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Ask your attorney about class-action waivers

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in Employment Law,Human Resources

The 8th Circuit Court of Appeals, which covers Minnesota em­­ployers, has ruled that an employee who previously agreed to waive her right to file a class-action overtime lawsuit does indeed have to rely on individual arbitration of her claim. That’s despite recent National Labor Relations Board (NLRB) decisions that claim such waivers are invalid.

Recent case: Sharon worked as an administrator for a chain of nursing homes. She was classified as exempt, so she didn’t earn extra pay for working more than 40 hours per week. When she was hired, Sharon signed an agreement promising to take any employment-related problems to arbitration rather than court. The agreement also waived Sharon’s right to participate in class-action litigation, but acknowledged her right to complain about working conditions or alleged discrimination to the EEOC, the NLRB or any other state or federal agency.

Sharon went to federal court seeking certification on behalf of a class of fellow employees who were allegedly wrongly classified as exempt. The nursing home company asked the court to send the case to individual arbitration instead of certifying it as a class action in federal court.

The lower court said the agreement Sharon had signed was invalid, but the 8th Circuit Court of Appeals overturned that decision. It concluded that, as long as Sharon was free to go to various agencies with her complaint and those agencies could file class-action lawsuits, the arbitration agreement was legal. Sharon can only complain about her individual case—and only in arbitration. (Owen v. Bristol Care, No. 12-1719, 8th Cir., 2013)

Final note: If you have an existing arbitration agreement, make sure it is broad enough to take advantage of this ruling. Get expert help from your attorney.

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