On December 12, 2017, a three-judge panel of the 2nd Circuit unanimously affirmed the ruling of a district court that a truck driver, Jaun Rodriguez-Depena, must arbitrate his FLSA claims. Mr. Rodriquez was employed by Diligent Delivery Systems, Parts Authority Inc., and Michigan Logistics, Inc. as a truck driver. The 2nd Circuit ruled as a matter of first impression for the circuit that an arbitration agreement signed by Mr. Rodriguez at the onset of his employment was applicable to his FLSA claims and prevented him from bringing a lawsuit in Federal Court.
The United States Supreme Court is currently wrestling with a number of issues surrounding mandatory arbitration agreements that are forced on employees by their employer. This particular case involved wage and hour claims, but, generally, the mandatory arbitration claims bar all employment lawsuits against an employer. Instead, the employer requires the employee to waive their right to file a lawsuit and to instead decide the dispute in an arbitration setting, which is often a more favorable venue to the employer than the employee.
Another critical issue is whether an employer can insert a class action waiver into the arbitration agreement. There has been a substantial increase in not only mandatory arbitration agreements but also class action waivers within those arbitration agreements. Large employers include class action waivers because, particularly where there are limited damages in play (which is often the case with an individual wage theft action, the employer is able to deter the claim altogether by isolating a single plaintiff. One of the purposes of Section 216(b) of the FLSA is to allow Plaintiffs to bring an action as a collective action, wherein they can pool their claims together with other similarly situated individuals. Class action waivers in mandatory arbitration agreements are a method utilized by employers to avoid those collective actions.
Justice Ruth Ginsburg of the United States Supreme Court recently referred to these mandatory arbitration agreements as “yellow-dog contracts” in which an employee has absolutely no bargaining power.
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