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NELP, NELA, and unions weigh in on class waivers in employer arbitration agreements

August 17th, 2017  |  Pamela Wolf

The National Employment Law Project (NELP), 10 international labor unions, and the National Employment Lawyers Association (NELA) are making their voices heard in an upcoming U.S. Supreme Court case that they say could radically tilt the legal landscape in favor of big corporations that break workplace laws. The amicus brief these groups filed on August 16, 2017, in consolidated cases, asking the Justices to rule on the lawfulness of class waivers in employer arbitration agreements, contends 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.

NELA describes itself as a non-profit professional membership organization composed of attorneys who represent workers in labor, employment, and civil rights disputes. NELP is a New York-based nationwide nonprofit organization that partners with community-based worker centers and other low-wage worker representatives to advocate for the rights of unorganized workers.

Hot-button question. In NLRB v. Murphy Oil USA, Inc. (No. 16-307), along with two other cases, Epic Systems Corporation v. Lewis (No. 16-285) and Ernst and Young LLP v. Morris (No. 16-300), the Justices will resolve the question of whether arbitration agreements that bar employees from pursuing work-related claims on a collective or class basis in any forum violate the National Labor Relations Act. In these cases, the NLRA bumps up against the Federal Arbitration Act, which favors enforcement of arbitration agreements. The cases explore what has become such a hot-button issue that the Trump Administration reversed its position under the Obama Administration when the NLRB was seeking certiorari, not only leaving the NLRB to fend for itself on the merits of the case, but actually opposing the Labor Board’s position on the class waiver issue in all of the consolidated cases.

Far-reaching impact. The case will have far-reaching and potentially devastating effects on the ability of workers to pursue legal action when employers break the law, according to NELP. The employers in the consolidated cases assert that the FAA permits 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, including class actions, as well as 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, NELP explained.

The brief filed by NELP, the unions, and NELA underscores that the right of employees “to act in concert for mutual aid or protection” is a foundational cornerstone of national labor policy. It is also crucial to addressing the enormous disparity in economic power between individual workers and their employers.

Employees disfavored by arbitration. NELP pointed to recent research showing that arbitration can enable employers to erode enforcement of legal protections. Mandatory arbitration reduces workplace claims to “a miniscule number,” according to 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. Even when workers pursue claims in arbitration, they win less frequently and obtain lower awards than workers who have access to the court system, research has shown.

Keeping bad behavior out of public eye. Another problem with forcing workers into individual arbitration proceedings is that it can make people dealing with the same issue proceed one by one, in secret proceedings outside of the public court system, NELP suggested, citing the 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.

“The state of forced arbitration in this country is a bald example of wealthy corporations writing the rules for the rest of us,” said NELP Executive Director Christine Owens. “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.”

According to 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.”

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