Employment class actions have become a costly pandemic in California and in many other states. In an attempt to stem the tide of such actions, some employers adopted
mandatory pre-dispute arbitration agreements which prohibit arbitrations on a class basis. Based on existing case law, however, it was unclear whether these types of class action waiver provisions are enforceable in the employment context.
On August 30, 2007, the California Supreme Court found in a split four to three decision that a class action waiver provision cannot be enforced where the claims at issue cannot be waived as a matter of law (e.g., a claim for unpaid wages including overtime), and a class action would be a “significantly more effective means” of resolving the claims at issue in the case.
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