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7th Circuit ruling sets up split on class-action waivers

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in Employment Law,Human Resources

A federal appeals court ruled late last month that arbitration agreements prohibiting class-action lawsuits violate the National Labor Relations Act.

The 7th Circuit Court of Appeals became the first circuit to embrace the National Labor Relations Board’s position in D.R. Horton, which held that class-action waivers in arbitration agreements interfere with employees’ rights to engage in concerted activity protected by the NLRA.

In prior arbitration agreement cases, the 2nd, 5th and 8th Circuits have rejected that position.

The 7th Circuit’s May 26 decision in Lewis v. Epic-Systems Corp. (No. 15-2997, 7th Circuit, 2016) sets up a circuit court split that the U.S. Supreme Court may eventually have to settle. The more immediate effect: Arbitration agreement class-action waivers will not be enforced by federal courts in Illinois, Indiana and Wisconsin, the states covered by the 7th Circuit.

In 2012, the NLRB’s D.R. Horton ruling said employees are entitled to form collective or class actions as a form of “concerted activity” protected by Section 7 of the NLRA.

Learn more about that NLRB ruling at www.theHRSpecialist.com/horton.

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