Compelled by U.S. Supreme Court precedent advancing arbitration as a method of dispute resolution, the California Supreme Court in Iskanian v. CLS Transportation Los Angeles, LLC (No. S20432, June 23, 2014) held that its decision in Gentry v. Superior Court is no longer good law and that arbitration agreements with mandatory class action waivers are generally enforceable. However, the court carved out an exception for representative actions brought under California’s Private Attorneys General Act of 2004 (“PAGA”), holding that employers cannot force employees to waive their right to bring representative PAGA actions in any forum.

The court’s decision in Iskanian means that while employers may limit their exposure to wage and hour class actions by using arbitration agreements that include class action waivers, employers still face representative actions based on unwaivable PAGA claims, much of which remain uncharted territory.