Tag: Arbitration Agreements

Categories
FLSA

Final Thoughts on Boaz: Employee’s Belief is not Determinative

There is another very good nugget in the Boaz case. It is just a single sentence, but it is very important for plaintiff’s lawyers to remember after their client gives his or her deposition. The Sixth Circuit said “an employee’s subjective belief that her position was exempt from the FLSA, however, does not mean the position was exempt as a matter of law.” In other words, if an attorney’s client, who does not have a sophisticated legally trained mind, testifies that she thought she was exempt from the FLSA, this is not a party opponent admission. The question is whether their duties, in light of the evidence, satisfy one of the exemptions. The employee’s belief that they are exempt is not determinative.

This is good language for plaintiff’s counsel to have on hand when their client makes a poorly thought out admission during her deposition because she was not able to match wits with a sophisticated opposing counsel. Remember, “the employee’s subjective belief” is not determinative that she was actually exempt in light of the law.

Categories
FLSA

Boaz v. FedEx Customer Information Services, Inc., et al. Part 2: Effective Vindication for Rights

In my last blog post, I wrote about the recent Sixth Circuit decision in in Boaz v. FedEx Customer Information Services, Inc., et al. That case stands for the proposition that an employer cannot contractually shorten the statute of limitations for claims under the Fair Labor Standards Act or the Equal Pay Act.

There were, however, a couple of additional nuggets worth noting. In Boaz, FedEx relied on a Sixth Circuit case called Floss v. Ryan’s Family Steak House, 211 F.3d 306 (Sixth Circuit 2000). In that case, the court held that an employee asserting an FLSA claim could waive her right to a judicial forum and instead arbitrate the claim. FedEx argued that such waivers are perfectly acceptable in the context of shortening the statute of limitations. The Sixth Circuit noted that “Floss itself said that an employee can waive his right to a judicial forum only if the alternative forum ‘allow[s] for the effective vindication [of the employee’s] claim.’” The court noted that a contract that shortens the statute of limitations does the exact opposite. In other words, it clearly prevents the vindication of an employee’s statutory rights.

This is important because it shows the Sixth Circuit still recognizes the holding in Floss. In other words, in the context of an arbitration agreement, an employee might still be able to challenge the validity of the arbitration agreement if it effectively prevents the employee from vindicating his or her rights. A great example of this is the financial ability to pay. If an arbitration agreement says that the employee must pay for the arbitration, or pay for a substantial part of the arbitration, an employee might successfully be able to argue that their too darn broke to pay for a $400 an hour arbitrator. This might defeat the arbitration agreement. That’s a good point for employee rights advocates to remember.

Categories
Age Discrimination (ADEA) FLSA Title VII

Employment Agreements that Limit a Statute of Limitations. Enforceable?

Employers love arbitration agreements. Employers are beginning to love agreements that have provisions that limit an employee’s statute of limitations. The Sixth Circuit just handed down a decision that addressed such an agreement from Federal Express. In that case, Boaz v. FedEx Customer Information Services, Inc., et al., the Plaintiff filed a Fair Labor Standards Act and Equal Pay Act case. Federal Express tried to convince the court to dismiss the FLSA case because it was brought more than six months after the statute of limitations.

The case involved claims under both the FLSA and the Equal Pay Act. Many people associate the Equal Pay Act with discrimination lawsuits. However, for purposes of this case, it is important to remember that the Equal Pay Act was an amendment to the FLSA. The Sixth Circuit framed the issue as follows: “Although Boaz’s claims were timely under the multi-year limitations. Under those Acts, her claims were untimely under the six month limitations in her employment agreement.”

Her employment agreement said “to the extent the law allows an employee to bring legal action against Federal Express Corporation, I agree to bring to that Complaint within the time prescribed by law or six months from the date of the event forming the basis of my lawsuit, whichever expires first.”

Because the lawsuit was filed after the six month limitation, Federal Express thought they had a get-out- of-jail-free card.

Fortunately for the employee, the Sixth Circuit did not agree. The Sixth Circuit said that “the issue is whether Boaz’s employment agreement operates as a waiver of her rights under the FLSA.” They noted that employees may waive their rights under Title VII. However, employees cannot waive their rights under the FLSA. Therefore, they reasoned that the six month limitation period is not valid in an FLSA case. This left the question of whether the Equal Pay Act claim was also barred. While an employee can waive a claim under Title VII, the Sixth Circuit said that the Equal Pay Act is different. The Equal Pay Act was an amendment to the FLSA. Because the statute of limitation cannot be contractually shortened for FLSA claims, it cannot be contractually shortened for Equal Pay Act claims either.

