In the first case of the new term, the court could dramatically alter the nature of the workplace…
The Supreme Court began its 2017–18 term today, kicking off what could be a momentous year. The day marks the start of Justice Neil Gorsuch’s first full term on the nation’s highest court, having restored the conservative majority at the tail end of the court’s previous term.
During the intervening year between Justice Antonin Scalia’s death and Gorsuch’s ascension, the court was largely quiet, avoiding sweeping decisions that likely would have left the court deadlocked between the four conservative and four liberal justices. Now, with Gorsuch on board, the conservative wing is free to shape the legal landscape of the country in line with the conservative ideological vision.
As such, the first cases the Supreme Court has chosen to hear are worth noting, as they are indicative of the court’s priorities. On Monday morning, for the very first oral arguments of the term, the court will hear arguments for three consolidated cases — Epic Systems Corp. v. Lewis, Ernst & Young LLP v. Morris, and N.L.R.B. v. Murphy Oil USA — collectively referred to as “Murphy Oil.” The consolidated cases are important to note for the left, as they go to the heart of the rights of workers, both in the workplace and the courthouse.
The central issue in Murphy Oil regards the legality of mandatory arbitration agreements, also called “forced arbitration.” In the consolidated cases, the court will decide whether forced arbitration is permissible in an employment setting.
Forced arbitration is exactly what it sounds like. Superficially, such an agreement is an agreement between the employee and their company to resolve any legal issue that arises between them in private arbitration, rather than taken to court. In reality, because of the power discrepancy between the company and the worker, companies set the arbitration as a condition of employment. In other words, its “sign this arbitration agreement waiving your right to go to court, or you’re out.”
If that sounds outlandish, just consider the facts of the cases themselves. In one of the three cases, N.L.R.B. v. Murphy Oil, the plaintiff, Sheila Hobson, was required as part of her job application to the company, Murphy Oil USA, to sign their arbitration agreement. There was no negotiation; applicants were required to waive their right to sue and enter the arbitration agreement as part of the application.
Hobson did so, and got the job. Later, she and other employees came to believe they had been unpaid for overtime and other work-related activities. They attempted to sue over the wage theft. When they got to court, however, Murphy Oil USA refused to litigate the case on the merits, instead insisting the case had to be thrown out and sent to individual arbitration proceedings because of the forced arbitration ‘agreement’ from the application. The courts agreed; they dismissed the case, and now Hobson and other workers like her have taken appeals of such decisions to the Supreme Court.
It is important to understand the scope of forced arbitration. Per the National Employment Lawyers Association, the rights the employee waives in signing forced arbitration agreements are enormously extensive: race, sex, and religious discrimination, sexual harassment and hostile work environments, unpaid wages and failure to pay overtime, wrongful denial of family or medical leave, wrongful terminations. All fall within the scope of a forced arbitration agreement; an employee who has signed onto forced arbitration and suffered such a harm cannot sue their employer, instead being forced into binding, individual, and private arbitration.
Forced arbitration applies to all claims, regardless of the severity of the underlying claimed harm. Last year, the New York Times reported that “a cruise ship employee who said she had been drugged, raped and left unconscious in her cabin by two crew members could not take her employer to civil court over negligence and an unsafe workplace.”
Arbitration is not like a court proceeding. The process is private, without necessarily involving many of the legal procedural guarantees many Americans would consider “due process.” Per the same New York Times report, “[l]ittle is known about arbitration because the proceedings are confidential and the federal government does not require cases to be reported”:
“Behind closed doors, proceedings can devolve into legal free-for-alls. Companies have paid employees to testify in their favor. A hearing that lasted six hours cost the plaintiff $150,000. Arbitrations have been conducted in the conference rooms of lawyers representing the companies accused of wrongdoing.
“Winners and losers are decided by a single arbitrator who is largely at liberty to determine how much evidence a plaintiff can present and how much the defense can withhold. To deliver favorable outcomes to companies, some arbitrators have twisted or outright disregarded the law, interviews and records show.
“‘What rules of evidence apply?’ one arbitration firm asks in the question and answer section of its website. ‘The short answer is none.’”
