Outten & Golden: Empowering Employees in the Workplace

Posts Tagged ‘Forced arbitration’

Forced arbitration silences sexual harassment victims. After protests, Google finally got rid of it.

Tuesday, November 13th, 2018

One week after 20,000-plus Google employees around the world staged a mass walkout to protest the company’s discrimination and its abysmal handling of sexual misconduct complaints against top-level executives — as the New York Times reported, multiple senior executives were granted multimillion-dollar severance packages or promotions after being accused of sexual violence — the company has announced revisions to its sexual harassment policy. Top of the list: An end to forced arbitration clauses.

In a memo to all employees, Google CEO Sundar Pichai detailed the changes employees could expect, and though the first bullet point about arbitration came with some defensive caveats (“Google has never required confidentiality in the arbitration process and arbitration still may be the best path for a number of reasons”), the change is a meaningful one that appears to be catching on among tech giants.

Chances are, you’ve signed a policy just like this one without even realizing it. As of 2017, more than half of American workers were bound by arbitration clauses, according to the Economic Policy Institute.

And if you didn’t sign one at work, you may have signed one elsewhere: In May, Uber announced it would be eliminating forced arbitration agreements for employees, riders, and drivers who make sexual assault or harassment claims against the rideshare company. Which means, until May, if you were an Uber rider, buried in the Terms & Conditions that virtually no one reads was language that forbade you from taking a sexual misconduct claim against Uber to the courts.

As the New York Times reported, Uber already allowed drivers and employees to get out of those agreements as long as they opted out within the first 30 days of signing their Uber contracts — but no such provision was in place for the riders.

Last December, Microsoft announced that it was eliminating forced arbitration agreements with employees who make sexual harassment claims. The company also declared its support for a proposed federal law that would essentially ban these still-commonplace agreements. “The silencing of people’s voices has clearly had an impact in perpetuating sexual harassment,” Brad Smith, Microsoft’s president and chief legal officer, told the New York Times.

And it was a forced arbitration clause that Fox Chairman and CEO Roger Ailes lorded over Gretchen Carlson, who sued him for sexual harassment in 2016. He fought back by pointing to the language in her Fox contract that barred her from bringing those claims to court and requesting that the court compel Carlson to engage in arbitration instead.

Carlson’s contract didn’t just stop her from bringing her claims to the justice system; it stipulated that “all filings, evidence and testimony connected with the arbitration, and all relevant allegations and events leading up to the arbitration, shall be held in strict confidence.” At least a dozen women reported similar experiences, with parallels not just to the initial harassment but with Ailes’ weaponizing of legal language in their employment contracts.

Other changes to Google’s sexual harassment policy, according to Pichai’s memo, include: “more granularity” around sexual harassment investigations and outcomes; an “overhaul” and consolidation of the means by which employees can report misconduct; “extra care and resources” for Google employees throughout the reporting process, with “extended counseling and career support”; and updated and expanded mandatory sexual harassment training, with failure to comply resulting in negative performance reviews.

Left unaddressed are workers’ demands that the internal harassment report be made public and that an employee representative be added to Google’s board. Only full-time employees are covered by the changes Pichai describes; contractors, vendors, and temporary workers are not.

Google Walkout For Change, the organizers behind last week’s mass demonstration, issued a statement that “commend[ed] this progress, and the rapid action which brought it about,” but called out what the workers’ perceive as the memo’s shortcomings. Mainly, “The company must address issues of systemic racism and discrimination, including pay equity and rates of promotion, and not just sexual harassment alone.”

Last year, Senators Lindsey Graham (R – SC) and Kirsten Gillibrand (D- NY) introduced legislation that would void arbitration agreements that prevent sexual harassment victims from seeking justice through the courts. It also allows victims to file EEOC complaints in addition to pursuing legal action in court, and it prevents employers from compelling arbitration, even in cases where the employee already signed an agreement with a forced arbitration clause.

A bill similar to the one introduced in the Senate, the Ending Forced Arbitration of Sexual Harassment Act of 2017, was introduced in the House by Rep. Cheri Bustos (D-IL). It
has bipartisan support and has been referred to the House Judiciary Committee. In 2019, with a Democratic majority in place, the House might actually pass it.

This article was originally published at ThinkProgress on November 10, 2018. Reprinted with permission. 

About the Author: Jessica M. Goldstein is the Culture Editor for ThinkProgress.

Stop Calling It an Arbitration Agreement—Employers Are Forcing Workers to Give Up Their Rights

Thursday, May 24th, 2018

Trump-appointee Justice Neil Gorsuch begins his decision for the majority in Epic Systems v. Lewis, the landmark arbitration case decided Monday at the Supreme Court, with a simple set of questions: “Should employees and employers be allowed to agree that any disputes between them will be resolved through one-on-one arbitration? Or should employees always be permitted to bring their claims in class or collective actions, no matter what they agreed with their employers?” Justice Gorsuch and the rest of the five-Justice conservative majority answered the first question in the affirmative and the second question in the negative. In so doing, the Supreme Court has ushered in a future where almost all non-union private sector workers—nearly 94 percent of the private sector workforce—will be barred from joining together to litigate most workplace issues, including wage theft, sexual harassment and discrimination.

The decision incorrectly holds that because the Federal Arbitration Act requires courts to treat arbitration agreements on equal footing with other contracts, the National Labor Relations Act, which explicitly protects workers who engage in concerted activity for mutual aid or benefit, does not protect workers’ rights to litigate claims at work. But the problem with the ruling goes much further: The entire decision is premised upon a massive fiction: that these arbitration agreements, wherein the worker loses all access to court to bring a collective action with her fellow workers, are the result of an agreement between the workers and the employer. In reality, arbitration agreements are mandatory rules imposed unilaterally by the employer—not two-sided agreements.

