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. 