FLSA claims are arbitrable

Arbitration is the name of the game these days. Employers like arbitration clauses because they take the case away from the jury and in theory are less expensive to litigate. The Supreme Court has been upholding arbitration claims left and right, in the context of employment discrimination and consumer protection suits, so much that many critics think that certain now-legal arbitration clauses will dissuade legitimate plaintiffs from proceeding to arbitration because their claims are not valuable enough without the class actions that arbitration clauses sometimes prohibit. The issue in this case is whether wage and hour cases under the Fair Labor Standards Act can be sent into forced arbitration.

The case is Rodriguez-Depena v. Parts Authority, decided on December 12. The Court of Appeals does not get into the facts other than to say plaintiff's employment contract said that any dispute "arising out of the contract" must be arbitrated. Is that legal? Yes, says the Second Circuit (Newman, Calabresi and Pooler).

The Court starts off by noting that "statutory claims are arbitrable unless Congress 'has evinced an intention to preclude a waiver of judicial remedies for the statutory rights at issue." The Supreme Court said that in Gilmer v. Interstate, 500 U.S. 20 (1991), a case brought under the Age Discrimination in Employment Act. Under Gilmer, age discrimination claims are arbitrable. So are FLSA claims, the Court now holds.

We don't have much analysis from the Second Circuit on this issue. Instead, the Court adopts Judge Weinstein's reasoning in Bynum v. Maplebear Inc., 160 F. Supp. 2d 527 (E.D.N.Y. 2016). So if you want to know the rationale for the holding in this case, you have to read Bynum. In that case, Judge Weinstein notes that "According to general principles of contract law, 'a party is bound by the provisions of a contract that he signs, unless he can show special circumstances that would relieve him of such an obligation.'" In addition, "The federal policy favoring arbitration extends to the enforcement of agreements to arbitrate claims founded on statutory rights." With these settled propositions behind us, you know the result:

The decisions of the Supreme Court, as well as of courts both within and outside this circuit, indicate that valid arbitration agreements subjecting individual FLSA claims to arbitration must be enforced in accordance with the FAA. The Supreme Court has declared: "`[b]y agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial, forum.'" Where the arbitration procedure provided would be unfair to the worker, the court may, as in this case, take into account protective equities and law due to the plaintiff under the FLSA.