Supreme Court backs employers over workers in first of two major labor cases

Richard Wolf | USA TODAY

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. It was the longest-pending case before the justices, having been heard on the first day of the term last October.

"As a matter of policy, these questions are surely debatable," Gorsuch said. Still, he said, "this court is not free to substitute its preferred economic policies for those chosen by the people’s representatives."

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," Ginsburg said.

As a result of the ruling, she said, "there will be huge under-enforcement 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 Oct. 2. Then in February, it heard a more closely-watched case challenging public employees unions' collection of fees from non-members in nearly two dozen states. The court's conservatives appear set to render another 5-4 ruling against the unions in that case.

“Unfortunately, the Supreme Court term is not over,” said Craig Becker, the AFL-CIO's general counsel and a former member of the National Labor Relations Board.

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% 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 operates 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 Me Too 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 to join unions and engage in collective bargaining. The question before the court was whether those rights render individual arbitration agreements void, as the National Labor Relations Board ruled for the first time in 2012.

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 impacts 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."

Ginsburg said the later law "should qualify as 'an implied repeal'" of the earlier one in part because it "speaks directly to group action by employees to improve the terms and conditions of their employment."

The case took an unusual twist when the Trump administration switched sides from the position taken by the Obama administration, which had backed the workers. As a result, the Justice Department argued in court against the National Labor Relations Board — a rare occurrence pitting one federal agency against another.

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."

In her dissent, Ginsburg employed a tactic she used successfully in 2007, when she urged Congress to correct the court's ruling against a female employee who complained she was paid less than men for the same work. The Lilly Ledbetter Fair Pay Act became the first law President Obama signed in 2009.

"Congressional action is urgently in order to correct the court's elevation of the Arbitration Act over workers' rights to act in concert," she said.

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