September 05, 2014 Articles

Do Arbitration Clauses Survive Termination of the Contract?

By Clarence Westbrook

In October 2011, Hilltop hired Cynthia Huffman and a number of other employees to review the files of mortgage loans originated by PNC Bank. Each employee executed an employment agreement that contained both a broad arbitration clause and a survival clause. The survival clause included clauses detailing services essential to the job, the term of employment, compensation, termination, and client confidentiality. While the survival clause listed half of the agreement's 24 clauses, it did not list the arbitration clause. Other important clauses that were not referenced in the survival clause included the noncompete, severability, and integration clauses.

Huffman reviewed loan files to determine whether lawful procedures were followed during foreclosure and other proceedings. Until the end of her employment in January 2013, Huffman regularly worked in excess of 40 hours per week, but she was not compensated at the overtime rate because Hilltop had classified her as an independent contractor. Huffman asserted that Hilltop's classification was in error, and that the failure to compensate her and other similarly situated employees at the applicable overtime rate constituted violations by Hilltop of the Fair Labor Standards Act and the Ohio Minimum Fair Wage Standards Act.

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