Unchecked corporate power: Forced arbitration, and how workers are fighting back

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One year ago, in Epic Systems v. Lewis, the Supreme Court ruled that employers can strip workers of their right to join together in court to fight wage theft, discrimination or harassment. In a new report, the Center for Popular Democracy (CPD) and the Economic Policy Institute (EPI) found that by 2024, more than 80 percent of private sector, non-union workers will be covered by forced arbitration clauses.

The report, “Unchecked Corporate Power: Forced Arbitration, the Enforcement Crisis, and How Workers Are Fighting Back,” projects that Epic Systems is spurring corporations to dramatically increase their use of forced arbitration clauses. Soon, only a small minority of American workers will be able to sue their employers.

This trend makes it critical that public enforcement agencies, like state departments of Labor, have the resources they need to ensure that employers respect important worker protections like minimum wage, earned sick and family leave, fair workweek standards, and protections against discrimination and harassment. Yet our public agencies are crippled by shrinking budgets and struggle to address persistent workplace violations.

The report was written by Kate Hamaji and Rachel Deutsch from the Center for Popular Democracy and Celine McNicholas, Heidi Shierholz, and Margaret Poydock from the Economic Policy Institute, with analysis of historical and current state-level funding by the National Employment Law Project.

Among the report’s findings:

TOO FEW INVESTIGATORS
The number of covered workers per federal wage-and-hour investigator and health and safety officer has more than doubled since 1994, to over 170,000 workers for each agency staffer.

In six states profiled in the report, the number of workers per investigator range from 54,900 to 188,800.

The report calls on Congress to override Epic Systems and restore the fundamental rights of working people to enforce their rights by passing the Restoring Justice for Workers Act and the Forced Arbitration Repeal Act.

“Congress must act to overturn the Supreme Court’s deeply flawed Epic Systems v. Lewis decision, which makes it nearly impossible for millions of workers to get justice when their employers violate fundamental workplace protections.” said Celine McNicholas, Director of Government Affairs at EPI. “These laws were passed to ensure that workers in this country have the basic rights to fair pay and a safe workplace free from discrimination — Congress cannot allow a Supreme Court dominated by corporate interests to take them away. We must demand that our representatives restore our rights and pass the Restoring Justice for Workers Act and the Forced Arbitration Injustice Repeal Act.”

‘WHISTLEBLOWER ENFORCEMENT’
The report identifies the “whistleblower enforcement” model as the most promising state-level solution to the corporate accountability crisis. Bills introduced in six states in 2019 — Massachusetts, Maine, New York, Oregon, Vermont, and Washington — would empower workers to sue law-breaking employers on behalf of the state and all injured workers, including those covered by arbitration clauses. The bills allow a worker to file a representative action on behalf of all the company’s workers, just as the agency is authorized to do, allowing the collective enforcement of rights in spite of Epic Systems. The suits collects penalties owed by lawbreaking employers to fully fund enforcement agencies.

“By enacting these policies, state leaders can directly address the current crisis in corporate accountability and ensure that minimum wage, fair scheduling, and other workplace protections are enforced,” said Rachel Deutsch, Supervising Attorney for Worker Justice at CPD. “Through the courage of workers demanding change, and the leadership of their elected representatives, we can restore access to courts, empower workers to hold lawbreaking employers accountable, and make hard-won workplace standards meaningful to families across the country.”

PRIVATE ATTORNEY GENERAL ACT
The report points to California’s Private Attorney General Act (PAGA) as a successful model. In the most recent fiscal year, California’s labor agency received over $34 million in PAGA revenue.

Since PAGA’s inception, the revenue has funded a wide variety of enforcement programs, including cracking down on companies that fraudulently misclassify their employees as independent contractors to avoid minimum wage, unemployment insurance, and other basic obligations to workers.

CALLING ON POLICYMAKERS TO ENACT BOLD REFORMS
Brenda Rojas, a first-generation college student in Oregon, is among those calling on policymakers to enact bold reforms.

“While working at Buffalo Wild Wings, my coworkers and I experienced wage theft regularly, and worked in an environment of constant sexual harassment,” Rojas said.

“Complaining about these working conditions was pointless, because we had signed a forced arbitration clause and the company knew that we couldn’t fight back in court. None of us understood the forced arbitration language when we signed our new hire paperwork, but we were told that if we did not ‘check all the boxes,’ we would not be hired. How can students like me build a brighter economic future when our employers are allowed to rip us off?”

To read the full report, visit epi.org/publication/unchecked-corporate-power.


 

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