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Supreme Court to Review Arbitration Case, Past Epic Ruling

The Court will decide if employers can limit PAGA actions through arbitration agreements, which will determine if a past Epic case ruling upheld California law.

The Supreme Court has agreed to hear the case of Viking River Cruises, Inc. versus Moriana, which will determine if a past arbitration case involving EHR vendor Epic overruled California’s arbitration policy.

In 2018, the Supreme Court ruled in favor of Epic in Epic Systems Corp. versus Lewis and upheld the use of class and collective action waivers in employment arbitration agreements.

The case originated when Epic employee Jacob Lewis alleged that Epic did not properly compensate him for overtime pay and filed a complaint against the company in federal court. However, Epic requires employees to sign an arbitration agreement that waives their right to pursue work-related claims through class or collective action and instead requires them to resolve claims through arbitration.

The Court ruled in favor of Epic with a 5 to 4 decision, determining that the arbitration waiver did not violate the National Labor Relations Act and was protected under the Federal Arbitration Act.

In Viking River Cruises, Inc. v. Moriana, the Supreme Court will decide if employers can limit actions under California’s Private Attorneys General Act (PAGA) through arbitration agreements with representative actions waivers in the way that they limit class actions through class action waivers.

PAGA allows aggrieved employees to file lawsuits to recover civil penalties for California Labor Code violations on behalf of themselves, other employees, and the State of California, according to the National Law Review. Under PAGA, counsel can include hundreds or thousands of employee claims in one action. Additionally, PAGA provides for penalties calculated on a per pay period basis for each employee.

In California’s 2014 Supreme Court case Iskanian versus CLS Transportation Los Angeles, LLC, the Court determined that PAGA claims are not covered under the Federal Arbitration Act and that employers could not enforce arbitration agreements that made employees waive their right to file PAGA representative actions.

“Since Iskanian, courts have consistently rejected employers’ attempts to enforce representative action waivers in employment arbitration agreements, reasoning that PAGA actions are distinguishable from traditional class actions,” the law firm stated.

“And for the last several years, courts have routinely used this same reasoning to reject arguments that Epic Systems applies to PAGA representative actions.”

Viking River Cruises, Inc. v. Moriana seeks to determine if the ruling in Epic’s original arbitration case conflicts with the ruling in Iskanian v. CLS Transportation Los Angeles, LLC.

“A favorable ruling for California employers could change the landscape by allowing employers to implement and enforce arbitration agreements with PAGA waivers,” the National Law Review stated. “In short, it would allow arbitration agreements to control PAGA claims on parity with all other statutory employment claims under state and federal law.”

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