Trump-nominated Neil Gorsuch wrote the opinion labor advocates say is bad news for workers.
Trump-nominated Neil Gorsuch wrote the opinion labor advocates say is bad news for workers. dkfielding/getty

In a 5-4 decision this morning, the U.S. Supreme Court dealt a setback to workers’ rights and made it easier for bosses to avoid class action lawsuits.

The ruling from the court’s conservative majority upholds employers’ rights to require workers to sign contracts waiving their ability to bring legal actions against their employers. Instead, those agreements, typically signed when an employee is hired, can mandate that employers go through arbitration for workplace-related complaints. In contrast to class action lawsuits, arbitration is a closed-door process that happens between an individual employee and their employer.

The court majority rejected an argument that federal labor law protects employees’ right to band together in legal action just like it protects their rights to organize unions. While the National Labor Relations Act grants collective bargaining rights, it “says nothing about how judges and arbitrators must try legal disputes that leave the workplace and enter the courtroom or arbitral forum,” wrote Justice Neil Gorsuch for the majority.

Writing for the dissent, Justice Ruth Bader Ginsburg called the majority analysis "egregiously wrong." Instead, Ginsburg wrote, federal labor laws recognize the need for collective power. Those laws, Ginsburg wrote, operate on the premise "that employees must have the capacity to act collectively in order to match their employers’ clout in setting terms and conditions of employment."

Workers’ rights advocates are decrying the decision. Charlotte Garden, a Seattle University law professor who has studied the way arbitration affects the gig economy, calls the ruling “a disaster for workers.”

The ruling covered three cases involving non-unionized employees who had been required to waive their class action rights and then attempted to sue to get back pay.

In theory, arbitration allows individual workers and employers to negotiate without the cumbersome process and costs associated with going to court. But for individual workers who’ve been underpaid, their cases can be so small that it’s hard to find a lawyer to represent them in arbitration. The process can favor employers, particularly employers who appear before the same arbiters in multiple cases. Unlike court rulings, arbitration decisions are rarely made public, making it easier for employers to avoid media or public scrutiny for wrongdoing. As has been highlighted by the MeToo movement, mandatory arbitration agreements can also keep discrimination and sexual harassment claims out of the public eye.

“Low-wage workers will be especially affected by this decision,” Garden says. “They’re likely to have the types of low-dollar claims that are likely to go unvindicated because of this.”

Without class action lawsuits, workers being ripped off by their bosses will be left depending on other avenues to get help. Among them: unions and enforcement agencies. In Washington State, the Department of Labor and Industries enforces statewide laws. In Seattle, where labor laws favor workers more than at the state level, the Office of Labor Standards handles enforcement.

“In addition to putting pressure on unions to vindicate workers’ rights, it puts pressure on enforcement agencies,” Garden says.

Seattle created OLS around the time it raised the minimum wage. The office is now responsible for enforcing wages, sick time, scheduling regulations, and other laws. The office has hired more investigators since its creation, but has also had some blunders and still struggles with long investigation timelines.

According to the latest data available from OLS, the office resolved 33 cases against 31 employers in the first four months of 2018. Most cases are resolved through settlements with employers, sometimes without severe penalties if the employers have agreed to pay the workers. The cases resolved this year included The Gap and the Elephant and Castle Pub. The Gap agreed to pay 260 workers about $20,000; Elephant and Castle agreed to pay 65 workers about $123,000, according to OLS. In total, 1,257 employees have received about $427,000, according to the office.

Washington could also look to counter the Supreme Court decision by allowing individual workers more ways to take action against their employers, Garden says. A California law allows workers who believe their rights have been violated to act as a proxy for the state and seek civil penalties from their boss on behalf of themselves and other employees. New York has considered a similar idea.

This type of law, Garden says, may be "the way forward for states that are going to want to respond to this decision."