Employment and FLSA Litigation - Thursday, March 15, 2012 8:02 - 0 Comments

Invalidating FLSA Collective-Action Waivers No Longer A Pipe Dream

After recent U.S. Supreme Court decisions seemed to be a death knell for class arbitration, most observers thought that a FLSA collective-action waiver in an arbitration agreement would insulate employers from substantial liability. But fortunately a recent decision by the Southern District of New York suggests otherwise.

In the case, Raniere v. Citigroup Inc., the Court found that the FLSA’s opt-in provision creates substantive rights that employees cannot waive. As a result, a provision that waives the rights of employees to proceed collectively under the FLSA is unenforceable. An arbitration agreement cannot become a vehicle for employers to invalidate the Congressional purposes of the collective-action provision or the policies upon which that provision is based.

Only time will tell if other courts follow the Raniere logic. While other courts have found that the FLSA’s opt-in provision provides substantive rights to employers — often in cases involving simultaneous Rule 23 class actions and FLSA collective actions — it’s unclear whether courts will find that the opt-in provision provides substantive rights to employees. If they do, employers could find themselves doing the unthinkable—arbitrating FLSA collective actions.