Gaffers v. Kelly Services, Inc.
OPINION AND ORDER Granting Plaintiff's 7 Motion for Conditional Certification of Collective Action and Denying Defendants' Renewed 61 Motion to Stay and Compel Arbitration. Signed by District Judge David M. Lawson. (SPin)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
Case Number 16-10128
Honorable David M. Lawson
KELLY SERVICES, INC.,
OPINION AND ORDER GRANTING PLAINTIFF’S MOTION FOR
CONDITIONAL CERTIFICATION OF COLLECTIVE ACTION AND DENYING
DEFENDANTS’ RENEWED MOTION TO STAY AND COMPEL ARBITRATION
Plaintiff Jonathan Gaffers is employed by defendant Kelly Services, Inc. as a home-based
call center agent. He filed this action under the Fair Labor Standards Act (FLSA) alleging that Kelly
is not paying him for the time it takes for him to log on to Kelly’s computer applications so he can
perform his job, and for certain other time spent solving technical connection problems, all of which
extends his total work time beyond 40 hours during most weeks. He, along with 20 other potential
opt-in plaintiffs, seeks to conditionally certify the case as a collective action and notify hundreds of
other similarly situated employees of their right to opt in to the lawsuit. Kelly has offered several
reasons why the collective action should not be certified, and it also moves to stay the case because
all of its employees since November 2014 have signed an agreement to give up their rights under
the FLSA to prosecute or participate in a collective action; instead, Kelly contends, they must
arbitrate any employment disputes on an individual basis. The parties have briefed both motions
thoroughly, and the Court finds that the motion papers adequately set forth the relevant facts and
law, so oral argument will not aid in the disposition of the motions. Therefore, it is ORDERED that
the motions be decided on the papers submitted. See E.D. Mich. LR 7.1(f)(2).
Over 70 years ago, the Supreme Court held that an employer cannot force an employee to
give up the rights that Congress granted under the FLSA. And much more recently, the Sixth Circuit
has held that those non-waivable rights include the right to participate in a collective action.
Because the pertinent sections of Kelly’s employment contract, phrased as an arbitration provision,
force employees to waive their non-waivable FLSA right to a collective action, those sections are
illegal and unenforceable. Therefore, Kelly’s motion to stay the case and compel arbitration will
be denied. And because the plaintiff easily has satisfied the minimal showing necessary for
conditional certification, the Court will grant the motion to conditionally certify the case as a
According to its website, Kelly and its subsidiaries “offer a comprehensive array of
outsourcing and consulting services as well as world-class staffing on a temporary,
temporary-to-hire, and direct-hire basis.” Kelly says that it furnishes more than one million contract
workers worldwide, employing about half that number, with the remaining workers engaged by its
“supplier partners.” As it relates to this case, Kelly “offers call center services through a program
called KellyConnect, which is a comprehensive call center solution for its customers.” Kelly
employs workers as call center agents for the KellyConnect program in different settings, but most
of its call center agents are employed via a “virtual call center” arrangement, where they work from
Plaintiff Jonathan Gaffers has worked for Kelly as a home-based call center agent since June
2014 at an hourly wage ranging from $10 to $11 per hour. At the start of each work shift, Gaffers
says he must activate his computer and log in to various secure servers and applications, which takes
him from 10 to 15 minutes per day. At the end of his shift, Gaffers must spend three to five minutes
shutting down and logging out of those same computer systems and applications. However, Kelly
has a policy by which it pays its home-based call center agents for no more than a total of 10
minutes per day for time spent on the startup and shutdown activities. Gaffers contends, therefore,
that he is required to work between 3 and 10 minutes each day for which he is not paid. He also
alleges that during the workday he will sometimes be disconnected from the virtual call center
systems, and he then is required to place a telephone call to Kelly’s technical support department
to restore his access to the services. He sometimes is required to wait on hold for 10 to 15 minutes
to speak to technical support staff, or to wait up to three or four hours for a return phone call.
However, Kelly has a policy by which it pays its call center agents only for time spent actually
speaking to technical support staff, and it limits payment for time spent dealing with technical
problems to no more than one hour per day.
Gaffers attached to his complaint two pay statements showing that he was paid for 40 hours
at his regular wage and 0.46 hours of overtime in the first week, and for 40 hours at his regular wage
with 0.70 hours of overtime in the second week. He alleges that in these same weeks he should have
been paid for between 15 and 60 minutes of overtime work that he spent logging into and out of the
virtual call center systems, and that he also should have been paid additional overtime wages for
unpaid time spent dealing with technical issues.
It appears to be undisputed that all of the members of the prospective class were employed
as call center agents in various units of Kelly’s “AppleCare” program. Kelly asserts that the
program employs more than 6,000 employees working under 11 different job titles across 48 states.
According to Kelly, the 11 job titles that members of the class worked under were: “(1) AppleCare
Tier 1 Advisors; (2) AppleCare Tier 1 Chat Advisors; (3) AppleCare Tier 2 Advisors; (4) AppleCare
Tier 2 Chat Advisors; (5) AppleCare Tier 1 CPU/Mac+ Advisors; (6) AppleCare Tier 1 CPU/Mac+
Chat Advisors; (7) AppleCare Tier 2 CPU/Mac+ Advisors; (8) AppleCare Tier 2 CPU/Mac+ Chat
Advisors; (9) AOS Customer Service Representatives; (10) AppleCare Team Lead; and (11) IT SC
Agents.” Kelly contends that some of these titles indicate salaried positions that are exempt from
the overtime pay requirement under the FLSA. See 29 U.S.C. § 213(a)(1) (excluding from the
regulations of the overtime pay provisions “any employee employed in a bona fide executive,
administrative, or professional capacity”); 29 C.F.R. pt. 541 (outlining the scope of the section 213
exemption). Kelly also asserts that agents in different roles use various combinations of 35 different
computer and telecommunication programs and systems in their work, but, based on its review of
declarations submitted by 20 potential opt-in plaintiffs, only three of those systems were used by all
of the declarants.
