U.S. workers might soon have a harder time banding together and suing their employers for not paying overtime wages or other workplace violations, thanks to the Supreme Court.
The justices on Monday heard oral arguments in a case that will determine whether companies can legally force their employees into arbitration. Now pervasive but often little noticed in work contracts, mandatory arbitration agreements require that workers give up their right to sue the company in a class or collective action lawsuit. Instead, an employee must take a dispute to arbitration as an individual.
The case, known as Murphy Oil, could dramatically shift the balance of power between workers and their bosses. If the stakes weren’t already clear, Justice Stephen Breyer, one of the court’s liberals, said during Monday’s arguments that the case has the potential to undermine “the entire heart of the New Deal” by weakening workplace protections.
Worker groups are bracing for a loss in the case, now that the court has a slim conservative majority with the addition of Justice Neil Gorsuch earlier this year.
Class-action lawsuits are one of the most powerful ways that workers can hold employers to account, particularly at a time when fewer and fewer employees belong to labor unions. As unions and worker groups put it in a brief filed in the pending case, “few workers are willing to put a target on their back by bringing legal claims against their employer on an individual basis, given the threat of workplace retaliation, blackballing, and other, ‘more subtle forms’ of employer disapproval.”
By creating strength in numbers, class actions allow workers to join together when they’ve been systematically wronged as a group ― say, when their employer has failed to pay the legally required minimum wage, or time-and-a-half for overtime.
Employers don’t like class actions because they can be costly to defend and lead to big payouts when the plaintiffs have a strong case. Arbitration lets employers steer disputes to what they view as a more favorable arena. Employers get to set the arbitration procedures, and a worker can’t appeal a decision.
Take the case of Sheila Hobson, a former employee of Murphy Oil in Alabama and one of the lead plaintiffs in the high court case. Hobson claims that when she worked for the chain of gas stations, she and her colleagues were required to do off-the-clock work before and after their shifts. They wanted to take Murphy Oil to court for backpay. But when they got together and sought out a lawyer, they were told they couldn’t sue as a group because they had agreed to binding arbitration when they took their jobs.
The National Labor Relations Board, the federal agency that enforces collective bargaining law, argues that the arbitration agreement violates Hobson’s right to link up with other workers for “mutual aid and protection.”
Employer groups argue that collective bargaining law here should not supersede the federal statute establishing the arbitration process.
Disputes over minimum wage and overtime laws commonly spur workers to sue their employers as a group, so a ruling in favor of employers in Murphy Oil could be a boon in particular to low-wage employers.
The case also could make it harder for workers to file lawsuits as a group under a host of other laws, including the Family and Medical Leave Act and the Civil Rights Act. Google, for instance, is currently being sued for gender pay discrimination in a proposed class action led by three women.
Employers involved in the case found a new ally when President Donald Trump took office. Although former President Barack Obama’s solicitor general had filed a brief in support of the workers’ arguments, the new White House took the unusual step of reversing the position of the previous administration in an ongoing Supreme Court case. In June, the Department of Justice filed a new brief, saying the office had “reconsidered the issue and has reached the opposite conclusion.”
Jeff Wall, DOJ’s principal deputy solicitor general, argued before the court on Monday, urging the justices to rule against the workers.