Employment Law Daily Sixth Circuit class waiver precedent not applied to former employee, her FLSA collective action
Wednesday, August 30, 2017

Sixth Circuit class waiver precedent not applied to former employee, her FLSA collective action

By Joy P. Waltemath, J.D.

Finding that because she was no longer actively employed, a former call center employee was not covered by the NLRA and that filing an FLSA collective action is not concerted activity under the NLRA, a federal district court in Tennessee suggested her motion to certify a nationwide collective action was likely to be barred by an arbitration agreement she had signed. The court did not believe that the Sixth Circuit’s opinion in NLRB v. Alternative Entertainment, Inc., which held that mandatory agreements waiving class or collective litigation and arbitration violate the NLRA, was controlling. The former employee lost her status as an NLRA “employee” when she left work for reasons other than a labor dispute or unfair labor practice. And while class or collective actions may qualify as concerted activities in some contexts, the NLRA’s language implied that the “other concerted activities” protected by the Act must be related to collective bargaining or to achieve “more favorable terms or conditions of employment.” Seeking to require an employer to comply with the FLSA was not the same thing (Myers v. TRG Customer Solutions, Inc. dba IBEX Global Solutions, August 24, 2017, Trauger, A.).

FLSA collective action. The named plaintiff filed a motion to conditionally certify a nationwide collective action of call center employees and former employees who were dissuaded by the employer, like she claimed to have been, from joining another nationwide collective action (Andrews et al. v. TRG Customer Solutions, Inc., M.D. Tenn., No. 1:14-cv-00135) which was “being actively litigated in collective arbitration.” Her employer pointed out that she had agreed to arbitrate any employment-related disputes with IT, specifically including any claims under the FLSA, and that beginning in 2015, all new customer service representatives and technical support staff members had to sign a revised arbitration agreement that expressly waived class, collective, or representative action and required individual arbitration. (The employee’s earlier-signed agreement was apparently silent as to a class or collective waiver).

No motion to compel arbitration … yet. Notably, the parties were not litigating the enforceability of the arbitration agreements, nor had the employer filed a motion to compel arbitration. Rather, the employer presumed the validity of the agreements and argued that on that basis, the former employee’s motion to certify should be denied. She argued that even assuming the agreements were valid, “any provision—express or implied—prohibiting employees from pursuing an FLSA collective action in any forum is invalid as a matter of Sixth Circuit law.”

What Sixth Circuit precedent applies? As to the agreement she had allegedly signed, which did not include an express waiver of the right to bring a collective action, the Sixth Circuit has held that, when an arbitration agreement is silent regarding the availability of classwide arbitration, the agreement must be construed as prohibiting classwide arbitration, said the court. She argued that the Sixth Circuit’s holding in NLRB v. Alternative Entertainment, Inc., established that the arbitration agreements her former employer sought to enforce “are unlawful and unenforceable within this Circuit.”

Not statutory employee. “The question is whether that holding applies to waivers of the right to bring a collective action under the FLSA,” said the court, finding that for several reasons, it did not apply here. Rather, the court pointed to language from the Sixth Circuit opinion, which referenced “an arbitration provision requiring employees covered by the NRLA.” But the former employee did not qualify as a statutory “employee” because she was no longer employed by the employer, and her employment did not cease as a result of a labor dispute or an unfair labor practice. As such, the holding in Alternative Entertainment does not extend to her arbitration agreement, said the court.

Not concerted activity. And the court did not agree that a collective action under the FLSA qualifies as concerted activity protected by the NLRA. Instead, although class or collective actions might qualify as concerted activities in some contexts, that statutory language implied to the court here that “other concerted activities” was limited to activities related to collective bargaining and the achievement of “more favorable terms or conditions of employment.” A collective action to require an employer to comply with the FLSA “is not the same as achieving more favorable terms or conditions of employment by contract,” reasoned the court.

If agreements enforceable, no class certification. That said, because the Sixth Circuit decision in Alternative Entertainment did not apply, the court concluded, based on other Sixth Circuit precedent, that an arbitration agreement that does not expressly permit collective action implicitly prohibits it. Accordingly, if the arbitration agreements are enforceable, the implied and express waivers of collective action will also be enforceable. After all that discussion, however, the enforceability of the arbitration agreements was not actually before the court, because there was no pending motion to compel arbitration. But to consider the former employee’s motion for conditional certification would be premature, said the court, because if she and other similarly situated current and former employees are subject to arbitration agreements that require them to pursue arbitration individually, “certification of a collective class would be an exercise in futility.”

Accordingly, the court was hopeful that, as in the Andrews case being “actively litigated in class arbitration,” the parties would be able to reach an agreement to proceed with a collective arbitration, “thereby avoiding lengthy litigation of the questions of whether the arbitration agreements signed by the plaintiffs were enforceable as to each individual opt-in plaintiff and whether the defendant could compel individual arbitration. The court gave the parties 14 days to try.

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