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Last month, the Ninth Circuit Court of Appeals, in O’Connor v. Uber Technologies, Inc. (September 25, 2018), became one of the first courts to follow the U.S. Supreme Court’s holding in Epic Systems Corporation v. Lewis (May 21, 2018) to enforce class action waivers in employment disputes. In Epic Systems, the U.S. Supreme Court held that class action waivers requiring individual arbitration are enforceable, and that neither the Federal Arbitration Act’s (“FAA”) savings clause nor the National Labor Relations Act (“NLRB”) render such waivers invalid. In O’Connor, the Ninth Circuit invoked the Epic Systems precedent to send a set of class actions against the ride-share service Uber into individual arbitrations.
The O’Connor case was one of several consolidated class actions brought by current and former Uber drivers against the company. The drivers claimed, among other violations of California and federal labor law, that they had been misclassified as independent contractors, when they were in reality acting as Uber’s employees. The plaintiffs in O’Connor received encouragement when the California Supreme Court ruled in Dynamex Operations West, Inc. v. Superior Court that workers who perform core company functions (like drivers in a ride-share service) are employees, not independent contractors. In an attempt to circumvent Dynamex, counsel for Uber argued to the Ninth Circuit that the ruling was inapplicable to O’Connor because it was limited to claims brought under California Wage Orders, and did not extend to the O’Connor plaintiffs’ claims under the California Labor Code.
The recent Ninth Circuit ruling in O’Connor did not address the application of Dynamex, but instead simply reversed the district court’s rulings on arbitration and class certification. In particular, the O’Connor Court rejected the plaintiffs’ assertion that their arbitration agreements were unenforceable because they contained class action waivers that violated the NLRB. Pointing to Epic Systems, the Court held that “the district court’s orders denying Uber’s motions to compel arbitration … must be reversed.” The Court also rejected Plaintiff’s argument that the named plaintiffs had constructively opted out of the Uber arbitration agreements on behalf of all putative class members. The Court held that any such rule would be preempted by the FAA.
California employers, take note. The rulings in Epic Systems and O’Connor make clear that class action waivers in employment agreements are (for now) enforceable, and should be included in all new hire packets.
Lisa Lawrence-Hughes is an Associate with Hunt Ortmann and is a seasoned business and employment litigator, with over 12 years of experience defending employment lawsuits and advising California employers. For more information, please visit our website here or contact us directly at email@example.com.