Employers in the past had the ability to thwart an employee’s ability to litigate an employment law related claim in court, whether on their own behalf or as a class-action against the employer. Namely, an Illinois business could have had an arbitration agreement in their employment agreement or employment hand-book that only permitted a disgruntled employee to arbitrate his or her claims before a private arbitrator only and not a federal or state court. This binding arbitration therefore had the ability to stem the expensive tide of class-action wage and other employment based claims against Illinois businesses.
A recent 7th Circuit Court of Appeals case has, for the moment, now stripped an employer’s ability to compel employees to arbitrate employment law claims. In a unanimous decision on May 26, 2016, in Lewis v. Epic Systems Corporation, the United States Court of Appeals for the Seventh Circuit invalidated an individual arbitration agreement waiving class and/or collective actions and held that if such agreements are required by the employer as a condition of continued employment, then they necessarily interfere with employees’ exercise of their Section 7 rights under the National Labor Relations Act to engage in protected concerted activity, irrespective of whether the employees are represented by a union. The Seventh Circuit’s holding directly conflicts with the rulings of the Fifth, Eighth, and Eleventh Circuits on this issue, potentially setting up review by the United States Supreme Court. Although the Lewis decision does not invalidate all individual arbitration agreements in the employment context, the decision applies to employers within the 7th Circuit’s jurisdiction and that have made entering into such agreements a condition of continued employment.
Illinois employers who have adopted individual arbitration agreements should understand that they may not be enforced in the 7th Circuit if they are conditioned on continued employment. Given that other Circuits have disagreed with the Seventh Circuit and have affirmed individual arbitration agreements, the Supreme Court is likely to take up the issue in the 2016-2017 term. Illinois employers should review their employment policies and hand-books as to such arbitration policies in them and consult with an experienced employment law attorney to best guide them on alternative strategies going forward.
Should you have any questions about whether your arbitration agreements in your employment agreements are valid or require further review, or any other law that may affect your business, please contact Waltz, Palmer & Dawson, LLC at (847)253-8800 or contact us online.
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