Case No. 16-285 | 7th Cir. Decision
Epic Systems Corp. v. Lewis, along with Ernst & Young v. Morris and National Labor Relations Board v. Murphy Oil USA (both cases consolidated with Epic Systems), deals with the relationship between the Federal Arbitration Act (“FAA”) and the National Labor Relations Act (“NRLA”). Epic Systems is a large healthcare software company headquartered in Wisconsin that, like many other businesses, requires employees to resolve employment disputes via arbitration, thus waiving their right to formal court proceedings.
In April 2014, Epic Systems sent an email to employees that contained an arbitration agreement stating that wage and hour claims could only be brought via individual arbitration, and that the employees to whom the email was sent waived “the right to participate in or receive money or any other relief from any class, collective, or representative proceeding.” The email further stated that, so long as an employee continued to work at Epic Systems, they were deemed to have accepted the Arbitration Agreement. Epic Systems provided no option to decline the agreement and still continue to work for the company. Jacob Lewis was one of the employees to whom the email was sent, and registered his agreement with the company.
Lewis later felt that Epic Systems had violated the Fair Labor Standards Act and Wisconsin law by misclassifying technical writers—his position with the company—in a way that unlawfully deprived them of overtime compensation. Lewis, on behalf of himself and his fellow technical writers, sued Epic Systems in Federal Court. Epic Systems moved to dismiss, arguing individual arbitration was Lewis’ only move forward. Lewis countered by arguing that the arbitration clause violated the NLRA and was unenforceable. The district court denied Epic Systems’s Motion to Dismiss, holding that the agreement and waiver were unenforceable because they violated the right of employees to engage in concerted activities under Section Seven of the NLRA. Epic Systems appealed the decision, claiming that the trial court erred in declining to enforce the agreement under the FAA. The U.S. Court of Appeals for the Seventh Circuit affirmed the dismissal and stated that the waiver was also unenforceable under the FAA because the waiver was illegal under the NLRA.
The Court now will hear the case to determine “whether an agreement that requires an employer and an employee to resolve employment-related disputes through individual arbitration, and waive class and collective proceedings, is enforceable under the [FAA], notwithstanding the provisions of the [NLRA].” The outcome will be eagerly watched by employers and employees alike to determine whether the individual arbitration provisions many have long included in employment agreements are enforceable going forward.