This week, in Konig v.
U-Haul Co. of Cal., the Second District issued a ruling that held that an
employment contract requiring employees to waive their rights to class or
representative actions in arbitrations with the employer was enforceable. U-Haul, the employer, required employees to
sign an arbitration agreement and a waiver of “any right to join or consolidate
claims in arbitration with others or to make claims in arbitration as a
representative or as a member of a class or in a private attorney general
capacity” unless U-Haul agreed to the procedure. An employee bringing a wage and hour claim
against U-Haul sought to have the waiver declared unconscionable. 

    Applying Discover Bank,
the Second District noted that, while contractual class-action waivers are
unconscionable when they apply to claims that have “predictably . . . small
amounts of damages,” wage and hour claims against an employer, such as the one
disputed in Konig, are not predictably small. Therefore, the Court reasoned, a class-action waiver was not
substantially unconscionable under the standard outlined in Discover Bank. 

    This case is sure to generate a lot of comment, including
some recommendations to employers that they begin adding representative claim and
class-action waivers to their employment contracts. However, this
opinion will not be the last word on the issue, and I expect more changes to
the law in this area soon. Because
the California Supreme Court granted a petition to review an opt-in employment
arbitration agreement with a similar class-action waiver in April, there will likely be changes to the standard announced in Konig.

Tags: wage/hour

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