April 25, 2018 Practice Points

FLSA Claims Held Arbitrable Against All Three Employers

By Kelly Rice

The Second Circuit has rejected an employee's argument that claims under the Fair Labor Standards Act (FLSA) are not arbitrable and required him to arbitrate such claims against his three employers even though he had an arbitration agreement with only one of them.

In Rodriguez-Depena v. Parts Authority, Inc., et al., 2017 WL 6327827, the plaintiff Rodriguez-Depena filed an FLSA suit against three companies that he worked for in 2015. The plaintiff alleged that all three companies failed to pay him overtime wages. He signed an employment contract with only one of the three companies, and that contract contained a mandatory arbitration clause. The companies moved to compel arbitration, and the district court granted their motion. The plaintiff appealed to the Second Circuit.

Citing Barrentine v. Arkansas-Best Freight Systems Inc., 450 U.S. 728 (1981), the plaintiff argued that his FLSA claims were not subject to arbitration. The Second Circuit disagreed. It noted that the Barrentine decision held that, under the applicable collective bargaining agreement, an employee was entitled to bring his FLSA claims in district court after he had submitted his claims to certain union grievance procedures and his claim had been rejected. The Second Circuit held that Barrentine could not properly be interpreted to preclude the arbitration of an individual FLSA claim. Instead, the Second Circuit relied on Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (1991).

According to the Second Circuit, in Gilmer, the Supreme Court held that claims under the Age Discrimination in Employment Act (ADEA) were arbitrable and that, in general, statutory claims are arbitrable unless Congress "has evinced an intention to preclude a waiver of judicial remedies for the statutory rights at issue." Id. The Second Circuit noted that there is an "absence of such indication of congressional intent" with regard to the FLSA. Id.

The Second Circuit also rejected the plaintiff's assertion that the FLSA precluded arbitration because it authorized suit "in any Federal or State court of competent jurisdiction," noting that, in Gilmer, the Supreme Court held that similar language in the ADEA did not bar arbitration under that statute.

The Second Circuit also rejected Rodriguez-Depena's argument that his claims were not arbitrable because the employment agreement was not signed by the other two companies who had employed him. The Second Circuit agreed with the district court that Rodriguez-Depena's dispute with the non-signatory companies was intertwined with his dispute with the company with whom he had made an arbitration agreement. Accordingly, the plaintiff's arguments were for the arbitrator to determine.

The Second Circuit concluded by affirming the district court's order compelling arbitration.

Kelly Rice is a 2018 J.D. Candidate at DePaul University College of Law in Chicago, Illinois.

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