Tip of the day—don’t overlook arbitration clauses

The Appellate Division, Fourth Department of the New York State Supreme Court recently held an employee could be compelled to arbitrate all issues relating to his employment, including the interpretation of a clause that exempted union-represented employees from the arbitration agreement. Read on to understand how an arbitration clause can keep you out of court.

Background

Guy Basile was hired as a bartender by Crescent Hotels & Resorts, which managed a downtown Syracuse hotel. During his 2016 hiring process, he executed an arbitration agreement that submitted all disputes concerning the agreement—including threshold arbitrability issues of “interpretation, application, enforceability or formation”—to arbitration. In addition to a broad arbitration clause applying to “all disputes, claims or controversies, past present or future,” the arbitration agreement specifically provided for arbitration of wage and hour claims under the Fair Labor Standards Act (FLSA) or analogous state law.

Basile filed suit against Crescent and other defendants on behalf of himself and a putative class of the hotel’s waiters, bartenders, and other employees, alleging unlawful retention of gratuities by the employer in violation of New York Labor Law § 196-b. The complaint, as amended, alleged the hotel added a “service charge” of approximately 20% to bills for weddings, banquets, and other events it hosted but failed to pay the service charges to the wait staff.