Sacramento (CA) – The California Supreme Court ruled this week that Circuit City employees may sue the store for labor law violations, despite arbitration agreements they may have signed years ago.
According to the LA Times, every one of Circuit City’s 46,000 employees had to sign a document waiving their right to sue their employer and capping damages for any wrongdoing. The California court essentially tossed these agreements out the window, allowing the employees to sue for as much as they want.
The waivers would require disgruntled employees to follow an internal arbitration process, where damages could not amount to more than one year of back pay.
In the past two years, numerous employees have filed suit against Circuit City, alleging the store refused to pay overtime wages.
The case that led to this week’s ruling was filed by Robert Gentry in 2002. Gentry claimed that Circuit City’s waiver was not binding because it violated California state labor laws. The appellate court disagreed, but when raised to the state’s Supreme Court, the earlier decision was overturned.
This is a big ruling for all employees in the state of California, and will likely have a sweeping effect across the country, as numerous companies employ similar policies about potential lawsuits.
The LA Times reports the new decision could quite possibly lead to a class action lawsuit against Circuit City. It reports there is a large potential plaintiff pool and individual cases are often overlooked by trial attorneys.