Gaffers submitted a copy of a policy letter from Kelly addressed to its “AppleCare
Advisors,” suggestively entitled “Getting Paid Correctly! Read the Instructions Here!!!” Plf.’s Mot.,
Ex. D. That document offers the following directions to employees about the limits on time they
could be paid for starting up and shutting down or dealing with technical issues relating to their
computer and communication systems:
Note that no more than 5 minutes of “boot up” or “boot down” time will be paid.
This means that that iDesk login time should not be more than five minutes prior to
the start of shift — for example, if you start at 10am, you should not log into iDesk
prior to 9:55am. You also should log into iLog right after logging into iDesk.
Note that you will NOT get paid for the time you are on hold with the Help Desk or
Attendance Line. You will also not get paid for the duration of that tech issue . . . you
will only get paid when reporting it to the Help Desk or Attendance Line.
Id. at 3. Gaffers also submitted declarations from six current or former Kelly employees. The
declarants worked as virtual call center agents for Kelly through various dates between 2013 and
today. They all were paid on an hourly basis, at rates ranging from $10 to $12 per hour. They all
stated that they were subject to Kelly’s policy by which they were paid no more than 10 minutes per
day for time spent on startup and shutdown tasks. Each of the declarants stated that s/he regularly
worked more than 40 hours per week, and estimated that s/he spent significantly more than 10
minutes per day in unpaid overtime on startup and shutdown tasks:
Margaret Key worked from May 2012 to June 2014. She regularly spent an average of 15
minutes per day on startup and login tasks, and five to 10 minutes per day logging out and
shutting down systems that she used. Supp. Decls. [dkt. #41], Ex A (Pg ID 873).
Erica Ramsey worked from September 2015 to December 2015. She typically spent between
5 and 20 minutes on startup tasks, and between eight and 30 minutes on shutdown tasks.
Supp. Decls. [dkt. #41], Ex B (Pg ID 878).
Robert Sabot worked from August 2014 to November 2015. He estimated that he spent
between 15 and 30 minutes per day on startup tasks, and between 10 and 20 minutes per day
on shutdown tasks. Supp. Decls. [dkt. #41], Ex C (Pg ID 883).
Duane Truax worked from October 2011 to July 2013. He spent an average of 20 minutes
per day on startup tasks, and between 20 minutes and two hours per day on shutdown tasks.
Supp. Decls. [dkt. #41], Ex D (Pg ID 888).
Nhadia Montreuil was hired in May 2015 and still works for Kelly. She spends an average
of 10 to 20 minutes per day on startup tasks, and between five and 30 minutes per day on
shutdown tasks. Supp. Decls. [dkt. #49], Ex A (Pg ID 960).
Tressie Rhymer worked from December 2014 to November 2015. She spent between 20
minutes and two hours each day on startup tasks, and between 30 minutes and two hours on
shutdown tasks. Supp. Decls. [dkt. #49], Ex B (Pg ID 966).
Kelly asserts that, since November 2014, all Kelly employees, including 10 of the 20
identified potential opt-in plaintiffs, were required as a condition of hiring or continued employment
to sign an agreement to submit to arbitration any employment-related disputes that may arise in the
course of their work. That agreement contains provisions by which the employees are required to
(1) submit without exception to binding arbitration as the sole remedy for all claims they may have
against Kelly for breach of contract or unpaid wages; (2) accept a shortened 300-day limitations
period for all claims submitted to arbitration; and (3) waive any right to participate in or recover
from any form of class or collective action. The agreement also prohibits any arbitrator from
presiding over any form of collective or class proceeding or supervising any procedure for providing
notice of possible claims to any group of potential plaintiffs. The operative provisions read in full
1. Agreement to Arbitrate. Kelly Services, Inc. and its subsidiaries (“Kelly” or
“Kelly Services”) and I agree to use binding arbitration, instead of going to court, for
any “Covered Claims” that arise between me and Kelly Services . . . . This
Agreement will survive and apply to any and all periods of employment or
re-employment with Kelly Services.
2. Claims Subject to Agreement. The “Covered Claims” under this Agreement shall
include all common-law and statutory claims relating to my employment, including,
but not limited to, any claim for breach of contract [or] unpaid wages. . . . I
understand and agree that arbitration is the only forum for resolving Covered Claims,
and that both Kelly Services and I hereby waive the right to a trial before a judge or
jury in federal or state court in favor of arbitration for Covered Claims.
6. Limitations on Actions. Kelly Services and I agree to bring any claims that each
party may have against the other within 300 days of the day that such party knew, or
should have known, of the facts giving rise to the cause of action, and the parties
mutually waive any longer, but not shorter, statutory or other limitations periods.
8. Waiver of Class and Collective Action Claims. Both Kelly Services and I also
agree that all claims subject to this agreement will be arbitrated only on an individual
basis, and that both Kelly Services and I waive the right to participate in or receive
money or other relief from any class, collective, or representative proceeding. No
party may bring a claim on behalf of other individuals, and no arbitrator hearing any
claims under this agreement may: (i) combine more than one individual’s claim or
claims into a single case; (ii) order, require, participate in or facilitate production of
class-wide contact information or notification of others of potential claims; or (iii)
arbitrate any form of a class, collective, or representative proceeding.
Ramsey Agreement at 1-2 (Pg ID 1400-01).
