California Supreme Court Limits Class Action Waivers in Wage and Hour Cases

On August 30, the California Supreme Court issued its opinion in Gentry v. Circuit City Stores, Inc. (Gentry). In this important decision, the court held that a class action waiver contained in an employment arbitration agreement may undermine employees’ unwaivable statutory rights to overtime. The court concluded that such a waiver should not be enforced if a class action arbitration would be a significantly more effective way of vindicating the rights of employees than individual arbitrations. Although the court opined that not all class action arbitration waivers are unenforceable, the dissent suggested that the practical effect of the court’s opinion is that no class action waivers will be enforced in wage and hour cases.

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