The United States Supreme Court's recent decision in a consumer finance case may have given employers a creative way to limit their exposure to FLSA collective actions. In its April 27 decision in AT&T Mobility LLC v. Concepcion, the Court struck down the California Supreme Court's common law rule prohibiting the enforcement of arbitration agreements containing collective/class action waivers, opening the door for employers to modify their arbitration agreements to include class-arbitration waivers.
While courts in the Fifth and Eleventh Circuits have long enforced arbitration agreements with respect to individual employment claims (including FLSA claims), until last week it was unclear whether an arbitration agreement that excluded the possibility of class-wide arbitration would be found enforceable. This issue is particularly important in the context of FLSA claims, where individual claims are often small, and many cases are lucrative for plaintiffs' lawyers only if a class-wide or "collective action" can be brought.
The Supreme Court's April 27 decision removes some of this uncertainty by declaring that any state statute or law that precludes enforcement of a class/collective action waiver directly conflicts with the FAA and is therefore void as a matter of law.
In light of the Supreme Court's decision, employers should consider implementing or revising their existing arbitration agreements/plans to prohibit class or collective arbitrations. By doing so, employers may reduce the risk of being subjected to a potentially crippling FLSA or Title VII collective/class actions. Members of the Balch & Bingham Labor & Employment Practice Group have drafted and enforced employment arbitration agreements for many years and in both state and federal courts. As such, we have the knowledge and experience to create and implement such agreements quickly and cost-effectively.
[ via Balch & Bingham ]
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