Thursday, November 17, 2011

Court Enforces Arbitration of FLSA Claims Where Arbitration Agreement is Contained Within 51-Page Employee Handbook

In Brown v. Luxottica Retail N. Am., Inc., 2010 US. Dist. LEXIS 104642 (N.D. Ill. September 29, 2010), Judge Gottschall granted the defense motion to compel FLSA claims. Defendants had a 51-page employee handbook, which contained within it, commencing on page 27 and consisting of five pages, a Dispute Resolution Agreement. That Agreement, among other terms, provided as follows:
  1. That the employee would not file, join, participate or intervene in a class action;
  2. That arbitration of any claim on a class or collective basis was prohibited;
  3. That all legal disputes, including claims under the FLSA, had to be submitted to binding arbitration before the AAA;
  4. That the employee would be required to pay a filing fee to the AAA only up to the amount required to file a lawsuit and that the employer would pay any difference;
  5. That the employer would pay all of the arbitration fees and costs;
  6. That, to the extent authorized by applicable law, either the employee or the employer could seek an award of attorney’s fees from the other; and 
  7.  That the Dispute Resolution Agreement was not offered on a take-it-or-leave-it basis, but rather the employee could opt out of the Agreement within 30 days of receipt of the Agreement, by completing an opt-out form attached to the Agreement.
The court found the Agreement to be neither procedurally or substantively unconscionable. The court rejected plaintiff’s argument that the dispute resolution agreement was “buried” in the handbook and that its language and format was confusing such that a reasonable worker could not understand it. The court found the Agreement to begin in a large, bold font; the text to be in a regular font; that there was “a dearth of legalese”; and, while single-spaced, was easily readable. The court stated that “[t]here is nothing hidden or buried about this Agreement, as long as an employee reads the Handbook”. The court further found that it was “written in easily readable type and about as plain as a legal agreement can be.” The court went on to state that “the law does not protect persons who choose not to read documents given to them.” Finally, the court stated unequivocally as follows:
“Nothing in the FLSA precludes an agreement to arbitrate a FLSA claim, even when the arbitration agreement is part of an employee handbook and whether or not the employee signs the agreement or the handbook.”

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