eLABORate: Eleventh Circuit Upholds Class Action Waivers

March 25, 2014

Employers should be aware of a recent decision that allows employers in the Eleventh Circuit to use collective action waivers in arbitration agreements with employees to minimize exposure to collective action lawsuits.

In Ashley Walthour v. Chipio Windshield Repair, LLC et. al., the Eleventh Circuit held that employees do not have a substantive right under the Fair Labor Standards Act (“FLSA”) to pursue collective actions. (No. 13-11309 11th Cir. March 21, 2014). The court found that there was no conflict between the FLSA, which establishes national minimum wage and maximum work hours, and the Federal Arbitration Act (“FAA”), which strongly favors enforcing arbitration agreements by their terms. After examining the FLSA’s text, legislative history, and purposes, the court discerned that because Congress did not exempt the FLSA from the FAA, arbitration agreements must be enforced by their terms, including class action waivers. Furthermore, after examining the Supreme Court’s decision in Gilmer v. Interstate/Johnson Lane Corp, the court concluded that the FLSA creates a procedural right to a collective action, not a non-waivable substantive right to a collective action. (Gilmer111 S. Ct. 1647 (1991). In reaching this decision, the Eleventh Circuit has now joined the Second, Fourth, Fifth, and Ninth Circuits.

In light of this decision, employers in the Eleventh Circuit should evaluate whether implementing arbitration agreements or adding waivers to existing arbitration agreements makes sense for their workforces.