High court upholds individual arbitration
State software company Epic Systems supports ruling
WASHINGTON – The Supreme Court dealt an initial blow to millions of workers Monday in the first of two major disputes this term pitting corporations against labor unions.
In a 5-4 decision controlled by the court’s conservative wing, the justices ruled that employers have the right to insist that labor disputes get resolved individually, rather than allowing workers to join together in class-action lawsuits.
Millions of workers routinely sign such arbitration agreements unknowingly, only to find out later that they are barred from collective action
About 25 million workers are affected by those contracts.
Justice Neil Gorsuch wrote the decision, joined by the other four conservatives on the court.
“As a matter of policy, these questions are surely debatable,” he said. “But as a matter of law the answer is clear. In the Federal Arbitration Act, Congress has instructed federal courts to enforce arbitration agreements according to their terms.”
Justice Ruth Bader Ginsburg wrote the dissent, joined by the other three liberals. She summarized it from the bench, something justices do only rarely to signify their objections.
“When workers charge their employers with unlawful conduct – in this case, violations of laws governing wages earned and hours worked – there is strength in numbers,” she said.
As a result of the ruling, she said, “there will be huge underenforcement of federal and state statutes designed to advance the well-being of vulnerable workers.”
The high court heard oral arguments in three separate forced arbitration cases on the first day of its term last October. Then in February, it heard a more closely watched case challenging public employees unions’ collection of fees from nonmembers in nearly two dozen states. The court’s conservatives appear set to render another 5-4 ruling against the unions in that case.
The justices have been deferential in the past to arbitration agreements, which are favored by many employers as a way to resolve disputes over pay, benefits and other matters without going to court.
Last year, 54 percent of companies reported using arbitration clauses in
contracts. About one-third of the contracts barred workers from banding together.
The nation’s major business trade groups lined up in favor of the three employers: Epic Systems, a Wisconsin health care software company; Ernst & Young accountants; and Murphy Oil, which has gas stations in 26 states.
On the other side were workers’ rights groups such as the National Employment Law Project, which warned Monday that the ruling could set back the #MeToo movement against sexual harassment in the workplace.
“Forced arbitration means women have to pursue their claims alone, before a private arbitrator hired by the company, with a low likelihood of success and little chance to appeal,” Christine Owens, the group’s executive director, said in a statement.
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 is whether those rights render individual arbitration agreements void.
Gorsuch concluded that the latter law did not supplant the earlier one and that the two must be considered together. Nothing in the National Labor Relations Act affects how judges and arbitrators must try legal disputes, he said.
“Congress has instructed that arbitration agreements like those before us must be enforced as written,” he said. “While Congress is of course always free to amend this judgment, we see nothing suggesting it did so in the NLRA.”
During oral argument in October, the court’s four liberal justices attacked individual arbitration agreements with a vengeance. Ginsburg likened them to “yellow dog contracts,” outlawed in 1932, that required workers to forswear union membership.
Justice Stephen Breyer said a decision for employers would overturn labor law, “undermining and changing radically what has gone back to the New Deal.”