SCOTUS: Workers Can Be Required to Waive Their Right to File Class Action Suits

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Opponents Say Ruling Stacks the Deck in Favor of Employers

A May 2018 U.S. Supreme Court decision could pose a threat to the ability of workers to speak up about bad conditions at their workplaces and still keep their jobs, according to a recent article in the Harvard Business Review (HBR). The decision was the first handed down by the conservative majority now making up the Supreme Court since the Senate confirmed President Trump’s nominee Neil Gorsuch in 2017.

Epic Systems Corp. v. Lewis asked the following question: Can an employer require its workers to submit to individual arbitration in workplace claims without an option to go to court or pursue group arbitration? The High Court ruled 5-4 that businesses could legally require workers, as a term of their employment, to surrender their right to participate in class action lawsuits. For workers, this means those who have suffered discrimination or sexual harassment at their workplaces won’t be allowed to seek legal remedies by joining with others who believe they have sustained similar harm.

As expected, the business community largely supported the ruling. In October 2017, business advocate the Retail Litigation Center filed an amicus brief with the U.S. Supreme Court to support the enforcement of arbitration agreements, asserting that class actions are not the type of “concerted activity” envisioned or protected by the National Labor Relations Act (NLRA)

Lewis v. Epic Systems Corporation, initially filed in Wisconsin Western District Court in February 2015, involved a notification made by Epic Systems to its employees stating that if they continued to work at the company, they would be deemed to have accepted a new company policy compelling them to use individual arbitration in wage and hour disputes. Epic Systems employee Jacob Lewis initially agreed to the terms as instructed, but later filed a lawsuit asserting his rights under the Fair Labor Standards Act and Wisconsin law.

State and federal laws generally provide workers with basic rights in the workplace. But while workers think they have more rights than they actually do in some areas (termination of employment being one), they often have extremely limited knowledge concerning their rights in other areas (workplace health and safety, for example), according to Cornell University research.

Some might argue that if a worker feels that his employer is violating his rights, why doesn’t he just quit and get another job? Non-compete agreements that now cover an estimated 30 million workers effectively remove that option for many employees.

Although worker protection laws are intended to protect individual worker rights, enforcing those rights often require collective efforts, such as class action lawsuits. But about one-third of employers with mandatory arbitration requirements like Epic Systems have added requirements to waive participation in class action lawsuits to their mandatory arbitration requirements, according to the HBR report. Many believe these clauses make it easier for employers to continue to maintain unfair and illegal employment practices and to silence workers, saying, in effect, “if you want to keep your job you’ll agree to our conditions. If not, security will escort you to the parking lot.”

The Supreme Court decision in Epic Systems is likely to expand such clauses even more, further restricting the options of workers by requiring them to litigate wage and hour claims on a one-by-one basis. As Justice Ruth Bader Ginsburg wrote in her dissenting opinion in Epic v. Lewis: “The court today holds enforceable these arm-twisted, take-it-or-leave-it contracts — including the provisions requiring employees to litigate wage and hours claims only one-by-one,” she said. “Federal labor law does not countenance such isolation of employees.”

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