Gaffers filed his complaint in this case on January 14, 2016. In one count, he alleged that
the defendant failed or refused to pay him and numerous similarly situated employees overtime
wages for time they were required to work at the start and end of each work shift logging into and
out of various computer and telephone systems they are required to use for their work, contrary to
29 U.S.C. § 207. He seeks to certify a collective action under the FLSA, 29 U.S.C. § 216(b), on
behalf of himself and “[a]ll current and former hourly home-based customer care agents who worked
for Defendant at any time during the last three years.” The complaint as originally filed also set
forth a second count for breach of contract and sought to certify a nationwide class on that claim
under Federal Rule of Civil Procedure 23, but the parties stipulated to dismiss the breach of contract
and Rule 23 class claims.
Kelly filed a motion to dismiss on February 29, 2016, which the Court denied on June 7,
2016. Gaffers filed his pre-discovery motion for conditional certification of a collective action early
in the case, on January 29, 2016. The parties filed a flurry of other preliminary motions, and the
Court summarily addressed those motions after a hearing on April 6, 2016. Kelly filed its renewed
motion to compel arbitration and partially to dismiss the complaint on June 6, 2016. Those two
motions remain pending and are addressed in this order.
II. Motion to Stay and Compel Arbitration
Kelly maintains that none of the employees who signed the standard employment agreement
after November 2014 can participate in a collective action, and they must seek redress of their FLSA
claims through arbitration on an individual basis. Kelly looks to the Federal Arbitration Act (FAA)
for fortification of its position, and it insists that the Court must compel arbitration of those claims.
It contends that this case should either be dismissed or stayed as to the claims of those plaintiffs who
signed arbitration agreements, and also should be stayed as to the claims of the remaining plaintiffs
who did not sign the agreement to arbitrate, to avoid inconsistent rulings on overlapping issues of
fact and law applicable to all of the claims. The plaintiff argues that the defendant has not
established that the arbitration agreement is valid or enforceable as to any defined group of
plaintiffs, and it has several facial defects that mitigate against enforcing it, including the class
action waiver, which renders the agreement unenforceable, citing the Seventh Circuit’s recent
decision in Lewis v. Epic Systems Corp., 823 F.3d 1147 (7th Cir. 2016).
Congress has established a “liberal federal policy favoring arbitration agreements,” AT&T
Techs. v. Commc’ns Workers of Am., 475 U.S. 643, 648 (1986), by enacting the FAA “in response
to widespread judicial hostility to arbitration,” Am. Exp. Co. v. Italian Colors Rest., --- U.S. ---, 133
S. Ct. 2304, 2308-09 (2013). The core provision of the FAA states:
A written provision in any maritime transaction or a contract evidencing a
transaction involving commerce to settle by arbitration a controversy thereafter
arising out of such contract or transaction . . . shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in equity for the revocation
of any contract.
9 U.S.C. § 2. Federal courts “rigorously enforce” contractual arbitration agreements “according to
their terms,” including in cases that involve “claims that allege a violation of a federal statute, unless
the FAA’s mandate has been ‘overridden by a contrary congressional command.’” Italian Colors,
133 S. Ct. at 2309 (citations omitted). The purpose of section 2, then, is “to make arbitration
agreements as enforceable as other contracts, but not more so.” Prima Paint Corp. v. Flood &
Conklin Mfg. Co., 388 U.S. 395, 404 n.12 (1967). As the Seventh Circuit recently pointed out,
section 2’s “‘saving clause permits agreements to arbitrate to be invalidated by “generally applicable
contract defenses,” . . . but not by defenses that apply only to arbitration or that derive their meaning
from the fact that an agreement to arbitrate is at issue.’” Lewis, 823 F.3d at 1156 (quoting AT&T
Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011)). One of those “applicable contractual
defenses” is illegality, since “illegal promises will not be enforced in cases controlled by the federal
law.” Kaiser Steel Corp. v. Mullins, 455 U.S. 72, 77 (1982); see Lewis, 823 F.3d at 1157.
In Lewis, the Seventh Circuit held that an employment agreement that required employees
to litigate wage and hour claims only through individual arbitration collided with the National Labor
Relations Act (NLRA), 29 U.S.C. §§ 151, et seq., and therefore was illegal and unenforceable under
the FAA. The court reasoned that a restriction in an employment agreement that barred collective
actions violated the NLRA’s grant of the right to employees “to self-organization, to form, join, or
assist labor organizations, to bargain collectively through representatives of their own choosing, and
to engage in other concerted activities for the purpose of collective bargaining or other mutual aid
or protection.” Id. at 1151-52 (quoting 29 U.S.C. § 157). Perhaps it does, but the Court finds it
unnecessary to reach that question under the NLRA.
Kelly’s employment agreement bars employees from collectively litigating employment
disputes in any forum. By itself, there is nothing illegal about an agreement that includes a waiver
of class arbitration. In Italian Colors, the Supreme Court held that such a waiver was allowed in a
merchant credit card subscription contract that effectively prevented an antitrust class-action suit
because “[t]he antitrust laws do not ‘evinc[e] an intention to preclude a waiver’ of class-action
procedure.” 133 S. Ct. at 2309 (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,
473 U.S. 614, 628 (1985)). And in AT&T Mobility LLC v. Concepcion, the Court held that the FAA
pre-empted a state law barring enforcement of a class-arbitration waiver in a consumer protection
There also is nothing inherently illegal about a contract that requires employment disputes
generally to be brought only in an arbitral forum. See Gilmer v. Interstate/Johnson Lane Corp., 500
U.S. 20, 28 (1991) (approving arbitration agreement as applied to an age discrimination claim under
the Age Discrimination in Employment Act (ADEA)); Morrison v. Circuit City Stores, Inc., 317
F.3d 646, 666 (6th Cir. 2003) (generally approving employment an contract that compelled
arbitration of a discrimination case under Title VII).
