Washington – The U.S. Supreme Court heard arguments recently in a case that could give employers the ability to bar class action lawsuits over workplace issues.
The justices heard arguments concerning National Labor Relations Board v. Murphy Oil USA, which was consolidated with two related cases, Epic Systems Corporation v. Lewis and Ernst & Young v. Morris.
The outcome will determine whether mandatory arbitration agreements with individual workers that prevent them from pursuing work-related claims collectively are prohibited by the National Labor Relations Act (NLRA). The court’s decision could affect some 25 million employment contracts.
A ruling in favor of employers, Justice Stephen G. Breyer said, could cut out “the entire heart of the New Deal” and undo an understanding of labor relations with roots in the administration of President Franklin D. Roosevelt.
A COURT THAT FAVORS ARBITRATION
The Supreme Court has ruled in earlier cases that companies doing business with consumers may require arbitration and forbid class actions in their contracts. Such contracts typically require disputes be resolved by arbitration and that the claims be brought one-by-one. That makes it hard to pursue minor claims that affect many people, whether in class actions or in mass arbitration.
Arbitration clauses with class-action waivers are now commonplace in contracts for things like cellphones, credit cards, rental cars and nursing home care.
The justices of the Supreme Court are now considering whether they should use a different approach for employment contracts and whether the Federal Arbitration Act, which favors arbitration, or the National Labor Relations Act, which protects workers’ rights to engage in “concerted activities” and prohibits arbitration clauses that require class-action waivers, should apply.
WHAT’S AT STAKE
The NLRA guarantees workers the right to stand together for “mutual aid and protection” when seeking to improve their wages and working conditions. Employer interference with this right is prohibited. However, increasingly, employers are requiring workers to sign arbitration agreements that force them to waive their rights to collective actions, and handle workplace disputes as individuals.
In practice, that means that even if many workers faced the same type of dispute at work, individual employees must hire their own lawyers, and must resolve their disputes out of court, behind closed doors, with only the employer and a private arbitrator. The NLRB has found these forced arbitration agreements interfere with workers’ right to engage in concerted activity for their mutual aid and protection, in violation of the NLRA.
OBAMA V. TRUMP
The Obama administration had filed a brief supporting the workers on behalf of the National Labor Relations Board. The Trump administration, predictably, reversed course.
Corporate interests and the Trump administration are fighting the NLRB, focusing their argument on the Federal Arbitration Act (FAA), which requires courts to enforce arbitration agreements, subject to contract defenses.
However, the Supreme Court has never issued a decision under the FAA enforcing an arbitration agreement that violates an express prohibition in another federal statute. That is what corporate interests arguing against the NLRB are asking the Court to do in this case.
If they succeed, they will, as the NLRB argues in its brief, be using “private contracts to eviscerate the public rights Congress protected in the NLRA.”
Daniel R. Ortiz, a law professor at the University of Virginia, who joined NLRB General Counsel Richard F. Griffin, Jr., arguing for the workers, said, “When an employer tries to coerce by making it a condition of continued employment that employees agree to a set of arbitral rules that make collective action impossible” that would be unlawful.
However, that’s exactly what lawyers for Murphy Oil are arguing for. If they win it will mean workers can be required to waive their NLRA rights as a condition of employment and will be left to individually arbitrate workplace disputes.
WHY IT MATTERS
Workers depend on collective and class actions to enforce many workplace rights. Employment class actions have helped to combat race and sex discrimination and are fundamental to the enforcement of wage and hour standards.
Many significant cases dealing with workers’ rights have been brought as collective or class actions. Without the ability to aggregate claims, it would be very difficult if not impossible for workers to find legal representation in these matters.
If the justices are persuaded by corporate interests and the Trump administration, Murphy Oil may be the last workers’ rights case the Supreme Court considers for the foreseeable future.
(Information from the Economic Policy Institute and the New York Times.)
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