SCOTUS Forced Arbitration Case Could End Worker Class-Action Lawsuits, Amicus Brief Warns

Washington, DC—In an upcoming U.S. Supreme Court case that could radically tilt the legal landscape in favor of big corporations that break workplace laws, labor unions and worker rights groups filed an amicus brief today, explaining to the Court that employers cannot be allowed to use arbitration agreements to force workers challenging employer misconduct to give up their legally protected right to pursue legal action together as a class or group.

The friend-of-the-court brief, filed by 10 international labor unions with a combined membership of 13.5 million workers, as well as the National Employment Law Project and the National Employment Lawyers Association, points out that the right of employees “to act in concert for mutual aid or protection” is a foundational cornerstone of national labor policy—crucial to addressing the enormous disparity in economic power between individual workers and their employers.

“The state of forced arbitration in this country is a bald example of wealthy corporations writing the rules for the rest of us,” said Christine Owens, executive director of the National Employment Law Project. “In the fine print, big companies are rewriting the rules and taking away ordinary Americans’ day in court. Class actions and other types of group litigation are crucial for workers in holding big companies accountable when they break the law.”

“This case has enormous consequences for workers in this country,” said Michael Rubin, a partner at the law firm Altshuler Berzon and primary author of the amicus brief. “If the Supreme Court upholds the forced waiver of employee rights through these arbitration clauses, it will spell the end of class-action employment litigation as we know it. No well-counseled employer will forgo the opportunity to both privatize and individualize potential lawsuits.”

“The right of workers to pursue concerted claims to improve working conditions is at the core of federal labor policy and the National Labor Relations Act,” said Craig Becker, counsel to worker Sheila Hobson in NLRB v. Murphy Oil USA, Inc.; general counsel to the AFL-CIO; and former member of the National Labor Relations Board. “Standard arbitration clauses today forbid even two employees from banding together in arbitration. The restraint on concerted action revives the ghost of the ‘yellow dog’ contract, which once barred workers from joining a union. Just as those contracts were unlawful, the arbitration clauses at issue in this case violate federal labor law.”

The case will have far-reaching and potentially devastating effects on the ability of workers to pursue legal action when employers break the law. The defendant employers allege that the Federal Arbitration Act allows them to require employees, as a condition of employment, to submit any legal dispute to private arbitration on an individual, worker-by-worker basis. This type of forced arbitration clause would prohibit every form of group legal action. This would include class actions, but also any type of joint or group legal challenge, whether a case brought by two or more workers, a single worker soliciting the joinder of workers, or any other type of similar case.

The Supreme Court case consolidates three court cases, all of which stemmed from claims against the employers for unpaid wages and other unlawful workplace practices. In one of the cases, the employer, Epic Systems, Inc., required employees to sign an arbitration clause that expressly forbade an arbitrator from awarding any form of non-individual relief. Under such a clause, even if a worker won a case finding that a company’s promotion policy was illegal and discriminatory, for example, another worker would not benefit from that ruling since the arbitrator could only order relief for the individual employee. The clause would also prohibit two employees who had faced the same problem—for example, an employer who discriminated on the basis of sex or race, or a supervisor who failed to pay legally required overtime wages—from pursuing their case together.

The workers in the cases at issue sought certification of class actions in federal court. One of the workers, Ms. Sheila Hobson, filed a case with three of her coworkers alleging that their employer, Murphy Oil USA, Inc., had not paid them legally required overtime and had also not paid them for time worked “off the clock.” The group of coworkers also sought class certification of their claims. Murphy Oil USA, Inc. argued that the workers were required to pursue claims individually, one at a time, in private arbitration. The employer had required each of the workers to sign arbitration clauses as a condition of keeping their jobs.

Recent research reveals that arbitration can enable employers to erode enforcement of legal protections. Mandatory arbitration reduces workplace claims to “a miniscule number,” reported Jean R. Sternlight, a law professor at the University of Nevada at Las Vegas. While millions of employees are bound by forced arbitration clauses nationwide, fewer than 2,000 file arbitration claims annually. Research shows that even when workers pursue claims in arbitration, they win less frequently and obtain lower awards than workers who have access to the court system.

Forcing workers into individual arbitration proceedings can also force people dealing with the same issue to proceed one by one, in secret proceedings outside of the public court system. As proven by recent sexual harassment cases at Fox News, these requirements often mean that companies are able to keep repeat violations and egregious corporate behavior out of the public eye.

While the Obama administration had filed a brief in support of the workers in this case, the Trump administration—in a highly unusual reversal—filed a brief in support of the corporations and in favor of forced arbitration. The move drew heavy criticism from worker advocates, who accused the administration of standing not with regular people, but with deep-pocketed corporations that want to strip away workers’ rights.

Amici on the brief included the American Federation of Teachers; American Federation of State, County and Municipal Employees; Communications Workers of America; International Association of Machinists; International Brotherhood of Teamsters; International Union, United Automobile, Aerospace and Agricultural Implement Workers of America; National Education Association; Service Employees International Union; United Food and Commercial Workers International Union; United Steelworkers International Union; National Employment Lawyers Association; and National Employment Law Project.

DOWNLOAD THE AMICUS BRIEF.

READ ABOUT ANOTHER AMICUS BRIEF FILED BY CIVIL RIGHTS GROUPS.

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