But the cases approving arbitration agreements that barred class or employment litigation
did not address claims arising from Congressional enactments that included the right to bring
collective actions. The plaintiff’s claim in this case arises under the Fair Labor Standards Act. By
enacting the FLSA, Congress authorized “[a]n action to recover [unpaid minimum wages and
overtime compensation] against any employer (including a public agency) in any Federal or State
court of competent jurisdiction [to be brought] by any one or more employees for and in behalf of
himself or themselves and other employees similarly situated.” 29 U.S.C. § 216(b) (emphasis
added). The question presented by this case is whether an employer may induce an employee to
contract around that right. If it cannot, then contract provisions that have the effect of barring
collective actions under the FLSA are illegal and therefore unenforceable under the FAA.
“‘Congress passed the FLSA with broad remedial intent,’ to address ‘unfair method[s] of
competition in commerce’ that cause ‘conditions detrimental to the maintenance of the minimum
standard of living necessary for health, efficiency, and general well-being of workers.’” Monroe
v. FTS USA, LLC, 815 F.3d 1000, 1008 (6th Cir. 2016) (quoting Keller v. Miri Microsystems LLC,
781 F.3d 799, 806 (6th Cir. 2015); 29 U.S.C. § 202(a)). “The provisions of the statute are ‘remedial
and humanitarian in purpose,’ and ‘must not be interpreted or applied in a narrow, grudging
manner.’” Ibid. (quoting Herman v. Fabri-Centers of America, Inc., 308 F.3d 580, 585 (6th Cir.
2002)). “To effectuate Congress’s remedial purpose, the FLSA authorizes collective actions ‘by any
one or more employees for and on behalf of himself or themselves and other employees similarly
situated.’” Ibid. (quoting 29 U.S.C. § 216(b)).
“The Supreme Court has made clear that statutory rights, such as those created by Title VII,
may be subject to mandatory arbitration only if the arbitral forum permits the effective vindication
of those rights.” Morrison, 317 F.3d at 658. “‘[S]o long as the prospective litigant effectively may
vindicate [his or her] statutory cause of action in the arbitral forum, the statute will continue to serve
both its remedial and deterrent function.’” Id. at 28 (quoting Gilmer, 500 U.S. at 28). However,
the Sixth Circuit has recognized that the statutory rights granted to employees under the FLSA
warrant stricter conservation than those under Title VII and other civil rights laws, because the
employer that convinces its employees to forego those rights, such as the entitlement to a minimum
wage, would gain a critical economic advantage over its competitors who fully comply with the law.
That, the court of appeals has said, is precisely the outcome the FLSA was enacted to prevent. The
Sixth Circuit gave considerable attention to this point in Boaz v. FedEx Customer Info. Servs., Inc.,
725 F.3d 603, 606-07 (2013), where it refused to enforce a clause in an employment agreement that
purported to shorten the limitations period for FLSA claims from three years to six months. The
court emphasized that “[a]n employment agreement ‘cannot be utilized to deprive employees of their
statutory [FLSA] rights.’” Id. at 606 (quoting Jewell Ridge Coal Corp. v. Local No. 6167, United
Mine Workers of America, 325 U.S. 161, 167 (1945)).
Later, in its decision in Killion v. KeHE Distributors, LLC, 761 F.3d 574, 592 (6th Cir.
2014), the court of appeals considered a clause in a separation agreement signed by terminated
employees that contained a comprehensive waiver of any right to pursue class or collective action
claims for unpaid wages under the FLSA. The Killion court concluded that the waiver was invalid
because it would deprive the employees of the right to pursue a collective action, which expressly
was guaranteed by the FLSA. However, the court noted that there was no arbitration provision in
the settlement agreement, and it therefore found “no countervailing federal policy that outweighs
the policy articulated in the FLSA.” Ibid. The Sixth Circuit has not confronted the question whether
a purported waiver of the right to pursue a collective action in any forum is valid when embedded
in an agreement to submit to binding arbitration individual claims (and only individual claims) under
the FLSA. Id. at 591 (“[N]one of our precedents permitting arbitration of FLSA claims has
addressed employees’ collective-action rights.”).
Other circuits have held that employers do not commit an unfair labor practice by requiring
employees to sign arbitration agreements that contain waivers of the right to bring class or collective
actions. Cellular Sales of Missouri, LLC v. NLRB, 824 F.3d 772, 776 (8th Cir. 2016) (“[W]e
conclude that Cellular Sales did not violate section 8(a)(1) [of the NLRA] by requiring its employees
to enter into an arbitration agreement that included a waiver of class or collective actions in all
forums to resolve employment-related disputes.”); Murphy Oil USA, Inc. v. NLRB, 808 F.3d 1013,
1018 (5th Cir. 2015) (“Murphy Oil committed no unfair labor practice by requiring employees to
relinquish their right to pursue class or collective claims in all forums by signing the arbitration
agreements at issue here.”) (collecting cases). As noted above, the Seventh Circuit split from that
line of reasoning when it decided in Lewis that where an arbitration agreement “precludes employees
from seeking any class, collective, or representative remedies to wage-and-hour disputes, [the
agreement] violates Sections 7 and 8 of the NLRA,” and “[n]othing in the FAA saves the ban on
collective action.” Lewis, 823 F.3d at 1161.
