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« New class certification decision: Sony Electronics, Inc. v. Superior Court | Main | Supreme Court announces amendment to Rule 976 on publication of Court of Appeal opinions »

Wednesday, December 20, 2006


Sean McLoughlin

In the interest of full disclosure, I should state that I drafted the UAP including the class action waiver that was upheld in Konig.

I think that post-Armendariz it is specious to speculate as Justice Mosk did in his dissent that employees are necessarily at a disadvantage in arbitration. Employers pay the cost, discovery is permitted, where precisely is the alleged disadvantage? And in wage/hour cases, an employee faced with a small dollar amount claim has the free, speedy and pro-employee biased DLSE administrative claim and hearing as an option, and they needn't share their recovery with any lawyer. But in fact, as plaintiffs' wage/hour lawyers love to repeat when trying to cajole a settlement, the amounts of waiting time and other penalties that accrue for even short term or low paid employees subjected to wage/hour violations quickly add up, and the Labor Code provides for attorneys fees on top of all that, so what are these theoretical "predictably small" wage/hour claims and what is wrong with them proceeding individually before the DLSE or in arbitration?

michael walsh

The "alleged" disadvantage is that arbitrators are generally reluctant to render awards which are favorable to individual claimants (who are not repeat customers) and against large employers (who are).

The issue in Konig, however, is not whether arbitration was fair. The opinion noted that the arbitration order was not appealable. The issue is whether employee waivers of class actions are enforceable. If California wants to change its public policy from favoring class actions, favoring the prompt payment of wages and enforcing work safety and working conditions, and replace those policies with others favoring corporate profits and generation of business tax revenue, then you may be right.

The "free, speedy and pro-employee biased DLSE administrative claim and hearing" is no such thing, except free, especially since the current administration started dictating the practices and filling the department with friends of chamber of commerce.

While waiting time and other penalties do accrue quickly, the reality is that only a small fraction of employees ever assert such claims, even for egregious violations, either because they are afraid of retribution (not an unreasonable fear) or because the wage and hour laws are too confusing for the average worker, and employers are more than happy to provide misinformation. When we were filing meal period class actions against restaurants, we heard literally hundreds of stories about how managers would inform employees that lunch breaks aren't legally required in the restaurant industry.

In short, the class action remedy was the only thing that caused these employers to change their illegal practices that had been ongoing, without consequence, for decades. DLSE hearings didn't do it. The rare individual lawsuits didn't do it. The attorney general didn't do it. Only the class action accomplished anything. If employee class actions are done away with, the violations will return, in grand scale, with no real consequences to employers and no real relief for employees. Some people think that would be a good thing, but not all of us do.

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