That air-tight arbitration clause? It might not stop class-action after all — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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That air-tight arbitration clause? It might not stop class-action after all

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in Employment Law,Human Resources

A federal magistrate has ordered notifications sent to a large group of employees inviting them to join in a Fair Labor Standards Act (FLSA) lawsuit.

The court did so even though some of those employees may have signed away their rights to litigation via an arbitration clause.

Recent case: A small group of workers who were originally classified as independent contractors sued Spar Business Services in Texas, alleging that they really should have been classified as employees. Their lawsuit sought back overtime pay under the FLSA.

Spar Business Services tried to block their efforts to bring a class-action lawsuit. Then, after the lawsuit had been filed, it had some employees sign arbitration agreements. At that stage, the company argued that those workers could not be included in the collective action because they had already agreed to arbitrate any claims.

But the court said they could be included for now, and their notices to join will include a statement that the arbitration agreement may bar their participation at a later date. (Rodgers v. Spar Business Services, No. 03-14-CV-00055, SD TX, 2015)

Final note: What’s the moral of the story? Consider including an arbitration clause in your independent contractor agreements from the start. Consult with your attorney before litigation starts brewing. Presenting contractors with an arbitration agreement later may mean you will spend time in federal court defending the agreement and its timing. That could cost more in time and money than arbitration would have saved.

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