Surprise Ruling In Favor Of Labor Opens Up New Options For Workers Looking To Sue Their Employers

A lawsuit involving a digital medical records company could be huge for economic justice. CREDIT: SHUTTERSTOCK
A lawsuit involving a digital medical records company could be huge for economic justice. CREDIT: SHUTTERSTOCK

Workers cannot be prohibited from bringing class-action lawsuits against their employers, an appeals court panel ruled Thursday, even if the boss makes them sign away that right in order to keep their job.

The case involves Epic Systems, one of the largest medical software companies in America. Founded in the late 1970s, the billion-dollar business only recently began making workers agree to so-called “forced arbitration” clauses in which they forswear their rights to go to court either individually or collectively.

By doing so, the judges found, Epic violated its workers’ federal labor rights to take collective action, making the clauses unenforceable.

The decision breaks a pattern of appeals courts repeatedly validating such forced arbitration clauses, bringing America closer to a reckoning over a deep and pervasive imbalance of power. Corporations of all kinds could soon lose their ability to tie the little guy’s hands and effectively guarantee they’ll never face serious legal challenges to potentially abusive business practices. In addition to Thursday’s rejection of arbitration clauses in the workplace, federal regulators are also working to annihilate them from all consumer finance products — the other major area of the law where they hold sway. is one of the titans of the digital medical systems industry. The Wisconsin-based company has enjoyed the kind of media buzz that’s become cliche out in Silicon Valley: a lighthearted workplace culture with freewheeling, well-paid young staff that’s revolutionizing the world for everyone else’s benefit.


But the past couple years have been tough for Epic. It missed out on a multi-billion-dollar contract to build health records for the Pentagon and had another large deal with Veterans Affairs suspended recently.

And in late 2013, a group of workers sued the company demanding back pay and arguing they were eligible for overtime. At that point, Epic didn’t require workers to waive their courtroom rights.

Epic only imposed its forced-arbitration clause for employees in April 2014, sending an email notifying workers that if they continued in their positions they agreed to be bound by the new contract conditions. Lewis’ lawyers say he would have been fired if he had tried to refuse the arbitration clause. The firm later paid $5.4 million to settle the 2013 lawsuit that appeared to have prompted the new arbitration clauses now at issue in 2016.

Thursday’s ruling doesn’t necessarily mean the workers suing Epic today will get a similar payday. Their claims for overtime pay will ultimately hinge on a different corner of the employment law landscape, involving the exact nature of their duties and specific statutory language about what kinds of salaried workers do and don’t have a right to overtime.

But even if Epic’s writers do not ultimately score a big payday, they have already helped workers across the country. The legal ground underneath forced arbitration clauses just started to quake. Thursday, American bosses were undefeated in the appeals court system on forced arbitration clauses with their workers, despite years of effort from the National Labor Relations Board (NLRB). The agency argues that taking away workers’ right to sue as a class over workplace abuses is a direct violation of labor law, which protects collective action whether or not the workers have a union. But the past few years have been whack-a-mole: The board bangs a company for depriving workers of collective action rights through arbitration, the company appeals, and judges take the company’s side.


By breaking that pattern on Thursday, the Seventh Circuit created a dispute within the appeals court system — one of the very things the Supreme Court exists to address. The decision means that Epic can either yield and take the narrower questions of overtime law to court as Lewis wants, or ask the Supreme Court to vindicate their forced-arbitration clauses.

The outcome of such a high-court showdown over employment contract arbitration clauses is hard to guess. Some employment lawyers write derisively about the NLRB’s legal argument that class-action suits are a protected form of substantive collective action. Analysts who are more friendly to labor interests see a lot of good reasons for the Supreme Court to validate the agency’s interpretation of how labor and arbitration law intersect here. if the court were to take on the case before a ninth justice is seated, and come back in a 4–4 tie, then the Seventh Circuit ruling striking down employment arbitration clauses would carry the same precedential weight as the previous anti-worker rulings in other parts of the country. That would make it easier for the NLRB to keep going after bosses who threaten to take away somebody’s job unless they sign away their right to go to court.

At the same time the legal system weighs the future of workplace arbitration rules, the Consumer Financial Protection Bureau (CFPB) is getting ready to wipe out the other main category of arbitration clauses. Sen. Elizabeth Warren’s (D-MA) brainchild announced this month that it intends to outright ban forced arbitration language from all consumer financial products, from credit cards to checking accounts to nearly every type of loan a person can take out.

The CFPB’s action alone would affect tens of millions of Americans. If combined with a potential unraveling of workplace arbitration rules, there could soon be a staggering rebound in the sheer number of people who stand a chance of exposing and punishing corporate wrongdoing.