Is Kellogg the First of Many to Exploit Supreme Court Arbitration Victory?

A group of former Kellogg employees are suing the cereal giant claiming that the company shouldn’t have sued them earlier in 2018. Kellogg sued the employees for suing the company. It’s a bit confusing.

Kellogg targeted the group of former employees for defying their arbitration agreements and in doing so, they announced a clear warning to all their employees: not to sue the company. The complicated case has hearings scheduled for February and will be watched by many as one of the first instances when U.S. employees with grievances seek justice after the recent U.S. Supreme Court precedent that is making waves.

Last year a Kellogg employee out of Nevada filed suit against the company in federal court. The suit was filed on behalf of co-workers who were not provided with federally mandated overtime pay. Kellogg denied the accusations and they were able to successfully petition the judge to move the case to arbitration by bringing up the arbitration agreement signed by the employee that required disputes to be handled in arbitration rather than court.

This type of arbitration agreement usually ends up limiting the rights of employees in comparison to the legal rights they would have in the court system. Arbitration also promotes quick and efficient dispute resolution and discourages litigious lawyers’ fighting for plaintiffs. Others claim that the arbitration process limits transparency and removes the right to sue as a class and takes leverage away from employees seeking resolution.

What arbitration means for employees and employees depends on who you ask, but no one can argue that arbitration agreements have become more and more common at U.S. companies in recent years. Thanks to a series of U.S. Supreme Court rulings that quashed attempts to curb them, companies are embracing them more and more actively.

This past May, in a 5-4 ruling, the high court’s Republican-appointed majority held that arbitration agreements that require workers to sign away rights to file a lawsuit as part of a class can be enforced for workplace disputes. Proponents of arbitration insist that this is extremely detrimental to the enforcement of both federal minimum wage and overtime laws. Months later, Kellogg began filing breach of contract claims against former employees that signed onto the overtime lawsuit alleging violations of continued employment agreements that included an agreement that delayed the firing of workers during corporate restructuring in exchange for arbitration of claims.

Kellogg filed suit alleging that the original plaintiff was in breach of contract because he filed an employment claim in court against the company. Kellogg seeks punitive damages and legal costs. Former employees were shocked by Kellogg’s response and their attorneys have sued the company in return alleging that Kellogg’s claims against their former workers are actually illegal because they constitute retaliation as described in the Fair Labor Standards Act.

If you are a victim of retaliation in the workplace or if you need help obtaining overtime pay from your employer, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.