Waiver of Rights to Bring Class Actions Invalidated by the National Labor Relations Act

Sara Geenen

Today, the Seventh Circuit Court of Appeals issued a decision in the case Lewis v. Epic Systems Corp. holding that an arbitration provision Epic required its employees to agree to was unenforceable as it restricted employees rights protected by the National Labor Relations Act.

In 2014, Epic notified its employees that, if they chose to remain Epic employees, they were subject to an arbitration agreement that mandated wage-and-hour claims be brought only through individual arbitration so that employees waived “the right to participate in or receive money or any other relief from any class, collective, or representative proceeding.” The Plaintiff, Lewis, received the email and agreed to the provision. He later brought suit in federal court on behalf of himself and others in similar jobs alleging that they were misclassified and should be entitled to overtime pay. Epic responded by moving to dismiss the case in light of the arbitration agreement.

The Seventh Circuit held that a class action for wages is concerted activity protected by section 7 of the National Labor Relations Act. As a result, an arbitration provision that attempts to restrict such activity is an unfair labor practice and is unenforceable.

The decision is good news for employees who have little to no choice when it comes to arbitration agreements hoisted upon them by employers in “exchange” for continued employment because it allows employees to join together to protect their wages and working conditions and to, together, hold their employer accountable for violations of wage and hour law.