On April 2, 2014, Jacob Lewis, who was a technical writer for Epic Systems, received an email from his employer with a document titled “Mutual Arbitration Agreement Regarding Wages and Hours.” The document stated that the employee and the employer waive their rights to go to court and instead agreed to take all wage and hour claims to arbitration. Furthermore, unlike in court, the employee agreed that any arbitration would be one-on-one. This “agreement” did not provide any opportunity to negotiate, and it had no place to sign or refuse to sign. Instead, it stated, “I understand that if I continue to work at Epic, I will be deemed to have accepted this Agreement.” The workers had two choices: immediately quit or accept the agreement. This is not the hallmark of an agreement; it is the hallmark of a mandatory rule that is unilaterally imposed.

When Lewis tried to take Epic Systems to court for misclassifying him and his fellow workers as independent contractors and depriving them of overtime pay, he realized that by opening the email and continuing to work, he waved his right to bring a collective action or go to court. It is estimated that approximately 60 million Americans have already been forced to sign such individual arbitration agreements, and with Monday’s decision, they are certain to spread rapidly.

From the opening questions of the decision to the subsequent analysis, Justice Gorsuch and the conservative majority completely paper over the forced nature of these “agreements.” Gorsuch describes the facts of this case thusly: “The parties before us contracted for arbitration. They proceeded to specify the rules that would govern their arbitrations, indicating their intention to use individualized rather than class or collective action procedures.” In addressing why it is necessary to honor the waiver of class or collective action, he writes, “Not only did Congress require courts to respect and enforce agreements to arbitrate; it also specifically directed them to respect and enforce the parties’ chosen arbitration procedures.”

But the workers in this case had no meaningful input or opportunity to negotiate the issue of arbitration. Describing the worker’s decision to open an email and not quit his job immediately in this manner is at best delusional and at worst deceitful.

The entire structure of the Supreme Court’s modern jurisprudence on arbitration agreements and class-action waivers is built on the idea that it is proper, appropriate and preferred for those in power to force others to waive their rights. But it wasn’t always this way. In 1925, Congress passed the Federal Arbitration Act (FAA), which sought to address the animosity some judges had towards arbitration, by requiring judges to treat arbitration agreements like other contracts. A 2015 Economic Policy Institute report describes the FAA as something that was  originally intended to be applied “to a narrow set of cases—commercial cases involving federal law that were brought in federal courts on an independent federal ground.” In essence, the FAA was designed so that businesses that negotiate contracts with each other can choose have their claims heard by an arbitrator of their choosing. “But,” the report explains, “in the 1980s, the U.S. Supreme Court turned the FAA upside-down through a series of surprising decisions. These decisions set in motion a major overhaul of the civil justice system. It is no exaggeration to call the Supreme Court’s arbitration decisions in the 1980s the hidden revolution of the Reagan Court.”

The modern case that opened the door to the flood of arbitration agreements was a 2011 Supreme Court case involving a couple that wanted to bring a consumer class action against AT&T to challenge a practice where cell phone companies offered “free” phones, but then charged customers the sales tax on the full value of the phones. Justice Scalia, writing for the five-Justice majority, treated the cell phone contract as something negotiated by the parties. He extolls the virtues of allowing these types of agreements because “affording parties discretion in designing arbitration processes is to allow for efficient, streamlined procedures tailored to the type of dispute.” Scalia finds no issue with the fact that only one party here had power, and that it can be said with certainty that in the history of the world, no one has ever negotiated a cell phone contract with a carrier.

Now, to engage in most activities, from signing on to social media to buying a phone or airline ticket to putting a relative in a nursing home, one is provided a forced contract with an individual arbitration clause hiding inside. After Monday’s decision, it will be unlikely that many will be able to accept or remain at their jobs in the private sector without similarly waiving their right to go to court or act collectively to redress their rights.

This piece was originally published at In These Times on May 23, 2018. Reprinted with permission.

About the Author: Moshe Z. Marvit is an attorney and fellow with The Century Foundation and the co-author (with Richard Kahlenberg) of the book Why Labor Organizing Should be a Civil Right.

Lifelong Wage Warrior Larry Mishel Takes On Trump’s Tax Scam

Tuesday, December 19th, 2017

Lawrence Mishel, the outgoing President of the Economic Policy Institute, is finally – after 30 years at the progressive economic research organization – seeing one of his wishes come true. Leaders in both major political parties are talking about wage stagnation, and how to address it.

“I’ve always wanted to elevate the concerns about people’s paychecks as the salient economic issue,” he said in an interview in his downtown Washington office.

The bad news is that the stagnant wages conversation is being co-opted by the Trump administration and congressional Republicans to sell a tax cut bill that will primarily benefit corporations and the wealthy.

Even so, Mishel counts that as progress. When Mishel joined the then-embryonic EPI as its first research director in 1987, all of the major right-wing think tanks denied that wage stagnation among the working class was a problem, even though EPI was among the first to show the trend unfolding, using the federal government’s deep trove of economic data. Few Democrats recognized the issue, either, Mishel said.

Today, “what’s interesting is there is so much of a dedication on the Trump team to link everything they are going to do to good jobs and wages, something that Democrats have not always done, for mysterious reasons,” Mishel said, pointing as an example the administration promoting its tax bill as “a $4,000 pay raise to workers.”

“The polls show that not many people buy it, even among Republicans, but it’s interesting that this transformation has happened,” Mishel said.

A Lifelong Passion

Mishel has had a lifelong passion for the plight of workers, going at least as far back as his Philadelphia boyhood and days at Penn State University. At Penn State, he combined that passion with a passion for economics, and after receiving advanced economics degrees from American University and the University of Wisconsin at Madison, he went to work as an economist for several unions, including the United Auto Workers; United Steelworkers; the American Federation of State, County and Municipal Employees; and the Industrial Union Department of the AFL-CIO.

