Executive Summary: In Lai Chan et al. v. Chinese-American Planning Council Home Attendant Program, Inc., decided February 3, 2016the Southern District of New York (covering New York, Bronx, Westchester, Rockland, Putnam, Orange, Dutchess, and Sullivan counties) deferred to arbitration the unpaid wage and overtime claims of sleep-in workers covered by a union agreement, even though the agreement to arbitrate was signed after the lawsuit alleging these claims against the home care agency was commenced. An earlier decision in this same case from the New York County Supreme Court had denied the agency's motion to dismiss the complaint, and volunteered that under New York Labor Law, sleep-in workers must receive wages for 24 hours of work. This question will now be decided in arbitration, not in a court action.

What Reason Did the Federal Court Give?

The question presented was whether unpaid wage and overtime claims of sleep-in workers should be deferred to arbitration under a union collective bargaining agreement even though the agreement with the arbitration provision was signed after the claims were brought in court.

The plaintiffs claimed that the agreement to arbitrate, which was embodied in a 2015 Memorandum of Agreement between the agency and 1199 SEIU, could not apply retroactively to their claims. The court rejected this argument, stating that under controlling case law, unless the parties said otherwise in the agreement to arbitrate, "an arbitration provision may cover claims that accrued prior to the execution of the agreement to arbitrate." Moreover, the court added that any question on the scope of the arbitrable issues was for the arbitrator to decide, not the court. Were it not for this court's decision, the agency would have had to defend the workers' claims as a class action in court.

Points to Consider:

  1. To have a court defer wage and hour (or other) claims, whether brought singly or as a class, to arbitration, you must have your home care workers sign bona fidearbitration agreements. These agreements should be written in a manner to be understood by home care workers, provide sufficient protection to allow workers to bring their claims in arbitration, and be entered into voluntarily by workers with safeguards against any claim of fraud or duress.
  2. Implementation of arbitration agreements in non-union settings and procedures to obtain worker signatures must be consistent, uniform, and designed to obtain informed consent, whether the agreement is requested from a new employee as a condition to hire or a current employee as a condition of continued employment.

What Questions Does This Decision Raise?

  1. How do you construct an enforceable arbitration agreement that meets all legal requirements?
  2. What is the "best practice" to be used in asking home care workers to sign arbitration agreements?
  3. Where an employer knows a class action lawsuit was filed against it, must it advise all workers, including new hires who are asked to sign arbitration agreements, of the lawsuit?
  4. Will individual arbitration agreements with non-union workers, if implemented properly, apply retroactively to class actions the same as union agreements to arbitrate?
  5. How would an agreement to arbitrate with a union affect an agency's formerworkers from bringing an action in court, either as a class or singly? 
  6. What time limits for bringing wage and hour claims will apply to claims brought in arbitration?