The Northern District of Texas has dismissed a worker’s Fair Labor Standards Act (“FLSA”) claim because it should have been submitted to arbitration.  In Gay v. Manchester Mgmt., LLC, No. 3:18-CV-1378-D., (ND Texas, October 22, 2018), a woman, Gay, signed an agreement to arbitrate all future claims against her employer, Manchester, when she began working for the company.  The binding arbitration agreement specifically included FLSA wage and hour claims.  In addition, the agreement stated any questions regarding its validity, enforceability, or scope must be resolved by an arbitrator.

Later, Gay filed a complaint against Manchester seeking compensation for her unpaid overtime hours with the Northern District of Texas in Dallas.  In response, the woman’s employer sought to dismiss the case based on the agreement Gay signed at the commencement of her employment with the company.  Gay opposed Manchester’s motion to dismiss by arguing the arbitral agreement was unconscionable and illusory.  In addition, the worker asserted her court case should be stayed in lieu of dismissal.

In a memorandum opinion, the federal court first stated it was required to engage in a two-step process when “considering a motion to dismiss claims because they are allegedly subject to binding arbitration.”  Such a determination requires a court to consider:  “(1) whether there is a valid agreement to arbitrate between the parties; and (2) whether the dispute in question falls within the scope of that arbitration agreement.”  Where an arbitration agreement contains a delegation clause that transfers “the court’s power to decide arbitrability questions to the arbitrator,” however, the court stated it was obligated to “refer a claim to arbitration to allow the arbitrator to decide gateway arbitrability issues.”