PHILADELPHIA - A Pennsylvania federal court has denied a motion to impose sanctions on a Delaware County hospital barring it from requiring that new employees sign arbitration agreements while an employee class action lawsuit goes forward.
U.S. District Judge J. Wendy Beetlestone denied the motion submitted by Nancy Gauzza and Melissa McCloskey requesting that sanctions be imposed on Prospect Holdings and Delaware County Memorial Hospital over what they claim was "unauthorized and materially misleading" communication with new employees. The hospital is being sued for failure to pay hourly employees overtime wages.
The court ruled arguments that the arbitration agreements were “inherently confusing, misleading, coercive, and designed to thwart the rights of employees” to be unsupported. "None of the cases, however, stand precisely for the broad proposition for which they are cited," the court ruled.
The hospital had required new employees to sign arbitration agreements. According to court documents, 968 of their employees signed the arbitration agreement prior to the litigation being filed. Some 119 had signed after the litigation was filed.
Attorneys for Gauzza and McCloskey argued that the agreements "may preclude them from participating" in their lawsuit against the hospital. Gauzza and McCloskey filed a class-action lawsuit against the hospital, claiming it violated the Fair Labor Standards Act and the Pennyslvania Minimum Wage Act.
However, in the Oct. 4 ruling, the court concluded that the hospital could, in fact, have new employees sign the arbitration agreement when they are hired and not be required to disclose the ongoing lawsuit. "This argument is unpersuasive," the court ruled. "It is not inherently abusive for Defendants to continue their pre-existing policy of requiring new hires to sign arbitration agreements as a condition for employment."
Attorneys for Gauzz and McCloskey had argued that the hospital “intentionally omit[s] known, material information about the existence of this lawsuit and the nature of Plaintiffs’ claims.” However, the hospital presented evidence that there was a "standing policy under which they require “all new hire, non-union caregivers at [Delaware County Memorial Hospital] — before they begin working in their roles — to sign [it],” and that this policy was in place for more than a year before" the Gauzz and McCloskey lawsuit, court documents say.
The initial complaints were filed on Aug. 11, 2017 when a Fair Labor Standards Act claim was brought on a collective basis and a Pennsylvania Minimum Wage Act claim was filed as a class action. The complaints were filed “for all hourly employees in Prospect Hospitals during the maximum limitations period who had hands-on patient care responsibilities and worked during one or more unpaid meal breaks without receiving all overtime wages owed for this work," according to the lawsuit.