In the case of Ely v. East Coast Restaurant, Nicole Ely had filed a lawsuit against East Coast Restaurants and Night Clubs (ECRNC), Michael Rose, Rose Enterprises, and Matthew Rose. Ely worked as a dancer at the Gold Club (operated by ECRNC and Rose Enterprises) and alleged that she was not paid minimum wage, or overtime wages, and had tips taken from her.
Ely also claimed that she was misclassified as an independent contractor and had to rely solely on customer tips that she was required to share with other workers and management. She brought this lawsuit on behalf of herself and other similarly situated individuals. Gold Club moved to dismiss the claims, arguing that an arbitration agreement signed by Ely and other employees required the solution of disputes through arbitration. Ely objected, contending that the arbitration agreement was unreasonable.
Gold Club argued that the agreement should be considered and that the court should defer to the arbitrator to decide if it should be enforced. However, Ely asserted that the court should decide whether the agreement was valid and enforceable before referring the dispute to arbitration.
The court had agreed with Gold Club’s request to settle the dispute through arbitration instead of proceeding with a trial. As a result, Ely’s claims were dismissed, but could still be pursued through arbitration.
Key lessons from this case:
- Arbitration is the process of solving a dispute between parties by helping them to agree to an acceptable solution instead of going to trial.
- Arbitration agreements may be used by employers, but their enforceability can be challenged based on fairness.
- Misclassified employees should identify their employment details and rights to overtime compensation or tips.
If you want to know more about overtime regulations, read our guide on New Hampshire Overtime Laws.
