Second Circuit Makes it Official (Again): FLSA Claims are Subject to Arbitration
Stating unequivocally what it previously had assumed, the Court of Appeals for the Second Circuit recently held that FLSA claims are arbitrable, notwithstanding the requirement that FLSA litigation settlements be “supervised.” Rodriguez-Depena v. Parts Authority Inc., 2017 U.S. App. LEXIS 24995 (2nd Cir. Dec. 12, 2017). The Second Circuit had in recent years addressed various issues surrounding the arbitrability of FLSA claims, such as whether a class (collective) action waiver in an arbitration provision rendered the provision unenforceable as a matter of law (to which this Court of Appeals responded “no,” but which issue currently is pending before the U.S. Supreme Court due to a circuit split), implicitly confirming that FLSA claims could be subject to arbitration agreements. However, the Second Circuit had neither formally, expressly held that FLSA claims are arbitrable, nor expressly rejected the position that the its decision in Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199 (2nd Cir. 2015), requiring judicial scrutiny of FLSA settlements, impacted the arbitrability of such claims. Until now.
Among the arguments made by the plaintiff in Rodriguez-Depena, in asserting that his FLSA claims were not subject to arbitration, was the contention that the Second Circuit’s recent decision in Cheeks, requiring judicial oversight and approval of litigation settlements involving FLSA claims, implied that the supervision requirement was intended to override forum selection clauses such as arbitration agreements. Quickly rejecting that assertion, the Court of Appeals noted that “[t]he rationale of Cheeks . . . is assurance of the fairness of a settlement of a claim filed in court, not a guarantee of a judicial forum.” Thus, with respect to individual FLSA claims, and at least until the Supreme Court’s decision is rendered with respect to collective action claims, employers in the Second Circuit who have implemented, or contemplate implementing, an arbitration provision for their employees may rest assured that, generally speaking, such a provision will be enforceable as to FLSA claims.