Contrary to holdings by every other federal appeals court to have addressed the issue, the Seventh Circuit Court of Appeals has ruled that an arbitration agreement that bars class-based arbitration restricts the right of employees to engage in protected concerted activity for their “mutual aid and protection,” and violates the National Labor Relations Act (NLRA).
The ruling by the Seventh Circuit in Lewis v. Epic Systems Corp., No. 15-2997 (7th Cir. May 26, 2016), adopts the controversial position of the National Labor Relations Board (NLRB) that arbitration class waivers impermissibly interfere with employee NLRA rights and therefore are unenforceable.
Affirming a federal trial court decision, the Seventh Circuit sidestepped the employer’s contention that the Federal Arbitration Act (FAA) expresses a federal policy favoring arbitration in accordance with the parties’ written agreement, and that forcing employers into class arbitration where they have not agreed to it violates the FAA. Notably, four other federal appeals courts — the Second, Fifth, Eighth, and Ninth — have rejected the NLRB’s and Seventh Circuit’s interpretation.
By creating a so-called “circuit split” among the federal appeals courts, the Seventh Circuit has now teed up the issue of whether arbitration class waivers violate the NLRA for likely Supreme Court review.
The Seventh Circuit’s opinion in Epic Systems is available here.
Members of the Equal Employment Advisory Council (EEAC) can read more here.