Overtime and Arbitration Clauses

On April 25th, 2012, in Kinecta Alternative Financial Solutions Inc. v. Superior Court (Malone) (California Courts of Appeal – 2nd District, No B235491), the court found that arbitration may not compelled where a plaintiff has not consented to arbitration.

In Kinecta, the plaintiff worked at a credit union, where she signed an employment contract that included an arbitration clause. Some time later, the plaintiff filed a suit against the defendant alleging both failure to pay overtime and failure to provide meal/rest breaks. The defendant sought to dismiss the claim and compel arbitration, but the court found that because the arbitration agreement was not amenable to class arbitration, it could not compel arbitration.

Using Kinecta as a map, the court detailed a four-part test to determine whether compelling class arbitration is appropriate. First, the court will look at the "modest size of the potential individual recovery." Next, the court will look at whether there is a "potential for retaliation against the class." The court also weighs whether there are "absent members of the class [that] may be ill informed about their rights," along with any other obstacles that might impede the class members' right to overtime pay. With each of these factors, the plaintiff has the burden of proof, which means that s/he must demonstrate the existence of the factors through a factual showing.

If you feel that you have a wage and hour claim, please do not hesitate to contact a Southern California Employment Law attorney today.

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