Employee Seeks 'FMLA Loophole' to Arbitration Agreements

If you have a signed arbitration agreement, you're on pretty solid footing because the FAA allows a party to petition any federal district court for an order directing arbitration in the manner provided in the agreement. Indeed, the FAA strongly evidences a public policy preference for arbitration.

But suppose one of your employees decides to pursue a class action lawsuit in federal court alleging violations of the Family and Medical Leave Act. The FMLA prohibits employer interference with employee FMLA rights. It also contains a right of action for class action suits. Might this be the kind of right with which an employer cannot interfere?

The FMLA regulations also state that an employee "cannot waive, nor may employers induce employees to waive, their prospective rights under the FMLA." Therefore, when employees assent to arbitrate, they may not waive class action rights, especially if they can only waive claims to the extent the law permits.

Are you nervous? Do not be. A Kentucky federal judge explain why in Bixby v. Toyota Motor North America (case):

Neither of these cited authorities [...] prove a clear and manifest congressional intent for the FMLA to displace the FAA. The Supreme Court has "made clear that even a statute's express provision for collective legal actions does not necessarily mean that it precludes" arbitration[...] [T]he Supreme Court has "had no qualms in enforcing a class waiver in an arbitration agreement" even when the relevant statute permits collective legal actions and expressly provides that any waiver of the rights conferred by the statute is void.

After all, a plaintiff is not losing any substantive FMLA rights. The plaintiff can still pursue them in arbitration rather than court. In essence, there is no FMLA loophole to arbitration.