2d Circuit Opens Door to Class Action Waivers

Continuing my series of posts this week on recent Second Circuit FLSA cases, today I’ll talk about class action waivers and arbitration clauses.

If that last clause is just legalese to you, let me try to walk you through it and why employers

Last week, while most of us were focused on the events in Boston, the U.S. Supreme Court came down with a notable decision last week involving a wage & hour class action (it’s actually called a “collective” action, but for the non-lawyers out there, just think of it as a class action) and what should happen when a class representative fails to accept an offer to compromise by the employer that would have made the plaintiff “whole”. 

U.S. Supreme Court

Before you get too excited, its worth noting to the human resources professional out there that it’s hard to see how this case is going to change the day-to-day advice you are giving.  This Supreme Court’s decision is one only a lawyer could love.

But the case is important for employers and lawyers, because it provides another tool to use in defending against wage & hour claims. 

Indeed, combined with the court’s recent decisions limiting class actions (see Comcast Corp v. Behrand case) and enforcing arbitration provisions (see AT&T v. Concepcion line of cases), it demonstrates how the court system is grappling with an increasing number of wage & hour claims that threaten to overwhelm the system.

The Symczyk case has been neatly recapped in the Employment Class Action blog here:

The plaintiff brought FLSA claims challenging the employer’s use of an “auto-deduct” policy for meal periods. Along with its answer, the defendant made a Rule 68 offer to the plaintiff of judgment for $7,500, plus attorney fees and costs to be determined by the court….

When the plaintiff did not respond to the offer, the defendant moved to dismiss the case. The district court dismissed the FLSA claims on the basis of Rule 68 and remanded the remaining state law claims….

 The Supreme Court … found that the district court had correctly dismissed the case. Because the plaintiff did not contest that her own personal claim would have been satisfied by the offer, the majority assumed that it did, indeed, moot her individual claim. .

Ultimately, the Court held that an offer of judgment under Rule 68 that satisfies the representative plaintiff’s claims moots a potential collective action under the FLSA.
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Suppose you have your employees’ sign agreements to arbitrate all of  their employment disputes.  (I’ve talked about arbitration agreements in many posts before.)

Can you have an arbitration agreement that says that an employee is precluded from bringing a Title VII (race or gender discrimination) class action claim in Court?

Employees have argued that

At yesterday’s labor & employment law seminar, we had both Heidi Lane, a Prinicipal Attorney with the Connecticut Department of Labor, and Jonathan Kreisberg, Regional Director of the NLRB’s Hartford Office, speak to attendees about the latest developments under both Connecticut and federal law.

But for those who couldn’t make it, here

On Monday, the Connecticut Bar Association held its annual meeting. Lots of labor and employment law topics were covered, some of which I missed. I’ve asked one of my bar colleagues, Rita Trivedi — who will be a Teaching Program Fellow at Columbia Law School in the fall — to share her insights on the events.   My thanks to Rita for the contribution.

First up: A recap of NLRB Acting General Counsel Lafe Solomon’s address to the meeting.  

It’s been a busy year at the National Labor Relations Board, and Acting General Counsel (ACG) Lafe Solomon’s address at the Connecticut Bar Association’s Annual Meeting gave practitioners much to think about.  

Among the highlights:

  • The next possible “big thing” for employers to think about are at-will disclaimers.   Solomon observed that a blanket at-will statement might (emphasis on might) violate the NLRA.  Thus, employers should now take particular care when drafting at-will clauses in employee handbooks.   

    In general, many employer handbooks have clauses that provide that the employee is and will remain at-will, unless that status is changed by the company’s top executive (either in writing or otherwise).  Intended to prevent a change based on the casual statements of a manager or co-worker, at-will clauses have become a bastion of employment policy.  

    Yet, according to Solomon, if an employee could reasonably believe that this kind of clause means that even union representation and a collective bargaining agreement cannot alter his or her at-will status, the employee might conclude that organization is futile – in which case the employer’s provision might violate the NLRA.  

    What then should management attorneys and their clients do to address what Solomon recognized as a valid concern? 

    Through a passionate discussion on all sides at the meeting, the takeaway seems murky, and few concrete examples or models came to light.  Savings clauses to the effect that nothing in the policy infringes on rights under the NLRA will likely be insufficient to prevent exposure.  

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Earlier this month, the Second Circuit (Jock v. Sterling Jewelers, Inc.) affirmed an arbitrator’s decision, concluding that the arbitrator’s analysis should be upheld even if the District Court disagreed with the legal analysis. Such a decision is entitled to “substantial deference”.

The case rests on the principle that arbitrations are not going to

Over the last 24 hours, there’s been a lot written about the Supreme Court’s decision yesterday in Wal-Mart Stores v. Dukes.  Frankly, all of them are starting to say the same thing:  The decision is going to hamper all class-action discrimination cases going forward.

But that statement tends to simplify the decision a bit too much.  In my view, what the decision stands for is that it will be increasingly unlikely that the mega-class action (the one that covers an entire company) will be able to proceed without a very specific and tangible practice or policy that the plaintiffs can point too. 

What types of things are we talking about? Well, it would be unlikely, but suppose a company had a mandatory retirement age of 60 but without a legitimate basis for doing so. In essence, it was a company-wide practice of discriminating against older workers.  That type of class action will probably survive.
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