The Ninth Circuit has followed Lewis’s reasoning, holding that an employment agreement
that restricts employees from litigating employment disputes only in “separate proceedings” violates
the NLRA and cannot be enforced. Morris v. Ernst & Young, LLP, No. 13-16599, 2016 WL
4433080, at *2 (9th Cir. Aug. 22, 2016) (“Concerted activity — the right of employees to act
together — is the essential, substantive right established by the NLRA. 29 U.S.C. § 157. Ernst &
Young interfered with that right by requiring its employees to resolve all of their legal claims in
‘separate proceedings.’ Accordingly, the concerted action waiver violates the NLRA and cannot
be enforced.”). Various district courts have followed, distinguished, or declined to adopt Lewis’s
holding. See Tigges v. AM Pizza, Inc., No. 16-10136, 2016 WL 4076829, at *16 (D. Mass. July 29,
2016) (“What are the class actions before the Court, if not employees ‘band[ing]’ together, as a
class, in ‘confronting’ their employer ‘regarding the terms . . . of their employment?’”) (denying
motion to dismiss and granting Rule 23 motions for class certification); Bruster v. Uber
Technologies, Inc., No. 15-2653, 2016 WL 4086786, at *3 (N.D. Ohio Aug. 2, 2016) (“Lewis
analyzed and invalidated a mandatory arbitration provision. . . . In this case, the Uber agreement
allowed drivers like Plaintiff to opt-out of the arbitration provisions within thirty days of signing up
to drive with Uber. . . . [The agreement therefore] does not impinge on any NLRA rights Plaintiff
has, if any, because Plaintiff Bruster could have opted out of arbitration.”); Bekele v. Lyft, Inc., No.
15-11650, 2016 WL 4203412, at *20 (D. Mass. Aug. 9, 2016) (“[I]t is clear from the text of the
NLRA that an employee’s ability to bring a class action against his employer under Rule 23 is not
a substantive right protected by the statute.”). It is worth noting that the Tigges and Bekele decisions
within mere weeks reached opposite outcomes on the same question. The Bekele court cited the
Tigges decision in a footnote, but declined to address its reasoning. However, both cases are
distinguishable from the present action because they involved putative class actions under Rule 23,
not collective actions under section 216(b). The Bekele court noted this distinction where it
observed that “an employee’s ability to bring a class-action lawsuit under [Rule 23] is of a different
class or character than the enumerated rights [under the FLSA],” and “it is far from clear that
Congress’s intent in enacting the NLRA was to prevent an employee from freely waiving his right
to bring a Rule 23 class action, a right that did not exist when the NLRA was enacted,” Bekele, 2016
WL 4203412, at *20.
In Walthour v. Chipio Windshield Repair, LLC, 745 F.3d 1326 (11th Cir. 2014), the Eleventh
Circuit approved an arbitration agreement that barred collective actions under the FLSA, because
that court could “discern no ‘contrary congressional command’ that precludes the enforcement of
plaintiffs’ Arbitration Agreements and their collective action waivers.” Id. at 1334. The court relied
heavily on Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165 (1989), in which the Supreme Court
held that collective action language in the ADEA mirrored the enforcement mechanism Congress
approved in the FLSA, and Gilmer v. Interstate/Johnson Lane Corp., which approved arbitration
of ADEA claims and implied that a waiver of the right to bring a collective action would be
acceptable. But the Walthour court failed to consider one of the principal rationales for precluding
employers from contracting around an employee’s FLSA rights: that “an employer . . . gains a
competitive advantage by doing so.” Boaz, 725 F.3d at 606 (reasoning that “[t]he [Supreme] Court’s
rationale for prohibiting waiver of FLSA claims is . . . not present for [employment discrimination]
After reviewing the controlling decisions on point, it is safe to conclude that the agreement
to arbitrate in this case cannot be enforced to bar the plaintiffs from pursing a collective action in
any forum to resolve their unpaid overtime claims. The Sixth Circuit has not directly addressed the
question, and neither has the Supreme Court. However, their decisions nearest the issue strongly
suggest that when they do, their answer will be nearer that of the Seventh Circuit in Lewis than it
will be to the reasoning of those courts of appeals that have adopted the contrary rule. There are
several reasons for this conclusion.
First, it is beyond question that “Section 16(b) of the FLSA gives employees the right to
bring a private cause of action on their own behalf and on behalf of ‘other employees similarly
situated’ for specified violations of the FLSA.” Genesis Healthcare Corp. v. Symczyk, --- U.S. ---,
133 S. Ct. 1523, 1527 (2013) (emphasis added). The Lewis court seems to suggest otherwise, see
823 F.3d at 1161 (“while the FLSA and ADEA allow class or collective actions, they do not
guarantee collective process.”), but the Sixth Circuit has held that “a plaintiff’s right to participate
in a collective action [under the FLSA] cannot normally be waived.” Killion, 761 F.3d at 590.
There is no reason, therefore, to consider the impact of the NLRA on Kelly’s employment contract.
Second, this right to a collective action is not “merely procedural,” and the law recognizes
no such distinction between “procedural” and “substantive” rights under the FLSA. Boaz, 725 F.3d
at 606 (“FedEx extrapolates that employees can waive their ‘procedural’ rights under the FLSA even
if they cannot waive their ‘substantive’ ones,” but “the FLSA caselaw does not recognize any such
distinction.”). Moreover, the Supreme Court has recognized the substantive distinction between
individual and collective litigation of disputes, and it has held that the difference is so consequential
to a party’s rights that a court cannot compel it “under the FAA to submit to class arbitration unless
there is a contractual basis for concluding that the party agreed to do so.” Stolt-Nielsen S.A. v.
AnimalFeeds Int’l Corp., 559 U.S. 662, 687 (2010); see also Reed Elsevier, Inc. ex rel. LexixNexis
v. Crockett, 734 F.3d 594, 598-99 (6th Cir. 2013) (“[W]hether the parties arbitrate one claim or
1,000 in a single proceeding is no mere detail. . . . [T]he question whether the parties agreed to
classwide arbitration is vastly more consequential than even the gateway question whether they
agreed to arbitrate bilaterally.”); Opalinski v. Robert Half Int'l Inc., 761 F.3d 326, 334 (3d Cir. 2014)
(“Traditional individual arbitration and class arbitration are so distinct that a choice between the two
goes, we believe, to the very type of controversy to be resolved.”) (citing Reed Elsevier).
