On March 21, 2014, the United States Court of Appeals for the Eleventh Circuit joined a growing number of federal Courts of Appeals to reject arguments that class waivers contained in arbitration agreements should not be enforced in the employment context. In Walthour v. Chipio Windshield Repair LLC, the Eleventh Circuit (which covers Georgia, Florida, and Alabama) upheld a broad arbitration provision which required employees to bring all employment claims in their “individual capacity and not as a plaintiff of class member in a purported class or representative proceeding ….”
What Was the Case About?
Two individuals employed by the defendant as “Window Repairers” filed an action seeking overtime and minimum wage payments under Section 16(b) the Fair Labor Standards Act (“FLSA”). They styled their case as a putative FLSA “collective action” on behalf of themselves and “others similarly situated.” The employer moved to compel arbitration pursuant to the arbitration provision (quoted above), which the two plaintiff-employees had previously signed in connection with their employment.
Opposing the defendant-employer’s motion to compel arbitration, the plaintiffs maintained they had a statutory and substantive right to file a collective action under the FLSA and that this right was non-waivable based on the FLSA’s text and legislative history. The District Court, however, rejected these arguments and granted the employer’s motion to compel arbitration. The plaintiff-employees appealed to the Eleventh Circuit.
What Did the Court Find?
The Eleventh Circuit (which covers Georgia, Florida, and Alabama) affirmed the District Court’s decision to enforce the arbitration provision, and compel arbitration of the plaintiff-employees’ claims. Citing the Federal Arbitration Act (“FAA”), the Eleventh Circuit found that arbitration provisions must be enforced according to their terms unless overridden by a “contrary congressional command.”
After examining the FLSA’s text, legislative history and purposes, as well as Supreme Court precedent, the Eleventh Circuit found that it could “discern no ‘contrary congressional command’ that precludes the enforcement of plaintiffs’ Arbitration Agreements and their collective action waivers.” Specifically, the Court found that the FLSA does not override the language of the FAA and that the enforcement of collective action waivers in arbitration agreements “is not inconsistent with the FLSA.” Finally, the Eleventh Circuit noted that both the Second Circuit and Fifth Circuit – including the recent D.R. Horton case – have similarly “concluded that §16(b) [of the FLSA] does not provide for a non-waivable, substantive right to bring a collective action.” The Eighth Circuit has similarly ruled.
What is the Takeaway for Employers?
All employers (regardless of size) are susceptible to claims under the FLSA. To decrease the risk that employees will file collective actions under the federal wage and hour law – which are extremely burdensome and costly to defend – employers should strongly consider implementing an arbitration agreement that contains a broad class/collective action waiver. A simple, but carefully worded change to an existing arbitration provision – or the introduction of an arbitration provision containing such waiver language could potentially save employers significant time and costs in the future.
Given these developments, now is a good time for employers to communicate with experienced wage and hour counsel about their arbitration agreements. If you have any questions, please feel free to contact an attorneys in the Gibbons Employment & Labor Law Department.
