The U.S. Supreme Court kicks off its new nine-month term on Monday with a major employment case that could deprive workers of the ability to join together to file lawsuits when taking on companies over a wide range of labor disputes.
The Trump administration will argue alongside companies that agreements requiring workers to arbitrate disputes with their employers individually, rather than bringing class-action lawsuits collectively with their co-workers, are valid.
Class-action litigation can result in large damages awards by juries and is harder for businesses to fight than cases brought by individual plaintiffs.
In an unusual twist, the administration will face off against an independent agency of the federal government, the National Labor Relations Board (NLRB).
Republican President Donald Trump’s Justice Department in June reversed the government’s stance in the case taken under Democratic former President Barack and said it would not defend the NLRB’s position that employment agreements requiring workers to waive their rights to bring class action claims are invalid.
The NLRB argues that those agreements violate federal labor law and let companies evade their responsibilities under workplace statutes.
The three consolidated cases coming before the justices involve professional services firm Ernst & Young LLP, gas station operator Murphy Oil USA Inc and healthcare software company Epic Systems Corporation.
It is one of the biggest cases that the Supreme Court, with a 5-4 conservative majority since Trump’s appointee Neil Gorsuch was confirmed by the Senate in April, will tackle during a term that runs until the end of June. Other major cases involve voting rights, religious liberty and union funding.
At stake is the future of so-called class-action waivers, which employers have increasingly required employees to sign as part of their arbitration agreements to guard against a rising tide of worker lawsuits seeking unpaid wages.
The case against Murphy Oil arose in 2010 when Sheila Hobson — who had worked for the prior two years at a facility in Calera, Alabama — and three other employees, complained that they were not being paid for overtime and other work-related activities, including driving to competitors’ fuel stations to check their prices and signage.
“It just hit me. This is not right. I’m working off the clock,” Hobson said.
Her lawyer, former NLRB member Craig Becker, said people like Hobson might not file individual claims because of the fear of retaliation from their bosses.
‘QUICK AND FAIR’
Many attorneys representing businesses say that resolving workplace disputes through arbitration with individual employees is a speedy and cost-effective alternative to class-action litigation.
“Unlike class actions, which can drag on forever, an individual worker in a properly constructed arbitration program can get a quick and fair resolution to their case, and most employers will pick up almost all of the cost,” said Steven Suflas, a lawyer who has represented companies in similar cases.
About one in four private-sector non-union employees — nearly 25 million workers — have signed arbitration agreements with class-action waivers, according to a study by the left-leaning Economic Policy Institute think tank.
Workers have fought back against the waivers, arguing that the cost of pursuing their cases individually in arbitration is prohibitively expensive. The prospect of winning a large damages award in a class action can be the only way for workers to find lawyers to take their cases, they argue.
The NLRB has invalidated dozens of class-action waivers for violating workers’ legal right to band together to improve the workplace.
Regional federal appeals courts, however, have split on the issue. Three have ruled that class-action waivers in workers’ arbitration agreements are binding. Another three have decided that they are unenforceable.
Although two Trump administration nominees recently joined the NLRB, giving the five-member board a Republican majority for the first time in nearly a decade, the agency’s general counsel is an Obama-era holdover who will argue the case about a month before his term expires.
The Trump administration’s choice for NLRB general counsel still needs to go through the Senate confirmation process. It is possible the NLRB will change its legal position on the issue before the justices rule on the case, according to legal experts.
(Reporting by Lawrence Hurley and Robert Iafolla; Editing by Will Dunham)
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