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Just as with the NLRA, the FLSA Does Not Preclude Collective Action Waivers in Arbitration Agreements, Sixth Circuit Holds

In a natural extension of the Supreme Court’s recent conclusion that the NLRA does not preclude the use of class or collective action waivers in employment-related arbitration agreements, the Sixth Circuit Court of Appeals has confirmed that such waivers are likewise permitted under the FLSA. Gaffers v. Kelly Services, 2018 U.S. App. LEXIS 22613 (6th Cir. Aug. 15, 2018). In so holding, the Sixth Circuit followed the lead of the Supreme Court’s decision in Epic Systems Corporation v. Lewis, 138 S. Ct. 1612 (2018). The Sixth Circuit has jurisdiction over Kentucky, Michigan, Ohio, and Tennessee.

The plaintiff, a former Kelly Services employee, brought suit under the FLSA on behalf of himself and his co-workers, alleging that the Company failed to properly pay him for all time worked. Because about fifty percent of the putative class (collective action) members the plaintiff seeks to represent signed arbitration agreements, the Company moved to compel arbitration. Denying the motion, the district court concluded that the NLRA and the FLSA rendered the agreements unenforceable and denied the motion.

On appeal, the Sixth Circuit easily dispensed with the lower court’s determination regarding the NLRA, in light of the Supreme Court’s interim decision in Epic Systems that the NLRA does not in fact preclude enforcement of class or collective actions waivers in employment-based arbitration agreements. Moving on, the Court of Appeals first noted that the plaintiff “faces a stout uphill climb” in his contention that the Arbitration Act and the FLSA’s collective action provision cannot be reconciled.  Noting the Supreme Court’s direction in Epic Systems, “that a federal statute does not displace the Arbitration Act unless it includes a ‘clear and manifest’ congressional intent to make individual arbitration agreements unenforceable,” and that the right to engage in collective action alone does not satisfy this standard, the Sixth Circuit concluded that the FLSA contained no express language precluding the use of arbitration. On the contrary, the FLSA’s collective action provision “gives employees the option to bring their claims together [but] . . . does not require employees to vindicate their rights in a collective action.” Thus, “employees who do not sign individual arbitration agreements are free to sue collectively, and those who do sign individual arbitration agreements are not.” Notably, the Court of Appeals added, long ago the Supreme Court held that the Age Discrimination in Employment Act (ADEA), which contains exactly the same collective action language as (and is patterned on) the FLSA, does not displace the Arbitration Act, and thus there is no reason that such a provision should not be equally enforceable under the latter Act.

Finally, the Sixth Circuit rejected the plaintiff’s argument that the collective action waiver should be deemed unenforceable for public policy reasons, noting that such a basis would be the province of Congress, not the courts, as well as the plaintiff’s argument that the Arbitration Act’s “savings clause” should preclude enforceability of the waiver provision. As the Supreme Court made clear in Epic Systems, the savings clause – which allows courts to refuse to enforce arbitration agreements “upon such grounds as exist at law or in equity for the revocation of any contract” (e.g. fraud or duress) – cannot be used when the defense applies only to arbitration agreements, as opposed to all contracts in general, or when the defense would “interfere with the ‘fundamental attributes of arbitration,’” including the common attribute of individualized proceedings.

Jackson Lewis P.C. © 2019

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About this Author

Principal

Stephanie L. Adler-Paindiris is a Principal and Office Litigation Manager for the Orlando, Florida, office of Jackson Lewis P.C. She is Co-Leader of the firm's Class Actions and Complex Litigation practice group. Her practice focuses exclusively on the representation of employers at the trial and appellate level in state and federal courts, as well as proceedings before administrative judges and agencies.

Ms. Adler-Paindiris has conducted over a dozen trials before juries and judges in state and federal courts. In addition, Ms. Adler has participated in...

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Eric R. Magnus, Jackson Lewis, Wage and Hour Class Defense Lawyer, Employment Matters Attorney
Shareholder

Eric R. Magnus is a Shareholder in the Atlanta, Georgia, office of Jackson Lewis P.C. His practice is focused primarily on defending federal and state wage and hour class and collective actions in jurisdictions across the United States.

Mr. Magnus’ collective and class action practice focus primarily on “donning and doffing,” “off-the-clock” and misclassification wage and hour cases. Mr. Magnus has obtained summary judgment at the district and circuit court levels in Fair Labor Standards Act and state law cases across the country. Mr. Magnus has also obtained favorable settlements in nationwide off-the-clock, donning and doffing and misclassification cases in several jurisdictions. He is an active member of the firm’s national class action and wage hour practice groups. Mr. Magnus also regularly advises clients prospectively on proper classifications of employees and on effective methods to avoid off-the-clock claims.

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David Golder, Jackson Lewis, wage hour dispute attorney, Fair Labor Standard Act Lawyer
Principal

David R. Golder is a Principal in the Hartford, Connecticut, office of Jackson Lewis P.C. Mr. Golder has extensive experience handling class and complex litigation, including nationwide, high-stakes wage and hour disputes. Mr. Golder defends employers in class-based, multi-plaintiff, and multi-district wage and hour class and collective actions involving claims for employee misclassification, improper payment of wages, off-the-clock work, and meal and rest break violations. Mr. Golder also provides preventive advice and counsel to employers wishing to limit their...

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