Bob Egelko, June 24, 2014

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