Workers’ ‘day in court’ axed in Court’s arbitration ruling

Bill Knight column for Thurs., Fri. or Sat., June 7, 8 or 9, 2018

A U.S. Supreme Court majority on May 21 unleashed employers to run roughshod over labor law, ruling 5-4 that employers can prohibit their workers from banding together in disputes over pay and other workplace disputes. The Court’s five-justice conservative bloc said employers may require employees, as a condition of employment, to give up any joint legal remedy despite of the guarantee of New Deal laws stating that workers have a right to unionize or “engage in other concerted activities for the purposes of collective bargaining or other mutual aid or protection”

The ruling could affect 25 million U.S. workers, according to the Economic Policy Institute (EPI), which reports that half of workers have had to sign arbitration agreements to be hired.

The four dissenting justices said the decision will especially hurt low-wage workers, who are less likely to have job security.

Harvard Law Professor Noah Feldman commented, “The court barred workers from bringing collective legal action against employers if their employment contracts require individual arbitration. Employers don’t want class actions filed against them. By making employees sign agreements that require individual arbitration of disputes, businesses can now be sure that they won’t be taken to court when they’ve shortchanged many employees minimally – even if the collective loss to employees is significant.”

The case, “Epic Systems Corporation v. Lewis” (which consolidated three comparable cases), upends established law. In fact, in an unusual move, the Republican-majority National Labor Relations Board disagreed with the Trump administration’s Justice Department, arguing that agreements requiring employees to waive their right to collective action violate labor law.

After all, in some disputes, no individual employee has enough resources to go to court. However, they can join with other workers in similar situations and bring class actions on behalf of the group. For decades, class-action lawsuits have been critical to exercise people’s right to “their day in court.”

“The rights of workers are under attack,” wrote Sharon Block, director of the Labor and Worklife program at Harvard Law School, and Harvard Fellow Terri Gerstein. “Wage theft is rampant through violations of minimum-wage laws, refusal to pay overtime, and forcing employees to work off the clock. Our crude national discourse encourages all types of discrimination. And we now know better than ever how pervasive sexual harassment is.”

Conservative Justice Neil Gorsuch, writing the majority opinion, said the older Federal Arbitration Act took precedence over the National Labor Relations Act (NLRA), what moderate Justice Stephen Breyer called “the entire heart of the New Deal.”

And progressive Justice Ruth Bader Ginsburg pointed out in her biting dissent that the reality of the NLRA is that it was enacted to overcome the long history of anti-union law and practices. The whole point of the NLRA, she said, was to reject the idea that employers could use their power in wielding employment contracts to make employees surrender their rights.

In fact, Ginsburg argued, under the NLRA, individual arbitration agreements are illegal.

The ruling was “egregiously wrong,” she added, noting that workers don’t really have a choice about signing such arbitration agreements and calling them “arm-twisted, take-it-or-leave-it contracts.”

Again, the decision means the older (1925) Federal Arbitration Act somehow prevails despite the NLRA having passed 10 years later. That arbitration law says that courts should enforce arbitration agreements as written, unless judges find that the agreement falls within “such grounds as exist at law … for the revocation of any contract.” But when the NLRA passed in 1935, it said, again, that workers may join unions and engage in collective bargaining OR “other concerted activities for the purpose of collective bargaining OR OTHER MUTUAL AID OR PROTECTION,” and class-action suits seem exactly that. The NLRA, as Ginsburg said, effectively modified the edict arbitration agreements should ordinarily be enforced.

Although it’s unclear how the ruling could affect civil rights and other discrimination claims since they weren’t specifically mentioned by Gorsuch, advocates for such issues are as alarmed as worker groups.

Everyday employees “may now be forced behind closed doors into an individual, costly – and often secret – arbitration process,” said Fatima Goss Graves, president of the National Women’s Law Center.

Kristen Clarke, president of the Lawyers’ Committee for Civil Rights Under Law, said the “decision will make it easier for employers to escape liability for widespread discrimination and harassment. No American should be forced to sign away their right to invoke the meaningful protections afforded by our nation’s critical civil rights laws.”

The NAACP wrote, “If employers can preclude workers from acting together in every forum, they can – and will – effectively extinguish the civil rights claims of the most vulnerable members of the workforce.”