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Top Wage and Hour Lawyer Reply: Will My Severance Agreement Stop Me From Suing For Back Pay?

On Behalf of | Sep 15, 2014 | Wage: Minimum Wage, Wage: Overtime, Wage: Tipped Employees |

Best Ohio Wage and Hour Attorney Answer: Is it worth it to bring a small claim for overtime pay that my job refused to pay? What is a collective action lawsuit under the FLSA? Can my employer limit my rights to join a collective action? What is the best way to find the top Wage Lawyers in Ohio?

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The Fair Labor Standards Act (FLSA) requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their regular hourly rates for hours worked beyond 40 per week. The FLSA provides that employers who violate the law are liable to the aggrieved employees for their back wages and an equal amount in liquidated damages, plus reasonable attorney’s fees and costs. One mechanism for pursuing employees’ rights under the FLSA is through a collective action. Similar to a class action, a collective action allows one or more employees to serve as the class representatives of several other similarly-situated employees, all of whom are pursuing damages under the FLSA against a common employer for the same FLSA violations. Because collective action lawsuits can be very damaging and costly to employers, some employers have searched for ways to have their employees waive their right to participate in a collective action.

Recently, the Sixth Circuit Court of Appeals (Ohio) dealt with the question of whether an employer could legally bind an employee to a waiver of his/her right to participate in a collective action in exchange for a severance payment. The Court held that such waivers and agreements are invalid under the law. Specifically, in Killion v. KeHE Distributors, the company discharged about 69 employees as part of a restructuring in 2012. As part of the layoff, the company offered severance packages to each of the employees, and within the agreement was a covenant prohibiting the employee from participating in a collective action related to their employment.

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Thereafter, a FLSA lawsuit was filed and the plaintiffs sought to include the 69 laid off workers as class members. The suit focused on whether employees were properly classified as outside salespeople and therefore exempt from minimum wage and overtime rights, an issue that our wage and hour attorneys blogged about earlier this month.

Despite having signed the waivers as part of a severance agreement, the Court held that the waivers were invalid because they deprived the employees’ rights under the FLSA, something that the FLSA explicitly prohibits. In response, the employer noted that the workers at issue were still eligible to pursue their own individual claims, just not participate as a member of a collective action, but the Court rejected this argument, holding that because the workers’ individual claims were relatively small their best avenue for asserting their FLSA rights was through a collective action. But, a key to this case was that there was no provision in the agreement calling for arbitration. Specifically, the Court held:

We are aware, of course, that the considerations change when an arbitration clause is involved. Boaz explained that “an employee can waive his right to a judicial forum only if the alternative forum allow[s] for the effective vindication of [the employee’s] claim.” Arbitration, it noted, is such a forum. But this line of precedents is of only minimal relevance here because the plaintiffs’ collective-action waivers in this case contained no arbitration clause. And, in any event, none of our precedents permitting arbitration of FLSA claims has addressed employees’ collective-action rights. (citations omitted).

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Because no arbitration agreement is present in the case before us, we find no countervailing federal policy that outweighs the policy articulated in the FLSA. The rationale of Boaz is therefore controlling. Boaz is based on the general principle of striking down restrictions on the employees’ FLSA rights that would have the effect of granting their employer an unfair advantage over its competitors. Requiring an employee to litigate on an individual basis grants the employer the same type of competitive advantage as did shortening the period to bring a claim in Boaz. And in cases where each individual claim is small, having to litigate on an individual basis would likely discourage the employee from bringing a claim for overtime wages. Boaz therefore controls the result here where arbitration is not a part of the waiver provision.

So what does this mean to you? It is critical to read, and preferably have an employment law attorney read and advise you, on any agreement that you boss puts in front of you to sign – particularly when it comes at the end of your employment. Furthermore, these types of cases have a lot of confusing and moving parts – another reason to consult to consult a wage and hour lawyer.

If you believe that your employer is not paying you all of your wages for all of your lawfully earned overtime compensation at a rate of one and half times your normal wages as requires under the Federal Fair Labor Standards Act or Ohio Minimum Fair Wage Standards laws or you are an nonexempt employee that has been misclassified as exempt or independent contractor, contact the attorneys at Spitz, The Employee’s Law Firm today for a free and confidential initial consultation. The wage and hour lawyers at Spitz, The Employee’s Law Firm will provide you with the best options for your overtime pay dispute situation. If you even think that you may be entitled to overtime pay that you are not being paid, call 866-797-6040.


The materials available at the top of this overtime, wage and hour web page and at this employment law website are for informational purposes only and not for the purpose of providing legal advice. If you are still asking, “Am I entitled to overtime?”, “Does my job have to pay me for …”, “My paycheck is not right…” or “What do I do if…”, the your best option is to contact an Ohio overtime attorney to obtain advice with respect to FLSA questions or any particular employment law issue. Use and access to this employment law website or any of the links contained within the site do not create an attorney-client relationship. The legal opinions expressed at the top of this page or through this site are the opinions of the individual lawyer and may not reflect the opinions of Spitz, The Employee’s Law Firm, Brian Spitz, or any individual attorney.

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