California lets private citizens enforce state labor laws. The Supreme Court might put an end to that

Betty Q. Hixson

The U.S. Supreme Court will hear a case this month that could prevent many Californians from taking their employers to court on claims that they violated state labor laws, such as paying minimum wages and requirements for overtime, meal and rest breaks.

Most large companies, in their employment contracts, require workers to take those disputes to private arbitration rather than suing in court. Arbitrators’ decisions are virtually unappealable, and their findings usually favor employers, their frequent customers. A review of 1,213 California employment arbitration cases from 2003 through 2007, published by the Journal of Empirical Legal Studies, found that employees won only 21.4% of the verdicts. Another study found that employers were more likely to win if they had appeared before the same arbitrator in the past.

And because the contracts require individual arbitration and prohibit collective action, the potential payments are often so small that employees cannot find lawyers to take their cases, causing many to drop their claims.

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