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Currently, a major issue in the field of labor law is the enforceability of class waivers. Some employers have attempted to avoid the risk of class action employment cases by requiring their employees–as a condition of employment or continued employment–to sign a written document agreeing never to file a class action lawsuit or to serve as a class representative or be a class member in such a suit. The enforceability of such agreements (so called “class waivers”) has been the subject of a considerable amount of litigation over the past several months. Employees have challenged the enforceability of class waivers primarily in two separate forums, in the courts and before the National Labor Relations Board (“NLRB”).
In a class and collective action wage and hour lawsuit being handled by Riggan Law Firm, LLC (working in conjunction with Weinhaus & Potashnick) in the United States District Court for the Eastern District of Missouri, the Court recently issued an order stating that class waivers signed by employees of Convergys Corporation are invalid and unenforceable as a matter of law. In the lawsuit, Grant, et al. v. Convergys Corporation, the plaintiffs are current and former customer service representatives who worked at call centers operated by Convergys in St. Louis, Missouri. The plaintiffs allege that they and other similarly situated call center representatives were required to perform pre-shift and post-shift work tasks (such as booting up and logging into computer programs and applications and closing down and logging out of programs/applications), and as such, incurred “off-the-clock work” for which they were not paid. The lawsuit seeks payment of unpaid overtime pursuant to the Fair Labor Standards Act (“FLSA”) and Missouri law and unpaid straight-time (or gap-time) wages under Missouri law, as well as liquidated damages, attorneys’ fees, and costs/expenses.
The Plaintiffs have filed a motion to conditionally certify the case as a collective action pursuant to the FLSA, 29 U.S.C. Section 216(b), and have also filed a motion to certify the case as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure. Convergys has attempted to defend against these motions by filing its own motion to strike the Plaintiffs’ class and collective allegations, based upon the fact that some (but not all) of the class members, including the lead/representative plaintiff, signed written class waivers at the beginning of their employment.
In its Order of March 1, 2013, the Court denied Convergys’ Motion to Strike the Plaintiffs’ class and collective allegations and held that the written class waivers were invalid and unenforceable as a matter of law. Because a contractual provision that violates federal law cannot be enforced, the Court stated that the waiver provision in Convergys’ employment agreement must be stricken if it violates the National Labor Relations Act (“NLRA”). The NLRA provides that employees shall have the right to engage in… concerted activities for the purpose of collective bargaining or other mutual aid or protection…” 29 U.S.C. Section 157. The Court noted that the National Labor Relations Board (which interprets the NLRA) and courts enforcing NLRB decisions have consistently held that collective and class litigation, through which employees band together to challenge employers’ policies on wages and hours, is concerted activity engaged in for the purposes of mutual aid and protection within the meaning of the NLRA.
In its court filings, Convergys relied on a number of other cases that were ultimately rejected by the Court as distinguishable and/or non-persuasive authority. First, the Court found that the NLRB case called D.R. Horton, 357 NLRB No. 184, 2012 WL 36274 (NLRB Jan. 3, 2012) is inapplicable because it dealt with the issue of an arbitration agreement requiring individual arbitration of employees’ claims, and thus precluding employees from proceeding collectively in any forum. The Court held that there is a material distinction between the circumstances in D.R. Horton and those in the present case: the waiver provision here is not contained in an arbitration clause and the Federal Arbitration Act (FAA) is not complicated. The Court found that the NLRB has long acknowledged collective and class litigation engaged in by employees for mutual aid and protection as a protected concerted activity under Section 7 of the NLRA, and that this precedent is not altered by D.R. Horton.
Another case relied upon by Convergys was Owen v. Bristol Care, Inc., 2012 WL 1192005 (W.D. Mo. Feb. 28, 2012), rev’d, 702 F.3d 1050 (8th Cir. 2013). In Owen, the district court held that an arbitration agreement prohibiting class arbitration of FLSA claims was unenforceable as a waiver of a substantive right. The Eighth Circuit Court of Appeals reversed and enforced the waiver. Declining to apply D.R. Horton, the court explained that while the NLRB’s interpretation of the NLRA is entitled to great deference, the NLRB’s interpretation of the FAA is not. In Grant v. Convergys, the Court held that the Owen case does not directly address the issue before the Court, because that case, like D.R. Horton, involved a waiver of class arbitration contained in an arbitration agreement. The Court stated that Owen reiterates the principle that the NLRB’s interpretation of the NLRA is entitled to great deference but the NLRB’s interpretation of the FAA is not. Accordingly, the Court stated that it was giving great deference to the NLRB’s longstanding interpretation of the NLRA as protecting the type of collective litigation pursued by the Plaintiffs in the Convergys case.
Lastly, the Court rejected Convergys’ reliance on Palmer v. Convergys Corp.., 2012 WL 425256 (M.D. Ga. Feb. 9, 2012), a case where Convergys was successful in convincing a federal court in Georgia to enforce written class waivers signed by Convergys’ employees. The Court noted that while the facts of the Palmer case are very similar to those in Grant v. Convergys, the Court stated that the Palmer case provided no meaningful guidance. In Palmer, the only mention of the NLRA is contained in a footnote, summarily dismissing D.R. Horton without explanation. The Palmer court did not discuss the issue of whether employees’ collective litigation constitutes concerted activity for mutual aid and protection under Section 7 of the NLRA. Ultimately, the Court in Grant v. Convergys held that the Palmer court’s reasoning and conclusion are neither informative nor persuasive.
In addition to the federal court invaliding Convergs’ class waiver agreements, an Administrative Law Judge with the NLRB previously reached the same conclusion in a separate proceeding. Convergys has filed an appeal of that decision to the NLRB.