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On April 2, 2014, Epic Systems Corp. sent an email to some employees that contained an arbitration agreement mandating that wage-and-hour claims be brought only through individual arbitration and waiving employees' right to participate in class actions, according to the 7th U.S. Circuit Court of Appeals ruling in Jacob Lewis v. Epic Systems Corp.
“Epic gave employees no option to decide if they wanted to keep their jobs,” the three-member appeals court panel ruled unanimously in late May.
One employee, technical writer Jacob Lewis, initially signed the agreement, but later had a dispute with Epic and sued the company federal court, alleging the health care software firm violated the Fair Labor Standards Act by misclassifying him and fellow workers and depriving them of overtime pay.
When Epic moved to dismiss Mr. Lewis' claim and compel individual arbitration, he responded that the arbitration clause violated the National Labor Relations Act because it interfered with employees' rights to engage in concerted activities and was unenforceable. The federal court agreed and denied Epic's motion, which the Verona, Wisconsin-based firm appealed.
But the appeals court upheld the lower court. The National Labor Relations Board has interpreted the NLRA “to prohibit employers from making agreements with individual employees barring access to class or collective remedies,” and Epic's arbitration provision impinges on rights provided by the NLRA, the appeals court ruled.
The attorney for Epic could not be reached for comment on any plans to appeal the ruling to the U.S. Supreme Court.
An appeals court ruling upholding the use of class action waivers in arbitration agreements is creating confusion for employers because it conflicts with other appeals courts on the issue.