Tag Archives: arbitration

A truly Epic failure for workers

He just turned 50 last year…

Today’s post comes from guest author Jon Rehm, from Rehm, Bennett & Moore.

Free speech in the workplace has been discussed heatedly in the wake of the cancellation of “Roseanne”and a new rule prohibiting NFL players from kneeling during the national anthem. Parties on both sides in the culutrue war have argued that employees don’t have freedom of the speech on the job. While that is generally true, the National Labor Relations Act gives employees some rights of speech and associationon the job. But a recent Supreme Court case could have paired back those rights.

In Epic Systems v. Lewis the United States Supreme court held in a 5-4 decision that neither the National Labor Relations Act  nor the savings clause of the Federal Arbitration Act  prevents enforcement of arbitration clauses that preclude class or collective actions against employers by their employees.

As many commentators and the dissent pointed out, the Epic decision will make it more difficult for workers to band together to address wage and hour violations. Individually, even with attorney fees available, it is not economical for employees to pursue individual cases of wage theft if those individual cases amount to a relatively small amount. An example of such a case were the so-called “donning and doffing” cases pursued against various meat packing plants in the Midwest.

Employers have won some major victories in the area of wage and hour law this Supreme Court term. Epic follows on the heels of a decision making it easier for employers to prove they are exempt from the overtime provisions of the Fair Labor Standards Act

But Epic could impact labor and employment law beyond just wage and hour law. Here are a few ways Epic could impact more than just wage and hour law. This list is not inclusive and Epic is probably worth more discussion, but I wanted to discuss the broader implications of this case and bring up lesser discussed but important implications of this case.

What is a protected concerted activity?

The National Labor Relations Act protects protected concerted activity for the mutual aid of co-workers that goes to the terms and conditions of employment. The employees argued that participating in a collective action case under the Fair Labor Standards Act. Justice Neil Gorsuch, writing for the five Justice majority, disagreed. Gorsuch wrote that the NLRA only covered activities that employees do for themselves, not class action litigation. What concerned me more, was Gorsuch’s  use of a “canon”of statutory construction to hold that seemingly broad language in the NLRA about it employees being able to engage in collective activity for “mutual aid and protection” only applied to forming labor unions and other activities related to formal collective bargaining.

This conclusion concerned me because I have long advocated for non-unionized employees to engage in collective self-help on the job to address issues like bullying  or even accommodation of a disability.  But, as the dissent points out, association rights on the job are also protected by the Norris-LaGuardia Act (NLGA) NLGA expressly provides for a right to self-organization among employees. Though the Epic court rejected NLGA as a basis for overcoming an arbitration clause, it’s broader language could still be the basis for workplace speech and assocation rights than a paired down NLRA.

That Norris-LaGuardia would serve as backstop for employee association rights would assume the Roberts/Gorsuch court is merely following some rules of statutory construction rather than imposing their own economic preferences into the law. That might not be a fair assumption. The Federal Arbitration Act explicitly excludes employment contracts from coverage. In 2001, the Supreme Court limited that exclusion from workers in the transportation industry.  Epic would appear to further limit that exclusion in contradiction to plain and clear statutory language to the contrary.

 

Can Epic be made to benefit workers?

Epic may benefit some employees. One impetus behind using arbitration clauses to prevent class action claims is to defeat class action claims on retirement plans under ERISA. However ERISA also governs short-term and long- term disability policies. Currently, short-term and  long-term disability policies very difficult to win because courts defer to insurers on how the plans are interpreted. Some employee-benefit attorneys believe that employees will have a better chance of disability claims in arbitration.  Union-side labor lawyer, Moshe Marvit has also speculated that Epic might make it easier for employees to form unions.

Many management-side attorneys are also skeptical of arbitration  which could also prevent employers from adopting arbitration clauses.

Constitutional perspectives

So how is it that the Supreme Court can ignore seemingly plain language about the Federal Arbitration Act not applying to employment disputes? The Circuit City decision from 2001, provides one clue. In Circuit City the Supreme Court used a narrow interpretation of interstate commerce to hold that the FAA only applies to transportation employees. This holding is consistent with other holdings from the Rehnquist and Roberts courts that limit that power of the federal government to regulate through the commerce clause. (12)

Though Epic doesn’t discuss state police powers under the 10th Amendment much of the case law relied upon in Epic has to do with how the FAA pre-empts state laws preventing arbitration in certain cases. Essentially the so-called “contracts clause” which prevents laws that impair the obligation of contract.  This includes state laws enacted under 10th Amendment police powers. The Supreme Court took up a contracts clause case, Sveen v. Melin, this term.  That case could also have implications in the world of employment law depending on the language of the decision and any possible concurring opinions from the likes of Justices Gorsuch, Alito or Thomas.

Q&A With Senior Partner Matt Funk: Mandatory Arbitration, Sexual Harassment Legislation, Scaffolding & More

Senior Partner Matt Funk

Today’s post comes from guest author Matthew Funk, from Pasternack Tilker Ziegler Walsh Stanton & Romano.

