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Posts Tagged ‘collective actions’

High Court OKs Employers’ Use of Class Waivers

Posted on: May 23rd, 2018

By: Paul Derrick

Class action waivers in employment arbitration agreements are enforceable under the Federal Arbitration Act (FAA), says the U.S. Supreme Court in a much-anticipated decision.

The Supreme Court’s long-awaited decision resolves a circuit split on whether class or collective action waivers contained in employment arbitration agreements violate the National Labor Relations Act (NLRA). By a 5-4 margin, the Court ruled that, under the FAA, arbitration agreements providing for individualized proceedings, rather than class or collective actions, are enforceable.

Arbitration agreements that require employees to pursue work-related claims in arbitration, rather than in court, have long been enforced pursuant to the FAA. Six years ago, however, the National Labor Relations Board decided that employers violate the NLRA when they require employees, as a condition of employment, to agree that they will resolve workplace disputes individually pursuant to an arbitration provision containing a class or collective action waiver.

The Supreme Court’s opinion makes it clear that the Board and various courts were wrong in believing that the NLRA trumps the FAA.  It noted that that nothing in a class or collective action waiver interferes with an employee’s right to participate in a union or engage in collective bargaining.

So, what does the Court’s ruling mean for employers right now?

First, they should look at their arbitration agreements and consider modifying them to include class action waivers if they are not already included.

Second, they should consider including an arbitration agreement and class waiver provision as part of their onboarding paperwork (but remember such clauses should not be included within the text of an employee handbook).

Finally, employers should expect that there is more litigation yet to come as employees and unions angle for ways to get around the Supreme Court’s decision.  Especially in states such California, there are other avenues by which employees can still maintain class and collective actions as a means of redressing their workplace disputes.  Despite these anticipated end-run attempts, employers should rest better knowing that the Supreme Court has explicitly approved the use of class action waivers in arbitration agreements.

If you have any questions or would like more information about this or any other labor law issue, please contact Paul Derrick at [email protected].

SCOTUS Rules Employers May “Pick-Off” FLSA Plaintiffs

Posted on: April 18th, 2013

By: Anthony Del Rio

The U.S. Supreme Court has issued its opinion on a case regarding whether an employer may “pick-off” the named plaintiff in a Fair Labor Standards Act (“FLSA”) collective action. The Court ruled 5-4 in favor of the employer, which means that employers may be able to use a Rule 68 offer of judgment to short-circuit FLSA collective actions in the future.

The case, Genesis HealthCare Corp. v. Symczyk, involved an employee that filed a FLSA wage and hour claim intended to be a collective action. The defendant made a Rule 68 offer of judgment that would have given the plaintiff everything she could possibly have obtained through the lawsuit (all alleged damages and attorneys’ fees), effectively mooting her claim before any other employees joined the collective action. The plaintiff did not accept the offer before the prescribed deadline, and the defendant moved to dismiss. The district court dismissed the case, because it was moot as to the only plaintiff. However, the Third Circuit Court of Appeals, while acknowledging the individual’s claim was moot, was persuaded by the plaintiff’s argument that it was a litigation tactic to “pick-off” the lead plaintiff and reversed the district court’s ruling.

The Supreme Court sided with the district court. The holding now provides solid ground for employers to attempt to moot collective actions before they start. However, the majority did not hold that an unaccepted Rule 68 offers will always moot a plaintiff’s FLSA claims, because that issue had not been appealed. Unfortunately, there is conflicting case law regarding whether an FLSA claim is mooted by an unaccepted offer of judgment. Nonetheless, the Supreme Court has provided employers with what may be a very useful tool in defeating FLSA collective actions.

The opinion is available here:  http://www.supremecourt.gov/opinions/12pdf/11-1059_5ifl.pdf