In Lewis v. Epic Systems Corporation, No. 15-2997 (May 26, 2016), the Court of Appeals for the Seventh Circuit ruled that an employer-imposed agreement that required that employees bring any wage-and-hour claims against the employer only through individual arbitration, and prohibited collective arbitration or collective action in any other forum, violated the National Labor Relations Act (NLRA), and was unenforceable under the Federal Arbitration Act (FAA).
An employee sued Epic Systems in federal court, contending that it had violated the Fair Labor Standards Act (FLSA) and state law by misclassifying him and fellow employees, and thereby unlawfully deprived them of overtime pay. Epic Systems moved to dismiss the claim and compel individual arbitration pursuant to the agreement. The Plaintiff responded that the arbitration clause violated the NLRA because it interfered with employees’ right to engage in concerted activities for mutual aid and protection and was therefore unenforceable. The district court agreed and denied Epic Systems’ motion.
The Seventh Circuit Court of Appeals upheld the district court’s determination, stating that the agreement ran straight “into the teeth” of the employees’ Section 7 right to engage in concerted activities for the purpose of collective bargaining or other mutual aid or protection, and that contracts that stipulate away employees’ Section 7 rights or otherwise require actions unlawful under the NLRA are unenforceable.