On Monday, the U.S. Supreme Court began hearing oral arguments on three consolidated cases deciding your rights to sue your employer in court. The court is debating whether arbitration clauses that forfeit your right to band together with other employees and pursue class-action claims against your employer — clauses that employers are increasingly writing into employees’ contracts — are illegal.
If the lawyers representing employers have their way, companies would be allowed to continue writing employment contracts that force workers into less costly individual arbitration agreements if employees want to raise the alarm and pursue legal action against wrongful treatment and toxic workplaces.
Lawyers for the workers argued that contracts that deny employees the right to class-action lawsuits could violate a different federal labor law. Lawyers representing employees said that the National Labor Relations Act makes it illegal for any contract to deny employees the rights to engage in “concerted activities” for “mutual aid and protection.”
The ideologically-split justices were divided on whether arbitration clauses with class-action waivers in employment contracts are illegal. Justice Stephen Breyer noted that a ruling against the workers would endanger “the entire heart of the New Deal,” while Justice Kennedy noted that even if the justices sided with employers, employees could still individually go to the same lawyer, which would give employees “many of the advantages” of collective action.
But for Justice Ginsberg, individual action is not enough. She noted that individual claims are so costly for employees that the legal bills would outweigh the potential settlements. “That’s why this is truly a situation where there is strength in numbers,” Ginsburg said.
Why arbitration is a bad deal for employees
The court’s decision would affect 25 million employment contracts, according to the Economic Policy Institute. More than half of private, non-unionized workplaces have mandatory arbitration practices, according to a new study. That means that 60 million Americans are giving up their right to go to court to protect their legal employment rights. It’s often not much of a choice of whether you want to give up this right. To get the job, employees are often required to sign arbitration clauses in their employment contracts.
But these clauses matter later when employees seek justice for a company’s wrongdoing. When you want to take your case to court as an employee, the deck is stacked against you. Results show that when cases go to arbitration, companies usually get their way. Between 2010 and 2014, companies sought to push 1,179 class actions into arbitration, and judges overwhelmingly ruled in their favor in four out of every five cases, according to the New York Times.
The court is expected to reach a decision by June, according to Reuters.