Arbitration Clause Not Binding On Employees Who Asserted Claims Under Rest Period And Wage-Statement Itemization Laws

In Zavala v. Scott Brothers Dairy, Inc., (— Cal.Rptr.3d —, 2006 WL 2789150, Cal.App. 2 Dist., Sept. 28, 2006), a California Court of Appeal addressed the issue of whether an employer could compel arbitration of its employees’ claims that it failed to provide statutory rest breaks and properly itemized wage statements. The Court of Appeal held that the employer could not compel arbitration because the employees’ right to assert their claims in a civil lawsuit for violation of the rest break and wage-statement laws are independent of the collective-bargaining process.


Robert Zavala and a group of fellow employees (collectively, “Employees”) brought a lawsuit against their employer, Scott Brothers Dairy, Inc. (“Dairy”), for failure to provide its employees with statutory rest breaks and properly itemized wage statements. Dairy moved to compel arbitration. Employees were represented by the Chino Valley Products Dairy and Teamsters Local Number 63 (“Union”), which operated under a collective bargaining agreement (“CBA”) that provided for wage-statement itemization and “coffee breaks” and also provided a grievance procedure that culminated in final and binding arbitration. The Union had previously brought a grievance on behalf of its members regarding the rest break issue and the Union and Dairy had resolved the matter prior to the Employees filing their lawsuit. The trial court denied Dairy’s motion to compel arbitration on the ground that the Employees’ claims did not arise under the CBA.


Labor Code section 226.7, subdivision (a) provides, “No employer shall require any employee to work during any meal or rest period mandated by an applicable order of the Industrial Welfare Commission.” The California Code of Regulations, title 8, section 11070, subdivision (12)(A) mandates that employers allow employees to take rest periods of at least ten minutes per four hours worked and that the rest period time must be counted as hours worked, with no deduction from wages. If an employer fails to provide a rest period, it must pay an employee for one hour of pay for each work day that the rest period is not provided. Labor Code § 226.7, subd. (b). Labor Code section 226, subdivision (a) provides that an employer must give each employee an itemized wage statement which lists specific information about the hours worked. An employer who violates this section is guilty of a misdemeanor. Labor Code section 219 provides that certain provisions of the Labor Code, including sections 226 and 226.7, cannot be contravened or set aside by a private agreement.

The Court of Appeal concluded that, regardless of whether the parties’ CBA contained a broad arbitration provision, this provision is not binding on Employees “because the Union could not waive [Employees’] right to bring statutory labor-rights claims in court and because such claims did not arise under the CBA.” The Court determined that the California “Legislature made both rest breaks and wage-stub itemization requirements specifically nonwaivable and nonabridgeable by contract.” Because the Union could not waive the Employees’ statutory rights, they “may protect those rights in a judicial forum.” The Court noted that, while the parties could resolve the statutory rights violations through arbitration, there is no provision in the CBA indicating that Employees agreed to do so. “Mere recital of the statutory rest break and wage-statement requirements in the CBA does not [require] arbitration of alleged violations of those statutory rights.”

The Court further noted that the rights asserted are conferred on Employees “as individual employees, not as members of a collective organization and so they exist independent of the collective-bargaining process.” The Employees’ lawsuit represents their “effort to enforce nonwaivable statutory rights, not an attempt to enforce compliance with the CBA.” The Court concluded that Employees are not required to arbitrate their claims of violations of the rest period and wage-statement itemization laws.

The Court also held that Employees are not precluded from bringing their lawsuit on the ground that the Union had already grieved the issue of rest breaks under the CBA. When the Legislature enacted the minimum labor standards it “granted to individual employees the right to vindicate them in court, separate from the enforcement tools it gave to the Labor Commissioner.”

The Court concluded the Employees do not have to arbitrate their claims against Dairy and they can proceed with their lawsuit.

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