In Walthour v. Chipio Windshield Repair, LLC, Case No. 13-11309 (decided March 21, 2014), the Eleventh Circuit Court of Appeals held that employers could enter into enforceable arbitration agreements with their employees in which their employees waived their right to bring class actions or collective actions under the Fair Labor Standards Act (“FLSA”).
In Chipio, the plaintiffs had sued their employers contending that their employers had failed to pay them the required minimum wage and overtime wages for having worked in excess of 40 hours per week. Each of the employees had entered in an arbitration agreement that provided that all disputes with their employer would be decided by arbitration. Those agreements further provide that the employees could make claims only in their individual capacity and not as a plaintiff or a class representative in any class or representative proceeding. The plaintiffs sued their employers claiming that the defendants had violated the FLSA. The district court dismissed the case stating that the matter needed to be arbitrated.
The Eleventh Circuit affirmed the dismissal of the claims in favor of arbitration. The Court held that the FLSA did not contain a “contrary congressional command” that would have prevented the employers from invoking the Federal Arbitration Act to enforce the arbitration agreements, including the waiver of the right to bring a class or collective action.
This ruling follows rulings in other federal circuits upholding arbitration agreements and collective action waivers in claims under the FLSA. Opinion, p. 21-22. Decisions such as the Chipio decision provide employers with a powerful tool for structuring how wage and hour claims are resolved.
For more information on collective action waivers, contact your Appellate Counsel at Smith, Gambrell & Russell.