Trump Administration Decision to Side with Corporations Injures Workers’ Ability to Seek Redress

The Trump administration’s Justice Department’s decision to side with employers in saying mandatory arbitration overrides federal labor law hurts millions of workers, the top employment lawyer at the labor-backed Economic Policy Institute says.

And if the employers, and Trump’s government, win, employers will be freer than ever to use “private contracts to eviscerate the public rights Congress protected in the National Labor Relations Act,” EPI counsel Celine McNicholas adds.

McNicholas published a long analysis of the case, Murphy Oil v NLRB, even before the Justice Department revised its prior brief sent to the U.S. Supreme Court on mandatory arbitration. DOJ now sides with the employers. The justices will hear Murphy Oil on October 3.

Workers at three firms, Murphy Oil and its 1,000 gas stations, Epic Systems and the accounting firm of Ernst & Young, all sued as classes saying their firms illegally denied them overtime pay. The National Labor Relations Board sided with the workers, and threw out mandatory arbitration of their complaints, but the firms went to court, and lower courts split.

Until now, the department defended the NLRB, which has regularly thrown out mandatory arbitration agreements bosses force workers to sign as conditions of employment.

The pacts force workers to take all disputes with bosses – including disputes covered by labor law, such as over wages and working conditions – to mandatory arbitration, and to give up their rights to sue under labor law if they lose. Bosses win most arbitration cases.

Now the Justice Department wants to put mandatory arbitrations first, leaving the NLRB and workers out in the cold.

“If the Supreme Court sides with corporate interests and the Trump administration, workers will likely be forced to sign away the long-held right to join together with their co-workers to address workplace disputes,” McNicholas said.

Citing a new research paper from Cornell University law professor Alexander Colvin, McNicholas reported bosses subject 56 percent of private sector non-union workers to mandatory arbitration agreements covering individual complaints and 41 percent of workers to mandatory arbitration of class action cases. The bosses’ win rates are very high, EPI reports.

And it’s not just white-collar workers, either. For example, Fox News anchor Gretchen Carlson last summer had to overcome a mandatory arbitration agreement to sue her boss, Roger Ailes for sexual harassment.

But EPI’s Ross Eisenbrey added that last summer employers forced a group of Spanish-speaking janitors in Chicago to sign contracts with mandatory arbitration clauses – written in English, which they couldn’t understand. The janitors yielded their rights for class action, or any other group action, if bosses shorted their wages or otherwise mistreated them.

That flies in the face of labor law, “guarantees workers the right to stand together for ‘mutual aid and protection’ when seeking to improve their wages and working conditions,” McNicholas explained. “Employer interference with this right is prohibited.”

The situation on the ground is another matter.  “In practice,” with mandatory arbitration clauses, “even if many workers faced the same type of dispute at work, each individual employee must hire their own lawyer, and must resolve their disputes out of court, behind closed doors, with only their employer and a private arbitrator,” she said.

On Sept. 27, the Trump Justice Department sided with the bosses in the case. It

said federal arbitration law overrides virtually everything else. “Agreements to resolve disputes through arbitration shall be valid, irrevocable and enforceable” unless there are other legal grounds to break the entire contract, its brief said.

“Courts must enforce agreements to arbitrate claims unless the Federal Arbitration Act’s mandate has been overridden” by a specific federal law “or unless enforcing the agreement would deprive the plaintiff” – the worker – “of substantive federal rights.

“Neither of these justifications for non-enforcement is applicable here. The agreements, including their prohibition on class-action or collective proceedings, should therefore be enforced according to their terms.”

That hurts workers hard, McNicholas says. 

“Workers could be required to waive our right to pursue workplace disputes on a collective or class basis, and instead we will be forced to individually arbitrate work-related claims. This is troubling, considering that employees who arbitrate grievances against their employer are much less likely to win than workers who file in federal court,” she explained. 

When workers sue, they win 36.4 percent of the time in federal courts and 57 percent of the time in state courts, Eisenbrey added. But they win only 21.4 percent of arbitration cases. They also win more money in court: Median damages of $176,426 in federal courts versus $36,500 in arbitrations.  The median splits all awards: Half are above and half below.

“Workers also depend on collective and class actions to enforce many workplace rights. Employment class actions have helped to combat race and sex discrimination and are fundamental to the enforcement of wage and hour standards,” McNicholas wrote.

“Without the ability to aggregate claims, it would be very difficult, if not impossible,” for workers, especially low-wage workers, to hire lawyers.  “That is the power of class and collective action suits: They let workers pool their claims, making it possible for an attorney to earn enough to make the case worth pursuing. And with class and collective action waivers in arbitration agreements, the arbitration process can only compensate an individual worker — rather than remedy systemic labor and employment violations experienced by many workers.”