What is the takeaway? Employers can have contracts that shorten the statute of limitations for some claims, such as Title VII. However, an employer cannot have a contract that shortens the statute of limitations for a Fair Labor Standards Act case in the Sixth Circuit. Likewise, because the Equal Pay Act was an amendment to the FLSA, Equal Pay Act claims also cannot be subject to contracts that shorten the statute of limitations. The court does not say so, but presumably the Age Discrimination in Employment Act is similar to the Equal Pay Act. It also is based on the statutory construction of the Fair Labor Standards Act.

There are two other nuggets the Sixth Circuit addressed in the Boaz case. However, you will have to stay tuned for our next blog post to find out about those.

Categories
FLSA Overtime/Wage & Hour

D.R. Horton and Class Action Waivers

                As noted on an earlier post, the United States Supreme Court has held that arbitration agreements that contain class action waivers are generally enforceable. This was the holding in a case called Concepcion. That case specifically held that such agreements were enforceable under the Federal Arbitration Act.

                Subsequent to Concepcion, the National Labor Relation Board handed down a decision in a case called D.R. Horton. This decision held that such waivers in FLSA collective actions were not enforceable because they violated the National Labor Relation Act prohibition against agreements that banned “concerted activity.”

                D.R. Hornton was an exciting moment for employee rights advocates. It was a glimmer of hope in an otherwise sea of bad news. D.R. Hornton was appealed to the Fifth Circuit. This was an important strategic decision that the employer made. The employer could have either appealed the decision to the Fifth Circuit or the D.C. Circuit. Because the Fifth Circuit has jurisdiction over the case but not the agency, any decision of the Fifth Circuit would be binding in that Circuit but not on the NLRB.

                Oral arguments in D.R. Hornton were held on February 5, 2013. Subsequent to the Board’s ruling, however, courts have not been receptive to D.R. Hornton. In fact, 27 courts have rejected D.R. Hornton, while only two have followed it. Interestingly, the two that have followed it have been a couple of the more recent decisions. One was out of the Eastern District of Missouri.

                That sets up a situation where the agency with jurisdiction over labor agreements has said that agreements are not enforceable, while courts around the country have said that they are. If that did not create enough confusion, the D.C. Circuit handed down a case called Noel Canning v. NLRB. In this case, the D.C. Circuit held that the President’s recess appointments to the NLRB were not valid because Congress was not in recess. As if this was not confusing enough, three circuits have rejected the Noel Canning case. Moreover, because of when the D.R. Hornton decision came out, there is some question about whether Canning applies to D.R. Hornton. Some read the Canning decision to only apply to appointments within a limited time period. Others read the Canning decision to go back to prior appointments, which would capture the D.R. Hornton decision.

                What does all this mean? I have no earthly idea. Fortunately, I do not wear a black robe. Unfortunately for myself and my clients, the law is in a great state of confusion in this area. Stay tuned.

Categories
FLSA Overtime/Wage & Hour

Arbitration Agreements and the “Effective Vindication of Rights” Argument

                 In 2011, the U.S. Supreme Court handed down the consumer case of AT&T Mobility, LLC v. Concepcion, 131 S.Ct. 1740 (2011). Generally speaking, Concepcion held that arbitration agreements which banned class actions are enforceable.

                After Concepcion, advocates argued that there was at least one exception to Concepcion. Importantly, Concepcion did not overrule a 1985 United State Supreme Court case called Mitsubishi Motor Corp. v. Soler Chrysler-Plymouth. That line of case effectively held that agreements which prevent plaintiffs from vindicating their rights are not enforceable.

                Therefore, some advocates argued that any arbitration agreement containing a class action waiver that was drafted in a way that it effectively prevented plaintiffs from vindicating their statutory rights were unenforceable. That was the only way, they argued, to reconcile Concepcion and Mitsubishi Motor Corp.

                In 2012, the Second Circuit handed down In Re American Express Merchants Litigation, 667 F.3d 204 (2d Cir. 2012). In this case, the Second Circuit found that the plaintiffs had proved they would be unable to effectively vindicate their rights under the Sherman Act, and thus the agreement at issue was unenforceable.

                The United States Supreme Court granted certiorari on the American Express case and recently heard oral arguments. Stay tuned.