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FLSA and valid arbitration agreements

One of the biggest questions regarding Fair Labor and Standards Act’s (FLSA) collective actions and valid arbitration may have been answered by the U.S. Court of Appeals for the Fifth Circuit Court. This ruling, the first of its kind, determined that district courts should not send notice of a collective action to employees with arbitration agreements that are valid. The exception to this rule is when there is nothing in the agreement that would prohibit the employee from participating in a collective action.

Why the exception?

The ruling applied to the case of JPMorgan Chase & Company involved approximately 42,000 present and past employees. They were to receive notice of litigation, but 35,000 of these employees had signed arbitration agreements that waived their right to join an FLSA collective action. The ruling states that the employer must prove that the employee has a binding arbitration agreement. The court believes that if the arbitration is binding it is simply stirring up a lot of trouble and confusion by sending these notices to employees who do not qualify.

What does it mean?

This ruling gives employers a stronger defense against FLSA actions. Nevertheless, employers should check to make sure their arbitration agreements are legal and binding. Employees, on the other hand, are advised to check to make sure to see if their contract is binding.

Georgia is in the Eleventh Circuit, which draws its conclusions on this matter; however, the recent ruling may influence future decisions in the other circuits. Those with questions are advised to speak with a knowledgeable attorney with experience handling FLSA and other employment law matters.

Georgia is the 11th Circuit

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