Labor & Employment Law Daily Wrap Up, WAGE-HOUR—CLASS ACTIONS—6th Cir.: Arbitration agreement, properly curtailed, bars litigation of hair stylists’ class wage claims, (Apr 24, 2025)

By Jason Albright, J.D.

“Each stylist, the salon claims, is her own boss….”

Lady Jane’s Haircuts for Men was entitled to compel arbitration of the putative class and collective wage claims of several hair stylists who alleged that the salon misclassified them as independent contractors and owed them unpaid minimum wages and overtime under the FLSA and state law, the Sixth Circuit found. Although the applicable arbitration agreement contained an unlawful cost-shifting provision, there was also a severability clause, and the agreement offered “no handhold for invalidating the entire arbitration clause based on the cost-shifting section.” The better approach, according to the appeals court, was enforcement without the cost-shifting provision (Gavin v. Lady Jane’s Haircuts for Men Holding Company, LLC, No. 24-1509 (6th Cir. Apr. 23, 2025)).

Hair salon and “independent contractor[s].” Lady Jane’s Haircuts for Men, according to the court, is a hair salon. And each of its stylists, the salon claimed, is her own boss, an independent contractor. That relationship, the salon said, allows it to avoid the FLSA’s minimum-wage and overtime-pay requirements, which apply to employees, not independent contractors.

Wage suit. Several stylists disagreed, and they filed a class-action complaint against the salon in federal court under the FLSA and several state laws. Lady Jane’s then moved to dismiss the lawsuit.

Arbitration clause and commercial arbitration rules? Invoking the arbitration clause in its Independent Contractor Agreement with each stylist, Lady Jane’s argued that the claims must proceed before the American Arbitration Association (AAA). Under the arbitration clause, “arbitration proceedings shall be administered by the [AAA] under its Commercial Arbitration Rules.”

Expensive. The AAA’s Commercial Arbitration Rules, in turn, “require the parties to split the costs of arbitration.” The stylists responded that the arbitration agreement was unenforceable because it was unconscionably costly and would require them to pay arbitration costs that exceed their yearly incomes. The district court agreed.

Arbitration agreement severed and enforced. At the same time, however, the district court enforced the severability clause in the contract, curtailing contract’s reference to the Commercial Arbitration Rules, which meant that the AAA arbitration would default to the less costly rules for employment and independent contractor disputes. With the offending clause chopped off, the court enforced the rest of the arbitration agreement and granted Lady Jane’s motion to dismiss.

Appeal. The stylists appealed to the Sixth Circuit, which affirmed.

Offending provision properly curtailed. The appeals court found that the offending cost-shifting condition in the arbitration clause could be severed and the agreement accordingly enforced. “If any provision of this Agreement,” the contract’s severability clause said, “is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions shall nevertheless continue in full force without being impaired or invalidated in any way.” And its “straightforward language applies here,” concluded the appeals court. “‘[W]hen the arbitration agreement at issue includes a severability provision,’ as we have explained, ‘courts should not lightly conclude that a particular provision of an arbitration agreement taints the entire agreement.’”

In short, the agreement “offers no handhold for invalidating the entire arbitration clause based on the cost-shifting section,” said the Sixth Circuit. “The better approach is the district court’s: enforce the arbitration agreement without the cost-shifting provision.”

The case is No. 24-1509.

Judge: Sutton, J.

Attorneys: Jessica Garland (Gupta Wessler) for Jamie Gavin. Nicole LeFave (Littler Mendelson) for Lady Jane's Haircuts for Men Holding Co., LLC.

Companies: Lady Jane's Haircuts for Men Holding Co., LLC

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