On February 1, a federal court in New York joined appeals courts in the 3rd, 4th, 5th, 8th, 9th and 11th circuits in finding enforceable a waiver of the right to bring collective actions under the Fair Labor Standards Act (FLSA) in arbitration agreements. This decision is at odds with the National Labor Relations Board’s (“NLRB”) D.R. Horton, Inc. decision issued last year which ruled that requiring employees, as a condition of employment, to sign an arbitration agreement barring collective or class actions for employment-related claims violated the National Labor Relations Act (see Blog post, NLRB Says Not To Requiring Employees To Sign Arbitration Agreements Prohibiting Group of Class Action).
In Janira Torres et al. v. United Healthcare Services, Inc., a group of sales representatives brought a collective wage-and-hour action against UnitedHealth Group in federal court in the Eastern District of New York. UnitedHealth Group filed a motion to compel arbitration because the sales representatives entered into an arbitration agreement that included a waiver of their rights to bring a collective or class action at the time they began working for the company. The court granted the motion stating that “[t]his scant legislative history is not at all persuasive that Congress intended the right to participate in an FLSA collective action to be an unwaivable right.” The court also commented that it need not defer to the NLRB’s ruling in D.R. Horton.
Last month, the 8th Circuit, in Owen v. Bristol Care, likewise ruled that an employer may include a waiver of the right to bring collective actions under the FLSA in a mandatory arbitration agreement. The court concluded that an arbitration agreement with a collective action waiver falls outside the limitations of D.R. Horton’s holding when the agreement “does not preclude an employee from filing a complaint with an administrative agency such as the Department of Labor (which has jurisdiction over FLSA claims, see 29 U.S.C. § 204)” and when “nothing in the [agreement] precludes any of these agencies from investigating and, if necessary, filing suit on behalf of a class of employees.”
As a result, an employer operating in states governed by the 3rd, 4th, 5th, 8th, 9th and 11th circuits and the Eastern District of New York has strong precedents for including FLSA collective action waivers in arbitration agreements.