Above all the Roberts Court is strongly pro-business. The court recently demonstrated that again when it closed the courthouse doors to the ability of many workers to sue for wage theft, harassment, and discrimination.
In Epic Systems v. Lewis, the court in a 5-4 decision ruled that an employer may lawfully require its employees to agree, as a condition of employment, to take all employment-related disputes to arbitration on an individual basis and to waive their right to participate in a class action suit or class arbitration.
There are many serious flaws with the majority’s reasoning. To begin with, the Federal Arbitration Act never was meant to apply to employment contracts.
The case involved an effort by workers to file a class action suit against an employer for violating the federal minimum wage law. The employer sought to dismiss the case because it had insisted as a condition of employment that the employees waive their ability to go to court or be part of a class action; any dispute had to be resolved out of court in an arbitration.
This should be an easy case. The National Labor Relations Act, a federal law adopted in 1938, protects a right for employees to engage in “concerted activities for the purpose of . . . mutual aid or protection.” As Justice Ruth Ginsburg explained in her dissent: “By joining hands in litigation, workers can spread the costs of litigation and reduce the risk of employer retaliation.”
But Justice Neil Gorsuch, joined by the conservative justices – John Roberts, Anthony Kennedy, Clarence Thomas, and Samuel Alito – rejected this and said that the arbitration clause in the employment contract that was insisted upon by employers had to be enforced and the workers could not go to court or even have a class action in arbitration. The Supreme Court invoked the Federal Arbitration Act, a law adopted in 1925, which provides that arbitration clauses in contracts shall be enforced.
There are many serious flaws with the majority’s reasoning. To begin with, the Federal Arbitration Act never was meant to apply to employment contracts. In fact, the law explicitly states “but nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”
Moreover, there is a well-established principle of statutory interpretation that says that a later statute should be seen as modifying an earlier one. Yet, the court gave the 1925 federal law precedence over one adopted in 1938. There also is a principle that great deference should be given to the statutory interpretation of federal agencies. For 75 years, the National Labor Relations Board always said that the right to engage in concerted activity includes a right to be part of class action suits and that employers cannot insist on arbitration as a condition for employment.
Justice Gorsuch’s majority opinion began with a false premise. In his first sentence he asked, “Should employers and employees be allowed to agree that any disputes between them will be resolved through one-on-one arbitration?” But the reality is that there is not anything like a mutual agreement; employers dictate as a condition for employment that employees give up their right to sue.
Why does this matter? The ability to bring a class action is especially crucial when a large number of people each lose a relatively small amount of money. This is exactly what occurs when there is wage theft. As Justice Ginsburg noted, “Violations of minimum-wage and overtime laws are widespread. . . . One study estimated that in Chicago, Los Angeles, and New York City alone, low-wage workers lose nearly $3 billion in legally owed wages each year.”
Individual employees are unlikely to bring individual claims to arbitration. Without the ability to bring class action suits, employees have little likelihood of recourse. Employers know it too and will be ever more emboldened to rip off their employees.
This is just the latest in a series of rulings in which the court, all in 5-4 decisions, has held that arbitration clauses in contracts should be enforced even though they are dictated by merchants and employers and doctors often in the small print of form contracts. The effect is to keep people from ever having their day in court.
The Supreme Court’s decision in this and other similar cases is interpreting a federal statute, not the Constitution. Congress can fix this by amending the Federal Arbitration Act to make clear that it does not apply in such cases. It is fine if parties voluntarily agree to take their disputes to arbitration, but it is wrong for businesses to be able to force workers and consumers to relinquish their ability to sue and be part of a class action.
Erwin Chemerinsky is dean and professor of law at the UC Berkeley School of Law; firstname.lastname@example.org.