Michael Rubin

Class action waivers in employment contracts remain a hot topic in California in the wake of the U.S. Supreme Court's Epic Systems Corp. v. Lewis decision last year underlining the primacy of arbitration. A key question: Does Epic fatally undercut the state's laws allowing representative actions under its Private Attorney Generals Act?

On the front lines of this battle is Rubin, who on June 5 stood before the state Supreme Court in Los Angeles, trying to fend off a new employer-side effort to limit or abolish workers' rights to sue collectively for unpaid wages.

"It's PAGA under assault following Epic," Rubin said following the argument.

The case involves bank workers seeking to sue for back pay and the bank's insistence that their collective claims be removed from the courtroom and compelled to individual arbitration. ZB N.A. and Zions Bancorporation v. Superior Court (Lawson), S246711 (Cal. Sup. Ct., petition filed Jan. 26, 2018).

The case dealt with the intricacies of California's worker-friendly labor laws. The state high court framed the issue as whether seeking recovery of individualized lost wages as civil penalties under Labor Code Section 588 falls within the preemptive scope of the Federal Arbitration Act. The code section allows the labor commissioner to assess penalties; PAGA lets workers sue over such claims.

Rubin and the bank workers got friend of the court help from the California Employment Lawyers Association, which argued that private arbitration agreements cannot be used to strip the state of its authority to recover civil penalties, including unpaid wages.

"This is another way employers have found to challenge PAGA," Rubin said. "It's another preemption challenge. They are again trying to strip workers of their state and federal rights. After Epic, employers are emboldened."

The arguments evidently gave rise to second thoughts by the justices. The day after the session, the court ordered the parties to file supplemental briefing on whether Section 558's civil penalties are recoverable under PAGA and how the answer affects the arbitration question.

Rubin is no stranger to the state Supreme Court lectern. He was there for the plaintiffs in last year's Dynamex case that took on the gig economy and made it harder for employers to classify workers as independent contractors.

"When you get to the Supreme Court level, broad policy is what they're interested in," he said. "How do we protect low-wage workers? The court was obviously struggling with how to protect workers, employers and the economy. But it was fairly clear they were going to rule for the plaintiffs."

-- John Roemer