Can the right to bring a collective action under the Fair Labor Standards Act (“FLSA”) be waived by an arbitration agreement?
While we await the Second Circuit’s decisions in the appeals of two Southern District of New York decisions that said no to this question [here and here], employers that want to enforce waivers for FLSA collective claims recently received good news.
Judge Paul Engelmayer, also of the Southern District of New York, recently held [here] that “the right to proceed collectively under the FLSA can be waived by agreeing to arbitrate.” This is another in a trend of cases upholding collective action waivers.
The core issue in these cases is whether the right to bring a FLSA collective action is “substantive,” or if it can be waived by an arbitration agreement. While the Federal Arbitration Act favors arbitration agreements, employees cannot be required to waive substantive rights under employment statutes.
In the recent decision, a television network coordinator claimed she was required to work off the clock. She sued under the FLSA on behalf of herself and similarly situated others. The employer moved to enforce its arbitration agreement and its waiver of class or collective proceedings. The plaintiff countered that arbitration agreements can never waive FLSA collective action rights.
The Court disagreed in siding with the employer. Judge Engelmeyer cited multiple Circuit and District court decisions holding that an employee’s right to proceed collectively under the FLSA can be waived in an arbitration agreement. The Court directly took on the contrary decisions in Raniere v. Citigroup (from a fellow S.D.N.Y. judge) and D.H. Horton (from the National Labor Relations Board), saying that those decisions are contrary to the U.S. Supreme Court’s Concepcion decision (generally upholding class-action waivers in arbitration agreements).
The Court also pointed out that other Supreme Court cases suggest that the right to collective actions under the FLSA is not “substantive” and can be waived. Finally, the Court mentioned the FLSA itself: the plain text and legislative history of the statute, it said, do not show any intent by Congress to prevent waivers of FLSA collective action claims.
Although cases rejecting FLSA collective action waivers remain on the books, this is another decision tipping the balance toward enforcement of those waivers.