Hands OFF Those PAGA Rights

Employers: if your standard employment contract includes a mandatory arbitration clause, please be aware that there are limits on what issues and claims you can force into arbitration.

In a recent California Appellate Court case, an employer included a mandatory arbitration clause in its employment contract. Within the arbitration clause was a provision allowing an employee to waive his or her right to bring a Private Attorneys General Act (PAGA) suit, which allows an employee to bring a claim for himself and other employees against the employer, on behalf of the State. Employees were not required to sign the PAGA waiver, and the contract stated that employees would not be subject to any adverse action if they chose not to sign it.

However, the Court ruled that the PAGA waiver was void, even though it was voluntary, because it was contrary to public policy. In addition, because the contract specifically stated that the waiver could not be separated from the rest of the arbitration clause, the entire arbitration clause was void.

Drafting arbitration clauses, and employment contracts in general, can be tricky. Sloat Law Group can help you ensure that your employment contracts are in compliance with California law and are enforceable.

[Reference: Securitas Security Services USA, Inc. v. Superior Court of San Diego County (2015) 234 Cal.App.4th 1109]