Last week, the U.S. District Court for the Eastern District of New York upheld a class action waiver in an employment arbitration agreement, sending the plaintiffs’ FLSA collective action claims to arbitration on an individualized basis. The plaintiffs, former sales representatives for United HealthCare, claimed that the class action waiver was unenforceable for several reasons. First, the plaintiffs claimed that participating in a collective action under the FLSA is a statutory right that cannot be waived. The court disagreed, finding that nothing in the FLSA or its legislative history establishes that the right to participate in a collective action is a non-waivable right. To the contrary, the court reasoned that because an employee is required to file a consent form in order to participate in a collective action under the FLSA, an employee certainly has the power to waive their participation in such an action. The plaintiffs next attempted to rely upon the Second Circuit’s opinion in In re American Express Merchants’ Litigation, 667 F.3d 204 (2d Cir. 2012), which found a class action waiver to be unenforceable because the practical effect of enforcing the waiver in that case would have precluded the plaintiffs from bringing their claims. The court also rejected this argument, noting that the Second Circuit made clear that class action waivers are not per se unenforceable, and finding that the plaintiffs in this case failed to show that arbitrating their FLSA claims on an individual basis would have been cost prohibitive. Lastly, the court rejected the plaintiffs’ argument, under the NLRB’s D.R. Horton decision, that class action waivers violate employees’ rights to engage in concerted activity. The court instead agreed with the Eighth Circuit’s recent decision in Owen v. Bristol Care, Inc., 702 F.3d 1050 (8th Cir. Jan. 7, 2013), which rejected the NLRB’s rationale in D.R. Horton and held that class waivers are enforceable in relation to claims brought under the FLSA.
Photo credit: Logan Simmons