Many employers place arbitration clauses in their employment applications or handbooks. The idea is that forcing employees to arbitrate workplace disputes will be quicker and easier than going to federal court. Plus, arbitration may discourage class-action lawsuits, which can take one employee’s claim and multiply it across the workforce.

A recent federal court decision by a Florida-based judge has upheld the right to take even Fair Labor Standards Act (FLSA) complaints over wage-and-hour law to arbitration.

Recent case:
Nizar Ghidon and a group of co-workers tried to sue their employer, a car dealership, in federal court. They charged they had been denied minimum wages and suffered retaliation when they complained.

The dealership pointed out that each employee had signed an agreement stipulating that all employment-related disputes, including those involving federal employment laws, would go to arbitration. The employees argued that FLSA claims can’t be forced into arbitration, and that employees can’t waive their rights to have FLSA cases heard in court.

The judge disagreed and dismissed the case, sending it to arbitration. (Ghidon, et al., v. Rick Case Hyundai, et al., No. 09-60088, SD FL, 2009)

Final notes: Stay tuned on this issue, as this case will probably be appealed to the 11th Circuit Court of Appeals. If you are considering including an arbitration agreement in your applications or handbook, have your attorney help draft the language. The agreement must be a valid contract. Be careful where you place the agreement. If you include it in the handbook, keep it separate from other policies. Specify that nothing else in the handbook is a contract. You want the arbitration agreement to be a valid contract, but not the rest of the handbook. Your attorney can help you get the language right.

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