Eighth Circuit Upholds Employment Agreement Waiving Collective Action Rights

by Ballard Spahr LLP
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The U.S. Court of Appeals for the Eighth Circuit has joined the clear majority of federal district courts in concluding that employment arbitration agreements may bar class and collective actions, in spite of the National Labor Relations Board’s (NLRB) decision last year in D.R. Horton, Inc. The NLRB held that the National Labor Relations Act prevents an employer from requiring its employees to waive their collective action rights through an arbitration agreement.

In Owen v. Bristol Care, the plaintiff filed suit against her employer, alleging violations of the Fair Labor Standards Act (FLSA). Despite having signed a “class waiver” in a Mandatory Arbitration Agreement (MAA), she instituted the action on behalf of herself and other similarly situated current and former employees. The district court rejected Bristol Care’s attempt to compel arbitration and relied upon D.R. Horton to conclude that the MAA was unenforceable.

On appeal, the Eighth Circuit reversed. The court distinguished D.R. Horton, because the NLRB holding addressed arbitration agreements that barred all forms of class actions, which the Board deemed to be protected concerted activity. In Owen, the agreement did not preclude an employee from filing a complaint with an administrative agency, which could then file suit on behalf of a class of employees. Moreover, even if D.R. Horton did apply, the Eighth Circuit noted that the court does not owe deference to the NLRB on this subject.

The court stated that its decision was consistent with other circuit court cases that have concluded that arbitration agreements containing class action waivers are enforceable in FLSA cases. The Eighth Circuit also noted that the Supreme Court has upheld a class action waiver in an Age Discrimination in Employment Act case.

While the Owen case is encouraging to employers, those using employment arbitration agreements with class action waivers should continue to tread carefully, given the continuing evolution of judicial thinking about the issue.

If you have questions on the Eighth Circuit decision or on the use of class action waivers and employment arbitration agreements, please contact Steven W. Suflas at 856.761.3466 or suflas@ballardspahr.com, Daniel V. Johns at 215.864.8107 or johns@ballardspahr.com, Erin K. Clarke at 215.864.8318 or clarkee@ballardspahr.com, or the member of the Labor and Employment Group with whom you work.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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