Wednesday, August 15, 2018

Sixth Circuit Rejects Another Attack on Arbitration Agreements Involving FLSA Claims


This morning, the Sixth Circuit unsurprisingly granted the appeal of an employment services firm whose arbitration agreement was denied enforcement by the trial court in a collective FLSA action.  Gaffers v. Kelly Services, Inc., No. 16-2210 (6th Cir. 8-15-18).  The Supreme Court’s decision earlier this year in Epic Systems rejected one of the legal arguments relied upon by the trial court: that arbitration agreements violate the NLRA when they preclude collective lawsuits.  This morning, the Sixth Circuit also reiterated that arbitration agreements are not precluded by the Fair Labor Standards Act either even though that statute also permits class action lawsuits. 

The plaintiff provided “virtual” call center support from home for the defendant employer.  He filed a lawsuit on behalf of himself and 1600 similar co-workers that he was not properly compensated under the FLSA for logging in and out of the employer’s computer network and during computer glitches.   Although he had never signed an arbitration agreement, about half of his co-workers had and the employer moved to refer those cases to individual arbitrations.  The trial court refused to enforce the arbitration agreements and the employer appealed.

The Supreme Court long ago held that the Federal Arbitration Act supported the enforcement of arbitration clauses in cases brought under the ADEA, which shares the exact same statutory enforcement  provisions with the FLSA.  Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 27 (1991).  In other words, when Congress adopted the ADEA, it incorporated the FLSA’s enforcement provisions.  Therefore, it is pretty clear that the FLSA does not preclude arbitration.

The Sixth Circuit refused to deny enforcement on policy grounds because Congress is supposed to set policy, not courts.   Court’s interpret statutes, not Congressional intent.   It also rejected the argument – rejected earlier this year by the Supreme Court – that the arbitration agreement should not be enforced on grounds of illegality.   It also refused to treat the arbitration agreement as an illegal waiver under the FLSA because FAA endorsed arbitration as lawful.
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 be changed or 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.