On June 2, 2019, the Illinois General Assembly approved the Workplace Transparency Act providing certain protections concerning sexual harassment in the workplace and imposing significant new obligations on Illinois Employers. This Bill was signed into law by Governor Pritzker in June 2019 and the provision of the new bill become effective January 1, 2020.
It has now become almost axiomatic that any given alleged violation of the Fair Labor Standards Act - calculation of the overtime rate, rounding procedures, travel time, exempt status, etc., can, and most certainly will, become the basis for a class action lawsuit, since a violation toward the one generally involves a violation toward the many (surely there is a Latin phrase for this).
On January 15, 2019, the U.S. Supreme Court issued a decision in New Prime Inc. v. Oliveira, a case concerning the enforceability of arbitration agreements in the interstate trucking sector of our economy.
Clients are increasingly aware of the growing number of class action lawsuits across the United States. What should the worried company owner do? The logical response is to have independent contractors (or employees) sign a contract under which they agree to mandatory arbitration of all disputes, claims or causes of action arising out of or related to the independent contractor (or employment) relationship with the Company.
√ Audit compensation classifications and policies
On May 21, 2018, in a 5-4 majority decision, the U.S. Supreme Court in Epic Systems Corp. v. Lewis ruled that employers can require as a condition of employment that workers waive their rights to participate in class action lawsuits by entering into a mandatory arbitration clause in their employment agreement. Supreme Court Justice Neil Gorsuch wrote the majority opinion which sided with businesses whose employment contracts include mandatory arbitration clauses that prevent class action lawsuits. The Court ruled that workers who have signed agreements with these types of clauses included in the document must pursue their claims individually and not as part of a class action. The Court's ruling strengthens employers' arguments that employment contracts that impose mandatory arbitration clauses regarding disputes of any kind do not violate their employees' constitutional rights. Many businesses impose mandatory arbitration clauses that specifically forbid class action lawsuits. With this most recent ruling it is estimated that companies will increasingly use these types of clauses to limit their liability exposure.
Since 2012, there has been an ongoing saga created by the National Labor Relations Board (NLRB) as to whether or not an Employer can require its Employees, as a Condition of Employment, to agree to arbitrate all Legal Claims against the Employer on an individual basis only, thereby waiving Class and Collective Action Procedures. The NLRB initially took issue with this type of action in the D.R. Horton, Inc. Case., 357 NLRB No. 184 (2012), in which it held that requiring Employees to waive the right to bring Claims in the form of a Class Action (or a Collective Action under the Fair Labor Standards Act) violated the guarantee of rights, as provided in Section 7 of the National Labor Relations Act, that allows Employees the right to engage in "protected concerted activity for mutual aid or protection". When that Case was appealed to the Fifth Circuit Court of Appeals, the Fifth Circuit denied enforcement of the Board's Order in the D.R. Horton, Inc. Case. Subsequently, the NLRB issued another Decision with a different Employer (Murphy Oil USA, Inc., 361 NLRB No. 72 (2014)) reaching the exact same results - that Class Waivers in Arbitration Agreements, as a Condition of Employment, unlawfully interfered with Employees' rights to engage in "protected and concerted activity" under the National Labor Relations Act. That ruling was again rejected by the Fifth Circuit on Appeal.
Arbitration agreements are a common tool many employers use as an alternative to going to court to resolve disputes with their employees. Arbitration has the potential to be a faster, cheaper, and more private way to resolve disputes, with more finality. One of the biggest advantages many employers see in arbitration is the ability to resolve disputes individually rather than as part of a class action. However, the NLRB has determined that, in its opinion, these waivers violate employees' right under federal labor law to engage in "concerted activities" for their "mutual aid or protection." This has caused uncertainty as to the legality of such class action waivers in arbitration agreements in the employment arena.