Akhter v. Compass Group USA, Inc.

Background

Ruma Akhter sued Compass Group USA, Inc., her former employer, alleging violations of the Fair Labor Standards Act and New York Labor Law based on Compass’s alleged failure to pay overtime wages. Compass moved to compel arbitration, meaning it asked the court to require Akhter to resolve the dispute through arbitration instead of in court.

Akhter conceded that she electronically signed the arbitration agreement and did not dispute that the agreement covered her claims if it was valid and enforceable. She opposed arbitration on two grounds.

The Handbook Disclaimer

Akhter argued that the arbitration agreement was unenforceable because she signed it on the same day as a receipt acknowledging the employee handbook, and the handbook contained a disclaimer stating that it was not a contract and did not create an employment agreement.

The court rejected that argument. It found that the arbitration agreement was a separate, single-page document with no references to the handbook. Directly above Akhter’s signature, the agreement stated that she had read, understood, and agreed to be legally bound by its terms, including the requirement to arbitrate disputes arising from her employment. An electronic log also showed that Akhter signed the arbitration agreement before the handbook and receipt were generated and signed. The court relied on a recent Second Circuit decision involving similar circumstances and distinguished cases in which the arbitration agreement had actually been incorporated into a handbook containing a disclaimer.

The Opt-Out Period

Akhter also argued that the agreement’s 30-day opt-out period had not begun because Compass had not signed the agreement. The court rejected that argument as well. Applying New York law, the court explained that an arbitration agreement does not need to be signed by the employer to be enforceable against the employee. The agreement contained no signature line for Compass, required only the employee’s signature, and instructed that the form be kept in the employee’s personnel file.

The court found no evidence that either party intended not to be bound until Compass countersigned the agreement. It concluded that Akhter became bound when she signed the agreement and agreed to its terms. Because she did not dispute that she failed to opt out within 30 days, the court held that the opt-out period had expired.

Disposition

Judge Jesse M. Furman granted Compass’s motion to compel arbitration. The court also granted Compass’s request to stay the federal action while arbitration takes place. It directed the Clerk of Court to administratively close the case, without prejudice to either side moving by letter within 30 days after the arbitration proceedings conclude to reopen the case. The order did not decide the underlying overtime claims.