A federal appeals court in Chicago ruled that electronic health record vendor Epic Systems Corp. violated its employees' rights by trying to require them to seek arbitration in state and federal wage-and-hour law claims and other disputes.
The three-judge panel supported a lower court ruling in the case, denying a motion by the Verona, Wis.,-based company to compel individual arbitration in a claim by technical writer Jacob Lewis for overtime pay.
In a 22-page ruling Thursday, Chief Judge Diane Wood of the 7th U.S. Circuit Court of Appeals concluded that the requirement was a violation of the 1935 National Labor Relations Act (NLRA). The National Labor Relations Board, Wood wrote, has “from its earliest days held that employer-imposed, individual agreements” that try to restrict employee rights under the NLRA “are unenforceable.”
Further, Wood wrote, employees may engage in concerted activity protected under the NLRA with or without a union.
The judge rejected Epic's argument that Congress could not have intended the labor statute to protect workers' rights to class-action remedies because the trial rule for such actions didn't exist at the time.
“There is no reason to think that Congress intended the NLRA to protect only 'concerted activities' that were available at the time of the NLRA's enactment,” she wrote.
The appeals court also didn't buy the argument Epic put forth based on a 2013 ruling in the 5th Circuit that stated employer-imposed arbitration clauses could trump the NLRA.
Wood found “several problems with this logic,” noting that the NLRA encourages arbitration and that Epic could avail itself of this preference “if it were included in a collective bargaining agreement” with its employees or merely included collective arbitration in its employee agreement.
The clash of opinions may set up an appeal to the U.S. Supreme Court to settle the issue.
An Epic spokesman declined to comment.
Lewis' attorney, Caitlin Madden, of Hawks Quindel, said several other of Lewis' former salaried Epic colleagues (he's no longer employed there) have signed on to his class action suit, which has been halted pending Epic's appeal. “We think there are a few hundred that may be affected by this specific case,” Madden said. The suit has not proceeded far enough for her to learn Epic's rationale for declaring these workers as not subject to wage and hour laws, she said. “We just know they were paid a salary regardless of the number of hours (they) worked.” Because the other judges in the 7th Circuit declined to hear the case “en banc” or as a group, Epic's appeal would need to go to the U.S. Supreme Court. That appeal would need to be filed within 90 days, but there's no word yet on whether Epic intends to go to the high court, she said.
The National Labor Relations Board filed a "friend of the court" brief on behalf of Lewis.
The healthcare industry is already facing a sea change in labor law from a new Obama administration Department of Labor rule that would make millions of full-time healthcare workers eligible for overtime.
Under the NLRA, employees are guaranteed not only the right to join labor unions and engage in collective bargaining, but also “to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” Attempts by employers to “interfere with, restrain or coerce employees in the exercise” are considered unfair labor practices, Wood said.
On April 2, 2014, Epic sent an e-mail to some of its employees containing an arbitration agreement mandating that wage-and-hour claims and some other disputes could be brought against the company only through individual arbitration, a summary of the case's history filed in court records shows.
In addition, under the Epic agreement, employees waived “the right to participate in, or receive money or any other relief from any class, collective or representative proceeding.”
Just in case the so-called “waiver of class and collective claims” was deemed unenforceable, the Epic agreement said “any claim brought on a class, collective or representative action basis must be filed in a court of competent jurisdiction.”
According to the appeals court, the agreement stipulated that employees were “deemed to have accepted” the agreement if they continued working at Epic. Thus, according to the court, “Epic gave employees no option to decline if they wanted to keep their jobs.”
Employees were to acknowledge they'd seen the agreement and accepted its terms by clicking on two respective buttons in the e-mail.
Lewis followed those instructions, but later had a dispute with Epic and, instead of arbitrating, sued in federal court, alleging Epic violated the Fair Labor Standards Act and Wisconsin law for misclassifying him and his fellow technical writers, illegally depriving them of overtime pay, the court summary said.