Neil Gorsuch’s first major opinion, after he gained control of a Supreme Court seat that Senate Republicans held open for a year until President Trump could fill it, was a decision allowing employers to force their workers to sign away their right to sue their employer. Under Gorsuch’s decision, workers who refused to give up that right could be fired on the spot.
The decision in Epic Systems v. Lewis was 5-4, along partisan lines.
On Friday, senator and presidential candidate Elizabeth Warren (D-MA) released a plan that, among other things, would significantly mitigate the damage Epic Systems caused to American workers’ ability to assert their rights in court. Warren’s proposal relies on executive action, so it cannot correct the Supreme Court’s error in Epic Systems entirely — only an Act of Congress or a new Supreme Court majority may do that. But it could restore rights to numerous workers employed by federal contractors.
To explain, Epic Systems involves a practice known as “forced arbitration,” where companies require individuals to sign away their rights as a condition of doing business with the company. A typical forced arbitration agreement requires workers to give up their right to sue their employer, and instead requires those workers to go to a privatized arbitration system that favors corporate parties.
Often, these agreements also require workers to give up their right to bring a class action lawsuit — which effectively allows the employer to cheat their employees out of relatively small sums of money with impunity.
As a paper by the Economic Policy Institute’s Ross Eisenbrey lays out, workers forced into arbitration are less likely to prevail, and when they do prevail, they typically receive less money.
Many of the Supreme Court’s decisions permitting forced arbitration contradict the explicit language of the Federal Arbitration Act — the statute that ostensibly provides for forced arbitration agreements. The Arbitration Act, for example, exempts “workers engaged in foreign or interstate commerce.” Nevertheless, in Circuit City v. Adams, a 5-4 Supreme Court held that the Act applies to most workers engaged in foreign or interstate commerce.
Epic Systems reaffirmed the atextual holding in Circuit City. It permitted employers to include class action bans in their forced arbitration contracts. And it did so despite another provision of federal law permitting employees to engage in “concerted activities for the purpose of collective bargaining or other mutual aid or protection.”
A class action lawsuit, where multiple workers join together to assert a similar claim against an employer, is an example of a concerted activity workers engage in for their mutual aid or protection.
In any event, Warren pledges that, if she is elected president, she will push executive action on the first day of her presidency that will “ban companies that want federal contracts from using forced arbitration and non-compete clauses that restrict workers’ rights.”
Warren’s arbitration proposal is part of a broader plan labeled “Valuing the Work of Women of Color,” which makes sense. As Warren notes, “forced arbitration and collective action waivers make it harder for employees to fight wage theft, discrimination, and harassment — harms that fall disproportionately on women of color.” Circuit City was itself an anti-discrimination case.
Restricting forced arbitration, however, could benefit any worker who has a legal disagreement with their employer. Under Epic Systems, employers can force their workers into arbitration and a class action ban simply by sending around an email to all employees informing them that they must give up their rights under pain of termination.
This said, it remains to be seen whether Warren will be able to implement an outright ban on federal contractors, or whether her executive action will need to be more circumspect. Any such action must flow from the president’s existing statutory authority, and that authority may not permit an outright ban.
In 2014, for example, President Obama signed an executive order disfavoring federal contractors who violate labor laws. That order, however, did not explicitly ban violators from federal contracts. Instead, it required federal officials to consider a contractor’s labor record when deciding if that contractor has a “satisfactory record of integrity and business ethics” that would allow it to receive federal contracts in the first place.
Moreover, any action Warren takes will be reviewed by a Supreme Court that includes Neil Gorsuch, and that Supreme Court appears quite eager to roll back the executive branch’s power to make policy — at least when the executive isn’t banning Muslims or trying to rig the 2020 Census to benefit Republicans.