Another California Court of Appeal provides employers with a victory with respect to the enforcement of arbitration agreements. Affirming an order compelling arbitration in a class action for California Labor Code violations, a California Court of Appeal ruled that the employee was required to arbitrate her individual wage and hour claims against her employer because the parties’ arbitration agreement was neither unconscionable, nor in violation of public policy. Nelsen v. Legacy Partners Residential, Inc., No. A132927 (Cal. Ct. App. Jul. 18, 2012). Significantly, the Court rejected the employee's reliance on D.R. Horton, Inc., 357 NLRB No. 184 (2012) in which the National Labor Relations Board (“NLRB”) ruled that class action waivers in employment arbitration agreements violated the National Labor Relations Act (“NLRA). The Court noted it was not inclined to follow the NLRB decision, as it was not binding and went beyond the scope of the NLRB’s expertise.
The Court’s decision provides employers with several positive developments, including the enforcement of an arbitration agreement and the Court’s well-reasoned critique of D.R. Horton. Nevertheless, employers should be aware that arbitration agreements, including those with class action waivers, remain subject to challenge in California and in other forums, including before the NLRB. At present, the NLRB appears committed to enforcing D.R. Horton and striking down class action waivers in arbitration agreements under its jurisdiction. As a result, employers should consult with their legal counsel when reviewing the enforceability of arbitration agreements.