Judge Vincent Briccetti of the U.S. District Court in White
Plains, New York, recently dismissed a purported collective action
filed by Tiffany Ryan, a former assistant branch manager at
JPMorgan Chase. Ryan sued Chase in June 2012 claiming that she was
misclassified as an exempt employee and denied overtime pay in
violation of the Fair Labor Standards Act. The Court ruled that the
binding arbitration agreement that Ryan had signed, which included
a waiver of class or collective actions, required her to submit her
claims to arbitration.
Ryan argued that the Court must defer to the National Labor
Relations Board's decision In re D.R. Horton. In that
case, the NLRB held that waivers of class, collective, or joint
actions in employment contracts violate the National Labor
Relations Act. Accordingly, Ryan argued that the agreement between
Chase and Ryan was unenforceable because of the collective action
waiver. The Court disagreed, finding that the D.R. Horton
decision and the NLRA were both non-persuasive and non-binding.
Citing the Supreme Court's 2011 decision AT&T Mobility
LLC v. Concepcion, and subsequent lower-court rulings based
upon that decision, the Court held that the collective action
waiver contained in Ryan's arbitration agreement was valid and
"At bottom, the Court finds the class waiver is fair, permits
[Ryan] to vindicate her statutory rights under the FLSA, does not
hinder her ability to recover attorney's fees or costs, and
comports with public policy favoring arbitration and honoring
private contracts," Judge Briccetti wrote.
The Court's decision represents an important and much sought
after expansion of the Supreme Court's ruling in
Concepcion, which held that companies can employ class
action waivers in consumer contracts. In the two years since the
Concepcion decision, employers have sought to apply the
Supreme Court's reasoning to analogous class action waivers in
employment contracts. Thus, the decision is likely to be cited
frequently by employers in defending against class and collective
actions in support of similar arbitration agreements.
As our readers know, federal and state departments of labor have intensified their scrutiny of independent contractor arrangements and are coordinating with the federal and state taxing authorities when misclassifications are found.
Courts often conclude that absent appropriate disclaimer language and statements in employee handbooks are "promises" to employees, binding employers to abide by these promises in their dealings with employees.
Employers sometimes rely on equitable arguments, such as "unclean hands" (which asserts that it would not be fair to hold an employer liable when the employee’s actions caused or contributed to his own injury or damages).