Eighth Circuit Holds Arbitration Agreements Containing Class Action Waivers Are Permissible Under the Fair Labor Standards Act

The Eighth Circuit has overturned a lower court ruling holding that arbitration agreements containing class action waivers are not enforceable in claims brought under the Fair Labor Standards Act (“FLSA”). Owen v. Bristol Care, Inc., Docket No. 12-1719 (8th Cir. Jan. 7, 2013).

The plaintiff signed an agreement which included an arbitration provision as part of her employment contract. A federal district court in Missouri refused to enforce the arbitration provision on the grounds that it would infringe on the plaintiff’s right to bring a collective action under the FLSA and her right under the National Labor Relations Act (“NLRA”) to act in concert with other employees to bring a collective action.

The Eighth Circuit held that the U.S. Supreme Court’s decision in AT&T Mobility v. Concepcion, 131 S. Ct. 1740 (2011), applies to employment cases as well as consumer cases, and the FLSA does not prohibit the enforcement of class action waivers in employment agreements. The court noted that the Federal Arbitration Act (“FAA”) created a strong public policy in favor of arbitration, and the FLSA does not contain a “contrary congressional command” overriding the FAA’s policy toward favoring arbitration agreements. The Eighth Circuit noted that its decision is consistent with all prior decisions of the federal circuit courts addressing the issue, as well as with “more than two decades of pro-arbitration Supreme Court precedent.”

The Eighth Circuit ruling distinguishes the January 2012 decision of the National Labor Relations Board (“NLRB”) finding that class action waivers in arbitration agreements violated the NLRA in In re D.R. Horton, Inc., 357 NLRB No. 184.

The court found that the D.R. Horton decision had “little persuasive authority” over the facts at hand because the arbitration agreement expressly permitted complaints to be filed by employees with administrative agencies such as the NLRB, and thus did not serve to prevent all “concerted activity,” as the agreements challenged in the D.R. Horton case had. Nor did the agreement preclude administrative agencies from investigating or filing suits on behalf of a class of employees.

An appeal of the D.R. Horton case is pending before the Fifth Circuit.

A copy of the Owen decision can be found here: http://docs.justia.com/cases/federal/appellate-courts/ca8/12-1719/12-1719-2013-01-07.pdf.