Typically, in our court system, we operate under the “American Rule” which means that parties have to pay their own attorneys’ fees in cases, regardless of whether they win or lose.  (Contrast that with the English Rule which is a “loser pays” system.)

But there is one big exception to the American Rule — and

In an important 5-4 decision, the U.S. Supreme Court this morning held, for the first time, that class or collective action waivers, particularly in wage/hour cases, and contained in arbitration agreements between employers and employees are valid and enforceable.

Because wage and hour class and collective actions are quite costly for employers to defend

A reminder: Employees are entitled to overtime for work over 40 hours a week, unless an exemption applies. For so-called white collar workers, there are three main exemptions: administrative, professional and executive.  Each of these categories looks at whether the employee had certain covered “duties” (known as the “duties” test) and a minimum guaranteed weekly salary (known as the “salary” test).

Under federal law (but not state law), there is also an exemption that allows employers to not pay overtime to “highly compensated” employees over $100,000 a year.   These rules have been in place for nearly 10 years, but the regulations are far from clear.

A recent case out of the Second Circuit (Anani v. CVS) examined these exemptions and regulations. You can download the case here.

The case comes down to a fairly arcane part of the federal regulations addressing whether a “reasonable relationship” exists between the guaranteed amount an employee is supposed to receive and the amount actually earned.  The Second Circuit concludes that this section does not apply when workers make over $100,000 under the FLSA.

It’s a fairly straightforward conclusion because to apply that language to highly compensated workers would render the rest of the regulation pretty meaningless. Thus, a win for the employer.


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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