Employees who sue for unpaid wages can either file (1) a civil lawsuit or (2) a wage claim with the Division of Labor Standards and Enforcement (“DLSE”). An employee who files a wage claim with the DLSE may participate in a settlement conference with his/her employer. If the case does not settle, the DLSE will set the case to an administrative hearing, known as a “Berman Hearing”. Berman Hearings are mini, informal trials with a Labor Commissioner. Berman Hearings, compared to civil lawsuits, are designed to provide a speedy, informal, and affordable method for employees and employers to resolve wage claims.

In OTO, LLC v. Kho, the Court enforced an arbitration agreement that required an employee to arbitrate his wage claim rather pursue his claim through a Berman Hearing. The Court reasoned that, arbitration still provided an “accessible and affordable” forum for the employee as the employer would pay arbitration costs and the employee still had access to legal representation.

What does this mean for you? Employer arbitration agreements may now compel employees to arbitrate their wage claims rather than go through a DLSE hearing. Please contact Stokes Wagner if you have any questions regarding arbitration agreements.

For more legal updates, check out our update for September 2017!