Supreme Court To Consider Lifting Class-Action Bar For Millions Of Workers

Existing federal labor law could free employees who now can't band together to sue their bosses.

If you’re one of the likely millions of workers who are contractually bound to go it alone in a legal fight with your employer, the Supreme Court may lift that barrier and allow you to take your boss to court along with other workers.

The justices on Friday agreed to hear three cases that, taken together, could relieve workers of so-called class-action waivers: contract provisions that prohibit workers from suing as a group over workplace violations, leaving them instead to arbitrate grievances on their own.

For years, courts have upheld these mandatory arbitration provisions under settled freedom-of-contract principles. But the National Labor Relations Board has been pushing the law in the other direction — relying on federal labor law to allow workers to sue collectively or as a class.

Under the National Labor Relations Act, the board has ruled and is now arguing before the Supreme Court that workers have a right to “concerted activities” for their “mutual aid or protection,” and that includes their right to band together in a legal action against employers. Which means the class-action waivers are unenforceable and cannot be used to tie workers’ hands.

The NLRB’s view hasn’t prevailed in lower courts. But two appeals courts last year broke with precedent in other parts of the country and ruled that federal law does indeed bar these waivers. The companies in those two cases appealed to the Supreme Court, and soon after the Department of Justice rushed to appeal a third case it had lost in another court.

The justices on Friday bundled the three cases and are poised to decide if these contractual prohibitions on class and collective actions are indeed illegal everywhere. 

“It often isn’t worth it for employees to bring their workplace disputes on an individual basis, because it costs more to litigate the case than the worker stands to recover,” explained Charlotte Garden, a labor law professor at Seattle University. “For these workers, an individual arbitration agreement means they can’t realistically bring their case at all.”

According to one study cited in the labor board’s petition with the court, between 15 percent and 25 percent of employers across the country subject their employees to mandatory arbitration practices.

“The amici are going to be thick on the ground on this one,” predicted Reuters in August, referring to the “friends” of the Supreme Court who are not involved in a particular case but nonetheless submit legal briefs expressing a position on a contentious issue. Important business cases often draw dozens of such briefs.

The Supreme Court is expected to hear the case in the spring.

It’s unclear how the incoming Trump administration — and the appointment of new board members to the NLRB — may affect the federal government’s position in the case. But as the Supreme Court agreed to hear it, the next administration may need to stick to the script advanced by the current one.

More broadly, President-elect Donald Trump, who has a history of resisting workers mobilized against his businesses, could soon roll back workplace reforms by the man he’s replacing.