The cost of wage violations can add up quickly in Massachusetts. Class action lawsuits for wage and hour violations continue to be on the rise. With mandatory triple damages and an award of attorneys’ fees to a successful employee, attorneys have not hesitated to file wage lawsuits on behalf of a class of individuals. An employer who has even unknowingly violated the Massachusetts Wage Act can suddenly be liable for hundreds of thousands of dollars, if not more, for those errors, plus the employer’s own attorneys’ fees incurred in defending the matter. So what is an employer to do? Consider following in the footsteps of MasTec North America, Inc.
Like other courts before it, the Superior Court has upheld an employee’s agreement to arbitrate all disputes as well as his waiver of the right to bring an action on behalf of a class of employees. A short while after beginning employment with MasTec, the employee signed off on its Dispute Resolution Procedure (“DRP”). The DRP required that all disputes arising out of or related to the employee’s employment with or termination of employment from the company be submitted to final and binding arbitration, i.e. the employee could not bring a lawsuit in court. In addition to waiving his right to file a lawsuit, the employee waived his right to bring a class action in arbitration. The employee had the ability to opt out of the DRP by submitting a form to the company within 30 days of the receipt of the DRP, but he did not exercise that option.
After the employee was terminated, he filed a lawsuit against MasTec alleging that he and others were owed overtime pay and that he had been terminated in retaliation for raising the overtime issue in the first place. MasTec moved to compel arbitration, and the court granted that motion. Despite the employee’s arguments to the contrary, the court held that retaliation does not invalidate an otherwise enforceable arbitration agreement and that the class action waiver did not violate the employee’s rights under the National Labor Relations Act, as the DRP allowed for administrative claims of NLRA violations to be brought before the National Labor Relations Board.
If he wants to pursue his case (and only his case), the employee will have to arbitrate his claims with MasTec. In arbitration, a neutral fact finder, usually jointly chosen by the parties, hears the facts of the dispute and makes a binding ruling. The arbitration process is quicker and usually much less costly than litigation. Unlike in a civil action, there is no public record of the lawsuit, so the dispute and its outcome may be kept confidential if the parties want it that way. On the down side, discovery may be more limited, and, if you think the arbitrator got it wrong, you have limited right to appeal. Additionally, if employees waive their rights to a class action lawsuit, that means that only those employees who want to take the time to dispute their claims (individually) through arbitration will sue you; however, you will not benefit from a class-wide settlement or finding, which would otherwise bind all employees who are similarly situated. Arbitration agreements and class action waivers (as well as their cousins jury waivers and contracts limiting the statute of limitations) in many circumstances can be a very useful tool for employers.
Neary v. MasTec North America, Inc., et al., No. 15-CV-2655-H (Mass. Super. May 10, 2016)(Curran, J.)