WASHINGTON (CN) – Justice Stephen Breyer took a stand for workers Monday as the Supreme Court kicked off its October term with a focus on employment arbitration agreements.
Showcasing his animated style, Breyer leaned forward on the bench this morning to argue that siding with employers on class action waivers would upend “the entire heart of the New Deal,” referencing the series of protections launched under President Franklin Roosevelt to aid workers during the hard times of the Great Depression.
In the near century since the New Deal came into force, class action lawsuits have been a critical tool for employees to protect their rights or assert leverage in the workplace.
This morning’s session involved class action waivers that Ernst & Young, Murphy Oil USA and Epic Systems Corp. had their employees sign as a condition of employment.
The Ernst & Young case sprang from allegations by Stephen Morris and Kelly McDaniel that they were misclassified on employee records to deny them overtime.
Though the waivers they signed required mediation, Morris and McDaniel called the process unfairly complex and prohibitively expensive.
One employee who brought unrelated claims against Ernst & Young incurred costs of $200,000 to go through the company’s “Common Ground Program” for arbitration. Those costs far outweighed the benefit, as the employee recovered a mere $1,800 in the end.
Justice Ruth Bader Ginsburg echoed Breyer’s position, likening employee agreements with class action waivers to “yellow dog contracts” or agreements between employers and employees where the worker agrees, as a condition of employment, not to join a labor union.
“You recognize that this contract … there is no true bargaining,” Ginsburg said, addressing one of the attorneys for the employers. “It's the employer [that] says you want to work here, you sign this ... this has all the same essential features of the yellow-dog contract. That is, there is no true liberty to contract on part of the employee.
Referencing the legislation that banned yellow-dog contracts in 1932, Ginsburg said, “that’s what Norris-LaGuardia wanted to exclude.”
Justice Anthony Kennedy meanwhile spoke to the other avenues of relief available to any employees who signed class action waivers. Nothing would stop these employees from “acting in concert” by hiring the same attorney to bring the same claims, he said, even if arbitrated individually.
The Trump administration has taken a similar tack, largely supporting company agreements that force workers to go to arbitration for disputes on a case-by-case basis versus bringing a suit in a class action.
Justice Neil Gorsuch, who joined the bench on Trump’s appointment in April, said nothing during the morning’s arguments.
Justice Ginsburg pressed Paul Clement, the attorney for Ernst & Young and Epic Systems, on whether other common parts of employee agreements, like confidentiality clauses, would impact workers' rights.
A former U.S. solicitor general, Clement began by conceding that a person does have the right to concerted activity. “In the sense that three or more employees could decide that they want to go to the arbitral forum and they would arbitrate individually,” he said.
He agreed with Justice Kennedy’s point that sharing a lawyer could help.
“They also have other options,” Clement added.
Justice Ginsburg jumped in before he could go further, asking Clement directly if confidentiality agreements “put a damper” on how workers can bring suit against their employer.
“Well, they can proceed very jointly before they get there,” he said. “The confidentiality agreement’s not going to stop the same lawyer from thinking about the three cases in conjunction.”
Justice Elena Kagan interrupted.
“Mr. Clement, usually, usually when you have a right, the fact that there is one way to exercise a right left over does not make it OK if we’ve taken away another 25 ways of exercising that right,” she said.
Illustrating her example, Kagan asked the court to consider the First Amendment.
“You know, when we think about the First Amendment, we don’t say we can ban leafleting because you can always write an op-ed,” she said. “And the same thing applies here. The fact that there’s something left over by way of concerted activity does not make it okay under Section 7 and Section 8 [of the Fair Labor Standards Act] to deprive employees of many other means of protected activity.”
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