Appeals panel: Illinois shops can't arbitrate away workers' class actions over fingerprint timeclock scans

By Jonathan Bilyk | Apr 11, 2019

The Four Seasons hotel, second tower from left, rises above Chicago's Magnificent Mile.   Roman Boed from The Netherlands [CC BY 2.0 (https://creativecommons.org/licenses/by/2.0)]

Illinois employers, facing an onslaught of class action lawsuits accusing them of violating a state biometrics privacy law by making their workers scan their fingerprints when beginning and ending work shifts, can’t sidestep those legal actions by claiming their employees agreed to handle their work-related disputes under arbitration.

On April 9, a three-justice panel of the Illinois First District Appellate Court in Chicago ruled claims under the state’s stringent Biometric Information Privacy Act can’t be considered “wage or hour” disputes, even if they revolve around claims that originate in work places and an employer’s practices.

Justices said the BIPA law “in short … is a privacy rights law that applies inside and outside the workplace.

“Simply because an employer opts to use biometric data, like fingerprints, for timekeeping purposes does not transform a complaint into a wages or hours claim,” justices said.

The decision was authored by Justice Michael B. Hyman, with justices Terrence J. Lavin and Aurelia Pucinski concurring.

In November 2017, attorneys with the firm of Stephan Zouras LLP, of Chicago, filed suit in Cook County Circuit Court on behalf of nearly all employees of the Chicago Four Seasons Hotel, through named plaintiffs Tony Liu and Cathy Li.

In the lawsuit, Liu and Li asserted the hotel had violated their rights and those of other workers at the hotel by not providing them the proper notifications and securing written authorization before requiring workers to scan their fingerprints on the hotel’s new so-called biometric punch clocks at the beginning and end of each work day.

The class action was one of hundreds of such lawsuits filed in recent years in Cook County and other Illinois courts under the Illinois BIPA law. Most of the lawsuits target employers of all sizes who require their workers to scan either a fingerprint or handprint on biometric punch clocks.

Those time clocks help businesses more accurately track employee work hours and reduce fraud, by making it all but impossible for coworkers to punch each other in or out of a work shift.

But the lawsuits generally assert employers failed to abide by the notification and authorization sections of the stringent BIPA law when rolling out the new timeclock systems since Illinois’ majority Democratic lawmakers approved the law in 2008.

The lawsuits could threaten to leave businesses on the hook for crippling amounts of damages. The law specifies damages of $1,000-$5,000 per violation, which could be understood to mean $1,000-$5,000 each time an employee scans a fingerprint on a punch clock.

Thus, businesses with only a handful of employees could face demands for damages reaching well into the millions of dollars.

Facing such threats, businesses have asked Illinois’ appeals courts for relief. But so far, any relief has been in short supply.

Earlier this year, for instance, the Illinois Supreme Court ruled plaintiffs claiming their rights were violated under BIPA do not need to first show those violations actually caused any injuries, such as identity theft, before they can sue.

And in the most recent ruling, the First District Appellate panel said employers also can’t rely on arbitration provisions in employment agreements to escape.

The Four Seasons matter landed before the appeals panel in December 2018, when the hotel petitioned the court on a so-called interlocutory appeal, essentially asking the appeals court to decide a question of law.

In this case, Four Seasons asked if an agreement signed by most, but not all, Four Seasons employees, known as EmPact, could force the BIPA claims into arbitration.

According to the appellate ruling, the agreement, which was not mandatory for employees to sign, included guidelines for dispute resolution on employment related legal claims, including discrimination, harassment, termination of employment and “a wage or hour violation.” The dispute resolution process under EmPact would end in “mandatory, binding arbitration,” as employees agreed under EmPact to “waive their rights to have their case ‘submitted to a court of law and decided by a judge or jury.’”

The hotel argued the arbitration provisions should also apply to Liu and Li’s BIPA claims, because they entirely involved the company’s biometric timekeeping policies, and thus, should be considered a “wage or hour” violation.

The justices, however, disagreed, saying BIPA claims are distinct from other wage and hour disputes, which more typically involve such subjects as failure to pay overtime wages or requiring employees to work “excessive hours.”

“… The plaintiffs’ complaint does not allege that Four Seasons failed to properly pay wages or required employees to work excessive hours,” Justice Hyman wrote. “Instead, it alleges Four Seasons violated their privacy rights by requiring them to submit to fingerprint scanning as a timekeeping method, squarely a matter under (BIPA.)”

The case remains pending in Cook County Circuit Court before Circuit Judge Franklin Ulyses Valderrama.

Four Seasons is represented in the action by attorneys with the firm of Miller Canfield, of Chicago.  

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Circuit Court of Cook County Four Seasons Hotel And Resorts - Headquarters Illinois First District Appellate Court Miller Canfield Stephan Zouras LLP

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