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Employment Law

Supreme Court Considers Class Arbitration in Employment Law Claims

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On October 29, 2018, the Supreme Court heard oral argument concerning class arbitration in employment law claims in Lamps Plus, Inc. v Varela. What’s on the line? Whether general arbitration clauses in employment contracts preclude the right to a collective or class arbitration.

Cases affecting class arbitration in employment law claims

Dallas employment law attorney, Ben DuBose, says “Last year, the Supreme Court’s Epic Systems ruling struck a big blow by holding that arbitration clauses in employment papers override a worker’s rights to bring Fair Labor Standards Act claims in the court system.” Now, DuBose says, “Lamps Plus could further whittle down worker rights.”

The lower appellate court found against Lamps Plus by holding that the general arbitration clause, which did not expressly state it prevented collective or class arbitration, because of its ambiguity permitted class or collective arbitration.

While Lamps Plus does not directly involve Fair Labor Standards Act (FLSA) claims, its impact could apply to a broad range of employment law based claims.

The combination of last year’s Epic Systems ruling which held that forced arbitration clauses are enforceable in employment contracts, coupled with an adverse ruling in Lamps Plus would result in employees only being able to bring individual cases in arbitration – absent express language in an arbitration clause consenting to class arbitration.

Employee rights at stake

In an arbitration, the parties give up their 7th Amendment right to a trial by jury as well as their right to appeal on substantive grounds to a court of law. Instead, arbitration takes place outside of the court system with a private arbitrator, often selected by the employer per the terms of the arbitration clause.

Questioning from the Court during oral argument suggests the Court will be closely divided on what standard should be applied to determine parties have agreed to class arbitration. The Lamps Plus decision will be issued during the spring or early summer of 2019.

Sex Discrimination in the Workplace – An Ongoing Fight

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The Equal Pay Act of 1963 was enacted to prevent sex discrimination in employee wages. Signed into law on June 10, 1963, the Equal Pay Act was part of John F. Kennedy’s New Frontier. After signing the bill into law, President Kennedy remarked: “While much remains to be done to achieve full equality of economic opportunity – for the average woman worker earns only 60 percent of the average wage for men – this legislation is a significant step forward.”

As an amendment to the Fair Labor Standards Act (FLSA), the Equal Pay Act was part of the same legal framework that establishes federal wage and hour laws.

Equal Pay Act provisions

The EPA provides that the employer may not pay lower wages to employees of one gender than it pays to employees of the other gender, employees within the same establishment for equal work at jobs that require equal skill, effort, and responsibility, and that are performed under similar working conditions.

Significantly, the EPA does not contain an intent requirement within the statutory language. Liability under the EPA is established by meeting the three elements of the prima facie case:

1. different wages are paid to employees of the opposite sex;
2. the employees perform substantially equal work on jobs requiring skill, effort, and responsibility; and
3. the jobs are performed under similar working conditions

If an employee can establish these elements, then the EPA imposes strict liability on employers who engage in wage discrimination on the basis of gender.

1972 broadening of the Equal Pay Act

In 1972, the Education Amendments to the EPA broadened the Act to cover executives, outside salespeople and professionals. This short Bat Girl video from the Department of Labor illustrates the issue.

Current sex discrimination for equal pay status

Despite the progress of the last half-century since passage of the EPA, there hasn’t been much improvement in the last decade in closing the gap further between genders. The most recent research shows women in the United States still make only 80%, on average, of their male counterparts. A host of factors are attributed to the slowing of improvement on this issue.

U.S. Supreme Court Strikes Big Blow to Worker Rights

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Supreme Court strikes big blow to worker rights

The U.S. Supreme Court’s recent decision in Epic Systems Corp. v. Lewis struck a big blow to worker rights. At issue was whether employer arbitration agreements, often signed as beginning day employment papers, can prevent workers from pursuing their right to participate in class or collective actions against their employer under the Fair Labor Standards Act (FLSA).

The history

Enacted in the 1930s, the FLSA established wage and hour rights including the federal minimum wage and overtime pay for hours worked over 40 during the workweek. Under the FLSA, workers can recover for underpaid and miscalculated wages. The statute also provides that current and former employees can pursue a type of class action known as a collective action so that other workers that have suffered similar wage losses can be identified and joined into the case. Collective actions can also help streamline litigation by creating efficiencies in time and money.

The opposing statute at issue in Epic Systems Corp. is the Federal Arbitration Act (FAA). The FAA provides that parties may contractually agree to resolve disputes through binding arbitration rather than the court system. In an arbitration, the parties give up their 7th Amendment right to a trial by jury as well as their right to appeal on substantive grounds to a court of law.

The ruling

In Epic Systems Corp, the Court rejected National Labor Relations Board’s contention that class waivers violate employee rights to take collective steps for their “mutual aid and protection.” The Court ruled that employers can require employees to arbitrate disputes with their employer and waive their right to pursue or participate in class or collective actions. The FLSA is silent about overriding arbitration agreements. Ultimately, “[i]n the Federal Arbitration Act,” the Court held, “Congress has instructed federal courts to enforce arbitration agreements according to their terms – including terms providing for individualized proceedings.”

The future

As both Justice Gorsuch, writing for the majority and Justice Ginsburg, for the dissent, point out – this result is something Congress can fix statutorily by clarifying that collective action rights cannot be waived by arbitration agreements. The Court also provides a sliver of daylight to workers by acknowledging state law contractual defenses to arbitration clauses still exist with respect to class waiver arbitration agreements.

