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Workers can't sue under FLSA if contract requires arbitration

In 2011, the U.S. Supreme Court ruled in a case called AT&T Mobility v. Concepcion that the Federal Arbitration Act of 1925 supersedes state laws that had prohibited employment contracts forbidding class-action arbitration. The ruling allowed employers nationwide to force workers to sign contracts in which, not only did all disputes have to be settled through arbitration, but they couldn't bring those disputes forward as a class.

The ruling was considered a blow against employee rights, because class actions, in both arbitration and courtroom litigation, are generally the most efficient and effective way for groups of workers to press their claims against large corporations. Unfortunately, a federal circuit court has just interpreted the Concepcion ruling to apply even to cases involving the wage and hour protections under the federal Fair Labor Standards Act.

The case, filed in 2007, was brought by a group of airport shuttle drivers who believed they had been unlawfully misclassified under the FLSA as independent contractors instead of employees. The misclassification, they said, had kept them from receiving the minimum wage and overtime pay they were entitled to by law.

Their contracts had required any disputes to be settled through arbitration and had specifically denied them the right to bring class actions. Believing the class-action prohibition to be illegal under state law, they took it to court. When the trial court agreed with the workers, the company appealed to the U.S. Court of Appeals for the Fourth Circuit. (Minnesota is in the Eighth Circuit.)

At that point the U.S. Supreme Court handed down its ruling in Concepcion. This week, the 4th Circuit held that the Concepcion ruling applied to wage and hour disputes, meaning that the shuttle drivers cannot take FLSA claims to court, and they can't bring their disputes as a class at all. They will have to rely on individual arbitration of their claims.

An attorney who represents employers in wage and hour claims commented, "I think the message is certainly that, with class action waivers, the trend is very clear what the Supreme Court intended."

Considering the limitations on class-action litigation in employment law claims the high court announced last year in Wal-Mart v. Dukes, it is clear that employees will continue to have a very difficult time using their numbers to hold companies accountable for violations of our nation's employment laws.

Source: Thomson Reuters News & Insight, "Concepcion spells doom for FLSA case," Carlyn Kolker, April 4, 2013

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