When Mishel became president of EPI in 2002, the think tank was beginning to gain a reputation as being more than an advocate of pro-worker policies; it has a reputation for rigorous, fact-based scholarship and economic analysis that is relied on by a broad range of scholars, journalists and lawmakers. Its “State of Working America” reports have become a bible for people seeking to understand the economy from a Main Street point of view.

This month, Mishel hands over the reins of the EPI presidency to Thea Lee, who was previously deputy chief of staff for the AFL-CIO and a leading spokesperson for the union on issues like the impact of trade policy on workers.

But Mishel says he’s not going to disappear; he plans to continue to do research for EPI. “I want to tell the narrative about how wages were suppressed,” he said, particularly to make the point that four decades of stagnant wages for the working class is the result of, to borrow from the title of an EPI publication, “failure by design.”

An Economic Conundrum

The current state of the economy presents a classic economic conundrum. Economic textbooks say that with today’s national unemployment rate, 4.1 percent, we should see wage inflation caused by a tight labor market.

The last time the national unemployment rate averaged 4 percent, in 2000, wages rose on average about 5 percent a year, as shown in this wage tracker by the Federal Reserve Bank of Atlanta. In 2017, the wage tracker shows wage growth in 2017 hovering around 3.4 percent. EPI research further finds that this substandard wage growth has been even worse for people at the lower end of the income scale, whose wages in 2016 grew only about half as much as those of the top 20 percent.

“A true sign of a robust economy is rapid wage growth, and we don’t see wages growing that much faster than inflation, even with roughly 4 percent unemployment,” Mishel said.

Barring a last-minute surprise, passage of the Trump administration/Republican tax bill this week appears inevitable. Asked to what the American economy might look like a year after the tax bill is passed, Mishel predicted a continued stock market rise because companies, already flush with cash and finding themselves flooded with more, will continue to choose to use that cash to buy back their shares rather than invest in creating new jobs.

The big winners will be stockholders and corporate executives. Workers? Not so much. A boost in stock prices at best only benefits the third of American workers who have meaningful stock holdings, primarily retirement accounts. And even among that group of workers, the average retirement account stock portfolio is less than $100,000.

“The rising stock market is not a sign that the economy is doing well,” Mishel said. In fact, an overheated stock market, disconnected from the pulse of the Main Street economy, is prone to the kind of explosive bubble-burst that the nation saw in 2008.

What We Need Instead

What we need instead, Mishel said, is structural changes that will lead to real wage growth and improved working-class living standards. Those policies include:

• Raising the minimum wage, which Mishel said would have ripple effects beyond low-wage workers to boost the take-home pay of about 30 percent of the workforce.

• Targeting job creation in areas of high unemployment, which are disproportionately communities of color. Ultimately, government policy should be to ensure that every person who wants a job has access to a job, publicly funded if necessary. “You want a situation where employers are chasing after workers, and not workers chasing after employers. When employers are chasing after workers, wages go up,” Mishel said.

• Rebuilding the collective bargaining system. In 2016, only about one in 10 workers belonged to a labor union, a close to 50 percent decline from 1983. Nearly half of those work in the public sector. In private companies, fewer than one in 16 workers – less than 7 percent – belong to a union. If unions are stronger, Mishel said, “workers in non-union employers benefit as well, because their employers will follow the lead of the employers where collective bargaining is setting the standard. …I don’t think we will ever get robust middle-class wage growth or have the vibrant democracy that we need without reestablishing collective bargaining.”

• Assuring what Mishel calls “day-one fairness,” which would include eliminating such practices as misclassifying full-time workers so they are not eligible for health benefits or overtime, or forced arbitration and noncompete clauses that prevent workers from challenging bad worker policies or even leaving a bad employer to work for a competitor.

Having Their Moment

When Mishel is presented with the view that Donald Trump’s presidency and right-wing control of Congress has placed many of these policy goals further out of reach, he offers a contrarian view.

“The right is having its moment now,” he said, “but what has happened, though, is that the traditional stranglehold on the Democratic Party policy agenda by what you could call the corporate Democrats and their friends has been broken… The center-left policymakers have moved much closer to where the Economic Policy Institute has always been. So [with] the next wave of candidates and the next wave of legislation that comes if and when Democrats have electoral victories, we will do a lot better than we did during the Clinton era or the Obama era.”

Examples include the increased willingness of the Democratic Party mainstream to embrace universal health care, a $15 minimum wage by 2023, and support for collective bargaining for all public employees, Mishel said.

With this change, “you will see the Economic Policy Institute emerge as a much more important source of policy proposals,” Mishel predicted. “Our time will come again; there may be a Democratic House in 2019, and who knows about the Senate? Nothing is for sure, but it is not as grim as ‘the Democrats will never get back.’”

The People Can Win

In the meantime, Mishel advises people concerned about the state of the American worker to not think of the economy as “broken.”

“People walk around as if we have a bad economy,” Mishel said. “We don’t have a bad economy. It’s been built to do what it is doing, which is skimming the most for those at the top.”

That should be heartening, he went on to say, because changing the economy is “a matter of organizing and policy and mobilization.” That work won’t be easy, he said, but “the people can win.”

This blog was originally published at OurFuture.org on December 19, 2017. Reprinted with permission.

About the Author: Isaiah J. Poole is communications director of People’s Action, and has been the editor of OurFuture.org since 2007. Previously he worked for 25 years in mainstream media, most recently at Congressional Quarterly, where he covered congressional leadership and tracked major bills through Congress. Most of his journalism experience has been in Washington as both a reporter and an editor on topics ranging from presidential politics to pop culture. His work has put him at the front lines of ideological battles between progressives and conservatives. He also served as a founding member of the Washington Association of Black Journalists and the National Lesbian and Gay Journalists Association.

