SAN FRANCISCO — Mechanics, detailers, and other employees at California CarMax Auto Superstores will have to arbitrate their class action overtime wage claim, according to a California federal judge. The CarMax employees brought their suit in March claiming the company’s piece-rate payment system resulted in unpaid wages during non-repair time and unpaid overtime. The employees also claimed they should have received twice minimum wage during their non-repair times. It is estimated that the total damages for the employees’ claims could be nearly $8 million.
CarMax Arbitration Claim
CarMax does have arbitration agreements with its employees. However, in this case two of the three lead plaintiffs claim their arbitration agreements are no longer valid because it was initially signed with Circuit City, CarMax’s parent company, which no longer exists. But, the court determined both the Circuit City and CarMax arbitration agreements were enforceable.
The plaintiffs also claimed the arbitration agreement was unconscionable and therefore unenforceable. The judge partially agreed with the plaintiff that the contracts were unconscionable because the contracts were a condition of employment and non-negotiable. But the agreement’s unconscionability was only procedural and not enough to invalidate the contract. Additionally, the agreement clearly informs potential employees to familiarize themselves with the dispute resolution requirements before they sign.
Arbitration Agreements
Arbitration, or dispute resolution, agreements are becoming more common in employment relationships because arbitration allows the parties to resolve disputes more quickly, and is usually cheaper than going to court. Arbitration agreements typically require both parties to seek mediation or arbitration for any dispute that arises during the contractual relationship. Sometimes the agreement will address disputes that might have arisen prior to the agreement, but that is less common. The agreements will also specify where the arbitration will take place and which state’s laws will apply. In many agreements, an employer will even specify what organization will be used to arbitrate disputes. The increasing use and enforcement of arbitration agreements makes it important to read them carefully before signing.
Unconscionability
Because arbitration agreements are often a condition of employment, there is some concern that employers will use the situation to add unfair conditions to the agreement. For this reason, when arbitration agreements, or employment agreements in general, are at issue before the court, the court will look at a number of factors, particularly unconscionability. An unconscionable agreement, as it sounds, is one that cannot be enforced in good conscience because it is grossly unfair to or takes advantage of one side or the other. The CarMax agreements do take advantage of the employees because they non-negotiable, but the terms of the agreement are not unconscionable.
If you believe your employer has failed to pay minimum wage or overtime and you signed an arbitration agreement, contact our knowledgeable team of overtime pay lawyers today at (855) 754-2795 to discuss your rights. Or complete the Free Unpaid Overtime Case Review form and our experienced legal team will evaluate your situation. If we accept your case, we will represent you under our No Fee Promise. This means there are no legal fees or costs unless you receive a settlement.