Wage theft is a serious problem in California. As Los Angeles wage and hour lawyers, we have seen this play out in almost every industry and at nearly every level of employment, but it tends to occur most often to the most vulnerable workers. The fast-food industry is no exception. One way that companies try to sidestep the worst outcomes in these cases is to, where possible, bar workers from banding together in class action litigation. This is achieved through mandatory employment arbitration agreements, which have largely been upheld by the courts, up to and including the U.S. Supreme Court, via an early 20th Century law known as the Federal Arbitration Act.
However, using this tactic in a series of California wage theft lawsuits may have backfired in the case of one national fast-food chain, according to The Los Angeles Times. The story begins as so many do: Large, chain employers cutting corners of labor laws and allegedly committing wage theft is fairly common, as is the practice of mandatory employment arbitration. What makes the recently-highlighted situation different is that in trying to shield itself from a class action litigation for wage theft, the company may have effectively shot itself in the foot.
This particular fast-food chain has some 2,300 restaurant locations nationally, and it’s been battling some 10,000 claims of wage theft for the last six years. Last summer, the company won its motion filed in a federal court in Colorado to compel some 2,800 workers who filed lawsuits to instead participate in mandatory employment arbitration. However, employment lawyers for the company may now be wondering if this was the smartest move because now it is facing tens of thousands of individual arbitration proceedings across the country – proceedings it is compelled to pay for itself and which could cost tens of thousands of dollars each. The alternative of a class action lawsuit may not seem so burdensome considering it would require a single group of lawyers in one location, rather than thousands scattered before abitrators across the U.S. As it now stands, according to The Times, approximately 150 claims have been filed. Continue reading