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Supreme Court Rules Employers Can Ban Class Action Lawsuits in Arbitration

Monday, May 21, 2018

The Supreme Court, dealing a potential blow to the #MeToo movement against sexual harassment, ruled that employers can require as a condition of employment that workers waive their rights to participate in class action lawsuits.

In a 5-4 ruling on a trio of cases penned by Justice Neil Gorsuch, the court’s Republican majority sided with businesses whose employment contracts include mandatory arbitration clauses that prevent class action lawsuits. Instead, workers who take to the courts against an employer must do so as individuals.

None of the cases at issue concerned sexual harassment — and sexual harassment claims, though often impeded by mandatory arbitration clauses, have not typically been pursued in court as class action cases. But Monday's ruling could strengthen legal arguments that employment contracts that impose mandatory arbitration on complaints of any kind do not violate constitutional rights.

“The respective merits of class actions and private arbitration as means of enforcing the law are questions constitutionally entrusted not to the courts to decide," Gorsuch wrote, "but to the policymakers in the political branches where those questions remain hotly contested … This court is not free to substitute its preferred economic policies for those chosen by the people’s representatives."

Mandatory arbitration has become a common feature in employment contracts as union power has declined and businesses have sought to reduce their legal exposure. Studies have shown that workers win far less often in mandatory arbitration than in court. In addition, since most arbitration is conducted in secret, mandatory arbitration has helped businesses avoid unfavorable publicity that might compel them to address chronic worker abuses.

According to a September survey by the left-leaning Economic Policy Institute, mandatory arbitration clauses of one kind or another have been imposed on more than half of all U.S. workers. About one-third of all businesses that impose mandatory arbitration clauses specifically forbid class-action lawsuits, the survey found.

Labor advocates warned during oral arguments last October the ruling would destroy incentives for investigating violations of labor law.

In a rare move, Justice Ruth Bader Ginsburg read a dissent from the bench warning the decision would lead to the “under enforcement of federal and state statutes designed to advance the well-being of vulnerable workers.“ She called the majority ruling “egregiously wrong” and called on Congress to step in to update federal labor law.

Gorsuch rejected the notion that the court’s decision would return America to a place where labor laws could not be effectively enforced. “Like most apocalyptic warnings, this one proves a false alarm,” he wrote.

Source: POLITICO

Category: Advocacy News

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