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Overtime Pay Lawsuits
14 Jan 2016

DENVER — A court has allowed a wage class action suit to go forward instead of requiring plaintiffs to attempt resolution through arbitration despite the existence of an arbitration agreement. The representative plaintiff was a massage school student who filed a class action wage suit on behalf of other similar students against the companies that owned their schools for violations of the Fair Labor Standards Act (FLSA) and Colorado wage and hour laws. The defendants are FCNH Inc., Virginia Massage Therapy Inc., Mid-Atlantic Massage Therapy, Inc., Steiner Education Group Inc., Steiner Leisure Ltd., and SEG CORT LLC. They all run about 31 private massage therapy schools throughout the United States.

Students Deprived of Wages

The plaintiff in this case alleges that the defendants violated FLSA by requiring students at their massage therapy schools to provide massage services to clients without pay as part of their training even though the schools received payments directly from the clients. According to the suit, the plaintiff received no instruction, training, or meaningful monitoring before, during, or after the massages on paying customers.

Under FLSA, trainees will not be considered employees who are entitled to compensation if the following conditions are met:

  • The training is similar to that which would be provided in a vocational school.
  • The training is for the benefit of the trainees or students;
  • The trainees do not displace regular employees, but work under close supervision;
  • The employer providing the training does not get any immediate advantage from the activities of the trainees;
  • The trainees are not entitled to a job at the end of the training period; and
  • The employer and the trainees mutually understand that the trainees are not entitled to wages for training time.

Arbitration Agreement

In this case, the defendants asked the court to dismiss the lawsuit and order the plaintiff to resolve the dispute through arbitration as she agreed to do when she signed an arbitration agreement. However, the court allowed the suit to move forward because the agreement was ambiguous over who would bear the costs of the arbitration process. According to the court, employees would likely not risk arbitration because they would be faced with the possibility of not being reimbursed for arbitrator fees that they would have to pay in advance in order to proceed. The court stated that being at the mercy of the arbitrator’s discretion as to whether to defer or reduce a plaintiff’s share of the arbitration fees does not provide the kind of protection for employees under FLSA. Because the arbitration agreement was not an effective and accessible alternative forum to resolve wage disputes, it allows the students to resort to a lawsuit.

An experienced employment attorney can assist you with the various procedural issues that may arise if you are seeking to file a wage suit against your employer. You should call (855) 754-2795 or complete the Free Unpaid Overtime Case Review form on the top right of this page. Our wage lawyers will conduct a free consultation and help you craft the best strategy to vindicate your wage rights and obtain compensation. Call our seasoned attorneys today.

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