It’s hard to read the Connecticut Law Tribune’s Editorial this week on “The Problem of Workplace Arbitration Clauses” with a straight face. It is dripping with sarcasm, filled with sweeping generalities, and reserves its greatest enmity for employers and the lawyers that represent them.

If the editorial is to be believed, employers and their lawyers apparently routinely use “deceptive” arbitration clauses — often pushed by a “third assistant personnel clerk” — that are hidden until “defense counsel raises the jury waiver or arbitration agreement from its dusty grave in the company’s personnel files.”

But perhaps I’m overreacting. So let’s review the editorial more closely and try to separate fact from fiction.  The editorial, in its full unedited version, is in italics. 

Over the last decade, employers have more and more often incorporated jury waiver or mandatory arbitration clauses into their employment arrangements to avoid the perceived horror of facing jury review of the way they treat their employees. These clauses are often presented in circumstances that many argue are deceptive, if not downright coercive.

On the first premise — that employers are using arbitration agreements more — the editorial doesn’t provide numbers. But I’ll tend to agree with the notion that the use of arbitration agreements are increasing. However, most employers are not concerned with “jury review.”  Just a handful of cases ever see a court room. Only 2.9 percent of federal employment cases even reach trial! The reasons for their use are complicated but part of it is that the cost of defending cases has skyrocketed. Indeed, from 2010 to 2013, the median time from filing to trial of a civil case in federal court in Connecticut has risen from 27.9 months to 35.7 months (nearly three years!).  Arbitration is much quicker and more cost effective for both sides.

As to the second premise — that the clauses are presented in circumstances that are “coercive” — I suppose that is up for debate. But it depends on your definition of “coercion”.  The legal definition of coercion typically means through “force” or “duress”.  The classic law school example of being forced to sign a contract at gunpoint is clearly “coercion.”  But an employee who wants a job and signs an agreement if he wants the job? In my view (and many courts), that is not “coercion.”

But let’s agree to disagree on this point and move on.

Despite the significance of an employee signing away a legal right that lies at the very base of our civil justice system, there is almost never any effort to explain to the employee what the waiver or arbitration agreement means or even that they are giving up any right at all. In fact, quite the reverse is the rule.

“Almost never”?  That statement barely deserves any credence.  There is no evidence to support this statement.  And additionally, what does it mean to “explain to the employee what the waiver” means? Typically, the provisions state that any claim out of an employee’s employment must be submitted to arbitration instead of the courts. Isn’t that enough? (Yes, say the courts.)

Regardless, employers have been advised to make sure that arbitration agreements are highlighted and not merely stuck in page 32 of a handbook.

And the editorial seems to ignore the positive attributes that alternative dispute resolution can bring to the employee as well.  Arbitration has a place in our “civil justice system” too.  (Indeed, in a 2012 editorial, the Law Tribune voiced its support for passage of the Uniform Arbitration Act. The drafters of that act noted that “the enforceability of arbitration agreements cannot be treated any differently from the enforcement of contracts generally under state contract law” and avoided specific references to employment agreements.)


Continue Reading Law Tribune’s Editorial on “Downright Coercive” Employment Arbitration Clauses Is Off-Base

In a 2-1 decision, the U.S. Court of Appeals for the Fifth Circuit (which does not include Connecticut) held on Tuesday that the NLRB erred in disallowing an employer’s mandatory arbitration agreement that waived the rights of employees to participate in class actions.

The decision in D.R. Horton v. NLRB (download here from Bloomberg Law)

For those of us that have been practicing for a while, it had seemed that the days of the big settlements for race discrimination cases were behind us.

After all, when the Coca-Cola and Texaco settlements were announced back in the late 1990s and 2000, many companies took notice.

But the news today is

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.
Continue Reading Offers of Judgment in FLSA Collective Actions: Another Tool for Wage & Hour Claims

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.  

    Continue Reading Guest Post: NLRB Acting General Counsel Addresses At-Will Disclaimers and More at CBA Annual Meeting