By: Brendan J. Begley

The California Court of Appeal this week provided a shield to employers against attacks left open by the state Supreme Court’s momentous decision earlier this month concerning meal and rest periods. The appellate court in Kinecta Alternative Financial Solutions Inc. v. Superior Court (Malone), No. B235491, decided that a trial court in Los Angeles should have dismissed class-action allegations in a meal-and-rest-period lawsuit.

In so doing, the Court of Appeal also relieved the employer from its obligation to produce confidential contact information of other employees who allegedly were not provided meal or rest periods. The appellate court reached those conclusions because the lead plaintiff and her employer had entered an enforceable arbitration agreement that did not contemplate class arbitration.

Of course, employers in the Golden State were relieved on April 12, 2012, when California’s highest court handed down its opinion in Brinker Restaurant Corp. v. Superior Court (Hohnbaum), No. S166350. That case confirmed that employers are not required to ensure their employees take legally mandated breaks; instead, employers only must provide such breaks to their workers. However, in that decision, the Supreme Court did not negate the ability of employees to file class-action lawsuits alleging meal-and-rest-period violations.

The Brinker decision is momentous because it is much easier for employers to show that they provided meal or rest periods than it is to prove that they ensured their workers actually took such breaks. Nonetheless, defending against any class action can be extremely costly and risky, even when an employer has strong evidence that it provided breaks. Avoiding class actions altogether is much more economical.

Accordingly, while the Supreme Court’s decision in Brinker generated much more fanfare, the Court of Appeal’s opinion in Kinecta may be of greater value to employers. Using an enforceable arbitration agreement to negate a class action at the outset can be a lot cheaper than defending a class action regardless of whether the employer has favorable evidence.

With that said, arbitration agreements may not be suitable for every employer. And when such agreements are desirable, care must be taken to ensure that their terms are enforceable. Thus, prudent employers who wish to explore implementing or updating arbitration agreements to reduce their exposure to meal-and-rest-period class actions should consult with legal counsel in light of the Kinecta decision.