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Sixth Circuit Decision is Win for Workers: Courts, Not Arbitrators, To Decide Whether There is Valid Arbitration Agreement and Burden to Prove Agreement Is on Employers.

Niara Stitt, Law Clerk at Freking Myers & Reul

On April 9, the Sixth Circuit Court of Appeals which covers federal courts in Ohio, Kentucky, Tennessee, and Michigan, ruled in favor of employees facing arbitration demands by their employers. In Taylor v. Pilot Corporation, the class-action plaintiffs brought suit, arguing that their employer violated overtime provisions of the Fair Labor Standards Act (FLSA).

During the lawsuit, the employees filed a motion asking the trial court to require Pilot to turn over information about the date on which each employee was hired. In response, Pilot filed a motion asking the court to force the employees to submit their claims to arbitration. Pilot argued that all the employees had signed arbitration agreements the day they were hired. Arbitration, an alternative dispute resolution format, often favors employers.

The employees again asked the court to make Pilot provide their employment date information to their lawyers so that any employees who did not actually sign the Arbitration Agreement would not be forced to arbitrate. The trial court sided with the employees, requiring Pilot to provide the information.

On the appeal by Pilot, the Sixth Circuit said that it is up to the courts to decide whether the employees entered into an enforceable arbitration agreement before making them go to arbitration. Importantly, the court said that the burden to prove that there was an agreement to arbitrate is on the employer.

The Sixth Circuit ultimately dismissed the appeal brought by Pilot. Because the appeal was based on a discovery issue— where the parties disagreed about what information Pilot had to give to the lawyers for the employees— the Court said the appeal was not from a final decision on the question of whether Pilot could force the employees to go to arbitration. In other words, it was not proper for the Court to hear Pilot’s appeal at this stage of the case.

This case should encourage workers to demand information about their commitment to arbitration. If an employer refuses to share this information, a lawyers for the employee can file a discovery motion asking the court to make the employer turn over this information. When an employer tries to force a worker into arbitration, it is up to the employer to prove to the court that there is a valid agreement to arbitrate entered into by the employee.

For more information on arbitration and its impact on workers, click here.

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