Applebee’s Is Trying To Limit Workers’ Ability to Sue the Company When Their Wages Are Stolen

Bruce Vail June 9, 2015

Class action lawsuits are often the only way non-union workers can get the money owed to them by cheating bosses. (Anthony92931 / Wikimedia Commons)

Work­ers in the restau­rant indus­try are rou­tine­ly the vic­tims of wage theft. For work­ers with­out a union, suing the com­pa­ny is one of the few ways to recov­er those wages. But a legal fight led by the restau­rant chain Applebee’s against the Nation­al Labor Rela­tions Board is aim­ing to fur­ther lim­it work­ers’ abil­i­ty to sue the com­pa­ny over dis­putes on the job. 

The Rose Group, a Penn­syl­va­nia-based fran­chise oper­a­tor of 56 Applebee’s restau­rants in sev­er­al states, is fight­ing a recent rul­ing by a labor board judge that the com­pa­ny vio­lat­ed the rights of its work­ers by forc­ing them to sign agree­ments not to sue, but instead to set­tle dis­putes in pri­vate arbi­tra­tion. In an April 22 deci­sion, Admin­is­tra­tive Law Judge Susan A. Fly­nn found that Rose Group had engaged in an ille­gal unfair labor prac­tice by forc­ing work­ers to sign a Dis­pute Res­o­lu­tion Pro­gram and Agree­ment” that restricts their rights to join class action law­suits against Applebee’s.

Rose Group attor­ney Thomas Lewis tells In These Times he is chal­leng­ing the rul­ing before the full NLRB and, if he los­es there, will take the case on to fed­er­al court. We’re con­fi­dent the court will sup­port us” against the NLRB, he says.

The abil­i­ty of employ­ees to file such suits is far from an obscure legal issue, accord­ing to Cather­ine Ruck­elshaus, Senior Attor­ney of the Nation­al Employ­ment Law Project. Wage theft vio­la­tions of the fed­er­al Fair Labor Stan­dards Act are rife in the fran­chise restau­rant indus­try, she says, and class action law­suits are often the only way non-union work­ers can get the mon­ey owed to them by cheat­ing bosses.

Com­mon com­plaints are vio­la­tions of the min­i­mum wage law and fail­ure to pay prop­er over­time. A sep­a­rate Applebee’s fran­chise oper­a­tor in New York is cur­rent­ly fac­ing a class action suit cov­er­ing thou­sands of work­ers for pre­cise­ly these sorts of vio­la­tions, and a sim­i­lar case in Chica­go was recent­ly set­tled in favor of the workers.

The Rose Group case began in August 2014 when serv­er Jeff Arm­strong filed a com­plaint with the NLRB. He had been employed at the Applebee’s in Rehoboth Beach, Delaware, for about a year and his com­plaint stat­ed that he had been unfair­ly fired and that the restaurant’s manda­to­ry arbi­tra­tion pol­i­cy was ille­gal. While con­sid­er­ing his com­plaint, the NLRB threw out his claim of unfair dis­missal, but agreed with him that the arbi­tra­tion pol­i­cy vio­lat­ed his rights as a work­er to engage in col­lec­tive action. 

I got my job back and I got the poli­cies changed, so I feel like I did pret­ty well,” Arm­strong said short­ly after resum­ing work at Applebee’s. Arm­strong, a qui­et labor rights cham­pi­on fea­tured in a 2012 In These Times arti­cle about work­ers push­ing back against the restric­tive social media poli­cies of super­mar­ket giant Ahold USA, returned to work at Applebee’s last month short­ly after Judge Flynn’s deci­sion. He reports that he has been wel­comed back on the job with no problems.

But Lewis, the Rose Group attor­ney with the New Jer­sey-based firm Stevens & Lee, says the legal nuances of his case may prove a bit more com­pli­cat­ed. NLRB pro­ce­dures give the Rose Group the right to have Judge Flynn’s deci­sion reviewed by the full five-mem­ber Board, he says, and the law also allows Rose Group to chal­lenge any full board deci­sions in fed­er­al court. Rose Group intends to fight the NLRB all the way, he says.

