The U.S. Supreme Court delivered a blow to the rights of workers on Monday by allowing companies to require them to sign away their ability to bring class-action claims against management, agreements already in place for about 25 million employees.
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The justices, in a 5-4 ruling with the court’s conservatives in the majority, endorsed the legality of the growing practice by companies to compel workers to sign arbitration agreements waiving their right to bring class-action claims on issues such as overtime wages or gender-based pay disparities either in court or before private arbitrators.
President Donald Trump’s administration last year reversed the government’s stance in the case, siding with the companies after former President Barack Obama’s administration had supported a U.S. National Labor Relations Board decision invalidating such employment agreements.
Justice Neil Gorsuch, Trump’s appointee to the court, wrote the ruling, saying federal arbitration law takes precedence over the National Labor Relations Act.
“The policy may be debatable but the law is clear: Congress has instructed that arbitration agreements like those before us must be enforced as written,” Gorsuch wrote.
Writing on behalf of the four liberal justices in dissent, Justice Ruth Bader Ginsburg said that the ruling was “egregiously wrong” and called for Congress to take action to protect workers’ rights.
“The court today holds enforceable these arm-twisted, take-it-or-leave it contracts — including the provisions requiring employees to litigate wages and hours claims only one-by-one. Federal labor law does not countenance such isolation of employees,” Ginsburg said in a statement she read in court.
The ruling came in the biggest business case of the court’s current term, which began in October runs through the end of June.
Growing numbers of employers have mandated that their employees sign waivers to guard against a rising tide of worker lawsuits on wage issues. Class-action litigation can result in large damages awards by juries and is harder for businesses to fight than cases brought by individual plaintiffs.
The NLRB argued that the waivers violate federal labor law and let companies evade their responsibilities under workplace statutes. Workers have fought back against the waivers, arguing that the cost of pursuing their cases individually in arbitration is prohibitively expensive.
About one in four private-sector non-union employees have signed arbitration agreements that include class-action waivers, according to the nonprofit Economic Policy Institute. Workers have fought back against the waivers, arguing that the cost of pursuing their cases individually in arbitration is prohibitively expensive.
Lawyers representing businesses have said that resolving workplace disputes through arbitration with individual employees is a speedy and cost-effective alternative to class-action litigation.
The three consolidated cases that came before the court involved professional services firm Ernst & Young LLP[ERNY.UL], gas station operator Murphy Oil USA Inc[MOUI.UL] and healthcare software company Epic Systems Corporation.