New York Securities Fraud Lawyers Blog
Investment News reports that FINRA has authorized its staff to propose a new rule that would ban “collective action” employment claims under the Fair Labor Standards Act or the Age Discrimination in Employment Act from arbitration. This rule would have to be approved by the SEC before it could take effect, but it has potential longterm significance for New York securities lawyers and the American workforce at large.
Collective action claims differ from class actions in that a potential plaintiff must choose to “opt in” to the lawsuit, while class actions have the effect of automatically including covered plaintiffs, but allow individuals to opt out.
FINRA has maintained that its rules do not allow for collective or class actions in its dispute resolution system, but FINRA rules only mention class actions. Federal courts have repeatedly ordered that collective action wage and hour cases be heard in FINRA arbitrations.
A recent such ruling in February may have been the impetus for FINRA to authorize this new rule proposal. FINRA and the SEC have long held the belief that the courts are the superior venue for handling class actions. But with Federal courts closing their doors to these cases, many of these cases had to be refilled in state court and stripped of their FLSA claims.
If passed, this new rule would have the effect of opening up the federal courts to brokers seeking to pursue class action employment claims. Pursuing these actions in courts would provide a boost to employees of major brokerage firms who are seeking various employment claims such as wage-and-and hour issues and overtime violations.