Forced Arbitration Protects Sexual Predators and Corporate Wrongdoing

Tuesday, October 24th, 2017

Fox News.  Sterling Jewelers.  Wells Fargo. 

What do they all have in common?  For years, they successfully kept corporate wrongdoing secret, through forced arbitration.

Buried in the fine print of employment contracts and consumer agreements, forced arbitration clauses prohibit you from going to court to enforce your rights.  Instead, employees who experience harassment and discrimination, or consumers who are the victims of financial fraud or illegal fees, are sent to a private arbitration forum.  Frequently designed, chosen, and paid for by the employer or corporation, in arbitration everything is conducted in secret. People who suffered the same abuses often can’t join together to show how rampant a problem is and confront a powerful adversary—and people are less likely to come forward at all, because they have no idea they aren’t alone.

When Gretchen Carlson sought her day in court over sexual harassment allegations against Roger Ailes, her former boss at Fox News, Mr. Ailes’s lawyers had a quick response: send the case to forced arbitration.  After she filed suit, he also invoked a clause that reportedly required absolute secrecy: “all filings, evidence and testimony connected with arbitration, and all relevant allegations and events leading up to the arbitration, shall be held in strict confidence.” It was only because she resisted that clause through a creative legal theory that her allegations were made public—unleashing a tsunami of claims of sexual harassment by Ailes and others at Fox News.

Hundreds and maybe thousands of former employees of Sterling Jewelers, the multibillion-dollar conglomerate behind Jared the Galleria of Jewelry and Kay Jewelers, known for advertising slogans such as “Every kiss begins with Kay,” were allegedly groped, demeaned, and urged to sexually cater to their bosses to stay employed.  The evidence of apparent rampant sexual assault was kept secret for years from other survivors and the general public through gag orders imposed in forced arbitration.

The same thing happened at American Apparel, where employees and models were forced to arbitrate sexual harassment claims and keep the details secret, and the proceedings were reportedly a sham.

We don’t yet know if Hollywood producer Harvey Weinstein used forced arbitration to suppress allegations of his decades-long campaign of sexually harassing, abusing, and assaulting young assistants, temps, employees and executives at the Weinstein Company and Miramax.  But the clauses may well have played a role, and his nondisclosure agreements and secret one-by-one settlements worked to the same effect.

And forced arbitration clauses do not only hide wrongdoing in sexual harassment cases.  Corporations also use forced arbitration to isolate victims and cover up massive, widespread wrongdoing in the financial sector.

For example, forced arbitration clauses found in legitimate customer accounts let Wells Fargo block lawsuits related to the 3.5 million sham accounts it opened; as a result it kept its massive scandal secret for years, and then lied to Congress about it.  People began trying to sue Wells Fargo in 2013, but cases were pushed out of our public courts into secret arbitrations, and Wells Fargo continued creating fake accounts.

KeyBank, like Wells Fargo, has also used forced arbitration to keep disputes secret and block relief for people charged overdraft fees when their accounts weren’t overdrawn.  A court recently ruled “unconscionable” KeyBank’s provision requiring a customer to “keep confidential any decision of an arbitrator.”  But the court allowed KeyBank to force the plaintiff to arbitrate his case individually, despite the fact that thousands or millions of KeyBank customers were subject to the same abuses. These customers were not permitted to come together to challenge these abuses as a group in court, because of forced arbitration.

By imposing secrecy and isolating victims, forced arbitration shields corporate wrongdoing and leaves it more difficult for those harmed to hold the wrongdoers accountable.  That’s why the Consumer Financial Protection Bureau issued a rule earlier this year prohibiting banks, payday lenders and other financial companies from using forced arbitration to cover up widespread frauds, scams and abuses.  This is a first step in the right direction of restoring Americans’ rights to challenge predatory practices.  But some in Congress have threatened to block this important protection. 

Earlier this year, Congress and President Trump overturned rules that prohibited employers with federal contracts from forcing employees to arbitrate sexual harassment or sexual assault claims, or claims alleging discrimination on the basis of sex, race, or religion.  In so doing, they took power away from women facing sexual harassment and returned it to those trying desperately to keep that harassment under wraps.

We cannot tolerate another blow against Americans seeking to hold the wealthy and powerful accountable.  The CFPB’s rule must be permitted to go forward. 

This blog was originally published at Public Citizen Litigation Group’s Consumer Law & Policy Blog on October 23, 2017. Reprinted with permission. 

About the Author: Emily Martin is General Counsel and Vice President for Workplace Justice at the National Women’s Law Center. She oversees the Center’s advocacy, policy, and education efforts to ensure fair treatment and equal opportunity for women at work and to achieve the workplace standards that allow all women to achieve and succeed, with a particular focus on the obstacles that confront women in low-wage jobs and women of color.

The Trump Administration’s Backdoor Plan to Erode the Rights of Workers to Act Collectively

Monday, October 2nd, 2017

On October 2, the U.S. Supreme Court will hear a case that implicates the very concept of collective action. NLRB v. Murphy Oil asks whether it is a violation of workers’ rights to force them to enter into arbitration agreements that prohibit collective or class litigation. Such agreements, often entered into as conditions of employment, require workers who want to sue their employers to do so individually in a private arbitration setting, rather than as a class of aggrieved workers who can pool their resources and knowledge. According to a recent study by the Economic Policy Institute, more than 60 million U.S. workers have now lost access to the courts because of such forced arbitration agreements.

Now, the Trump administration is entering the fray, submitting a brief to the Supreme Court in the Murphy Oil case aimed at advancing an anti-worker legal theory poised to erode protections for workers outside of the union context.

