One of the most dangerous legal traps that can ensnare a real estate business—or any employer, for that matter—is a company-wide lawsuit alleging violations of minimum-wage or overtime laws. A new decision by the United States Supreme Court appears to offer employers long-overdue relief from those dangers.
In the suit, Epic Systems Corporation v. Lewis, the high court affirmed employers’ right to use arbitration agreements and class-action waivers in worker contracts. That right, the majority opinion held, stems from the protections of the Federal Arbitration Act, which requires courts to enforce agreements to arbitrate disputes rather than to have those matters resolved in court. Many companies pair arbitration clauses with other terms in which the employees waive the right to participate in class actions or collective actions. Together, those provisions, when enforced, make it nearly impossible for an employee or other party to bring a class action or, as they are called in many labor-and-employment statutes, collective actions.
Before the Epic Systems decision, it was unclear whether employers could use the Federal Arbitration Act to defeat workers’ rights under various other laws, like the Fair Labor Standards Act, to band together to sue over purported workplace violations. The alleged legal infraction in Epic Systems was exactly that: supposed violations of the Fair Labor Standards Act, which sets national requirements for minimum wages and overtime.
If your company employs people (as most companies do), you should look into incorporating arbitration agreements and class-action and collective-action waivers into your employment agreements. You might even be able to have existing employees agree to those terms. In Epic Systems, for example, employees were sent emails informing them of the new terms of their employment and stating that their continued employment constituted acceptance of those terms. Whether that sort of acceptance mechanism is lawful in your state is a question your labor-and-employment counsel can answer.