Legal

Individual Vs. Class Action a Cost Consideration

By Daniel Saeedi, Rachel L. Schaller

Jul. 25, 2019

 

When Convergys hired Sean Abner, it required him to sign an agreement stating that he would not pursue any collective or class action lawsuit against Convergys. This waiver of Abner’s rights was not accompanied by an arbitration clause in the agreement.

Abner brought a collective action against Convergys under the FLSA, claiming that he and his co-workers worked three to five hours of off the clock each week and were not compensated for that time. Convergys filed a motion to strike Abner’s collective action claim under Epic Systems Corp. v. Lewis, upholding mandatory arbitration clauses in employment agreements that waive class and collective action procedures. Convergys claimed under Epic, the FLSA’s collective action mechanism was a procedural rule that could be waived, not a substantive right.

The U.S. District Court for the Southern District of Ohio disagreed, holding that a class or collective action waiver outside of an arbitration clause is unenforceable. The court noted that Epic found arbitration agreements, which waive class and collective action procedures in court in favor of single-plaintiff arbitration, are enforceable.

Critically, in Epic, the Supreme Court counterbalanced the right to pursue a collective action under the FLSA against the right to enforce arbitration agreements under the Federal Arbitration Act. Thus, as the district court in Abner recognized, without an arbitration agreement, there is “no countervailing federal policy that outweighs the policy articulated in the FLSA,” and a waiver of class or collective action procedure is unenforceable.

IMPACT: When exploring class action waivers, weigh the economic impact of arbitrating individual claims versus litigating class or collective claims in court.

Also in Legal Briefings: 

Stalker Costs Costco in Bulk

Busting the Home-State Advantage Regarding Wrongful Workplace Acts

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