Supreme Court to hear Iowa arbitration clause issue in overtime case

The U.S. Supreme Court will hear a case in 2022 brought by an Iowa fast-food worker who claims employers have no right to force arbitration on employees after first challenging the trial in pre-trial proceedings.

Taco Bell worker Robyn Morgan was part of a class action lawsuit seeking back wages for alleged overtime violations. After arguing the case for eight months in court, the Taco Bell franchisee invoked the arbitration clause contained in Taco Bell’s standard employment contract.

Iowa Federal District Court Judge John Jarvey ruled for the employee, finding that her employer waived its right to arbitration by waiting too long and litigating the case. But the Eighth Circuit Court of Appeals disagreed, saying the delay did not harm the employee’s chances of getting a fair result in arbitration because she was not ‘prejudiced’ by the delay as no discovery had been made and Morgan would not have to duplicate his efforts in arbitration. .

In 2018, the U.S. Supreme Court in the Epic Systems Corp. case ruled on a 5-4 vote that companies can use arbitration clauses in employment contracts to bar class action lawsuits. .

Then-Judge Ruth Bader Ginsburg dissented, saying arbitration would result in “huge under-enforcement of federal and state laws designed to improve the welfare of vulnerable workers.” (Associated Press)

Then-Judge Ruth Bader Ginsburg dissented, saying arbitration would result in “huge under-enforcement of federal and state laws designed to improve the welfare of vulnerable workers.”

She noted that in 1992 only 2% of non-union employers used binding arbitration agreements, but 54% did so in 2011.

The majority disagreed, stating that federal arbitration is proof that Congress favors arbitration and the virtues that Congress originally saw in it for prompt and inexpensive resolution of claims.

Arbitration was intended to displace disputes.

In early February 2022, Congress approved bipartisan legislation titled the Ending Forced Arbitration of Sexual, Assault and Sexual Harassment Act of 2021, prohibiting the use of forced arbitration to deal with sexual assault and harassment claims on the venue. of work, and sent it to President Joe Biden who is supposed to sign it.

Now, with Justice Ginsburg’s death and the two additions to the court with Trump appointees, the conservatives have a 6-3 majority. Past rulings indicate that the so-called conservative justices favor arbitration, while so-called liberal judges are less favorable to arbitration.

The United States Supreme Court has generally expanded access to arbitration in recent years.

So what is the conclusion of this arbitration case? If you still use arbitration agreements with your employees, be sure to tell your attorney about the signed arbitration agreement at the first sign of litigation. Don’t wait.

Another option at arbitration is to consider revising your employment contracts with employees to include a jury trial waiver.

Jury waivers offer significant protection against emotional distress on the run – and emotional verdicts. If an employer requires its employees to sign a jury waiver, any dispute covered by the waiver will be resolved in court by a judge, not a jury.

Several federal court judges in Iowa have approved these waivers.

There are trade-offs in waiving a jury trial.

For example, a test bench is effectively a one-person jury. The parties must cohabit with the judge assigned to them.

Additionally, a judge in a bench trial may be more active in questioning witnesses on the stand, both because the judge is the fact finder and because there is no likely jury. to be unduly influenced by a judge’s questions.

Additionally, in a jury trial, the judge may have concerns about allowing evidence that may be inflammatory or unfairly prejudicial.

In a bench trial, however, a reviewing court will generally assume that the district court was not influenced by evidence improperly presented to it, unless there is evidence to the contrary. .

On the plus side, bench trials tend to give the parties better guidance on their case and the logic behind the decision.

For example, in an action adjudicated without a jury, the court must search for the facts specifically and state its conclusions of law separately.

In contrast, in jury trials, both sides often wonder why the jury ruled the way it did, and attorneys – only if the court allows it – often have to contact each juror to find out the logic of their decision. .

Notwithstanding the United States Supreme Court’s decision in the Iowa Taco Bell case, if seeking an alternative to arbitration, employers should consider having all employees sign jury trial waivers.

Wilford H. Stone is an attorney at Lynch Dallas in Cedar Rapids.

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