The War on Employment Arbitration

By Andy Volin

The Seventh Circuit just created a split in the Federal Courts of Appeals by ruling an employment arbitration provision that did not permit arbitration of collective claims was not enforceable because it violated the National Labor Relations Act.  Lewis v. Epic Systems Corp., No. 15-2997 (7th Cir. May 26, 2016). This is the first federal appellate court that has agreed with the decision by the National Labor Relations Board in the D.R. Horton case (Read our blog post here). This decision only affects workers in states in by the Seventh Circuit – Illinois, Indiana, and Wisconsin. Epic Systems conflicts with decisions by several other Federal Circuits – the Fifth and Eighth Circuits. This makes it more likely that the Supreme Court will have to resolve the split in the circuits.

The Epic Systems decision is significant in several respects, but it should not be read as ending the ability of employers to require arbitration of employment claims, even in the 7th Circuit. Employers can still require employees to arbitrate most types of common employment claims, including wage and hour claims. But if a dispute arises in Illinois, Indiana or Wisconsin, the courts won’t enforce an arbitration clause with a class action waiver, at least until the Supreme Court takes the issue on.