US Court of Appeals in New Orleans issued a decision that permits
employers to require workers, as a condition of their jobs to agree to
arbitrate all workplace disputes and to do so as individuals standing against
their employers. This ruling could be the end of employment class actions,
which were so important in addressing barriers of race and sex discrimination
after the 1964 Civil Rights Act, and of course are still important to
enforcement of labor standards including minimum wage.
I read about this from a Politico post by Craig
Becker. The actual cases involved
D.R. Horton, a home-builder which operates in 27 states with annual revenue of
more than $6 billion. The company required all employees to sign an agreement
providing that the employment disputes would be resolved by binding arbitration
and that the arbitrator “may hear only Employee’s individual claims.” One
employee attempted to pursue a claim the D.R. Horton misclassified an entire
category of workers as exempt from the protection of federal overtime
regulations, the company insisted each worker had to file an individual claim.
So what’s an employee to do? To the National Labor Relation Board (NLRB)
Bat Signal. The NLRB found that the “agreement” to waive the right to join with
co-workers for workplace claims violated federal labor law saying not only do
employees have the right to join a union, but they can “engage in…converted activates
for the purpose of…other mutual aid or protection.” The NLRB found that as
employers can’t require employees not to join a union via a “yellow dog
contract,” the employers can’t require employees to “agree” not to file class
action suits.
The New Orleans Court of Appeals reversed the NLRB’s decision in a 2-1
vote. They found the Federal Arbitration Act (FAA) trumps the employee’s right
to act collectively. The FAA doesn’t actually address class action suits. The
court’s holding is in line with the Supreme Court’s decisions expanding their
interpretation of FAA. If the court’s holding becomes governing rule, no
employer will permit its employees to bring class action suits. Many employers already
require these waivers such as J.P. Morgan and United Healthcare. However, all
those represented by unions will have to yield their rights.
One federal judge said, “each employee would have to…undertake the person
risk of litigation directly against his or her…employer. Many employees would
likely be unable to bear such…risks.” Oh good, some states the reasons for all
of this. It is perfect, employers can cheat employees they keep in poverty and
there is nothing the poor can do about it, suckers. No one reading this blog
would be surprised to hear me say workers in the US are vulnerable to a host of
labor violations and it is just getting worse. This is particularly true of
low-wage workers. We also have to remember that organized labor continues to
weaken almost across the board, the only hope really is to organize unskilled
service workers, which is very difficult because the Walmart business model
where unionbusting is key.
Becker concludes by suggesting Congress might do something about this
when it takes up the Arbitration Fairness Act this year. I’m a far more cynical person. I worry that
one Congress is alerted to this problem they will make it worse by banning
unions or individual suits against employers, ok so I’m being a little tongue
and cheek here, but the point remains. I don’t believe Congress will help
especially the House of Representatives, remember who pays the bills here.
