Workers Lose a Big Case

The United States Supreme Court ruled on 5/21/18 that companies can force their employees to resolve their claims in arbitration rather than in a court of law and that agreements which prohibit employees from banding together in a class action case are enforceable. This decision is a major blow to all workers who have signed employment contracts which contain these provisions.

It is estimated that 54% of non-unionized employers use mandatory arbitration clauses today, up from 2% in 1992.

The vote was 5 to 4 with Justice Ginsberg delivering a forceful dissent from the bench.

Justice Gorsuch, a Trump appointee, wrote for the majority. His opinion appears to be an about face in his thinking. In a 2015 dissent involving mandatory arbitration provisions in consumer contracts, he said prior cases upholding mandatory arbitration provisions “have predictably resulted in the deprivation of consumers’ rights to seek redress for losses, and, turning the coin, they have insulated powerful economic interests from liability for violations of consumer protection laws.” Obviously, the very same thing can be said of employment contracts and the end result will be that because employers are “insulated” from liability to their employees, they will shortchange, cheat and abuse them. Gorsuch apparently is not worried about his hypocrisy.

With this decision we now have mandatory arbitration in consumer contracts (banks, credit cards, rental agreements, nursing homes, cell phones, etc.) and employment contracts. In effect, the Supreme Court has O.K.’ed the creation of a parallel, private and confidential judicial system that stacks the deck against consumers and employees.

One of the many pities here is that the vast majority of employees have no realistic choice other than to sign these agreements. If you are a nonunion worker and you need the job, you will sign and, even if you don’t sign that agreement, the next place you apply will probably have a similar agreement.

Considering the lack of real wage growth for lower and middle class workers over the last 40 years, it is amazing more workers have not unionized. Without a union, workers have no bargaining power and no legal protection.

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