In Davis v. Nordstrom, Inc., ___ F.3d ___ (9th Cir. June 23, 2014), the Ninth Circuit Court of Appeals reversed the order of the U.S. District Court for the Northern District of California (Judge Wilken) denying defendant employer’s motion to compel arbitration of class-wide claims of wage and hour violations.

Plaintiff was an employee who brought a class action against defendant employer for unpaid wages and failure to provide meal periods and rest breaks in August 2011. Defendant moved to compel individual arbitration of plaintiff’s claims because plaintiff had acknowledged receipt of an employee handbook that contained an arbitration agreement and class action waiver.  Plaintiff argued, however, that the class action waiver was unenforceable because the employee handbook also contained a provision requiring defendant to provide employees with “30 days written notice of any substantive changes to the arbitration provision” so that employees would have time to consider the changes and decide whether or not to continue employment. Until one month prior to plaintiff’s initiation of her class action, the arbitration provision in the handbook specifically permitted employees to bring class action lawsuits against the company. It was not until July 2011 that this provision was revised to require employees to arbitrate nearly all claims individually, and preclude employees from filing most class action lawsuits. The district court denied the motion, finding that no revised agreement was ever reached because defendant had failed to provide employees with the required 30 days’ notice of the change in the arbitration provision, and to inform employees that their continued employment constituted acceptance of the new arbitration provision. Defendant appealed.

The appellate court reversed, finding that defendant did, indeed, comply with the notice requirement. The court noted that defendant satisfied the minimal requirements under California law for providing employees with reasonable notice of a change to its employee handbook by sending a letter to the employees informing them of the modification, and not seeking to enforce the arbitration provision during the 30 day notice period. Moreover, the court held that California law imposed no duty upon defendant to specifically to inform employees that their continued employment constituted acceptance of new terms of employment.