Arbitration and Class Action Waivers Held Unenforceable in Washington

In an article, the Buchalter firm analyzes an unpublished decision in which the Washington Court of Appeals upheld a trial court’s refusal to compel arbitration in a proposed class action, Bangorn Sayaseng and Brandon Sayaseng v. Geodis Logistics, LLC.

The appellate court found that the employees’ arbitration agreements were unenforceable under both the Federal Arbitration Act (FAA) and Washington law.

The ruling follows a trend in state courts of rejecting arbitration provisions that limit workers’ ability to pursue collective wage-and-hour claims, particularly where the agreements include class-action waivers.

The dispute arose after two warehouse employees filed a putative class action alleging violations of several Washington wage statutes. Each had signed an arbitration agreement governed by the FAA that included a class action waiver and required individual arbitration.

The trial court determined, and the appellate court agreed, that the employees were transportation workers exempt from the FAA.

The court further concluded that, even apart from the FAA exemption, the agreements failed under state law. One lacked a severability clause, rendering it non-enforceable, and both were contrary to public policy because Washington recognizes wage-and-hour rights as substantive and non-waivable.

The Court of Appeals reaffirmed that Washington law views class action waivers in employment arbitration agreements as unconscionable, particularly in wage disputes where individual claims are too small to be pursued independently.

The decision signals that courts will continue to scrutinize such agreements closely, limiting their effectiveness for employers seeking to avoid class litigation.

Employers with Washington-based workers should review their arbitration agreements to ensure compliance with state and federal laws. Agreements should include clear FAA governing language, severability clauses, and adequate consideration for existing employees.

However, given Washington’s restrictive stance, even well-drafted arbitration agreements may not eliminate exposure to class action claims in wage-and-hour disputes.

Buchalter suggests that employees in Washington sign a separate/standalone document from other onboarding documents, rather than relying solely on an arbitration policy or clause in a handbook, as sufficient notice and acceptance of arbitration.