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The Supreme Court just gave companies a huge win over workers

In a 5-4 decision, the court rules employers can prohibit class action lawsuits and force employees into arbitration.

by Chelsey B. Coombs
May 21 2018, 8:30pm

The Supreme Court just made it harder for workers to join together and take legal action against their employers. In a narrow 5-4 split along ideological lines, the majority ruled that it’s legal for companies to put clauses in employment contracts that force employees into arbitration and prohibit them from joining together in a class action lawsuit.

National Labor Relations Board v. Murphy Oil USA, Inc. was essentially a battle to decide which of two laws, the 1935 National Labor Relations Act (NLRA) or the 1925 Federal Arbitration Act, take precedence when employees take legal action to remedy workplace grievances.

The high court's newest member, Justice Neil Gorsuch, argued that while the NLRA allows employees to organize unions and collectively bargain, it doesn’t specify that employees have the right to collectively sue their employers.

“The policy may be debatable, but the law is clear: Congress has instructed that arbitration agreements like those before us must be enforced as written,” Gorsuch wrote for the majority.

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Companies often put mandatory arbitration agreements into contracts to keep from having to pay out huge sums of money due to class action lawsuits. In order to join the company, a prospective employee has to sign a contract that bars class action suits. That means workers have to go one-on-one against the company if they have a grievance, or agree to mandatory arbitration. There is rarely an appeals process at the end of mandatory arbitration.

That gives businesses more power over employees. A September 2017 study by the Economic Policy Institute estimated that 60 million American workers currently have mandatory arbitration clauses in their contracts.

In her dissent, Justice Ruth Bader Ginsburg argued that individual arbitration usually doesn’t even make sense for these employees. “Individually, their claims are small, scarcely of a size warranting the expense of seeking redress alone,” she wrote. “But by joining together with others similarly circumstanced, employees can gain effective redress for wage underpayment commonly experienced.”

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Justice Stephen Breyer said in October that a pro-employer ruling would undermine laws at the “entire heart of the New Deal.”

Three similar cases that had to do with companies underpaying their employees were consolidated into one.

A former Murphy Oil employee said she was forced to work overtime without pay. But when she got together with employees to sue the company for backpay, they found the contracts they signed included a mandatory arbitration clause.

Both the National Labor Relations Board and the Obama White House argued in the employees’ favor. But the Trump White House reversed course, filing a brief in support of the employers in June.

Cover image: Associate Justice Neil M. Gorsuch, center left, is accompanied by Chief Justice John Roberts as they walk to the steps of the U.S. Supreme Court following an investiture ceremony on June 15, 2017 in Washington, D.C. (Photo by Ricky Carioti/The Washington Post via Getty Images)

supreme court
Neil Gorsuch