Lewis’s con­fi­dence is like­ly based, in part, on a 2013 deci­sion in favor of The Rose Group by a fed­er­al judge in Penn­syl­va­nia. Accord­ing to a con­tem­po­rary report in the on-line legal news ser­vice Law360:

A Penn­syl­va­nia fed­er­al judge…enforced the com­pa­ny’s arbi­tra­tion agree­ment with its employ­ees, reluc­tant­ly say­ing that while such indi­vid­ual arbi­tra­tion deals may be unap­pe­tiz­ing,” they are legal­ly enforceable.

U.S. Dis­trict Judge Berle M. Schiller voiced con­cern in his mem­o­ran­dum opin­ion … that The Rose Group had forced work­ers to sign away their right to lit­i­gate dis­putes in exchange for employ­ment, but he ulti­mate­ly deter­mined that plain­tiff Charles Wal­ton could­n’t show the arbi­tra­tion agree­ment was both pro­ce­du­ral­ly and sub­stan­tive­ly unconscionable.

As unap­pe­tiz­ing as the result may be, the state of the law com­pels this court to grant defendant’s motion and stay these pro­ceed­ings so that Wal­ton can arbi­trate his claims on an indi­vid­ual basis against defen­dant,” the opin­ion said.

But Judge Schiller made it clear the rul­ing did­n’t sit well with him, and he not­ed that the increas­ing use of these over­ar­ch­ing arbi­tra­tion claus­es and class action waivers is often unjust.

Judge Schiller’s final deci­sion notwith­stand­ing, oth­er judges have allowed class action wage claims against Applebee’s. In 2014, a fed­er­al judge in New York gave the green light to a class action suit against a fran­chise oper­a­tor who has employed thou­sands of work­ers in New York City and its sub­urbs. A sim­i­lar suit orig­i­nal­ly dat­ing back to 2006 suit was set­tled last year when a fed­er­al judge in Chica­go approved an agree­ment worth $2.7 mil­lion to reim­burse work­ers for lost wages at a now bank­rupt fran­chise oper­a­tor there. Also dat­ing back to 2006 was the case of Fast v. Applebee’s Inter­na­tion­al, which was unusu­al in the sense that work­ers won a case against the par­ent com­pa­ny itself, rather than one of the fran­chise operators.

Those cas­es, as well as oth­ers, all involve claims that Applebee’s or its fran­chise oper­a­tors vio­lat­ed the fed­er­al Fair Labor Stan­dards Act by cheat­ing work­ers out of their fair wages.

Accord­ing the offi­cial web­site for Applebee’s Ser­vices, Inc., there are over 1,990 Apple­bee’s restau­rants oper­at­ing sys­tem-wide in 49 states, 15 inter­na­tion­al coun­tries and one U.S. ter­ri­to­ry. The Apple­bee’s sys­tem employs approx­i­mate­ly 28,000 employ­ees com­pa­ny-wide.” The par­ent com­pa­ny did not respond to In These Times request for comment.

Ruck­elshaus of the Nation­al Employ­ment Law Project pre­dicts that the full NLRB will rule against The Rose Group, because Judge Flynn’s rul­ing in con­sis­tent the Board’s 2012 D.R. Hor­ton deci­sion, a con­tro­ver­sial case that favored work­ers over boss­es in cas­es involv­ing manda­to­ry arbi­tra­tion. But fed­er­al courts have often sided with boss­es, cit­ing the Fed­er­al Arbi­tra­tion Act (FAA), a Bill Clin­ton-era law designed to encour­age pri­vate arbi­tra­tion over lengthy and expen­sive court proceedings.

The con­flict between work­ers rights and the FAA may ulti­mate­ly wind up at the Supreme Court some­time in the future, Ruck­elshaus says. Mean­while, most non-union restau­rant work­ers will be left to fight their bat­tles with bad boss­es on their own.

Bruce Vail is a Bal­ti­more-based free­lance writer with decades of expe­ri­ence cov­er­ing labor and busi­ness sto­ries for news­pa­pers, mag­a­zines and new media. He was a reporter for Bloomberg BNA’s Dai­ly Labor Report, cov­er­ing col­lec­tive bar­gain­ing issues in a wide range of indus­tries, and a mar­itime indus­try reporter and edi­tor for the Jour­nal of Com­merce, serv­ing both in the newspaper’s New York City head­quar­ters and in the Wash­ing­ton, D.C. bureau.
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