Arbitration can be equitable and advantageous for parties of comparable bargaining power that willingly enter into such an agreement. But, more often than not, employment agreements with arbitration clauses involve a large disparity in favor of the employer. Employees often aren’t even aware they’ve signed an arbitration agreement.

The U.S. Supreme Court’s broad holding that forced arbitration clauses and class action waivers are enforceable in employment contracts will have a broad impact on millions of workers and will likely impact other areas of employment law beyond wage and hour disputes.

Microsoft No Longer Forces Secrecy in Sexual Harassment Claims

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In December, Microsoft announced it will no longer force secrecy in sexual harassment claims through the contract clause called forced arbitration. Going forward, Microsoft’s contracts will have this section removed.

What is forced arbitration?

For too long women, and men, subjected to sexual harassment in the workplace have been unable to take the matter to trial due to this clause. This results in fewer public trials and smaller settlements for the victims as claims are mediated through a third party without the ability to go to court. Just as troubling, forced arbitration hides what may be a widespread or ongoing problem within an organization from public knowledge.

Emily Martin, general counsel and vice president for workplace justice at the National Women’s Law Center, said, “By doing this, Microsoft is saying that it’s going to take concrete steps to make its workplace culture more conducive to addressing and preventing harassment. That message is important above and beyond the impact on individuals whose contracts are about to change.”

Martin further stated, “While Microsoft apparently didn’t use these provisions across its workforce, some companies use them more indiscriminately across their workforces to bind lower-wage workers as well as higher-wage workers. By standing up and saying that it believes that these provisions aren’t fair to employees, Microsoft helps change the conversation in a way that has the potential to help a lot of people by increasing the pressure on companies to do the same.”

Will this change sexual harassment claims?

This is a step in the right direction, however approximately 60 million American workers have these arbitration clauses in their contracts, and according to a study by the Employment Rights Advocacy Institute for Law & Policy, 80% of America’s 100 largest companies use them.

While changing the clauses and culture in the large companies would make a huge impact, working in a small company may still bind employees to forced arbitration in the event of sexual harassment. These companies could be fearful of lawsuits that would put them out of business and are not nearly as visible as a company such as Microsoft. Therefore, they will probably not face media disapproval in the same way and are not willing to take their chances in a court of law just to avoid negative publicity. For them, the forced arbitration clause is an insurance policy.

Legislators see need for reform

In December 2017, a bipartisan group of lawmakers called for legislation to end forced arbitration for sexual harassment claims in the workplace. Rep. Cheri Bustos, a Democrat from Illinois sponsored two pieces of legislation: H.R.4734 and H.R.4570. Sen. Kirsten Gillibrand, Democrat from New York, also backs the bill. Sen. Lindsey Graham, Republican from South Carolina, called on the U.S. Chamber of Commerce to support the bill. Both bills were referred to the subcommittee on Regulatory Reform, Commercial and Antitrust Law.

 

Other blog post from DuBose Law Firm

Arbitration Agreements Change for Nursing Homes and Long Term Care Facilities

DuBose Law Firm Celebrates 10th Anniversary

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In 2008 I did something I’d always dreamed of: hung out my own shingle. Since the late 1990s, I’d practiced law at one of the largest personal injury law firms in the nation. It was an invaluable experience representing the Greatest Generation, the Silent Generation, and Baby Boomers suffering from mesothelioma and asbestos lung cancer in courts across America. But ever since law school, I wanted to practice in a law firm like the one I clerked for in Lubbock, Texas: a small personal injury firm that provided legal services and personal attention to each client.

DuBose Law Firm 10th AnniversarySo, in June of 2008, a few months before the economy plunged into the Great Recession, I formed DuBose Law Firm. I’ve never looked back. What a decade it’s been and what a law firm we built. Just look at some of the milestones we achieved in our first 10 years:

●  Proudly represented asbestos victims across the United States
●  Successfully resolved cases for hundreds of clients
●  Tried cases before juries
●  Obtained appellate victories in the Supreme Courts of Louisiana and Missouri
●  Expanded our practice into two new areas: serious personal injury & employment/labor law
●  Opened a second office in New Orleans, Louisiana
●  Renovated our historic home office – The Adelfa B. Callejo Building – named in honor of the legendary Dallas civil rights icon who practiced law here
●  Community engagement – involved in local, state, and national bar associations as well as volunteering with Dallas schools and the community at large

Along the way, DuBose Law Firm grew to include a great team of attorneys, paralegals, and employees. My own family grew quite a bit as well. When we opened the office in 2008, my children were in elementary and pre-school. Now, my son is graduating from high school and our two girls aren’t far behind.

Throughout it all, DuBose Law Firm always stayed true to our core purpose: helping individuals who’ve been harmed. We strive to make a difference in our clients’ lives and in our society.

Just imagine what we’ll achieve in the next 10 years!

P.S. None of this would have been possible without the love and support of my wife and kids. They’ve been there for me all along the way.

DuBose Law Firm, PLLC
principal office address:
4310 N. Central Expressway
Dallas, Texas 75206
Phone: 214.389.8199
Fax: 214.389.8399
Sponsored by Attorney Ben DuBose, licensed in TX, OK, and PA