The Building Tradesman Newspaper

Friday, May 18, 2018

No class: mandatory arbitration poised to become go-to method of settling work disputes

By The Building Tradesman

By Heidi Shierholz and Celine McNicholas

Economic Policy Institute

The Supreme Court will soon decide whether employers can lawfully require workers to sign mandatory arbitration agreements that include class and collective action waivers. Rulings in NLRB v. Murphy Oil USA, Inc., Epic Systems Corp. v. Lewis, and Ernst & Young LLP v. Morris will have significant impacts on working people. 

If the Court sides with employers and the Trump administration, it is likely that the majority of workers in this country will be required, as a condition of employment, to sign away their right to pursue workplace disputes on a collective or class basis. In fact, available data suggest that it may take only six years for more than 80 percent of workplaces to adopt mandatory arbitration with class and collective action waivers.

A one-year Government Accounting Office study concluded in 1995 found that just 7.6 percent of employers had mandatory arbitration agreements. Last year, the Economic Policy Institute (EPI) commissioned a survey that found that 53.9 percent of nonunion private-sector employers have mandatory arbitration procedures. In other words, the use of mandatory arbitration agreements grew by more than 600 percent between 1994 and 2017. 

Using the growth rates between the two surveys to forecast future expansion suggests that by 2024, more than 80 percent of private sector, non-union establishments will adopt mandatory arbitration with class and collective action waiver of employment disputes, if the Court finds that such agreements are lawful.

That will leave more than 85 million workers subject to mandatory arbitration agreements with class and collective action waivers. This means that the vast majority of workers will be forced to sign away their right to act with their colleagues to resolve workplace disputes—as well as their right to go to court for these matters. As a result, even if many workers face the same type of issue at work, each individual worker will be forced to hire their own lawyer and resolve their dispute out of court, behind closed doors, with only their employer and a private arbitrator.

Workers depend on collective and class actions to enforce many workplace rights. Employment class actions have helped to combat race and sex discrimination and are fundamental to the enforcement of wage and hour standards. Without the ability to aggregate claims, it is very difficult, if not impossible, for workers to find legal representation in these matters. This is particularly true for low-wage workers, whose cases are unlikely to involve large enough awards to attract attorneys to invest time in the case. Class and collective action suits allow workers to pool their claims, making it possible for an attorney to earn enough to make the case worth pursuing.

But these cases before the Supreme Court have implications beyond class action suits. If the Court is persuaded by the Trump administration, the decision could prohibit a broad category of workers’ collective action guaranteed to U.S. workers since 1935 with the passage of the National Labor Relations Act. The right of working people to join together—whether through a union or not—to improve their wages and working conditions is at the heart of the NLRA. This right is as important today as it was when the Act was passed.

We are at a critical moment as a country. If we are going to address economic inequality, combat employer practices that perpetuate race and sex discrimination, and change the epidemic of sexual harassment that has been exposed by the #metoo and #timesup movements, we must be able to use our collective voice and our collective power to do so. It is only when we act together, whether as working people demanding fair pay—as the workers did in Murphy Oil—or as citizens speaking out collectively against injustice, that we are able to produce meaningful change. If the Court issues a decision that erodes our right to collective action, we must join together to demand Congress act to protect this right. After all, it was collective action that convinced Congress to pass the NLRA over 80 years ago.