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Class Action Waiver Does Not Bar Unpaid Overtime Class Action Federal Appeals Court Rules

The Federal Arbitration Act was put in place in 1925. It provides a formal, private setting for businesses to hash out their disputes with each other without resorting to the courts. It’s more cost effective for the businesses and saves the courts time and money by preventing them from getting flooded with business disputes.

An arbitration agreement is a clause included in a contract that states that, in the event of a dispute, the two parties will settle their differences in arbitration, rather than in court. These types of agreements have been common in contracts between businesses ever since the FAA was enacted in 1925, but over the past decade or so, more and more companies have been stretching their interpretation of the 1925 federal law to mean a business can force arbitration with anyone they do business with. They have been including arbitration agreements in their contracts with consumers and employees alike, but many advocacy groups have been arguing that forcing individuals to settle their disputes with large companies in arbitration puts the individuals at a severe disadvantage.

To start with, arbitration does not allow for class actions, which means any employee with a small claim does not have the ability to combine their claims with other individuals with similar claims. Many people with small claims who signed arbitration agreements simply forgo pursuing the matter because their claim doesn’t justify the costs of bringing a suit.

Arbitration is also private, so even if an individual does succeed in winning an award to cover their claims from a company, the results of the arbitration are not made public, so others who have been similarly harmed by the same company will have no way of knowing they might have a claim.

The Supreme Court has made a couple different rulings in the past few years that have supported companies’ use of arbitration agreements in just about all their contracts, but a new ruling by a different federal court has the potential to change all that.

Jacob Lewis, an employee of Epic Systems, filed an overtime wage and hour class action lawsuit against the healthcare software provider. His employer filed a motion to have the class action lawsuit dismissed, citing an arbitration agreement Lewis and other employees had signed.

The district court ruled in favor of the class of employees, a decision Epic Systems appealed. The case then went to the Seventh Circuit Court of Appeals, located in Chicago, which upheld the ruling of the district court.

A ruling in favor of the class of employees is a huge victory, not just for this class of plaintiffs, but for employees and employee advocates all over the country. With this ruling, Seventh Circuit Court has established a precedent for other courts to rule against  large companies trying to enforce arbitration agreements with individuals. Employee advocacy groups can now use this most recent ruling by the Seventh Circuit Court to convince other courts to not enforce arbitration agreements companies require their employees to sign. With any luck, this ruling might be the beginning of the end of companies forcing their employees into arbitration agreements.

The Chicago class action and employment law attorneys at the Chicago Overtime Law Center have three decades of experience fighting to help employees who are victims of wage, overtime and tip theft by their employers. We have a team of Chicago unpaid overtime lawyers who concentrate on prosecuting state and nationwide class action lawsuits. Our attorneys work out of Chicago and Oak Brook offices and pursue claims for workers all over the Chicago area including Berwyn and Bollingbrook. We protect unpaid workers who haven’t received overtime throughout the Chicago area including in DuPage, Kendall, Lake, McHenry, Kane and Cook Counties.

Our Oswego and Belvedere overtime and employment lawyers are intimately familiar with the issues that arise during wage claim litigation, and we know the laws that govern overtime cases well. Many employers mis-classify employees as being exempt from overtime laws and pay workers salaries instead of hourly wages in order to avoid paying them overtime. Some employers mistakenly classify employees as exempt and others intentionally do so in order to circumvent the law. In either case, workers do not receive the wages they should, and a lawsuit may be the only way to recover their earned wages.

The Chicago Overtime Law Center is based in Chicago and Oak Brook, and represents clients throughout the country who have unpaid overtime and other employment right claims.