California Employees Can Waive Class Claims In An Arbitration Agreement, But Not PAGA Claims

by Fenwick & West LLP

Resolving an issue that has created uncertainty for California employers, the California Supreme Court recently held in Iskanian v. CLS Transportation Los Angeles, LLC that class action waivers in employment arbitration agreements can be upheld under California law, but waivers of representative actions under California’s Private Attorneys’ General Act (“PAGA”) may not be.

Iskanian worked as a driver for CLS between March 2004 and August 2005. In December of 2004, Iskanian signed an arbitration agreement that provided that “any and all claims” arising out of his employment would be subject to binding arbitration, and that Iskanian could not assert any class or representative action claims in arbitration except as required by law. When Iskanian filed a class action lawsuit in 2006 for unpaid overtime and other violations of the wage and hour laws, CLS moved to compel arbitration, which was granted by the trial court.

While Iskanian’s subsequent appeal was pending, in 2007 the California Supreme Court decided Gentry v. Superior Court, which held that class action waivers are invalid under certain circumstances (link to September 2007 FEB). In response, CLS withdrew its motion to compel arbitration and the parties proceeded to litigate the case. During the pendency of the litigation, the United States Supreme Court decided AT&T Mobility LLC v. Concepcion in 2011, which held that federal law preempted California’s refusal to enforce waivers in consumer arbitration agreements (link to April 28, 2011 Litigation Alert). CLS then renewed its motion to compel arbitration, arguing that the ruling of Concepcion overruled Gentry. After the trial court and a California Court of Appeal agreed with CLS, the California Supreme Court took up review.

The California Supreme Court held that the decision of the United States Supreme Court in Concepcion made clear that Gentry’s general prohibition against employment class action waivers (unless certain conditions are met) is unenforceable under federal law, because a state cannot require a procedure that interferes with the fundamental attributes of arbitration. The Court further determined that the National Labor Relations Act does not prevent the enforcement of the class action waiver, and that CLS did not waive its right to compel arbitration by withdrawing its motion to compel after issuance of the Gentry decision.

However, the Court also held that an action for violation of California’s PAGA—which allows an aggrieved employee to bring a civil action personally and on behalf of other current or former employees to recover civil penalties for Labor Code violations—is unwaivable and is not preempted by federal law.

The California Supreme Court’s ruling thus meant that plaintiff Iskanian was required to arbitrate his individual damages claims, but that CLS must answer the PAGA action for civil penalties in some forum (either in a lawsuit or through arbitration).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Fenwick & West LLP | Attorney Advertising

Written by:

Fenwick & West LLP

Fenwick & West LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.