FLSA Violation – Arbitration Agreements

Listen to this article

7^th Circuit Court of Appeals

Case Name: Susie Bigger v. Facebook, Inc.,

Case No.: 19-1944

Officials: WOOD, Chief Judge, and KANNE and BARRETT, Circuit Judges.

Focus: FLSA Violation – Arbitration Agreements

The Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201 et seq. (“FLSA”), requires employers to pay overtime wages to certain employees, see id. §§ 207(a), 213. For enforcement, the Act allows employees to sue their employer for damages and to bring the action on behalf of themselves and other “similarly situated” employees, id. § 216(b), who may join the so-called “collective action.” The court overseeing the action has discretion to authorize the sending of notice to potential plaintiffs, informing them of the opportunity to opt in. Hoffmann–La Roche Inc. v. Sperling, 493 U.S. 165, 170–71 (1989). But the court must respect judicial neutrality and avoid even the appearance of endorsing the action’s merits. Id. at 174.

This case presents the question whether a court may authorize notice to individuals who allegedly entered mutual arbitration agreements, waiving their right to join the action. Facebook employee Susie Bigger sued Facebook for violations of the FLSA overtime-pay requirements. She brought the action on behalf of herself and all other similarly situated employees. The district court authorized notice of the action to be sent to the entire group of employees Bigger proposed. Facebook argued this authorization was improper because many of the proposed notice recipients had entered arbitration agreements precluding them from joining the action. Facebook also argued the court’s authorization of notice was improper because Facebook is entitled to summary judgment.

We hold that when a defendant opposing the issuance of notice alleges that proposed recipients entered arbitration agreements waiving the right to participate in the action, a court may authorize notice to those individuals unless (1) no plaintiff contests the existence or validity of the alleged arbitration agreements, or (2) after the court allows discovery on the alleged agreements’ existence and validity, the defendant establishes by a preponderance of the evidence the existence of a valid arbitration agreement for each employee it seeks to exclude from receiving notice. Because the district court here did not apply this framework, we vacate the court’s order issuing notice and we remand for the court to apply the proper standard. We also affirm the court’s denial of summary judgment to Facebook.

Vacated and remanded in part. Affirmed in part.

Full Text

Derek A Hawkins is trademark corporate counsel for Harley-Davidson. Hawkins oversees the prosecution and maintenance of the Harley-Davidson’s international trademark portfolio in emerging markets.