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Thursday, July 3, 2014

Supreme Court's Hidden Gift

By: Tommy Eden 

Ashely Walthour and Kevin Chappell, former window repairs for Chipio Windshield Repair LLC, filed a collective action claiming that Chipio had failed to pay minimum wage and overtime, in violation of the Fair Labor Standards Act (FLSA). After the Federal Court suit in Georgia was filed, Chipio moved to compel arbitration under the Federal Arbitration Act, citing the mandatory arbitration agreements Walthour and Chappell had signed shortly after being hired. The District Court Judge compelled arbitration. These agreements stipulated that all employment disputes were to be resolved exclusively through individual arbitration, including their class action rights.

The 11th Circuit Court of Appeals found in favor of the Arbitrator’s authority to hear the collective action noting, “
the text of the FLSA does not set forth a non-waivable substantive right to collective action.” In the Fall of 2013 the 11th Circuit held in the case of DIRECTV LLC v. John Arndt et al that such arbitration “agreements were worded broadly, encompassing all past, present, and future claims or controversies relating to wages and compensation.”

On Monday in mist of all the hoopla over the Hobby Lobby decision, the Supreme Court in a highly significant decision denied Certiorari in the Chipio Windshield case leaving mandatory arbitration of employment disputes as the sole remedy in the 11th Circuit for those employers who adopt such a program.

Common Sense Counsel: The Chipio case is truly a gift to employers who wish to engage in employment claims related risk reduction. Such a program increases the prospects that concerns will be resolved before they ripen into actual EEOC Charges, DOL Investigations, Lawsuits - you name your worst employment nightmare. In light of the emerging Supreme Court case law favoring alternatives to court litigation, consider options for designing an employee dispute resolution program and the potential business advantages - not the least of which is not having to spend a sunny day locked in a windowless room with a plaintiff’s attorney with an attitude. Plaintiff’s attorneys hate these programs for obvious reasons. The best programs have the following components: 1) an internal complaint process with a promise of no retaliation; 2) a toll free hot line for multiple location employers; 3) handbook provisions giving employee two channels to make their complaint and fair investigation process; 4) well drafted and broadly worded arbitration provision, covering class claims, that will pass court scrutiny; 5) training for all employees on the process; 6) private arbitration panel of former local judges, or AAA Arbitration, and mostly importantly; 7) a Human Resource professional with a listening ear and risk reduction mindset.


Tommy Eden is a partner working out of the Constangy, Brooks & Smith, LLP offices in Opelika, AL and West Point, GA and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at teden@constangy.com or 334-246-2901. Blog at www.alabamaatwork.com