Such efforts could have far-reaching implications. In a 1997 paper for Arizona Law review, professor of law emeritus Jack Greenberg argued, “Civil rights and class actions have an historic partnership,” with class actions routinely used “to challenge discrimination in employment, education, the use of public facilities and housing, to assert prisoners’ rights, and to promote welfare reform, to name just a few areas that conventionally are put in the civil rights category.”

More recently, the NAACP went further, arguing in an amicus brief submitted in August 2016 to the Supreme Court that “American democracy depends upon our unwavering commitment to equal opportunity. Federal labor law honors that commitment by guaranteeing employees the right to challenge workplace discrimination through concerted activity, including picketing, striking and group adjudication of workplace rights.”

Yet, in recent years, the rights of most Americans to engage in concerted legal has greatly diminished. In a 2015 investigative series on this trend, The New York Times reported that, starting in 1999, a “Wall Street-led coalition of credit card companies and retailers”—with soon-to-be Chief Justice of the Supreme Court John Roberts Jr. involved—engineered a plan to get rid of class action lawsuits, because such lawsuits allow individuals to pool their power against companies.

Years later, in a pair of cases decided in 2011 and 2013, with John Roberts Jr. as Chief Justice, the Supreme Court narrowly held that companies could include contract provisions that require plaintiffs to go through arbitration instead of court, while waiving their rights to class actions.

A federal judge interviewed in 2015 by the Times explained that the result is that now, “business has a good chance of opting out of the legal system altogether and misbehaving without reproach.”

The Times study of thousands of arbitrations—most of which are not publicly available—found that more and more consumer and labor and employment cases are being funneled into arbitration. Between 2010 and 2014, there was a 215 percent rise in arbitrations in labor cases over the previous four years. This represents a privatization of the justice system.

Furthermore, in many instances, the funneling of cases to individual arbitrations rather than class actions pressures workers into foregoing the process altogether. Looking at 2010 to 2014, the Times found that Verizon and Time Warner Cable, which have 140 million subscribers combined, faced only 72 arbitrations. After all, who would go up against an outmatched opponent alone?

It is understandable that workers would bow out, given that such arbitration settings are favorable to the employer. Unlike judges who are assigned cases randomly, arbitrators are chosen by the parties, meaning they are chosen regularly to arbitrate before the same corporations. If arbitrators against the corporations too often, there is a strong likelihood that the arbitrators will not be chosen again and therefore lose business in the future. This creates a financial incentive for arbitrators to side with corporations. The Times series notes that dozens of arbitrators “described how they felt beholden to companies. Beneath every decision, the arbitrators said, was the threat of losing business.”

Various attempts have been made to protect individuals from these arbitration provisions, including state laws holding these provisions to be unconscionable, as well as legal arguments claiming that such provisions violate federal anti-trust rules. But these arguments have failed at the Supreme Court. What has remained is the National Labor Relation Board’s (NLRB) position that Section 7 of the National Labor Relations Act (NLRA) protects workers’ substantive rights to join together in class actions. Section 7 provides that workers have “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”

The NLRB has taken the position that employment class actions constitute “other concerted activities,” which are protected under labor law. And workers cannot sign away these rights, in the same way that they cannot sign away the right to form or join a union. The Seventh and Ninth Circuit Courts of Appeals agreed with the Board that the employer violated workers’ rights by making them sign arbitration agreements with class action waivers, but the Fifth Circuit held otherwise.

This split in the circuits made the issue ripe for Supreme Court review, and the matter was indeed appealed to the Supreme Court in September 2016, and accepted for review by the Supreme Court in January 2017. At the time, President Obama’s Solicitor General filed a brief with the Supreme Court supporting the NLRB’s position. But Trump’s Solicitor General later changed this position in order to side with employers.

In this case, the Trump administration expresses a view of labor law in the Solicitor’s brief that completely reorients workers’ rights. The brief acknowledges that Section 7 of the NLRA contains what it terms “core” rights, which relate to unionizing and collective bargaining, but pushes aside all other concerted activities as only contained in “residual language” and therefore not deserving of the same level of protections. Such a reading of labor law effectively states that the law’s protections only apply to workers’ activities as they relate to unions.

However, the NLRB clearly states that “the law we enforce gives employees the right to act together to try to improve their pay and working conditions, with or without a union. If employees are fired, suspended or otherwise penalized for taking part in protected group activity, the [NLRB] will fight to restore what was unlawfully taken away.” These rights are far broader than the Trump administration acknowledges in its brief before the Supreme Court, and any limitation of them would greatly diminish the few rights workers have in the workplace.

This week, management-side Republicans gained a majority on the NLRB, and soon a management-side Republican will become the agency’s General Counsel. This new conservative Board is likely to shift labor law away from worker protections, as was the case during the George W. Bush years. However, Trump’s Solicitor’s argument goes much further. It invites the Supreme Court to formally bifurcate and limit workers’ rights to act collectively.

This piece was originally published at In These Times on September 28, 2017. Reprinted with permission. 

 About the Author: Moshe Z. Marvit is an attorney and fellow with The Century Foundation and the co-author (with Richard Kahlenberg) of the book Why Labor Organizing Should be a Civil Right.

Divide and Conquer: Employers' Attempts to Prohibit Joint Legal Action Will be Tested in Court

Thursday, September 28th, 2017
On Monday, October 2, the U.S. Supreme Court will hear arguments in the most consequential labor law cases to come to the Court in a generation, which could fundamentally alter the balance of power between millions of American workers and the people who employ them.

So why are so few people paying attention?

At first glance, the cases may seem dry and complex, as they involve 80-year-old laws that most people have never heard of. But the issue at stake is actually quite simple: should your employer be able to force you to give up your right to join your coworkers in a lawsuit challenging working conditions as a condition of getting or keeping a job?