Matt Funk is the president of the New York State Trial Lawyers Association and is a senior partner at Pasternack Tilker Ziegler Walsh Stanton & Romano. The New York Law Journal recently asked Funk to share his opinions on the U.S. Supreme Court’s recent decision on employment contracts and new laws on sexual harassment and scaffold protection.

Q: Do you think the Supreme Court’s recent decision that employment agreements that ban class actions do not violate federal labor laws will have an impact on workers?

A: The Supreme Court decision is a blatant misinterpretation of labor rights that will ultimately harm workers across the country. Individual workers typically lack the resources to take on major corporations by themselves. Through class-action lawsuits, workers can join together to hold negligent employers and bad actors accountable.

By allowing employers to strip this fundamental right away from workers, the Supreme Court is forcing victims to take reported violations to paid third-party arbitrators, usually from an arbitration firm chosen by the employer, which creates a strong potential for bias. It removes the dispute-resolution mechanism from an independent court, and places it into the hands of decision-makers in the pockets of the accused party, making it difficult to hold employers responsible for misconduct and labor violations.

Q: When did mandatory arbitration clauses really become so entrenched in the agreements and contracts that consumers regularly encounter?

A: Mandatory arbitration clauses have their roots in the Federal Arbitration Act, a law passed in 1925 that granted businesses the ability to resolve disputes outside of the courtroom through third-party arbitrators. The law was designed for business-to-business transactions but over the past 30 to 40 years, the courts have made it easier for corporations to include these clauses in contracts where the individual consumer or employee has no real power to change the contract terms. Eventually, these clauses became par for the course, often cloaked in legalese unrecognizable to the untrained eye.

Consumers often overlook these clauses, unaware of how their rights are being limited until it’s too late to avoid them or take action. The only way to level the playing field, and make sure corporations take consumer safety seriously, is to ban mandatory arbitration clauses in employment and consumer contracts.

Q: What is the association’s reaction to recent sexual harassment legislation passed and signed into law in New York City?

A: The legislation is a major step in the right direction, at a critical moment in the fight for gender equality. Over the past year, women across the country have shared their experiences in the workplace, demonstrating how institutions have reinforced sexism to physically harm and intimidate women, discourage their ambitions, prevent career advancement, and create hostile workplaces.

The City Council recognized that it was imperative to do more than just listen—they needed to act and do something to change the status quo. The legislation will help ensure that all managers and employees are properly trained and educated, creating a foundation for institutional reform that reverberates across businesses and organizations of all stripes in New York City.

Q: I know the association has taken a position on the Scaffold Safety Law in New York. What are the concerns?

A: It’s no secret that construction work is one of the most dangerous jobs in New York. In 2016 alone, 71 construction workers in New York State died in on-the-job incidents, the highest total we’ve seen since 2002. The Scaffold Safety Law is a much-needed source of justice and accountability that is essential to protecting workers and making safety paramount.

Given the risks involved, it’s up to owners and general contractors who have ultimate control over the work site to create a secure working environment, by following safety guidelines and providing proper equipment. When owners and general contractors ignore basic rules and fail to provide adequate gear, they put workers at risk and create tragedies out of sheer negligence and disregard for their employees’ lives.

The Scaffold Safety Law offers workers and their families a way to hold negligent owners and general contractors accountable. In instances where workers are seriously injured or killed as a result of unsafe working conditions, their families are forced to take on the costs of lost wages, medical bills and other impacts that are not adequately covered by workers’ compensation, not to mention the physical and emotional pain that results. The Scaffold Safety Law can help mitigate the financial stresses and devastation facing victims and their families, while delivering them justice. At the same time, it insists that owners and contractors follow safety guidelines and promote worker safety so workers can return home to their families at the end of a hard day’s work.

Q: You’re nearing the end of your term as NYSTLA president. What achievements are you most proud of?

A: Over the last year, I’m particularly proud of NYSTLA’s leadership in expanding and strengthening the legal rights of everyday New Yorkers. Working with a broad network of affected residents and families, advocates, and legislators, NYSTLA has been able to achieve legislative and regulatory victories that deliver justice and practical, meaningful results.

In January, Lavern’s Law was enacted, establishing legal rights for patients harmed by negligent failure to diagnose cancer or a malignant tumor by changing the statute of limitations to reflect the date of discovery. And in 2017, legislation was passed that expands access to SUM auto insurance, promoting better insurance coverage for drivers. Elsewhere on the road, we successfully fought for the implementation of a regulatory framework for ride-share services that is the best in the nation when it comes to protecting consumers, including proper insurance coverage. Not to be forgotten, we also reinforced victims’ legal rights through a bill that allows lawsuits to proceed in the same county where the violation occurred. And, finally, as a workers’ compensation attorney, I am particularly proud of our success working with the labor movement to beat back harmful changes that were proposed that would have gutted the workers’ compensation system.

At the same time, NYSTLA has continued to help young lawyers develop professionally and gain the knowledge they need to make a significant impact through a continuing legal education program that has repeatedly been voted the best in the state.

We believe in leading by example, and our efforts this year serve as a reminder of how the legal community can make a difference on behalf of the public interest.