Forced Arbitration In Employment Contracts Ruled Illegal

Following up on the decision by the CFPB to ban forced arbitration clauses when purchasing financial services, the United States Court of Appeals in the Seventh Circuit ruled that employment contracts that forced employees to resolve disputes via arbitration and also individually, as opposed to allowing the employees to band together as a class.  This forced arbitration was always a divide and conquer strategy against workers as individual workers usually had neither the time or the resources to fight their employers individually, especially when it is clear the arbitration process is stacked in favor of the company.  On the other hand, being able to form a class minimized both those concerns for the individual employee.

This a big win for employees and will hopefully lead to firms treating their employees while providing the employees with a little more clout if they do not do so. The case that resulted in this appeals court decision was actually prompted by a suit brought by an employee of Epic Systems claiming that the company had unfairly denied him and other employees overtime wages. Yes, that’s right – yet another company apparently engaged in systematic wage theft from its employees. Why am I not shocked…

Of course, this appeals court decision is at odds with an earlier appeals court decision in the Fifth Circuit, meaning that the case will probably have to be resolved by the Supreme Court. However, with only eight current members of the Supreme Court due to Republican obstruction, it is possible that an evenly divided court may just let the individual appeals court decisions stand within their own district.  Now, some conservative legal scholars seem to be quite happy with this kind of result, it would seem pretty ridiculous that you would be forced into individual arbitration if you were employed in Louisiana, but not if you were employed in Chicago. Let’s hope that the Court has a ninth justice before this case comes before it.