Class-Action Waivers in Employment Agreements Deemed Valid by California Appeals Court

by Ballard Spahr LLP

[authors: Geoffrey D. Bruen, Steven W. Suflas]

In a precedent-toppling decision last week, a California appellate court held that a class-action waiver in an employment arbitration agreement was valid after concluding that a California Supreme Court decision to the contrary has now been overruled by the U.S. Supreme Court.

In Iskanian v. CLS Transport, the California Court of Appeals, 2nd District, applied the U.S. Supreme Court’s landmark decision in AT&T Mobility v. Concepcion, which held that state law rules disfavoring arbitration are displaced by the Federal Arbitration Act.

The court found that Concepcion has overruled the California Supreme Court’s decision in Gentry v. Superior Court, which allowed state courts to invalidate class-action waivers where class arbitration would be a more effective way to vindicate the rights of aggrieved employees.

In Gentry, addressing a class action brought by employees who claimed they were unlawfully denied overtime pay, the court mandated that waivers should be invalidated where class actions are a more effective means of vindicating the rights of aggrieved employees than individual arbitration or litigation, outlining a test courts were to apply in deciding whether class waivers are unconscionable.

Now, in unequivocal terms, the Iskanian court has found that Concepcion “conclusively invalidates the Gentry test,” strengthening the validity of class waivers in employment arbitration agreements. In doing so, the court noted that Concepcion’s interpretation of the FAA prohibits the imposition of class arbitrations on employers who did not agree to it contractually. In other words, a class waiver in an arbitration agreement means what it says.

Rejecting the claim that the Gentry rule was based on public policy—and that Concepcion therefore did not reach it—the Iskanian court found that the Concepcion rule applies even where employees are vindicating state statutory rights, reiterating Concepcion’s mandate that “states cannot require a procedure that is inconsistent with the FAA, even if it is desirable for unrelated reasons.”

The Iskanian court continued: “The sound policy reasons identified in Gentry for invalidating certain class waivers are insufficient to trump the far reaching effect of the FAA.”

Accordingly, the appellate court found that the trial judge appropriately enforced the arbitration agreement, dismissing class-action claims and compelling individual arbitration of the wage claim.

Significantly, the appellate court disagreed with the National Labor Relations Board’s employee-friendly interpretation of Concepcion in the recent D.R. Horton decision. In that case, the NLRB found that employer-imposed arbitration agreements disallowing class or collective claims violated the National Labor Relations Act because they interfere with employees’ rights to engage in protected concerted activity under Section 7 of the National Labor Relations Act.

The Iskanian court found that it need not defer to the NLRB’s interpretation of the Concepcion decision and the FAA, since the Board is tasked only with interpreting the NLRA, and that, in any event, the D.R. Horton case was invalidated by subsequent U.S. Supreme Court precedent. The court also pointed out that Concepcion “made no exception for employment-related disputes.”

The plaintiff has signaled that the decision, which conflicts with prior state appellate precedent, will be appealed to the California Supreme Court.

As arguably the most employer-friendly decision in the wake of Concepcion, the Iskanian court’s interpretation of the FAA and Concepcion could be used persuasively across the country to attack state law arguments seeking to invalidate class waivers in employment arbitration agreements.

The attorneys in Ballard Spahr’s Labor and Employment Group regularly advise clients on employment arbitration agreements and programs, including their use of class-action waivers. If you have questions on the recent ruling or its implications for your organization, please contact Steven W. Suflas at 856.761.3466 or; Geoffrey D. Bruen at 215.864.8264 or; or the member of the Labor and Employment Group with whom you work.

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.

© Ballard Spahr LLP | Attorney Advertising

Written by:

Ballard Spahr LLP

Ballard Spahr 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.