The federal courts of appeals for the Seventh and Ninth Circuits say the answer should be no. They point to the National Labor Relations Act (NLRA), a law passed by Congress in 1935 to end “industrial strife and unrest” and restore “equality of bargaining power between employers and employees.” The NLRA gives workers the right to join unions and to “engage in other concerted activities” for “mutual aid or protection,” and it makes it illegal for employers to “interfere with, restrain or coerce employees in the exercise” of those rights.

But in recent years, more and more employers are requiring their employees to agree, as a condition of working for that employer, that they must resolve any disputes that might come up in the future in a private arbitration proceeding, and not in court. Many of these so-called arbitration agreements also prohibit the arbitrator from hearing more than one employee’s claim at a time—in other words, they ban employees from taking legal action together, either in court or in arbitration. A recent study from the Economic Policy Institute found that 23.1% of private sector, non-union workers, or 24.7 million Americans, work for employers that impose such a concerted legal action ban.

Sheila Hobson was one such employee. She worked at a gas station in Calera, Alabama that was run by Murphy Oil. When she applied to work there, she had to sign an agreement stating that she would not participate in a class or collective action in court, “in arbitration or in any other forum” and that her claim could not be combined “with any other person or entity’s claim.” Two years later, she joined with three coworkers to file a lawsuit under the Fair Labor Standards Act. She and her coworkers claimed that they were routinely asked to clean the station, stock shelves, check prices at competitors’ stations and perform other tasks while “off the clock” and without pay. Murphy Oil moved to dismiss the lawsuit, pointing to their arbitration agreement and arguing that each employee had to pursue their claims individually.

The National Labor Relations Board, a federal agency created by Congress to enforce the NLRA, stepped in to defend Ms. Hobson and her coworkers. The NLRB ruled that Murphy Oil’s arbitration agreement interfered with its employees’ right to engage in concerted activity for their mutual aid or protection in violation of the NLRA. But the Court of Appeals for the Fifth Circuit agreed with Murphy Oil, leading to this showdown before the Supreme Court.

The crux of Murphy Oil’s position, which is shared by the employers in the cases out of the Seventh and Ninth Circuits that are also being argued on Monday, is that the employers’ bans have to be enforced because of the Federal Arbitration Act. This law, passed back in 1925 at the request of businesses who wanted to be able to resolve commercial disputes privately under specialized rules, says that agreements to arbitrate should be treated the same as any other contracts. And because their concerted action bans are found in arbitration agreements, the employers argue, the FAA requires their enforcement.

But the FAA includes a “saving clause” that allows arbitration agreements to be invalidated on any “grounds as exist at law or in equity for the revocation of any contract.” One such ground for revoking a contract is that it is illegal, and the Seventh and Ninth Circuit opinions pointed out that a contract that interferes with employees’ rights under the NLRA is illegal and thus unenforceable under the FAA’s saving clause. Moreover, as the NLRB explained, the Supreme Court has repeatedly held that the FAA cannot take away anyone’s substantive rights; it merely allows those rights to be pursued in arbitration rather than in court. But the concerted action bans in these cases, and those like them that other employers force employees to sign, do take away the very substantive right to join with coworkers that the NLRA guarantees. By preventing workers from banding together in court or in arbitration, these agreements deprive employees of the ability to pursue their concerted action rights in any forum whatsoever.

Given the high stakes these cases present, both employer and employee positions have garnered a large number of friend-of-the-court briefs before the Supreme Court. The Chamber of Commerce has weighed in on the employers’ side, as have other groups representing industry and the defense bar. The Justice Department, which had originally represented the NLRB, switched sides with the change in presidential administration and is also supporting the employers.

Meanwhile a group of ten labor unions pointed out that given the economic power employers wield over employees who need jobs to support their families, “few workers are willing to put a target on their back by bringing legal claims against their employer on an individual basis.” The NAACP Legal Defense Fund and more than 30 other civil rights groups, including Public Justice, explained how joint legal action has unearthed patterns of discrimination and brought about systemic changes in workplace policies that individual cases could never have achieved, listing 118 concerted legal actions challenging discrimination based on race, gender, age, disability and sexual orientation that would not have been possible under concerted action bans like Murphy Oil’s. The National Academy of Arbitrators disputed the employers’ premise that joint or collective claims can’t proceed in the more streamlined forum of arbitration, noting that labor arbitrators have been resolving group claims in unionized workplaces for decades and that requiring each case against the same employer – with the same evidence – to proceed separately would actually be far less efficient and more costly. Finally, the Main Street Alliance argued that concerted action bans reduce enforcement of minimum wage and employment discrimination laws, which disadvantages responsible businesses relative to corporations that mistreat employees and break the law.

With nearly a quarter of U.S. non-union employees already subject to concerted action bans, a green light from the Supreme Court telling employers to continue this practice will no doubt cause that figure to soar. But Public Justice is hopeful that the Court will follow the plain meaning of the NLRA and find these bans to be the illegal acts that they are—attempts to coerce employees into giving up their right to join forces to increase their bargaining power. That right applies equally whether employees want to join a union, join a lawsuit or join a boycott or picket line. The Supreme Court should stop this employer power grab and reaffirm the right to concerted activity, which is just as important for workers now as it was when Congress established it over 80 years ago.

This article was originally published at Public Justice on September 28, 2017. Reprinted with permission.

About the Author: Karla Gilbride joined Public Justice in October 2014 as a Cartwright-Baron staff attorney. Her work focuses on fighting mandatory arbitration provisions imposed on consumers and workers to prevent them from holding corporations accountable for their wrongdoing in court.

Supreme Court opens its new term with a direct attack on workers’ rights

Monday, September 25th, 2017

The Supreme Court returns next Monday from its summer vacation for the first full term where Neil Gorsuch will occupy a seat at the far end of the Court’s bench. And the Court will open this term with a trio of cases that are very likely to immunize many employers from consequences for their illegal actions.

