A federal appeals court overturned a lower court ruling Tuesday and reinstated a disability discrimination charge filed by a former Neiman Marcus Group Inc. employee based on a mandatory arbitration agreement.

Tayler Bayer developed emphysema while working at the downtown San Francisco store operated by Dallas-based Neiman Marcus Group Inc., according to court papers in Tayler Bayer v. Neiman Marcus Group, Inc.

In March 2007, he was placed on medical leave by his physician, who authorized him to return to work on June 1, 2007, but limited him to working no more than four days per week.

Upon Mr. Bayer’s return from medical leave, Neiman Marcus denied his request to modify his work schedule to accommodate his medical condition under the Americans with Disabilities Act, according to court papers.

Shortly thereafter, Mr. Bayer filed an administrative charge with the U.S. Equal Employment Opportunity Commission charging the Dallas-based retailer with an ADA violation for its failure to accommodate Mr. Bayer’s work schedule request. 

The same day, Nieman Marcus presented Mr. Bayer with a mandatory arbitration agreement that gave him a choice between ending his employment by July 14, 2007, or being bound by the agreement.

Mr. Bayer filed suit against the retailer in U.S. District Court in San Francisco, charging violation of the ADA, which ruled in Neiman Marcus’ favor.

The ruling was overturned by a unanimous three-judge appeals court panel of the 9th U.S. Circuit Court of Appeals in San Francisco in Tuesday’s ruling.

“The ‘choice’ presented by Neiman Marcus was a false dilemma,” said the panel’s ruling. As the appeals court had held in an earlier, 2014 ruling in the case, “Bayer’s continued employment did not constitute implied consent to arbitrate because he repeatedly refused to sign the agreement-related forms and therefore was not bound by the agreement,” it said.

“Nor was the agreement a run-of-the mill arbitration document that simply channeled disputes to another forum, as Neiman Marcus maintains,” Tuesday’s ruling said.

“The California Court of Appeal has found the agreement unconscionable. Among other troubling terms, the agreement mandated arbitration for administrative charges already filed and purported to change statutes of limitation.

“Nieman Marcus also reserved for itself the power to amend, modify, or revoke the agreement terms at any time, with thirty days’ notice to the employee.”

The ruling said, “Bayer reasonably believed that his consent to the agreement would imperil his EEOC charge, and by extension his ability to receive an ADA accommodation.

“He repeatedly refused to sign the agreement-related forms and filed a second EEOC charge asserting Neiman Marcus interfered with his rights” in violation of the ADA “by pressuring him to choose between his ADA rights and his job.”

“As the district court found, Bayer ‘felt intense pressure and coercion’ in the leadup to the agreement’s effective date ‘and beyond,’” the ruling said.

An employer “interferes with ADA rights when it knowingly compels an employee with pending EEOC charges to a false choice to either resign or consent to an unconscionable arbitration agreement which specifically targets ADA rights,” the panel said, in reversing the lower court’s ruling and remanding the case for further proceedings.

Mr. Bayer’s attorney, Cliff Palefsky, of the Law Offices of McGuinn Hillman & Palefsky in San Francisco, said in a statement, “There have been very few decisions interpreting the interference clause of the ADA and other federal statutes.

“This is an important decision because it will create a legal basis for employees being presented with illegal arbitration agreements to address the issue without losing their jobs. And hopefully it will encourage companies to draft their agreements appropriately the first time,” the statement said. Mr. Bayer was terminated by Neiman Marcus in 2009, according to Mr. Palefsky.

Neiman Marcus’ attorneys did not respond to a request for comment.