On May 26, the Seventh Circuit Court of Appeals issued its decision in Lewis v. Epic Systems Corporation, another case evaluating the NLRB’s position that class-waiver provisions in arbitration agreements violate the National Labor Relations Act.  However, unlike any other Circuit Court that has addressed this issue thus far, the Seventh Circuit agreed with the NLRB’s position, finding that the company’s arbitration agreement was not entitled to enforcement under the Federal Arbitration Act.

Over the last few years, the Board has consistently taken the position that these class-waiver provisions infringe on the rights of employees to engage in concerted activities.  But federal appellate courts (including the Fifth, Second, and Eighth Circuits) have consistently rejected the Board’s reasoning and enforced these types of arbitration agreements.  However, the Seventh Circuit’s decision in Epic Systems has created a circuit split that will likely require intervention by the United States Supreme Court.

Importantly, the Eighth Circuit recently doubled-down on its rejection of the Board’s position.  On June 2, one week after the Seventh Circuit issued its Epic Systems opinion, the Eighth Circuit announced its decision in Cellular Sales of Missouri, LLC v. NLRB.  In once again rejecting the Board’s position, the Eighth Circuit relied on its prior decision in Owen v. Bristol Care, Inc., finding that the company did not violate the NLRA by requiring its employees to waive collective actions, or by enforcing this arbitration agreement.  However, the Eighth Circuit did give “considerable deference” to the Board’s finding that employees could reasonably construe the company’s arbitration agreement to foreclose their right to file charges with the Board.

Several other cases involving the enforceability of class-waiver provisions are pending on appeal in the various federal appellate courts.  The decisions in those cases will reveal whether the outcome in Epic Systems constitutes merely an outlier or represents a larger shift in thinking on this important issue.