Third, notwithstanding the well established disposition of the federal courts toward
upholding valid arbitration agreements, it is equally well established that no form of contract may
be construed to force a waiver of an employee’s rights under the FLSA. Morris, 2016 WL 4433080,
at *7 (declaring that “if a contract term in an arbitration agreement ‘operate[s] . . . as a prospective
waiver of a party’s right to pursue statutory remedies for [substantive rights], we would have little
hesitation in condemning the agreement’”) (quoting Mitsubishi Motors Corp. v. Soler ChryslerPlymouth, Inc., 473 U.S. 614, 637 (1985)); Boaz, 725 F.3d at 606-07 (“The limitations provision in
Boaz’s employment agreement operates as a waiver of her FLSA claim. As applied to that claim,
therefore, the provision is invalid.”). That is because rights under the FLSA, unlike those under
other employment discrimination statutes such as the ADEA or Title VII, cannot be waived, since
allowing employees to waive those rights (and thereby permitting employers to induce employees
to do so), would give employers who manage to secure such waivers a substantial economic
advantage over their competitors, and that outcome is the exact result that the FLSA’s uniform wage
regulations were enacted to prevent. Killion, 761 F.3d at 592 (“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.”).
The right to pursue litigation collectively to recover unpaid overtime is no different in this
respect than the right to receive overtime pay, because the employer that absconds from collective
litigation of such claims secures for itself the same unfair competitive advantage that it would by
refusing to pay at the required rates in the first instance. Ibid. (“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.”). The putative ban on proceeding by collective action in any forum is no less an
injury to an employee’s FLSA rights than an attempt to shorten the applicable statute of limitations:
We have little reason to think that the right to participate in a collective action should
be treated any differently than the right to sue within the full time period allowed by
the FLSA. The concern, Boaz explained, is that “an employer could circumvent the
Act’s requirements — and thus gain an advantage over its competitors — by having
its employees waive their rights under the Act.”
Id. at 591 (citation omitted).
As the Sixth Circuit plainly has held, an employer may not abrogate its employee’s rights
under the FLSA by purporting to obtain the employee’s contractual consent to give up those rights.
Boaz, 725 F.3d at 607. Moreover, “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.’” Id. at 606-07
(quoting Floss v. Ryan’s Family Steak Houses, Inc., 211 F.3d 306, 313 (6th Cir. 2000)). Here, the
agreement cannot reasonably be construed to allow for effective vindication of the plaintiffs’
collective claims for unpaid overtime, where it would expressly prohibit them from bringing any
such claims in any forum, arbitral or judicial.
Fourth, the arbitration provision in the defendant’s employment contract, coupled with the
class-waiver provision, is unlawful when applied to claims for collective actions under the FLSA.
Consequently, it is unenforceable under the FAA’s savings clause on a “ground [that] exist[s] at
law or in equity for the revocation of any contract.” 9 U.S.C. § 2; Lewis, 823 F.3d at 1159-60
(noting that “‘[t]o immunize an arbitration agreement from judicial challenge on’ a traditional
ground such as illegality ‘would be to elevate it over other forms of contract — a situation
inconsistent with the “saving clause”’”) (quoting Prima Paint, 388 U.S. at 404 n.12). The illegality
defense is not one that “appl[ies] only to arbitration or . . . derive[s its] meaning from the fact that
an agreement to arbitrate is at issue.” Concepcion, 563 U.S. at 339. The collective action waiver,
although tied to the arbitration provision, is not dependent on it. As the Ninth Circuit explained:
The illegality of the “separate proceedings” term here has nothing to do with
arbitration as a forum. It would equally violate the NLRA [and the FLSA] for [the
defendant] to require its employees to sign a contract requiring the resolution of all
work-related disputes in court and in “separate proceedings.” The same infirmity
would exist if the contract required disputes to be resolved through casting lots, coin
toss, duel, trial by ordeal, or any other dispute resolution mechanism, if the contract
(1) limited resolution to that mechanism and (2) required separate individual
proceedings. The problem with the contract at issue is not that it requires arbitration;
it is that the contract term defeats a substantive federal right to pursue concerted
work-related legal claims. When an illegal provision not targeting arbitration is
found in an arbitration agreement, the FAA treats the contract like any other; the
FAA recognizes a general contract defense of illegality.
Morris, 2016 WL 4433080, at *6-7.
Fifth, the remedy addressing the illegality in this case cannot be to compel the postNovember 2014 opt-in plaintiffs to take their collective action to arbitration. If the agreement
explicitly permitted collective arbitration, then the Court would be compelled to weigh carefully the
federal policy interests in favor of and against compelling the parties to honor the agreement to
arbitrate wage disputes. But that is not the agreement before the Court, and the Court may not
construe it to allow collective arbitration in the absence of express consent to that form of action.
Stolt-Nielsen, 559 U.S. at 684. Kelly and some of its employees signed agreements to arbitrate
individually all disputes they might have over unpaid overtime wages. They did not agree to
arbitrate collective claims, such as were brought in this case. Kelly may not leverage the absence
of consent to “opt out” of collective resolution of the plaintiffs’ unpaid overtime claims, by the
artifice of embedding a purported waiver of the right to collective litigation in an arbitration
agreement covering only individual claims, because the right to proceed collectively under section
216(b) is not one that may be waived by contract, in an arbitration agreement or otherwise. Boaz,
725 F.3d at 606-07.
The provision to require employees to arbitrate FLSA claims in an arbitral forum on an
individual basis is illegal and cannot be enforced. The Court, therefore, will deny the motion to stay
the case and compel arbitration.
