In Lewis v Epic Systtems Corp. No. 15-2997 (May 26, 2016) W.D. Wisc. the United States 7th Circuit Court of Appeals held that an employer mandated arbitration clause violated the right of employees to engage in collective action under section 7 of the National Labor Relations Act. In this case the employer required employees to submit overtime and pay disputes arising under the Fair Labor Standards Act to arbitration. Employees agreed to this arrangement by continuing to work for the employer. The Plaintiff agreed to the arrangement, but later changed his mind and sought to enforce his FLSA rights in court.
The Court, citing prior cases and National Labor Board decisions, stated that concerted and collective action protected under section 7 of the NLRA includes the right to bring class action lawsuits, or individual lawsuits supported by other employees or representative of other employees. The court found that the Plaintiff’s attempt to litigation his FLSA claims fell within the protections of section 7. Under section 8 of the NLRA the employer is prohibited from interfering with employees’ concerted activities. Consequently the arbitration clause was found to be an illegal contract provision and unenforceable. The court indicated that an arbitration clause may be enforceable if bargained with the union.
The Illinois Public Labor Relations Act contains a similar guarantee of collective and concerted activity as found in section 7 of the NLRA. The Illinois Labor Relations Board often looks to federal law under the NLRA to determine the nature and scope of rights and prohibitions under similar provisions in the two acts. Employers should consult with their labor attorneys before imposing a mandatory arbitration clause for FLSA based wage claims.
