HR Management & Compliance

Arbitration: Union Contract Didn’t Waive Employees’ Right to Pursue Wage and Hour Claims in Court






If your employees are
unionized, it’s likely that the collective bargaining agreement requires
arbitration of employment-related grievances. You probably assume that this
arbitration provision would cover wage and hour claims against your company,
such as charges that employees weren’t afforded adequate meal and rest breaks.
But a new court decision highlights that union employees may have the right to
take these claims to court despite the arbitration clause—although you may be
able to protect yourself by including appropriate language in the union
contract.

 

CBA Covers Wage and Hour
Matters

Employees at Scott
Brothers Dairy, Inc., in Chino
were represented by the Chino Valley Products Dairy and Teamsters union under a
collective bargaining agreement (CBA). The contract’s grievance procedure covered
employment grievances, broadly defined as “all disputes or controversies
arising under this Agreement…” The last step in the grievance process was final
and binding arbitration.

 

Various provisions of
the CBA provided for wagestub itemization and employee coffee breaks. The
language used was similar, but not identical, to that used in Labor Code and
Wage Order provisions requiring itemized statements and rest breaks.

 

Union Workers Sue

Robert Zavala, a former
dairy employee, filed a class action lawsuit in a Los Angeles County court
charging that the dairy had a policy of not providing workers with a 10-minute
rest break for each four hours worked and didn’t pay workers the required one
hour of additional pay for each day a break was missed— violations of the Labor
Code and Wage Orders. The suit also alleged that the dairy didn’t provide
employees with itemized wage statements. The lawsuit sought waiting-time
penalties and charged that the violations amounted to unfair business
practices.

 

The dairy asked the
court to send the case to an arbitrator because of the CBA’s grievance and
arbitration procedures. The trial court, however, refused to send the case to
arbitration, and the dairy appealed.

 


The HR Management & Compliance Report: How To Comply with California Wage & Hour Law, explains everything you need to know to stay in compliance with the state’s complex and ever-changing rules, laws, and regulations in this area. Coverage on bonuses, meal and rest breaks, overtime, alternative workweeks, final paychecks, and more.


 

Arbitration Denied

Now a California appeals court has agreed that the
employees can pursue their case in court despite the CBA arbitration terms.
1

 

The court explained that
the rest period and itemized wage statement requirements in the Labor Code and
Wage Orders are state-mandated minimum labor standards and set forth employee
rights and employer obligations that, according to Labor Code Section 219, cannot
be “contravened or set aside by a private agreement, whether written, oral, or
implied.” Thus, a CBA’s arbitration terms aren’t binding on employees as to
rest period and wage statement issues because the union couldn’t waive the
employees’ right to bring these statutory labor standards claims in court.
Further, the court noted, the CBA contained no provision that bound employees
to arbitrate violations of their statutory rights.

 

The court pointed out
that other courts have come down the same way on this issue. In one case, the
U.S. Supreme Court found that employee wage claims under the Fair Labor
Standards Act (FLSA) could be litigated in court rather than through a
collective bargaining agreement arbitration procedure. The high court reasoned
that even though courts should normally defer to an arbitrator’s decision where
the claim is based on rights arising from a union contract, “different considerations
apply where the employee’s claim is based on rights arising out of a statute
[like the FLSA] designed to provide minimum substantive guarantees to
individual workers.”
2

 

The Ninth Circuit, which
covers California, previously ruled that Labor
Code meal period claims could not be waived under a collective bargaining
agreement.
3 And another California appeals court
reached the same conclusion regarding rest breaks and itemized wage statements.
4

 

Explicit Waiver Required

Although it’s not
entirely clear, the court’s decision suggests that arbitration of statutory
wage-hour rights may be required if the union contract contains an explicit
waiver of the employees’ right to resolve these claims in court. Thus, employers
should take the time to review their collective bargaining agreements to determine
whether they contain such waiver language. If not, adding the waiver is
something that should be considered for the next round of contract negotiations.

 

You can find the new
case online at www.courtinfo.ca.gov/opinions/.

 

_

1 Zavala v. Scott
Brothers Dairy, Inc., Calif.
Court of Appeals (Dist. 2) No. B184547, 2006

2 Barrentine v.
Arkansas-Best Freight System, U.S.
Supreme Court No. 79-2006, 1981

3 Valles v. Ivy Hills
Corp., U.S.C.A. 9th Cir. No. 03-55440, 2005

4 Cicairos v. Summit
Logistics Inc., Calif.
Court of Appeals (Dist. 3) No. C048133, 2005