The three cases — National Labor Relations Board v. Murphy Oil USAErnst & Young LLP v. Morris, and Epic Systems v. Lewis — all involve employment contracts cutting off employee’s rights to sue their employer for legal violations.

In at least one case, employees were required to sign the contract as a condition of beginning work. In another, employees were forced to give up their rights as a condition of keeping their job. These contracts contained two restrictions on the employees: 1) a “forced arbitration” provision, which requires any legal disputes between the employer and the employee to be resolved in a privatized arbitration system; and 2) a provision prohibiting employees from bringing class actions or other collective suits against their employers.

Requiring private arbitration favors employers over employees. As an Economic Policy Institute study determined, employees are less likely to prevail before an arbitrator than before a court, and they typically receive less money from an arbitrator when they do prevail.

Banning class action suits, meanwhile, effectively permits employers to violate the law with impunity, so long as they do not do too much harm to any individual employee.

If an employer cheats one employee out of $300,000 worth of wages, for example, that employee is likely to be able to find a lawyer who will take his case on a contingency basis — meaning that the lawyer gets a percentage of what the employee collects from the employer if they win. If the same employer cheats 10,000 employees out of $30 each, however, no lawyer is going to represent any one of these workers on a contingency basis. Plus, few employees are likely to bother with a $30 suit. It’s too much hassle, and too expensive to hire a lawyer who won’t work on contingency. The solution to this problem is a class action suit, which allows the 10,000 employees to join together in a single case litigated by a single legal team.

Banning such class actions effectively leaves these employees without remedy. As one federal judge explained, “the realistic alternative to a class action is not 17 million individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30.”

The employer’s claim that they can combine a forced arbitration clause with a class action ban arises out of two previous Supreme Court cases that took an extraordinarily creative view of a nearly 100-year-old law.

In 1925, Congress enacted the Federal Arbitration Act to allow, as Justice Ruth Bader Ginsburg once explained, “merchants with relatively equal bargaining power” to agree to resolve their disputes through arbitration. Beginning in the 1980s, however, the Court started to read this law expansively to permit forced arbitration between businesses and relatively powerless consumers and employees.

Then, the Court got even more aggressive. By its own terms, the Federal Arbitration Act exempts “workers engaged in foreign or interstate commerce.” Nevertheless, in its 5-4 decision in Circuit City v. Adams, the Supreme Court held that the Act applies to most workers engaged in foreign or interstate commerce. Thus, forced arbitration clauses in employment contracts were given special protected status, even though the federal law governing these clauses says otherwise.

Similarly, Justice Antonin Scalia wrote for a 5-4 Court in AT&T Mobility v. Concepcion that the Federal Arbitration Act has penumbras, formed by emanations from its guarantees that give it life and substance. The right of businesses to insert class action bans, Scalia claimed, is one of these penumbras contained in the 1925 law. And so businesses gained the power to add no class action clauses to their forced arbitration agreements, even if a ban on class actions violates state law — and despite the fact that the Federal Arbitration Act says nothing about class actions.

Nevertheless, the employees in Murphy Oil and its companion cases hope that another provision of law will protect them from signing away their right to join a class action.

A provision of the National Labor Relations Act (NLRA) provides that “employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” Several lower courts have held that an employee’s right to engage in “concerted activities” protects their right to join class actions, and they cite multiple previous Supreme Court decisions which lend credibility to this claim.

In a world governed by the text of the law, employees would have a strong case that they cannot be forced to give up their right to bring class action litigation. But we live in a world governed by Circuit City and Concepcion — both of which demonstrate the Supreme Court’s willingness to take liberties with the law in forced arbitration cases.

This article was originally published at ThinkProgress on September 25, 2017. Reprinted with permission.
About the Author: Ian Millhiser is the Justice Editor for ThinkProgress, and the author of Injustices: The Supreme Court’s History of Comforting the Comfortable and Afflicting the Afflicted.

Working People Need to Know If We Can Trust Donald Trump’s NLRB Nominees to Protect Our Freedoms

Monday, July 17th, 2017

President Donald Trump chose two nominees for the National Labor Relations Board whose commitment to the freedom of working people to come together and negotiate is seriously in doubt. These two men, Marvin Kaplan and William Emanuel, have records of actively trying to strip working people of their freedoms.

Republicans are rushing to get these nominations through, but it is imperative that the Senate uses upcoming hearings and meetings to find out whether these nominees will side with working people or the richest 1% of Americans. NLRB decisions and actions have a real impact on the lives of working people, particularly the ability to join together with co-workers to advocate for positive change.

Of the nominations, AFL-CIO President Richard Trumka said:

Marvin Kaplan has never practiced labor law, and his experience comes from crafting legislation for politicians that rigs the rules against working people. William Emanuel has a long record of practicing labor law on behalf of employers, most recently at one of the most infamous union-busting law firms in the country. On their face, the resumes of both nominees appear to be in direct conflict with the mission of the NLRB.

Emanuel, a member of the staunchly anti-working people legal organization,  the Federalist Society, has extensive experience representing employers in collective bargaining, union elections and unfair labor practice proceedings under the National Labor Relations Act. Recently, he filed a brief before the U.S. Supreme Court arguing that employers should be allowed to require employees to waive their right to file class-action lawsuits or any other method of joining with others in seeking relief for rights violations. Emanuel has directly worked on numerous issues currently before the NLRB, raising serious questions about his ability to be impartial on those cases.

Kaplan hasn’t ever practiced labor law. His only related experience is in staffing a couple of Republican, anti-worker committees in Congress and helping run a series of oversight hearings criticizing the NLRB under President Barack Obama. He drafted legislation to overturn several NLRB actions that strengthened the freedom of working people join together. Like Emanuel, Kaplan has actively worked on numerous issues he would have to rule on if confirmed to the NLRB, calling into question his own impartiality on those cases.

