Third Circuit finds that group of employees’ Fair Labor Standards Act claims for unpaid wages and overtime did not require an interpretation of collective bargaining agreements and did not require arbitration pursuant to collective bargaining agreements.

The plaintiffs filed a collective action pursuant to the Fair Labor Standards Act against SEPTA, seeking recovery of unpaid wages and overtime in connection with pre-run reporting responsibilities and pre-trip vehicle safety inspections (which generally take 25 minutes to complete). SEPTA and its operators are bound by three separate collective bargaining agreements, each of which includes a provision concerning compensation for time spent working prior to the morning scheduled start time, and each of which includes grievance procedures requiring that “any dispute involving the application, implementation or interpretation of any of the provisions of the agreements” be subject to arbitration. The trial court dismissed the lawsuit, finding that the resolution of the FLSA claims depends on the interpretation of the collective bargaining agreements and, therefore, the claims must be decided by an arbitrator.

The Third Circuit, however, reversed and held that the operators’ FLSA claims did not require any interpretation of the collective bargaining agreements and did not, as a result, require that the claims be arbitrated. In so holding, the Third Circuit noted that the FLSA guarantees covered employees with specific substantive rights and takes precedence over conflicting provisions in a collectively bargained compensation agreement. Moreover, the Third Circuit further noted that where an employee’s FLSA claim is inevitably intertwined with the interpretation or application of a collective bargaining agreement, an employee must exhaust the provisions of the collective bargaining agreement prior to vindicating his rights in federal court. Despite this analysis, the Third Circuit noted that there was no contention that the operators were owed additional payments under the collective bargaining agreements or that SEPTA violated any provisions of the agreements. To the contrary, the operators asserted (and the Third Circuit agreed) that their FLSA claims were independent of any rights they had pursuant to the collective bargaining agreements and required payment for all “hours worked” under the FLSA.

Case Law Alert, 4th Quarter 2013