Sources indicate that a large percentage of Georgia’s employment lawsuits are in connection to the Fair Labor Standards Act (FLSA). A recent decision from the United States Court of Appeals for the 11th Circuit — which is the federal appeals court for Georgia, Florida and Alabama — could affect many of those claims. According to the 11th Circuit, arbitration is allowable in a wage and hour complaint.
Two Georgia men filed an FLSA collective claim after their employment was terminated in April 2012. In the suit, they alleged that their employers failed to pay them for overtime, failed to keep accurate records and failed to pay minimum wage to the men. The employers subsequently filed a motion to enforce an arbitration agreement that the men signed with the companies. The trial court granted the motion and dismissed the case.
The employees appealed, claiming the arbitration agreement was not enforceable because it constituted a waiver of the right to file an FLSA collective action. The 11th Circuit ruled that nothing in the FLSA says that the right to a collective action cannot be waived. The court found that an employee does not have to be part of a group in order to sue under the Act.
Therefore, Georgia businesses looking to avoid class-action complaints under the FLSA may have employees sign an arbitration agreement. It may be more cost-effective for an employer to deal with an individual wage and hour complaint in arbitration instead of going to court. Once this business decision is made, putting together a legally binding document may require some advice and assistance to make sure it stands up to the scrutiny of the courts.
Source: hr.blr.com, “Arbitration: 11th Circuit OKs waivers for FLSA collective actions“, Raanon Gal, May 28, 2014