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Staffing Agency Can’t Use Arbitration Clause in Employment Contract to Stymie Workers’ FLSA Class Action

call center workerA major national staffing services company could end up in legal hot water regarding the way it handled its time-keeping practices for some of its remote workers. A class of “virtual call center” employees launched a collective action accusing the company of violating the Fair Labor Standards Act by failing to pay them for all of the time they worked. In an important recent step in the case, the federal district court for the Eastern District of Michigan declared the arbitration clause in the workers’ contracts to be invalid and unenforceable, short-circuiting the company’s efforts to obtain a dismissal and a court order compelling binding arbitration of the case.

The limitations of technological devices, including computer crashes and delays associated with starting up and closing down applications, are a part of life for many modern workers. For some home-based workers of a major staffing agency, though, these limitations were more than a mere annoyance. According to the workers and their FLSA class action lawsuit, start-up and shut-down took between 13 and 20 minutes each day. The agency, however, paid workers for only a maximum of 10 minutes.

The class, all of whom staffed a service and support hotline for a major provider of smartphones, tablets, and other tech devices, also only received pay for a maximum of one hour of time spent on technical problems, even though crashes and disconnects from the company’s system allegedly could sometimes take as much as 3-4 hours to resolve. All of this meant that the virtual call center workers allegedly were not being paid for all of the time they actually spent working.

The company, however, believed it had an argument to stop the class action, which it launched in its motion to dismiss the case. All of the call center workers, when they started with the company, signed an employment agreement that contained a clause related to binding arbitration. This dispute, the company maintained, was covered by the binding arbitration clause, and the company was entitled to a court order compelling arbitration of the dispute.

The court, however, rejected the motion. Employers and employees generally may enter into employment contracts in which the employee agrees to submit disputes to binding arbitration or to waive his or her right to pursue class action litigation. While noting that neither the U.S. Supreme Court nor the Sixth Circuit Court of Appeals had ruled directly on this issue, the district court nevertheless concluded that the rules regarding the enforceability of a waiver clause in an employment agreement are different when the rights that the employee purports to waive are things expressly granted by Congressional enactments (such as the FLSA).

The FLSA, the court stated, had a “broad remedial intent” and was meant to diminish and stop “unfair method[s] of competition in commerce’ that cause conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers.” This legal framework meant that the arbitration clause in this case could not be considered enforceable.

Shortly after the district court ruled, the employer appealed. A ruling on this issue by the Sixth Circuit will have a binding effect on employers and employees in Tennessee when it comes to which types of FLSA-related waiver and arbitration clauses are (or are not) enforceable.

Sometimes the answers to the validity of a FLSA violation claim may lie in the statute, or they may lie in case precedent, or they may be in the employment agreement itself. For a knowledgeable legal team equipped to analyze every facet of your FLSA case and provide you with advice and representation, talk to the Tennessee FLSA attorneys at Mays & Kerr. Our team is highly experienced and ready to handle the challenges of your case.

To speak with one of our lawyers about your case, call 1-877-986-5529.

More blog posts:

11th Circuit Allows Employees to Bring FLSA Collective Action and State Class Action in One Case, Atlanta Employment Attorneys Blog, Oct. 26, 2016

Georgia Bodyguard’s $65K Damages Award in Unpaid Overtime Case Withstands Appeal, Atlanta Employment Attorneys Blog, Aug. 11, 2016

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