Supreme Court’s arbitration decision delivers another blow to workers’ rights

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U.S. Supreme Court justices have issued an arbitration ruling allowing employers to prohibit class action lawsuits by workers.

Trumka: Murphy Oil ruling is ‘outrageous and wrong’

By TIM ROWDEN
Editor

Washington – In a ruling AFL-CIO President Richard Trumka called “outrageous” and “wrong,” the U.S. Supreme Court delivered a major blow to tens of millions of workers recently, ruling that companies can use arbitration clauses in employment contracts to prohibit workers from banding together to take legal action over violations of federal labor laws.

Writing for the majority, Justice Neil Gorsuch –– joined by Chief Justice John Roberts and Justices Anthony Kennedy, Clarence Thomas and Samuel Alito –– said that the 1925 Federal Arbitration Act trumps the National Labor Relations Act.

The 5-4 ruling could affect some 25 million employment contracts.

“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,” Trumka said. “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,” Trumka said. “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.”

‘EGREGIOUSLY WRONG’

Justice Ruth Bader Ginsburg in her dissent, read from the bench in a sign of profound disagreement, called the majority opinion “egregiously wrong,” and said it will result in “huge under-enforcement of federal and state statutes designed to advance the well-being of vulnerable workers.”

The 1925 arbitration law came into being well before federal labor laws, Justice Ginsburg said, and should not cover the “arm-twisted,” “take-it-or-leave it” provisions employers are now insisting on.

Justice Ginsburg, joined by Justices Stephen Breyer, Sonia Sotomayor and Elena Kagan, called on Congress to address the matter.

THREE CASES

Last week’s ruling came in three consolidated cases —involving tens of thousands of nonunion employees of Ernst & Young LLP, Epic Systems Corp. and Murphy Oil USA Inc., each of which required individual employees to waive their rights to join a class-action suit as a condition of employment.

Employees in all three cases tried to sue together, arguing that it was necessary because the amounts they could obtain in individual arbitration were dwarfed by the legal fees they would have to pay.

Justice Ginsburg agreed and noted in her dissent that a typical Ernst & Young employee would likely have to spend $200,000 to recover only about $1,900 in overtime pay.

Trying to arbitrate such claims individually would be too expensive to be worth it, she wrote, and “the risks of employer retaliation would likely dissuade most workers from seeking redress alone.”

‘ONLY A MATTER OF TIME’

Brian T. Fitzpatrick, a law professor at Vanderbilt University who studies arbitrations and class actions, told the New York Times the ruling was unsurprising in light of recent Supreme Court decisions.

Justice Gorsuch, he said, “appears to have put his cards on the table as firmly in favor of allowing class actions to be stamped out through arbitration agreement…. It is only a matter of time until the most powerful device to hold corporations accountable for their misdeeds is lost altogether.”

The Obama administration and the National Labor Relations Board had backed workers in the cases, but after President Donald Trump was elected, the Justice Department threw its support to the employers.

Justice Gorsuch was appointed by Trump last year to replace the late Justice Antony Scalia, who died in 2016. The seat remained vacant for more than a year after Senate Majority Leader Mitch McConnell blocked President Barrack Obama’s nominee Merrick Garland – refusing to hold a Senate confirmation hearing – to ensure the seat would remain open for a Trump appointee.

STACKING THE DECK FOR THE EMPLOYER

The ruling will likely also have implications for the #MeToo movement as well as civil rights class actions claiming discrimination based on race, gender and religion.

“Employees may now be forced behind closed doors into an individual, costly – and often secret – arbitration process,” said Fatima Goss Graves, president and CEO of the National Women’s Law Center. “This will stack the deck in favor of the employer.”

There is no transparency in most binding arbitration agreements, and they often include nondisclosure provisions.

Class actions deal with the expense and fear of retaliation inherent in solo claims because, as Justice Ginsburg put it, “there’s safety in numbers.”

IMPLICATIONS BEYOND THE WORKPLACE

In an interview with National Public Radio (NPR), Yale Law professor Judith Resnik said the decision applies to all manner of class actions.

“What this says is that when you buy something, use something, or work for someone, that entity can require you to waive your right to use public courts,” she noted.

Cornell University labor law professor Angela Cornell told NPR she expects the number of litigation waivers to skyrocket now.

“What we see is the privatization of our justice system,” she said.

According to the Economic Policy Institute, 56 percent of nonunion private sector employees are currently subject to mandatory individual arbitration procedures under the 1925 Federal Arbitration Act, which allows employers to bar collective legal actions by employees.

The Supreme Court’s decision means tens of millions of private nonunion employees will be barred from suing collectively over the terms of their employment.

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Supreme Court ruling deals a significant blow to workers’ fundamental rights

The Supreme Court decision in Epic Systems Corp. v Lewis (NLRB v. Murphy Oil and Ernst & Young LLP v. Morris) deals a significant blow to the fundamental right of workers to join together to address workplace disputes.

“For over 80 years, the National Labor Relations Act has guaranteed workers’ right to stand together for ‘mutual aid and protection’ when seeking to improve their wages and working conditions,” said Celine McNicholas, director of labor law and policy for the Economic Policy Institute. “However, today’s decision clears the way for employers to require workers to waive that right as a condition of employment.

“The use of mandatory arbitration and collective and class action waivers — under which workers are forced to handle workplace disputes as individuals through arbitration, rather than being able to resolve these matters together in court — makes it more difficult for workers to enforce their rights,” she said.

OVERWHELMINGLY FAVORS THE EMPLOYER

“These agreements bar access to the courts for all types of employment-related claims, including those based on the Fair Labor Standards Act, Title VII of the Civil Rights Act, and the Family Medical Leave Act,” McNicholas said. “This means that a worker who is not paid fairly, discriminated against, or sexually harassed is forced into a process that overwhelmingly favors the employer — and forced to manage this process alone, even though these issues are rarely confined to one single worker.”

McNicholas said the decision “undermines the National Labor Relations Act and further erodes workers’ rights and freedoms.

“Workers depend on collective and class actions to combat race and sex discrimination and enforce wage and hour standards,” she added. “It is essential to both our democracy and a fair economy that workers have the right to engage in collective action. Congress must act to restore this fundamental right and ban mandatory arbitration agreements and class and collective action waivers.”

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