A federal judge incorrectly affirmed an arbitration award to New York City healthcare employees who weren’t bound by a collective bargaining agreement that required mandatory arbitration, an appeals court ruled.

Employees who stopped working at NYC home health agencies prior to the implementation of a mandatory arbitration agreement for wage-related claims are free to pursue their cases in state court, the US Court of Appeals for the Second Circuit said in an opinion issued Friday.

The decision partially vacates a Southern District of New York ruling that confirmed arbitration awards for present and past members of 1199 SEIU United Healthcare …