Supreme Court Guts Workers' Rights in Murphy Oil

By Shaun Richman,

With their decision Monday, May 21, 2018 in Murphy Oil, the Supreme Court has just gutted workers’ rights to act collectively to battle wage theft and discrimination. Murphy Oil is a gift to corporations, allowing them to force their workers to sign a class action waiver as a condition of employment. Justice Neil Gorsuch authored the 5-4 decision that might as well have read, “Because we have the votes.”

A class action waiver is when a worker waives – that is, gives away – their right to band together with other workers, access the courts, and force their employer to stop doing something discriminatory, dangerous, or otherwise wrong.

Class action lawsuits had been one of the most powerful ways for workers to win back-pay awards for employer misconduct. Arbitration, which takes place outside of the courts, is far more favorable to employers. That is doubly true when a worker must go it alone. Even if a worker can afford legal representation (instead of pooling the cost with dozens or hundreds of workers), they face the employer with only the facts and circumstances of their individual case.

The Murphy Oil decision consolidated a number of cases weighing the legality and constitutionality of class action waivers. In one case, Epic Systems, the Seventh Circuit Court ruled that the waivers violated the National Labor Relations Act’s protections for workers of workers’ concerted activity. The National Labor Relations Board (NLRB) agreed, and so did President Obama’s Solicitor General – until President Trump took the unusual step of reversing the United States’ official position on a pending Supreme Court case.

Murphy Oil follows a series of Supreme Court decisions favoring arbitration since 1991. Employers have matched that enthusiasm by increasingly requiring workers to sign employment agreements that include mandatory arbitration clauses. Most non-union employers now require employees to sign one – and 30% explicitly forbid their workers from taking class action, restricting their legal rights.

Arbitration is a funny thing in U.S. labor history. Although union activists tend to think of it as a positive thing – a recourse to a neutral third party at the end of a grievance procedure – it has not always been seen as, well, neutral.

Leftist critics frequently decried arbitration during the era where employers refused to sign contracts or formally recognize unions as the legitimate representatives. In the early 20th century, many unions called off early bruising strikes after the employer agreed to abide by an arbitrator’s decision.

In those days, “arbitration” basically meant asking for a nominally “progressive” lawyer or politician to the throw the workers a few scraps while almost always rejecting the union’s demand for formal recognition as the on-going bargaining representative of those workers.

The sea change in unions’ appreciation for the value of binding arbitration dates to 1935. That’s when the newly created NLRB provided the force of law to make employers bargain with duly recognized unions. What resulted was a routine of signed, written contracts covering wages, hours and working conditions – and dispute resolution procedures that included an appeal to a neutral third party over a violation of the contract or a disagreement about what some of the words on the page meant.

The crucial distinction here is that by being included in collective bargaining agreements, the recourse to arbitration was, by definition, the exercise of a collective right and the culmination of the collective power that it took unions to win those rights. That’s what the conservative majority on the court just stole from non-union workers.

In the Seventh Circuit, Judge Diane Wood first asserted that class action waivers violate labor law. She has been incredibly creative in the way that she issues pro-labor opinions. She also advanced the legal theory that so-called “right-to-work” laws violate the Takings Clause of the Fifth Amendment. Why was she not President Obama’s nominee to replace the late Antonin Scalia on the Supreme Court?

It’s a reminder that any party that wants labor's support must advance judicial nominees who “look like America” and who have a demonstrated track record of protecting, if not expanding collective rights, including workers’, consumers’ and others.

Class action waivers have come under scrutiny in the #MeToo era, where high-profile harassment survivors are arguing for a "carve out" when class-action waivers hinder redress for gender discrimination. But as writer E. Tammy Kim writes in yesterday's New York Times, "For decades, the spread of forced arbitration and its twin demon, the class-action waiver, have slowly eroded Americans’ civil rights....To unleash the full power of #MeToo, we must fight for much more: a rejiggering of the economy that begins with collective action and unbridled access to the courts."

As with many matters in the Trump era, workers can still defend their rights at the state level. Many community organizations are looking to replicate a California law called the Private Attorneys General Act (PAGA) of 2004. It grants workers the power of the state when seeking redress on a wage and hour claim. Because the state is not a party to employment agreements, the forced arbitration clauses are unenforceable when workers use the PAGA process.

Workers have won big through PAGA, upheld by California’s highest court in 2014. Wal-Mart, for instance, paid out $22.7 million in minimum wage violations. “The possibility of a PAGA case changes the calculus for a company, so that they would invest more in compliance and not be as cavalier about the labor standards,” Rachel Deutch of the Center for Popular Democracy (CPD) told Bloomberg news. CPD is a network of community organizations and unions pushing, among other policy reforms, the PAGA strategy in cities and states. That’s where the fight continues tomorrow.


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