By SHRM Government Affairs staff
On Feb. 22, 2012, the Society for Human Resource Management and the U.S. Chamber of Commerce filed a joint amicus brief with the U.S. Court of Appeals for the Second Circuit in the case Raniere v. Citigroup, Inc. The brief supports honoring arbitration agreements to settle overtime pay disputes.
In Raniere, three home mortgage consultants brought a collective action under the Fair Labor Standards Act (FLSA) for unpaid overtime, alleging that the defendant improperly classified them as exempt employees and, therefore, ineligible for overtime. The defendant moved to compel individual arbitration according to the terms of the signed arbitration agreements which prohibited collective actions.
The lower court refused to enforce the arbitration agreement between the parties on the sole ground that the agreement precludes collection actions and ruled that employees cannot, under any circumstances, waive their right to proceed collectively under the FLSA.
In its amicus brief on appeal, SHRM argued that according to the Federal Arbitration Act and Supreme Court precedent, federal statutory claims can be arbitrated. The FLSA, at issue in this case, neither expressly precludes arbitration nor specifically mandates the use of collective procedures in arbitration. SHRM also argued that, as a practical matter, arbitration should be encouraged as an easier, faster and less costly way for both employers and employees to resolve issues rather than bringing a lawsuit in court.
If the lower court’s decision is upheld, it will cast doubt on the enforceability of millions of employment arbitration provisions, according to the brief.