SCOTUS 5-4 Decision Strikes Blow to Worker Rights

The Supreme Court delivered a decision last week that immediately and negatively affects all workers: for the first time, employers can require that workers may not band together to challenge violations of federal labor laws.

Some background:

1. The 1925 Federal Arbitration Act allows employers to bar collective legal actions by employees, substituting private arbitration. 
2. The 1935 National Labor Relations Act (NLRA) protects the rights of workers to band together to challenge allegedly illegal actions by their employer.
3. The current lawsuit was brought by employees against Ernst & Young LLP (Houston), Epic Systems Corporation (Verona WI), and Murphy Oil USA (El Dorado AR). Those corporations have hiring requirements that employees may not act as "class." Of course, individual employees may sue their employers. 

Source: Creative Commons

A Century after the NLRA

By the right swing of the SCOTUS, the conservative majority has become increasing hostile to class actions and favoring individual arbitration. The right to create a class is an essential core for solidarity laborers: the right to band together to file class action lawsuits either in federal court or at minimum, to arbitrate such claims as a group. Over decades, the suits of classes include claims from disputes over wages to disputes of alleged discrimination based on race, gender, religion, or national origin. Without class negotiation for employee rights, the employer has enormous power at recruiting, hiring, creating in-working environments, and terminating.

Up to 2014, quoting Moshe Marvit in In These Times:

On April 2, 2014, Jacob Lewis, who was a technical writer for Epic Systems, received an email from his employer with a document titled “Mutual Arbitration Agreement Regarding Wages and Hours.” The document stated that the employee and the employer waive their rights to go to court and instead agreed to take all wage and hour claims to arbitration. Furthermore, unlike in court, the employee agreed that any arbitration would be one-on-one. This “agreement” did not provide any opportunity to negotiate, and it had no place to sign or refuse to sign. Instead, it stated, “I understand that if I continue to work at Epic, I will be deemed to have accepted this Agreement.” The workers had two choices: immediately quit or accept the agreement. This is not the hallmark of an agreement; it is the hallmark of a mandatory rule that is unilaterally imposed.

In the 2017 SCOTUS argument, Justice Ruth Bader Ginsburg criticized any employer's "waiver" against class action rights have all the essential features of the classic "yellow dog contract." That is, there is no real "liberty of contract" for employees. Instead, the employer says, "You want to work here, you sign this." And that, added Ginsburg, is exactly the kind of "imbalance" in negotiating power that the National Labor Relations Act was intended to correct by protecting the ability of employees to act collectively.

The corporations' lawyers expect small and large businesses to immediately move to impose these binding arbitration contracts to eliminate the fear of costly class-action verdicts from juries. "It gives employers the green light to eliminate their single largest employment law risk with the stroke of a pen," he said Ron Chapman, who represents management in labor-management disputes.

Responses

AFL-CIO President Richard Trumka responded:

Today, five justices on the Supreme Court decided that it is acceptable for working people to have our legal rights taken away by corporations in order to keep our jobs. This decision forcing workers to sign away the right to file class-action suits against such illegal employment practices as wage theft, sexual harassment and discrimination is outrageous—and it is wrong. In this case, the newest justice has joined the dangerous trend of this court to side with corporations over working people. We call upon Congress to immediately enact legislation making clear that no worker can be forced to give up their right to effectively challenge illegal conduct in the workplace in order to keep their job.

Additional Reading

Christian Faras at the New York Magazine in his article "The Supreme Court Has Decided to Shut Workers Out of the Courthouse for Good" has a good summary and implications of this decision for millions of workers:

The ruling is a devastating blow to employees who are required to sign arbitration agreements as a condition of employment — according to one report, more than 60 million workers operate under such an arrangement, which effectively forces them to resolve their disputes with their employers in a quasi-judicial hearing rather than in a court of law. Of those, about 25 million are subject to a class-action bar.

Terri Gerstein and Sharon Block at the New York Times's piece, "Supreme Court Deals a Blow to Workers" argue that this is one of the strongest threats to employees:

The Supreme Court has just told the nation’s workers: If you’re underpaid at work, or if you face discrimination on the job, you’re on your own.

Many are also concerned about the effect of this decision on lawsuits related to #MeToo and addressing systemic sexual and gender-based harassment in the workplace. The recent movement -- even in name -- is a reminder of the importance of workers coming together, demonstrating the vital importance of spaces for employees to share similar stories and address them not in individual private arbitration, but in large-scale ways that dig into problems of culture and not individuals. (See our previous article on this topic and the importance of addressing sexual harassment as a large-scale issue of culture rather than a problem between individuals.) In the In These Times piece, "The Supreme Court’s Latest Anti-Worker Decision Deals a Major Blow to the #MeToo Movement," Palak Shah, social innovations director for the National Domestic Workers Alliance, notes:

#MeToo has shown us that the abuse of power is not one ‘rotten apple in a barrel’: It is widespread and systemic, especially in low-wage industries. ... We need checks on power—like collective action—to counter abuses of power when they happen. While unchecked power imbalances exist between employers and workers, we can be sure abuses like sexual harassment will continue.