WASHINGTON — The U.S. Supreme Court will decide whether employers can require workers to sign arbitration agreements that prevent them from pursuing group claims in court, including a case involving Verona-based Epic Systems.
The justices have agreed to consider an issue affecting millions of workers who have signed forms waiving rights to bring class-action lawsuits over unpaid overtime, wage disputes and other workplace clashes. Businesses have increasingly used the agreements to limit exposure to large damage awards.
The National Labor Relations Board says such agreements conflict with labor laws giving workers the right to band together to complain about workplace conditions.
Lower courts have split over the issue. The high court will consider three cases — two in which appeals courts ruled that such agreements can’t be enforced and a third in which the appeals court said they are valid.
One case involves a form that retail gas station owner Murphy Oil USA required its workers to sign, agreeing that any employment disputes would be resolved individually through binding arbitration. The agreement prevents workers from bringing any legal action as part of a group.
An Alabama employee, Sheila Hobson, signed the agreement when she applied to work for Murphy Oil in 2008. But Hobson and three other workers later sued the company in federal court for failing to pay overtime to them and other employees.
When Murphy Oil tried to enforce the arbitration agreement, Hobson filed an unfair labor practice with the NLRB. The board ruled against the company, saying the agreement violated worker’s rights under the National Labor Relations Act. Federal law has long protected the right of workers to join together to protest workplace conditions, including through litigation.
But a federal appeals court in New Orleans said the agreement was enforceable under a different law, the Federal Arbitration Act.
In a second case, the federal appeals court in San Francisco sided with two employees who filed a class-action lawsuit against the accounting firm Ernst & Young. The court ruled that the lawsuit seeking unpaid overtime wages could proceed even though the workers had signed arbitration agreements as a condition of employment.
The third case also involves an overtime pay dispute by an employee at Epic Systems, the health care software provider. The federal appeals court in Chicago ruled that the worker could file a class-action lawsuit and declared an arbitration agreement he signed unenforceable.
Two similar suits have been filed against Epic. One, filed by technical writers no longer at Epic as of April 2014, may be near settlement. A stipulation filed last week by lawyers for Epic and the technical writers asked for the case to be dismissed. But U.S. District Judge William Conley, noting the case is a class-action suit, asked for more information and gave the parties until Jan. 24 to disclose the nature of the dispute and how it was settled, the method used to calculate settlement amounts for people in the class, and details regarding any attorney fees.
A separate lawsuit was filed on behalf of technical writers still at Epic as of April 2014.
The Retail Litigation Center, a trade group representing retailers, had urged the U.S. Supreme Court to hear the cases. The group says arbitration agreements “allow all parties to resolve disputes quickly and efficiently while avoiding the costs associated with traditional litigation.” Consumer advocacy groups have argued that such agreements discourage workers from challenging illegal policies.