ROBERT SIEGEL, HOST:
A study released last week shows that 56 percent of nonunion, private sector employees - that's more than half - are subject to mandatory arbitration procedures. As a condition of their employment, they have to sign an agreement surrendering their right to join any collective legal action against their company that alleges a violation of their rights as employees. Today the Supreme Court heard arguments testing whether such agreements violate federal law. NPR legal affairs correspondent Nina Totenberg reports.
NINA TOTENBERG, BYLINE: The three cases potentially involving tens of thousands of nonunion employees were brought against Ernst & Young, Epic Systems and Murphy Oil. Each required its individual employees as a condition of employment to waive their rights to join a class-action suit. In all three cases, employees tried to sue, maintaining that the amounts they could obtain in individual lawsuits were dwarfed by the legal fees they would have to pay as individuals to bring their cases under the private arbitration procedures required by the company.
For instance, the Ernst & Young employees who sought to bring a class-action pointed to a similar individual case that cost $200,000 in legal fees although the possible recovery for unpaid overtime for the individual was only $1,800. The employees went to court contending that their right to collective action is guaranteed by the 1935 National Labor Relations Act. The employers countered that bans on collective legal action are protected by another federal law, the Federal Arbitration Act, which was enacted in 1925 to reverse the then-longstanding judicial hostility to arbitration.
By 2011, the legal worm had turned, however. And at the Supreme Court, there was a conservative majority hostile to class-actions and instead favoring individual arbitrations. Until now, however, the cases before the court have involved consumer class actions, and there was little uproar over the court's upholding binding arbitration for consumer disputes or even its rejection of class-actions in arbitration for consumers. This case, however, involves employment rights, meaning a decision upholding class action waivers could well apply to cases involving claims of race, sex and religious discrimination in employment, too.
On the steps of the Supreme Court today, lawyer Michael Rubin, who's been active in these cases, stressed the importance of this case.
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MICHAEL RUBIN: These employer rules at issue apply to every type of case - discrimination - no less than wage an hour. This prevents any worker from joining with any other worker to pursue any type of workplace illegality in arbitration or in court.
TOTENBERG: Inside the courtroom today, the scene was a bit odd. The Obama administration had sided in court with the employees, but the Trump administration switched sides, leaving the National Labor Relations Board still siding with the employees. Lawyer Paul Clement, representing the three companies, and Deputy Solicitor General Jeffrey Wall got quite a grilling from the court's four liberal justices.
Justice Breyer - I can't see how you can win this case without overturning and changing radically what the law is going back to the new deal. Justice Ginsburg - this has all the features of the yellow dog contract. That is, there's no true liberty of contract on the part of the employee. The employer says, you want to work here; you sign this. The driving force of the National Labor Relations Act, she said, was that there was an imbalance, and there was no true liberty of contract, which is why the NLRA said concerted activity is to be protected from employer interference.
But Ginsburg and Breyer have been in the four-justice minority in most of these cases with the court's five conservative justices siding consistently with business. If the liberals had any hope, it looked as though it likely was dashed when Justice Kennedy repeatedly opined that employees with similar problems could all go to the same lawyer and that there should be no problem with having multiple separate hearings.
Nina Totenberg, NPR News, Washington. Transcript provided by NPR, Copyright NPR.