III. Motion to Certify Collective Action
The plaintiff and all the other opt-ins move to certify the action conditionally as a collective
action under 29 U.S.C. § 216(b) for “[a]ll current and former hourly home-based customer care
agents who worked for Defendant at any time during the last three years.” Kelly believes that the
proposed class would consist of over 6,000 employees, many of whom work in job positions that
differ from the plaintiff and the identified opt-ins. It argues, therefore, that the case is not
manageable as a collective action because resolution of the thousands of potential opt-in plaintiffs’
claims would require a series of fact-specific, individualized inquiries to analyze the practices and
experiences of each collective action member, on each computer, to assess the log-in, log-out and
technical support time.
The class-based litigation format authorized by 29 U.S.C. § 216(b), labeled a collective
action, “serves an important remedial purpose” by allowing “a plaintiff who has suffered only small
monetary harm [to] join a larger pool of similarly situated plaintiffs” in order to reduce individual
litigation costs and employ judicial resources efficiently. O’Brien v. Ed Donnelly Enters., Inc., 575
F.3d 567, 586 (6th Cir. 2009) (citing Hoffmann-La Roche, 493 U.S. at 170). The statute sets out two
requirements for collective actions: “1) the plaintiffs must actually be ‘similarly situated,’ and 2) all
plaintiffs must signal in writing their affirmative consent to participate in the action.” Comer v. WalMart Stores, Inc., 454 F.3d 544, 546 (6th Cir. 2006). The criteria in such cases generally are
evaluated at various stages of the litigation. Id. at 546-47.
At the notice stage, conditional certification may be given along with judicial
authorization to notify similarly situated employees of the action. Once discovery
has concluded, the district court — with more information on which to base its
decision and thus under a more exacting standard — looks more closely at whether
the members of the class are similarly situated.
Monroe, 815 F.3d at 1008 (citations omitted). “‘[C]onditional certification’ does not produce a class
with an independent legal status, or join additional parties to the action.” Genesis Healthcare, 133
S. Ct. at 1530. “The sole consequence of conditional certification is the sending of court-approved
written notice to employees, who in turn become parties to a collective action only by filing written
consent with the court.” Ibid. (citation omitted). At the notice stage, “the certification is conditional
and by no means final, and the plaintiff must show only that his position is similar, not identical, to
the positions held by the putative class members.” Comer, 454 F.3d at 546-47. “At the second
stage, following discovery, trial courts examine more closely the question of whether particular
members of the class are, in fact, similarly situated.” Id. at 547. The preliminary decision to
authorize notice “need only be based on a modest factual showing,” the “determination is made
using a fairly lenient standard,” and the analysis “typically results in conditional certification of a
representative class.” Ibid.
“[T]he FLSA’s ‘similarly situated’ standard is less demanding than Rule 23’s standard [for
certification of a class action].” Monroe, 815 F.3d at 1009. When evaluating whether potential optin plaintiffs are similarly situated, the Sixth Circuit considers three non-exhaustive factors that many
courts have found relevant: (1) the factual and employment settings of the individual plaintiffs; (2)
the different defenses to which the plaintiffs may be subject on an individual basis; and (3) the
degree of fairness and procedural impact of certifying the action as a collective action. Ibid.
(collecting cases). Proof of a “unified policy” of violations is not required, and employees are
similarly situated where they either (1) suffer from a single, FLSA-violating policy, or (2) have
claims that are unified by common theories of the defendant’s statutory violations, even if the proofs
of those theories may be necessarily individualized and distinct. Ibid. When deciding whether
certification of a collective action is appropriate, “[t]wo governing principles from [the] case law
serve as guides: plaintiffs do not have to be ‘identically situated’ to be similarly situated, and the
FLSA is a remedial statute that should be broadly construed.” Id. at 1011.
The plaintiff easily has made the required “modest factual showing” to establish that a class
of employees exist who have unpaid wage claims against the defendant with a common factual and
legal nexus. He submitted declarations from six employees who worked for the defendant as virtual
call center agents within the applicable limitations period, in the same or materially similar
positions, with similar wage rates and weekly work schedules (all regularly exceeding forty hours
per week). Those declarants all assert that they regularly spent, or still spend, substantially more
than the 10 minutes per day that they are allowed to be paid for system startup and shutdown
activities on tasks required for the performance of their job, which involve starting, stopping,
logging into, and logging out of, numerous computer and telecommunication systems. The plaintiff
also submitted a copy of the defendant’s written policy documenting the 10-minute per day
limitation on time paid for “bootup” and “bootdown” activities, and the declarants all stated that
their work was subject to that policy. That is a sufficient showing to establish that a class of
potential opt-in plaintiffs exists consisting of persons who are similarly situated and have claims that
are sufficiently factually aligned to allow them to proceed in a collective fashion.
The defendants embark on a discursive survey of minutiae relating to the potential plaintiffs’
job descriptions, the nature of the various products for which they provide call center support
services, and a laundry list of different computer and communication programs and systems that they
use. They contend that these variations in the plaintiffs’ circumstances render the dispute
unmanageable as a collective action. But the plaintiffs need not show that they are identically
situated in every detail in order to proceed collectively. Here, the plaintiffs all work in a virtual or
remote call center environment, they all provide the same basic service (answering the phone and
handling questions or complaints from customers of the “AppleCare” warranty and support
program), and they all allege the same basic factual and legal premises in support of their unpaid
overtime claims. The declarants also all contend that they are required to spend substantial amounts
of time — in some cases an hour or more each day — on startup and shutdown tasks that are
required for them to perform their jobs, and that Kelly refuses categorically to pay them for more
than 10 minutes per day for those tasks. Those declarations establish that the employees suffer from
a single, FLSA-violating policy, and they have claims that are unified by common theories of the
defendant’s statutory violations, even though the proofs of those theories may be necessarily
individualized and distinct. See Monroe, 815 F.3d at 1009. In fact the case is nearly on all fours
with the facts in Monroe:
[T]he record reveals that all FTS Technicians work in the same position, have the
same job description, and perform the same job duties: regardless of location, “the
great majority of techs do the same thing day in and day out which is install cable.”
