Another Step Back To The Gilded Age

While we are all consumed by the daily revelations that the Trump presidency is just one massive racketeering enterprise, the Federalist Society's one million dollar Supreme Court justice, Neil Gorsuch, cast the deciding vote in a major decision to take us back to the Gilded Age when workers had little or no protections.

The decision in Epic Systems v. Lewis enshrines the right for corporations to include not only a forced arbitration clause in their employment contracts but also waive their right for redress in a court of law in disputes with management. This decision essentially guts the National Labor Relations Act (NLRA) that allowed workers to band together for "mutual aid and protection". In his opinion, Gorsuch simply ignored the intent of the NLRA, instead relying on the earlier 1925 Arbitration Act that allowed such clauses. As Ginsburg pointed out in her defense, the NLRA was specifically written to address the imbalance between employers and workers that still existed after the Arbitration Act was passed.

I have written many times about failure of forced arbitration to protect workers and customers. Arbitration hearings are, by design, stacked against the complainant. Companies usually have lawyers or other agents representing them while the employee actually has to find the time to show up, usually with no legal or arbitration expertise to rely on. For complainants that actually make the effort to go through arbitration, the chances for success are limited. Often the companies themselves are able to choose the arbitrators and an arbitrator that is too friendly to the complainants will find that he is hearing fewer and fewer cases and making less and less money. In California, a study of 33,000 credit card arbitration cases over the course of three years found that the companies won 95% of the cases, with some of the cases discharged in less than ten minutes. Of course, credit card arbitration cases may not be representative of employee actions but it is hard to believe the results would differ dramatically.

Moreover, individual complaints are far more likely to trigger retaliatory actions from the employer, including threats to and eventual termination of employment. A collective action provides greater protection for each individual worker.

The case that prompted this Supreme Court review, Epic Systems v. Lewis, is instructive about what the results of this decision will be. The case was triggered by an employee who claimed that Epic Systems had illegally denied him and other employees overtime wages by misclassifying their worker status. After reaching a $5.4 million settlement for wage theft with workers in 2014, the company instituted new employment contracts that banned workers from bring wage disputes against the company on a collective basis. In February, 2015 employee Jacob Lewis filed a suit as a collective action against the company for wage theft from technical writers, of which Lewis was one. The company fought the suit, saying that the technical writers needed to go to individual arbitration instead of a collective court action, which is how the case ended up in the Supreme Court. In addition, another suit, again claiming wage theft, was brought against the company in December, 2016.

In the span of two years, Epic was involved in at least three separate actions involving wage theft. The company seems to be engaged in serial wage theft, but according to Gorsuch and the other conservative members of the Court, workers should not be allowed to engage in collective action to combat this broad assault on their pay. This decision by the Court just opens the door for corporations to continue to engage in massive wage theft, which is already costing workers somewhere between $40 and $60 BILLION per year.

Similarly, the Harvey Weinstein scandal provides an insight into this decision's effect on sexual harassment and abuse in the workplace. Weinstein used forced arbitration clauses to stifle and silence the victims of his sexual abuse who were employees for decades. For predatory bosses, this decision is a declaration of open season and totally at odds with the emergence of the #MeToo movement.

But there is actually a far more important reason that this ruling is an abomination, as pointed out to me by an esteemed legal friend. Our judicial system is built on a foundation of case law. Legal cases provide the precedent for subsequent decisions. By forcing these employment cases into arbitration, we essentially freeze employment case law as it exist now. That should be a frightening thought as we deal with the looming future of increased automation and the emergence of AI and confront issues we have not seen before in our quickly and ever-changing workplace.