Yesterday, the Sixth
Circuit issued an important FLSA decision concerning the enforceability of
employee waivers of FLSA class actions and the applicability of the outside
sales exemption in the FLSA. Killion v. KeHe
Distributors LLC, Nos. 13-3357/4340 (6th Cir. 7-30-14). In that case, the plaintiffs held “sales
representative” jobs with a food distributor, worked mostly in grocery and big
box stores stocking and re-ordering products, and were laid off. Some of the plaintiffs signed separation
agreements waiving their rights to bring a class action or other claim. They sued, claiming that that they had
typically worked 60 hours/week but were not paid overtime wages. Instead, they were paid commissions. The Sixth Circuit reversed the denial of
class certification to the plaintiffs who had signed the class action waiver on
the grounds that such waivers were unenforceable for FLSA claims. In addition, the Court found that a jury
could find that they were not exempt outside sales representatives because evidence
existed which showed that the plaintiffs (i) were inventory controllers that
did not make sales, (ii) spent most of their time stocking and cleaning
shelves, (iii) were compensated mostly (68%) for stocking shelves and store
maintenance, and (iv) conducted promotional activities to increase the sales of
account managers, not their own sales.
The employer had argued that the class action waiver should
be as enforceable as arbitration agreements in other FLSA claims. However, the Sixth Circuit disagreed on the
basis that there is a strong public policy in favor of arbitration agreements,
which does not exist in a simple class action waiver. Accordingly, the Court distinguished decisions
from other circuits enforcing similar waivers on the grounds that those cases
also involved arbitration agreements.
NOTICE: This summary is designed merely to inform and
alert you of recent legal developments. It does not constitute legal advice and
does not apply to any particular situation because different facts could lead
to different results. Information here can change or be amended without notice.
Readers should not act upon this information without legal advice. If you have
any questions about anything you have read, you should consult with or retain
an employment attorney.
