Force Arbitration is Bad for Consumers

Earlier this year, the Seventh Circuit Court of Appeals, the federal appellate court for Illinois and several surrounding states, struck down a forced arbitration requirement for employees.

This was an important victory for workers.

In Lewis v. Epic Systems Corporation, the Court considered whether an employer could compel employees to enter into arbitration agreements that limited the employee’s ability to bring wage and hour claims.  Wage and hour claims allow employees to sue to protect their rights to appropriate compensation for overtime and other rights. 

Lewis sued his employer claiming that it had violated the Fair Labor Standards Act by misclassifying him and other technical writers and denying those writers overtime pay.  Epic moved to dismiss Lewis’ claim and force him into arbitration.

In its opinion, the Court sided with Lewis. 

The Court noted that under the Act, employees have a right to “engage in concerted activities for the purpose of collective bargaining or other mutual aid or protection.”  The Act further provides that it “shall be unfair for an employer . . . to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed” under the Act.

The Court also noted the important role that class actions play in protecting rights.  The court held that “Collective, representative, and class legal remedies allow employees to band together and thereby equalize bargaining power.” The Court then ruled that Epic’s forced arbitration provision infringed on the rights of Lewis and other employees.

Forced arbitration provisions are becoming more and more common in our day to day activities.  They are found in all kinds of agreements, from your cell phone contract to nursing home admission agreements, and they are almost always bad for consumers. 

In arbitration, the agreements frequently specify the rules and sometimes the arbitrator or group of arbitrators and always tilt both the rules and the arbitrator in favor of the company and against the consumer.  The Seventh Circuit’s opinion is a win for employees and consumers generally and a strike against these forced arbitration provisions. 

For more information on forced arbitration and how it can impact you, I encourage you to visit http://www.consumeradvocates.org/for-consumers/arbitration; http://www.afj.org/our-work/issues/eliminating-forced-arbitration; or http://www.citizen.org/arbitration. If you need legal guidance, please contact us 24 hours a day. 

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