This blog was originally published at AFLCIO.org on July 11, 2017. Reprinted with permission.

About the Author: Kenneth Quinnell is a long-time blogger, campaign staffer and political activist. Before joining the AFL-CIO in 2012, he worked as labor reporter for the blog Crooks and Liars. Previous experience includes Communications Director for the Darcy Burner for Congress Campaign and New Media Director for the Kendrick Meek for Senate Campaign, founding and serving as the primary author for the influential state blog Florida Progressive Coalition and more than 10 years as a college instructor teaching political science and American History. His writings have also appeared on Daily KosAlternet, the Guardian OnlineMedia Matters for AmericaThink ProgressCampaign for America’s Future and elsewhere.

18 states are suing Betsy DeVos for putting for-profit college fraudsters over student borrowers

Friday, July 7th, 2017

Betsy DeVos is making it harder for students to get loan forgiveness after being cheated by for-profit colleges, but Democratic attorneys general across the country are challenging her in court. DeVos has had the Education Department put a hold on new rules that were supposed to take effect on July 1 protecting student borrowers—protecting student borrowers is definitely not what Betsy DeVos is about, let’s be clear on that—and 18 states are going to court to get the rules put back in place.

An existing federal law allows borrowers to apply for loan forgiveness if they attended a school that misled them or broke state consumer protection laws. Once rarely used, the system was overwhelmed by applicants after the wave of for-profit failures. Corinthian’s collapse alone led to more than 15,000 loan discharges, with a balance of $247 million.

Taxpayers get stuck with those losses. The rules that Ms. DeVos froze would have shifted some of that risk back to the industry by requiring schools at risk of closing to put up financial collateral. They would also ban mandatory arbitration agreements, which have prevented many aggrieved students from suing schools that they believe have defrauded them.

DeVos really is stepping in in favor of fraudulent schools over defrauded students—and taxpayers—in other words.

“Since day one, Secretary DeVos has sided with for-profit school executives against students and families drowning in unaffordable student loans,” said Maura Healey, the Massachusetts attorney general, who led the multistate coalition. “Her decision to cancel vital protections for students and taxpayers is a betrayal of her office’s responsibility and a violation of federal law.”

Two students left with debts after their school lied to them about their job prospects are also suing the Education Department over the same issues.

This blog was published at DailyKos on July 6, 2017.  Reprinted with permission. 

About the Author: Laura Clawson is labor editor at DailyKos.

The Trump administration is quietly making it easier to abuse seniors in nursing homes

Thursday, July 6th, 2017

The Trump administration is poised to undo rules issued by the Obama administration last year to protect seniors from a common tactic used by businesses to shield themselves from consequences for illegal conduct.

Under these rules, issued last September, Medicare and Medicaid would cut off payments to nursing homes that require new residents to sign forced arbitration agreements, a contract which strips individuals of their ability to sue in a real court and diverts the case to a privatized arbitration system.

But last month, the Trump administration published a proposed rule which will reinstate nursing homes’ ability to receive federal money even if they force seniors into arbitration agreements.

Forced arbitration can prevent even the most egregious cases from ever reaching a judge. According to the New York Times, a 94 year-old nursing home resident “who died from a head wound that had been left to fester, was ordered to go to arbitration.” In another case, the family of a woman who suffered “two spine fractures from serious falls, a large, infected ulcer on her heel that prevented her from walking, incontinence from not being able to get to the bathroom, receding gums from poor hygiene assistance, and a dramatic weigh loss from not being given her dentures,” was also sent to an arbitrator after they sued the woman’s nursing home alleging neglect.

Moreover, as law professor and health policy expert Nicholas Bagley notes, arbitration tends “to favor the repeat players who hire them—companies, not consumers.” Several studies have found that forced arbitration typically produces worse outcomes for consumers and workers. An Economic Policy Institute study of employment cases, for example, found that employees are less likely to prevail before an arbitrator, and that they typically receive less money if they do prevail.

The Obama-era rules were never allowed to take effect. Shortly after the regulations were announced, a George W. Bush-appointed judge in Mississippi issued a decision blocking the rule—although Judge Michael Mills did caveat his order by stating that “this case places this court in the undesirable position of preliminarily enjoining a Rule which it believes to be based upon sound public policy.”

Important parts of Mills’ opinion rely on dubious reasoning. At one point, for example, he cites a doctrine limiting the federal government’s power to use threats of lost funding against state governments in order to impose similar limits on federal efforts to encourage good behavior by private actors.

But let’s be honest. If the Trump administration wasn’t preparing to end the Obama-era rule, conservatives on the Supreme Court most likely would have done so themselves.

Prior to Justice Antonin Scalia’s death, the Supreme Court’s Republican majority took such a sweeping and expansive view of companies’ power to use forced arbitration that it is likely the Obama administration’s rules would have been struck down in a 5–4 decision. Now that Neil Gorsuch occupies Scalia’s seat, Republicans once again have the majority they need to shield arbitration agreements.

In the alternative universe where the winner of the popular vote in the 2016 presidential election was inaugurated last January, Justice Merrick Garland was likely to provide the fifth vote to uphold the Obama-era rule. But we do not live in that universe. And neither do the many elderly nursing home residents who will be worse off thanks to the Trump administration.

This article was originally published at ThinkProgress on July 6, 2017. Reprinted with permission.

About the Author: Ian Millhiser is a senior fellow at the Center for American Progress and the editor of ThinkProgress Justice. He received his JD from Duke University and clerked for Judge Eric L. Clay of the United States Court of Appeals for the Sixth Circuit. His writings have appeared in a diversity of publications, including the New York Times, the Guardian, the Nation, the American Prospect and the Yale Law & Policy Review.

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