The California Supreme Court recently held that the Federal Arbitration Act (FAA) does not preempt  California’s public policy prohibiting waivers in employment contracts of representative actions brought under  the Labor Code Private Attorney General Act of 2004 (PAGA), Cal. Labor Code § 2698 et seq. Iskanian v. CLS  Transp. Los Angeles, LLC, No. S204032 (June 23, 2014). The Court reasoned that “the FAA aims to ensure an  efficient forum for the resolution of private disputes, whereas a PAGA action is a dispute between an employer  and the state Labor and Workforce Development Agency.”

On the other hand, the Court overruled its private class action decision in Gentry v. Superior Court, 42 Cal. 4th  443, 463-64 (2007), explaining that under AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), “a class  waiver is not invalid even if an individual proceeding would be an ineffective means to prosecute certain claims  . . . because class proceedings interfere with fundamental attributes of arbitration.”