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NLRB Bans Class Action Waivers for Unpaid Overtime Claims

The National Labor Relations Board (NLRB) is a board formed by the federal government designed to protect employees working in the United States. The NLRB can form opinions and weigh in on various legal matters, but it does not have any jurisdiction and it has limited power to enforce any of its decisions.

Recently, the NLRB ruled that employment agreements that require workers to settle any disputes with their employer in arbitration are illegal and should be unenforceable in a court of law. Because the arbitration system is not equipped to handle class action or collective action lawsuits, the NLRB argues arbitration agreements deny employees their right to class action lawsuits, which is granted them in Section 7 of the National Labor Relations Act.

The Fifth Circuit Court has largely overturned the past few rulings made by the NLRB and allowed arbitration agreements between companies and their employees to stand. But the Seventh Circuit Court recently made a ruling that’s in line with what the NLRB has been saying all along. The Seventh Circuit Court ruled that Epic Systems’s arbitration agreement with their employees unfairly benefited Epic Systems and denied the employees their rights under the law.

The NLRB is using that ruling to back up its arguments for another court that is currently handling a similar matter. Price-Simms Inc. is an automobile company that sells and services vehicles in Sunnyvale, California. One employee, Richard Vogel, filed a wage and hour class action lawsuit against Price-Simms and was forced to arbitrate the matter individually per the arbitration agreement he had signed. Price-Simms allegedly requires all its workers to sign an employment contract containing an arbitration agreement as a condition of employment. Vogel then filed charges of unfair labor practice against his employer over the arbitration agreement.

The NLRB ruled in Vogel’s favor back in November 2015. Price-Simms appealed the ruling and now the case will be heard by a D.C. Circuit Court. The NLRB has filed a brief that urges the court to rule against the arbitration agreements included in Price-Simms’s employment contracts. In its brief, the NLRB cited the recent ruling by the Seventh Circuit Court that supports the NLRB’s position that arbitration agreements are unfairly restrictive to employees. In its ruling, the appellate court noted Epic Systems could not use the Federal Arbitration Act to enforce an arbitration agreement with its employees because such an agreement directly violates the right to class actions as granted to employees in the National Labor Relations Act.

The recent ruling by the Seventh Circuit Court is a huge victory for employees and employee advocates all over the country, including the NLRB. By directly contradicting previous rulings by the Fifth Circuit Court, as well as other appellate courts, the Seventh Circuit has provided an opening for other employees fighting against unfair arbitration agreements contained in their employment contracts. The National Labor Relations Board now has legal precedent it can point to as a reason why other courts should rule that arbitration agreements with employees are in direct violation of federal law and should not be upheld in the courts.

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 Evanston and Waukegan 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.