By: Micah Iberosi-Parnell, Esq.

While the leaked Supreme Court opinion overturning Roe v. Wade grabbed all the headlines last week, a recent decision by the U.S. Circuit Court of Appeals for the Sixth Circuit likely has a significant impact on the enforcement of arbitration agreements in ERISA claims and more direct consequences on employers across the country.

In Hawkins v. Cintas Corp., an employer, the Cintas Corporation, attempted to enforce the arbitration provisions in the signed employment agreements of two former employees after they alleged Cintas breached its fiduciary duty to the company’s retirement plan under ERISA Sect. 502. The Sixth Circuit Court found that Cintas could not compel arbitration against former employees, though. It reasoned that since ERISA breach of fiduciary duty claims are brought on behalf of the plan, the arbitration clauses in Cintas’ contracts with two individual employees were irrelevant to the case and could not be used to limit the plan’s rights. Although this case involved a retirement plan, the same logic applies to employers that attempt to use arbitration clauses in employment agreements to limit group health plan participants’ ability to file ERISA actions.

Overall, this case marks the latest action by federal courts and regulators to restrict employers’ ability to compel arbitration in ERISA cases. The DOL’s ERISA claim procedures already ban binding arbitration for group plan participants. The Sixth Circuit Court’s decision now signals that even non-binding arbitration clauses that can be appealed likely must be included in a group plan’s plan document to be enforceable in ERISA cases.

Currently, nearly 54 percent of nonunion, private-sector employers have mandatory arbitration procedures, which as the Hawkins decision highlights, cannot be enforced against plan participants.