The Inbox - August 8, 2014

| O'Neill, Ashley

A recent decision from the Third Circuit proved a boon to employers facing the dangers of class arbitration in costly wage/hour disputes.  In its decision, the Third Circuit determined that courts, rather than arbitrators, should decide whether class arbitration exists in the absence of specific language in the arbitration agreement.  Employers generally oppose class arbitration because of arbitrators’ tendency to allow them, and the low prospects of overturning an unfavorable arbitration decision.  The longer-term consequences of the decision also bode well for employers who seek to insert class waivers in their arbitration agreements.  Law 360 interviewed Steven Suflas, a Ballard Spahr partner, who opined that employers can now take solace in the fact that a court will likely enforce class waivers found in arbitration agreements. 

Speaking of upholding class waivers in arbitration agreements, the California Supreme Court’s recent Iskanian decision did just that.  However, the court did carve out a general exception to the rule, stating that employers may not bar arbitration of claims brought under the Private Attorneys General Act (PAGA) as a matter of California public policy.  As if on cue, plaintiffs in a federal putative wage class action against CarMax Auto Superstores California LLC filed new state claims under PAGA, claiming they could not be arbitrated despite being ordered to arbitrate other claims on July 2.  As reported by Law 360, CarMax argues that plaintiffs are seeking to avoid the arbitration order with the state PAGA claims while plaintiffs maintain that the suits are substantially different. 

On the other end of the workplace spectrum, where employers and employees get along famously, there is an ousted CEO whose former employees are waging a media campaign to have him reinstated.  The executive in question is Arthur T. Demoulis, formerly the CEO of Market Basket, a grocery store chain operating in the Northeast.  The company’s board, controlled by his cousin, ousted the CEO in favor of two newly appointed co-chief executives.  Many employees, who seem to show genuine affection for Mr. Demoulis and his hands-on management style, are fearful that the change in management will adversely affect the company’s culture and business model.  The Washington Post reports that Market Basket is known for its low prices, strong customer service, and a practice of offering above-average employee compensation and benefits.

And here’s one more feel-good workplace story making waves this week.  According to the Lexington Herald-Leader, the interim president of Kentucky State University, Raymond Burse, negotiated with the university’s Board of Regents to reduce his salary by $90,000 to fund hourly wage increases to those employees making less than $10.25 per hour.  The good news for the affected employees is that the increases will not only go into immediate effect, but will also be permanent, despite the temporary nature of Mr. Burse’s appointment.