Many employers rely on arbitration agreements with class action waivers, provisions that prevent employees from filing or joining collective lawsuits, to manage wage and hour litigation risk.
That strategy works reliably in states like California where courts typically uphold arbitration agreements with class action waivers.In Washington, however, courts disfavor class action waivers and arbitration agreements generally, and will invalidate such agreements when employees lacked a meaningful opportunity to review and agree to their terms. This refusal to enforce arbitration agreements or class action waivers creates a gap exposing employers to potential class action risk .[1]
This gap has not gone unnoticed. In 2025, more than 750 employment class actions were filed in Washington. Unlike California, where arbitration agreements with class action waivers are generally enforceable and limit claims to individual disputes, Washington presents a different playing field: the same underlying wage and hour claims, but a higher risk to employers where there is an increased chance that claims may proceed on a class basis. Recently-filed cases track a familiar pattern: complaints concentrate on missed meal and rest breaks, off-the-clock work, and overtime miscalculations at employers in the healthcare, hospitality and logistics industries. The active testing of these claims in Washington, which are often brought by California-based law firms, demonstrates the need for heightened vigilance by Washington employers and careful analysis of the arbitration agreements they rely on.
Washington’s Different View of Arbitration Agreements
Under the Federal Arbitration Act, employers can generally enforce class action waivers in arbitration agreements. The U.S. Supreme Court confirmed this in AT&T Mobility v. Concepcion, and California employers have relied on that holding for over a decade, funneling wage disputes into individual arbitrations instead of class actions.
Washington appellate courts, however, have repeatedly held that class action waivers in employment arbitration agreements are unconscionable under Washington law, particularly in wage and hour cases, where claims are often too small to justify the cost of individual litigation. Washington courts treat wage statutes as substantive, non-waivable rights and hold that class action waivers foreclosing recovery of those rights conflict with public policy. As a result, agreements enforceable in California may not be enforceable in Washington.
What Washington Courts Actually Look For: Procedural and Substantive Fairness
Washington applies a two-prong unconscionability test: procedural and substantive. An arbitration agreement is vulnerable if it fails either prong.
Procedural unconscionability asks whether the employee had a genuine opportunity to understand and agree to the arbitration terms. Burnett v. Pagliacci Pizza illustrates this risk.[2] There, the Washington Supreme Court struck down an arbitration provision contained only in an employee handbook, holding that the employee had no meaningful notice of the provision before signing his employment agreement and therefore never validly agreed to it. Arbitration clauses embedded in handbooks or other adhesion contracts, rather than presented as standalone, signed agreements, face serious enforceability challenges under this test.
Substantive unconscionability asks whether the agreement’s terms are unreasonably one-sided. Washington courts have found that class action waivers fail this test, particularly in the wage and hour context, where the one-sidedness is acute: employees must arbitrate claims on an individual basis while employers retain their right to bring claims collectively or in court. Because individual arbitration effectively prevents employees from vindicating statutory rights the legislature intended to be enforceable, the agreement is substantively unconscionable. An agreement can satisfy procedural fairness and still fail here, rendering the agreement unenforceable.
What This Means for Employers
Washington employers relying on arbitration agreements containing class action waivers should review those agreements immediately for two critical issues:
- Standalone presentation: Is the arbitration agreement presented as a separate document with a clear, signed acknowledgment, or is it buried in a handbook? Recent Washington cases have turned on this distinction, and it can be addressed with proper drafting. See Burnett v. Pagliacci Pizza, Inc., 196 Wash. 2d 38 (2020) (striking arbitration clause in employee handbook because employee lacked meaningful notice of the clause before signing the employment agreement).
- Severability: Does the agreement include a severability clause, so that if a court finds one provision unenforceable, the rest of the agreement survives? This too has proven decisive in Washington litigation and is straightforward to add. Sayaseng v. Geodis Logistics LLC, 35 Wash. App. 2d 1050 (2025), den., 584 P.3d 405 (2026) (finding class action waiver substantively unconscionable under Washington law and the absence of a severability clause precluded enforcement of the remaining arbitration provisions).
Pacific Northwest employers with Washington operations should treat arbitration enforceability and underlying wage and hour compliance as immediate priorities. A thorough audit of your agreements and your wage practices now can prevent costly litigation later.
Endnotes
[1] See Burnett v. Pagliacci Pizza, Inc., 196 Wash. 2d 38 (2020) (refusing to enforce arbitration clause in employee handbook when employer failed to provide separate, conspicuous notice).
[2] Burnett v. Pagliacci Pizza, Inc., 196 Wash. 2d 38 (2020)
