Former Employee Could Not Be Compelled to Arbitrate California Claims

Collective bargaining agreement that required arbitration of disputes arising under the agreement did not waive right to trial for statutory claims

By Joanne Deschenaux, J.D. Mar 8, 2017

​Although a collective bargaining agreement required arbitration of claims arising under the agreement, it did not include an explicitly stated, clear and unmistakable waiver of the right to a judicial forum for claims based on statute. Therefore, a former hospital employee could not be compelled to arbitrate her claims against the hospital for violations of California labor laws relating to meal and rest breaks and unpaid overtime compensation, the California Court of Appeal ruled.

Tanya Vasserman worked as a registered nurse at the Henry Mayo Newhall Memorial Hospital in Valencia, Calif., from March 10, 2014, to April 3, 2014. Her employment was subject to a collective bargaining agreement (CBA) between the California Nurses Association and the hospital.

The CBA defines a grievance as any "complaint or dispute" arising out of the "interpretation or application" of any section of the agreement. It then provides a three-step grievance procedure, which culminates in arbitration if the dispute cannot be resolved by the parties.

The overtime section of the CBA states that nurses are entitled to receive overtime pay based on a formula that depends on whether they are assigned to work eight, 10 or 12 hours in a day. It does not reference the grievance procedure or any statutes, and it does not include any discussion of remedies for violations.

[SHRM members-only toolkit: Complying with California Overtime Payment Law]

Another provision of the CBA requires the hospital to comply with the applicable labor code provision and Industrial Welfare Commission wage order regarding meal and rest periods and provides for a penalty for missed breaks. It further provides that if a nurse fails to receive any penalty due, he or she may file a grievance.

Vasserman did not allege that she filed any grievances for alleged violations of the CBA during her employment at the hospital.

She filed a class-action complaint on June 18, 2014, asserting claims on behalf of herself and other employees for statutory violations relating to overtime pay and meal and rest period requirements.

The hospital moved to compel arbitration but the trial court denied the motion. The hospital appealed.

No Clear Waiver of Right to Sue for Statutory Violations

The appellate court first noted that, "In a case involving alleged statutory violations, the presumption of arbitrability that typically applies to contractual disputes arising out of a CBA is not applicable." Further, any CBA requirement to arbitrate a statutory claim must be "particularly clear."

The court noted that the grievance and arbitration provision of the CBA does not include any agreement to submit statutory causes of action to arbitration. The provision of the agreement discussing overtime compensation does not mention California law or any other statutory requirements regarding worker pay. And, although the CBA provision dealing with meal and rest periods does mention the Labor Code and the applicable wage order, these references are only to the penalties employees may receive. "An employer's agreement to pay a penalty required by law is not the same thing as a union's agreement to waive members' rights to a judicial forum for statutory violations," the court stated.

The court concluded that the CBA did not include an expressly stated, clear and unmistakable waiver of the right to a judicial forum for individual statutory claims. It ruled, therefore, that the trial court properly denied the hospital's motion to compel arbitration.      

Vasserman v. Henry Mayo Newhall Memorial Hospital, Cal. Ct. App., No. B267975 (Feb. 7, 2017).

Professional Pointer: To preclude judicial litigation of claims arising under California's labor laws, CBAs must clearly specify which statutory rights are subject to mandatory arbitration. General language referring to all claims, disputes or complaints will not suffice.

Joanne Deschenaux, J.D., is a freelance writer based in Annapolis, Md.

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