There is also the case of the arbitrator him/herself, who is not a judge (and in some cases, not even a lawyer). The Times report mentions one case where the arbitrator “went to a basketball game with the company’s lawyers the night before the proceedings began. (The company won.)” Even where there is no potential collusion at play, though, the economic incentives stack the deck against employees: arbitrators are professionals who are often selected by the company, and an arbitrator who is too pro-labor in his decisions may soon find that no company wants to hire him.
The practice of forcing employees to sign arbitration agreements is increasingly widespread. A study released Wednesday by the Economic Policy Institute (EPI) found that in 1992, approximately 2% of private sector, non-unionized employees in the United States had signed a forced arbitration agreement. Today, that percentage is 55%. As a result, the EPI estimates that over 60 million American workers are working under such agreements.
The practice has become so widespread because many courts have essentially signed off on it. Courts frequently enforce arbitration agreements in many settings, including employment or consumer contracts, as a way of relieving the judicial system’s already-overstrained case load (the euphemism is that a claim will be sent to arbitration in the interest of “judicial economy”).
The real victory for businesses, though, lies in the fact that such claims by employees against them must be brought individually, rather than as a group through a class action. While the private and controlled nature of arbitration is appealing, arbitration can still be expensive for companies, both in terms of paying for the arbitration itself and time spent in actually litigating it.
However, those costs pale in comparison to defending against a class action lawsuit, which is sometimes the most realistic means by which a large group of employees can enforce their rights. By “large,” I do not mean just a large department of workers at a single location; the 2011 case of Wal-Mart Stores, Inc. v. Dukes, saw a class action representing 1.6 million women Wal-Mart workers.
The financial and institutional incentive for big business in forced arbitration is that forced arbitration prohibits large class actions that identify employees less so by social identities than by membership in a social class: for example, in the Wal-Mart case, identifying the class of plaintiffs as not just women, but women workers, specifically women Wal-Mart employees.
Forcing such people apart and into individual arbitration is and always has been successful- as the New York Times report found, when employees can’t bring their claims as a class action, and instead must bring them individually in private arbitration, many simply give up.
Besides the practical effect forced arbitration has on workers, the issue in Murphy Oil provokes fundamental questions about how we think about “rights,” both in and out of the workplace. Most Americans would consider the right to have your day in court to be a foundational aspect of our legal system. And regardless of the outcome of Murphy Oil, the laws that grant workers these rights will still be on the books (again, the issue is not about repealing laws that grant workplace rights, such as the Civil Rights Act or the Americans with Disabilities Act. It is about being ‘required to waive’ rights under them, and instead ‘agreeing’ to private arbitration).
The problem is that in a world where employers can require employees to sign a waiver of their rights or be fired, such ‘rights’ are no longer meaningful. Individual workers, particularly low-wage workers, do not have the negotiating power to meaningfully consent to such arbitration agreements (this is the whole concept behind unions).
Thus, Murphy Oil is likely to be a harbinger of how a newly empowered and energized conservative majority on the Supreme Court will shape the rights and daily lives of average, everyday Americans. Forced arbitration agreements have spread because the court system has allowed them to; a ruling from the Supreme Court affirming their legality would essentially be a green light for employers to deploy them.
And that green light is a near certainty. Speaking to Mashable, Bill Gould, a former chairman of the National Labor Relations Board and professor emeritus at Stanford Law School, was blunt in assessing the employees’ chances: “Based upon the way the Supreme Court has treated these arbitration clauses in the past, my judgment is that they will go against the employees.” In prior years, the liberal wing could occasionally get a justice such as Justice Anthony Kennedy to flip to them on social issues like same-sex marriage. On business issues, though, the conservatives are in lock-step.
Murphy Oil, as the first case the Supreme Court hears this term, signals a change. Federal courts have long been a hostile place to try to enforce workers’ rights. But with Gorsuch and the rest of the conservative wing set to dominate the Supreme Court for the foreseeable future, it appears it will no longer be the case that the federal courts will hear a worker’s case, and be hostile to it. Instead, the courts just won’t hear the case at all.