Big Banks Fail to Compel Arbitration in Major New York Employment Law Case

When most people think of New York employment law violations, they conjure up images of bus boys being forced to work overtime without getting paid… or freelance employees being misclassified as independent contractors. But big investment banks can make big mistakes, too, and violate the Fair Labor Standards Act (FLSA) and New York Labor Law (NYLL).

Of course, when big banks stand accused of such violations, they fight vigorously.

Consider a current case, in which plaintiffs argued that several big banks violated their employment rights. The banks sought to stop a potential class action by trying to compel a procedure known as arbitration. The plaintiffs did not want to be limited to arbitration, since that would have reduced their leverage. They wanted to preserve their opportunity to file a class action lawsuit.

When Do FINRA Rules Compel Arbitration?

Without getting too into the “legal muckety-muck,” this case led to an analysis of the rules of the Financial Industry Regulatory Authority (FINRA). The court faced a key question: do FINRA rules bind certain parties to use arbitration over class action? The U.S. Supreme Court (and some Circuit Courts) have issued rulings about when and how FLSA claims should be arbitrated… and when they should be allowed to proceed as class actions. But there was no precise precedent to follow in this case. So the court chose to follow language in the Federal Arbitration Act (FAA), which supported the plaintiffs’ view that there was no need to compel arbitration. Effectively, the FAA should preempt FINRA in this case.

That analysis may sound quite technical. But small technicalities in employment law cases can profoundly affect the lives and destinies of plaintiffs (and defendants).

Whether you’re struggling with a boss who won’t pay you fairly or trying to navigate a complex HR department that won’t listen to your complaints, you may feel overwhelmed.

So what can you do?

The short answer is: get help. Connect with one of New York’s most experienced and well-known employment law firms, Joseph & Kirschenbaum, today for a free and confidential consultation: (212) 688-5640. Or you can email us at info@jhllp.com.