SCOTUS Sides With Employers Against Employees Seeking Redress With Class Action Lawsuits

by Bamidele Ogunberu Last updated on May 23rd, 2018,

Washington, D.C., USA: The Supreme Court dealt a blow to millions of workers on Monday, ruling 5-4 for the time that companies may force workers into individual arbitration over wage and other workplace disputes, rather than deal with them as a class.

The court’s decision means that tens of millions of private nonunion employees will be barred from suing collectively over the terms of their employment. Millions of workers routinely sign arbitration agreements unknowingly, only to find out later that they are barred from collective action. About 25 million workers are affected by those contracts.

The Federal Arbitration Act of 1925 made arbitration agreements legal. Ten years later, the National Labor Relations Act protected employees’ rights. The question before the court was whether those rights render individual arbitration agreements void.

Writing for the majority, Justice Neil Gorsuch said that the 1925 Federal Arbitration Act trumps the National Labor Relations Act and that employees who sign employment agreements to arbitrate claims must do so on an individual basis — and may not band together to enforce claims of wage and hour violations.

“The policy may be debatable but the law is clear: Congress has instructed that arbitration agreements like those before us must be enforced as written,” Gorsuch writes. “While Congress is of course always free to amend this judgment, we see nothing suggesting it did so in the NLRA — much less that it manifested a clear intention to displace the Arbitration Act. Because we can easily read Congress’s statutes to work in harmony, that is where our duty lies.”

Justice Ruth Bader Ginsburg, writing for the four dissenters, called the majority opinion “egregiously wrong.” She said the 1925 arbitration law came well before federal labor laws and should not cover these arm-twisted, “take-it-or-leave it” provisions that employers are now insisting on.

The inevitable result, she warned, is that there will be huge underenforcement of federal and state statutes designed to advance the well-being of workers.

“[T]he edict that employees with wage and hours claims may seek relief only one-by-one does not come from Congress,” Ginsburg writes. “It is the result of take-it-or-leave-it labor contracts harking back to the type called ‘yellow dog,’ and of the readiness of this Court to enforce those unbargained-for agreements. The FAA demands no such suppression of the right of workers to take concerted action for their ‘mutual aid or protection.'”

She urged Congress to correct the court’s elevation of the arbitration act over workers’ rights.

The ruling came in three cases — potentially involving tens of thousands of nonunion employees — brought against Ernst & Young LLP, Epic Systems Corp. and Murphy Oil USA Inc.

Each required its individual employees, as a condition of employment, to waive their rights to join a class-action suit. In all three cases, employees tried to sue together, maintaining that the amounts they could obtain in individual lawsuits were dwarfed by the legal fees they would have to pay as individuals to bring their cases under the private arbitration procedures required by the company.

The employees contended that their right to collective action is guaranteed by the National Labor Relations Act. The employers countered that they are entitled to ban collective legal action under the Federal Arbitration Act, which was enacted in 1925 to reverse the judicial hostility to arbitration at the time.

The Supreme Court ruling on Monday in the first of two major disputes this term pitting corporations against labor unions.

The other is Janus Vs AFSCME which Nigeria Circle News reported on earlier. The Supreme Court heard this case, Janus v. American Federation of State, County, and Municipal Employees, Council 31, on Feb. 26.

Mark Janus does not want to pay fees to the labor union that represents him.

Fair share fees have been upheld as legal for decades, but if the court rules against AFSCME, the entire U.S. public sector would essentially be a “right-to-work” zone ― meaning employees could no longer be required to pay anything to the unions that bargain on their behalf. There are already 28 “right-to-work” states; the Janus case would affect the other 22 states, which have an estimated 5 million public sector workers.

If the Supreme Court gives him the chance to opt out, the Illinois state employee will gladly take the justices up on their offer.

So, too, could millions of other public sector workers across the country, which would be a huge blow to the U.S. labor movement. A ruling in Janus’ favor would squeeze a critical revenue stream for organized labor at a time when overall union membership rates are already hovering near historic lows.

A Supreme Court ruling on Janus V AFSCME is expected later this year.

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