FTS Technicians also are subject to the same timekeeping system (recording of time
by hand) and compensation plan (piece rate).
Key here, the record contains ample evidence of a company-wide policy of requiring
technicians to underreport hours that originated with FTS executives.
Monroe, 815 F.3d at 1011. Here, as in Monroe, the potential opt-in plaintiffs that so far have been
identified all do (or did) the same thing day in and day out, which is answering the phone and
fielding customer support queries. They all are subject to the same hourly pay scheme, they all are
required to submit their time using the defendant’s time reporting systems, and they all are (or were)
subject to the 10-minute time limit policy.
Moreover, at the notice stage, “the certification is conditional and by no means final,” and
the “determination is made using a fairly lenient standard.” Comer, 454 F.3d at 547. That lenient
threshold easily is surpassed here. The defendants’ concerns about exclusion of potential class
members who may be exempt from overtime, and other matters that may suggest partitioning of the
proofs at trial regarding discrete groups within the class, may be addressed by an appropriately
tailored scope of certification after the contours of the class fully are explored through discovery.
That “second stage [of certification], following discovery,” is the time when the Court must
“examine more closely the question of whether particular members of the class are, in fact, similarly
situated,” to determine if any identifiable groups of plaintiffs cannot proceed collectively with the
rest. Ibid.; see also Monroe, 815 F.3d at 1011 (“The district court made its final certification
determination post-trial. With the benefit of the entire trial record — including representative
testimony from technicians covering the several regions in which FTS operates — the court found
that FTS Technicians were similarly situated and a collective action was appropriate.”). The fact
that there may be some cognizable discrepancies between certain groups of plaintiffs is not a basis
for denying certification of a collective action, either at the notice or final stages. Monroe, 815 F.3d
at 1012 (emphasizing that “[t]he definition of similarly situated does not descend to such a level of
The defendant’s contention that the resolution of the case will require a exhaustive “minute
by minute” inquiry into the exact circumstances and work record of each identified opt-in plaintiff
is ill-founded. It is well accepted that no such pedantic ordeal is required either in discovery or at
trial in order to assess efficiently and justly the extent of unpaid wages claimed by the plaintiffs, or
the defendant’s factual defenses to their claims. Adequately developed representative testimony and
statistical surveys may be used to assess, both on a collective and an individual basis, the extent of
an employer’s liability on unpaid overtime claims. Tyson Foods, Inc. v. Bouaphakeo, --- U.S. ---,
136 S. Ct. 1036, 1043-44 (2016); see also Monroe, 815 F.3d at 1017 (“In FLSA cases, the use of
representative testimony to establish liability has long been accepted.”). It is equally well
established that “individualized defenses alone do not warrant decertification where sufficient
common issues or job traits otherwise permit collective litigation.” Monroe, 815 F.3d at 1013.
Where the employer has an adequate opportunity at trial to present testimony to establish its factual
defenses on either an individual or a aggregate basis, collective resolution of unpaid overtime claims
will be appropriate, and damages may be assessed by reliance on either aggregate or individual
calculations for damages. Ibid. The defendant certainly will have its opportunity with the aid of
discovery and in its trial presentation fully to explore the distinctions between groups of the opt-in
plaintiffs that it contends may affect its liability to them.
Finally, it is worth noting that, even at this preliminary stage of the case, the defendant
evidently has had no difficulty defining with some precision the contours of the population of
potential opt-in plaintiffs; it already asserts that it knows all of the job titles under which they
worked, the full retinue of computer and telecommunication systems that are used by different
groups of employees, and that some of those positions may be exempt from the overtime pay
regulations. The defendant’s exhaustive presentation on the details of the potential plaintiffs’
employment circumstances belies its contention that the case is hopelessly intractable as a collective
action, and in fact suggests the opposite.
The motion to certify the class conditionally will be granted.
The provision of Kelly’s post-November 2014 employment agreement that bars class claims
is unenforceable, and the arbitration agreement does not otherwise permit class-claim arbitration.
The plaintiff has established the requisites for collective action certification.
Accordingly, it is ORDERED that the hearing on the defendant’s renewed motion to stay
the action and compel arbitration, and the plaintiff’s motion for conditional certification, is
It is further ORDERED that the defendant’s renewed motion to stay the action and compel
arbitration [dkt. #61] is DENIED.
It is further ORDERED that the plaintiff’s motion for conditional certification of his Fair
Labor Standards Act claim as a collective action [dkt. #7] is GRANTED. The collective action
class is defined as all current and former hourly home-based customer care agents who worked for
Kelly Services, Inc. or its subsidiaries at any time on or after August 24, 2013.
It is further ORDERED that the defendants must furnish to counsel for the plaintiffs the last
known post office and email addresses of the potential members of the described class on or before
September 7, 2016.
It is further ORDERED that the plaintiff shall deliver notice promptly to putative class
members by United States mail, email, or both. The notice shall state that interested persons may
opt in to this litigation on or before November 7, 2016, but not thereafter.
It is further ORDERED that counsel for the parties appear before the Court for a case
management conference on September 8, 2016 at 3:30 p.m.
s/David M. Lawson
DAVID M. LAWSON
United States District Judge
Dated: August 24, 2016
PROOF OF SERVICE
The undersigned certifies that a copy of the foregoing order was served
upon each attorney or party of record herein by electronic means or first
class U.S. mail on August 24, 2016.
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?