- Terri GersteinOpen Society fellow, fellow in Harvard’s Labor and Worklife Program and former labor bureau chief for the New York State Attorney General’s Office.
In a major blow to workers’ rights, the Supreme Court ruled 5 to 4 Monday that employers can use arbitration clauses to prohibit workers from banding together to challenge violations of federal labor laws in class-action lawsuits. Arbitration is often confidential. Many workers may agree to mandatory arbitration clauses without even being aware of it when they sign a contract with their employer. In a rare show of public displeasure, Justice Ruth Bader Ginsburg read her dissent from the bench, calling the majority opinion “egregiously wrong” and saying, “The court today holds enforceable these arm-twisted, take-it-or-leave-it contracts—including the provisions requiring employees to litigate wage and hours claims only one-by-one. Federal labor law does not countenance such isolation of employees.” For more, we speak with Terri Gerstein, former labor bureau chief for the New York State Attorney General’s Office.
AMY GOODMAN: We move on now to another economic issue: the issue of the Supreme Court and workers’ rights. Juan?
JUAN GONZÁLEZ: Well, in a major blow to workers’ rights, the court ruled Monday that employers can use arbitration clauses to prohibit workers from banding together to challenge violations of federal labor laws in class-action lawsuits. The court ruled 5 to 4. Many workers may agree to mandatory arbitration clauses without even being aware of it, when they sign a contract with their employer. Arbitration is often confidential.
AMY GOODMAN: In a rare show of displeasure, Justice Ruth Bader Ginsburg read her dissent from the bench, calling the majority opinion “egregiously wrong” and saying, quote, “The court today holds enforceable these arm-twisted, take-it-or-leave-it contracts—including the provisions requiring employees to litigate wage and hours claims only one-by-one. Federal labor law does not countenance such isolation of employees.”
For more, we’re joined right now by Terri Gerstein, former labor bureau chief for the New York State Attorney General’s Office. She’s now an Open Society fellow, fellow in Harvard’s Labor and Worklife Program, where she’s working to strengthen state and local enforcement of labor laws.
Welcome to Democracy Now! Talk about the significance of this Supreme Court decision, where you have Judge Gorsuch writing the majority opinion, and you have Judge Ruth Bader—Justice Ruth Bader Ginsburg writing an even longer minority opinion, which is very unusual.
TERRI GERSTEIN: Well, the real significance of this case, I think, is that many, many workers—most workers—especially low-wage workers, will simply not be able to get justice when they experience wage theft or race discrimination, sexual harassment. The decision, as you said, decides that employers are allowed to force workers, through arbitration agreements, to give up their rights to bring a class action. And that is such a problem, first of all, because workers always get strength in bringing cases together. This is both because they’re afraid to bring cases often, because of retaliation, but if it’s a group, it gives more protection from retaliation.
It’s also true because of the economics of bringing a case. If you think about how much a minimum-wage case might be worth—the federal minimum wage is $7.25, even the places where the minimum wage is $15 an hour—if a worker is not paid a hundred hours, that doesn’t add up to very much money. And it still takes a lot of work for a lawyer to do these cases. So the only way the economics of these cases work for private lawyers to bring cases is to aggregate them into a class action. And it will be—now that workers—employers are free to require workers to give up their right to bring a class action, I think it will be extremely hard for workers to find lawyers who can afford to take these cases.
JUAN GONZÁLEZ: Well, and also, when you say “force workers,” this is basically what? A condition of employment, a part of the small print and the language whenever you sign to go to work. Most people don’t even like pay attention to that, right?
TERRI GERSTEIN: Right. It’s really interesting, when you look at the actual underlying cases, because these were actually three cases that were combined. In one of them, the arbitration agreement was actually part of the job application itself, so you couldn’t even apply for the job without agreeing to arbitration. In another couple of the cases, workers who were already working at that company suddenly got an email saying, “Here’s your new arbitration agreement. By continuing to work here, you are agreeing to this agreement.” So, and as you said, for a lot of people, it’s just in the very beginning, when you get a mountain of paperwork or, in some places, touchscreens, and you just sign everything. People don’t have the opportunity to really review it, to understand what they’re giving up. And they’re not really getting anything in exchange for signing this arbitration agreement and giving up their right to bring a class action. All they get is the right to have the job.
AMY GOODMAN: How many workers will be impacted by this?
TERRI GERSTEIN: Well, the Economic Policy Institute recently did a study that showed that around—over 50 percent, around 53 percent, of the nation’s workers, among non-union, private-sector employers, were covered by mandatory arbitration. And of those, 30 percent had class-action waivers.
But I think those numbers are likely to massively increase after this decision, because there were employers who were waiting to see what would happen. One management-side law firm already, as of yesterday, had something on their website: create your own arbitration—DIY arbitration agreement, create your own arbitration agreement in mere minutes, an online tool for employers. So I think that the proliferation of these agreements is going to skyrocket.
JUAN GONZÁLEZ: Now, what are the alternatives, for those who want to beat this back? I mean, it obviously would have to go through Congress, right? Because, essentially, the Supreme Court said Congress didn’t intend for workers to have this ability.
TERRI GERSTEIN: Right. So, the most obvious frontal attack on this would be an act by Congress. And, in fact, there is something promising in that there is a bipartisan bill to prohibit mandatory arbitration agreements in cases of sexual harassment. And it’s interesting, because if you look at the press release when that bill came out, all of—again, bipartisan—all of the reasons given for mandatory arbitration being a problem in sexual harassment cases really apply to all different kinds of workplace violations—the fact that workers tend to lose more in arbitration, they get less money when they do win, it’s secret, there’s no appeal rights. So, that bill could certainly be expanded to include not just sexual harassment, but also wage theft, the Fair Labor Standards Act and other types of workplace violations. Also, the Federal Arbitration Act could be amended to make it clear that this kind of arbitration agreement is not protected.
Assuming that Congress—you know, I hope that Congress will take action on this, because this really should be a bipartisan issue, ensuring some kind of basic rights and safety net for workers. But if Congress doesn’t act, there are some things that states can do—the public enforcers, the departments of labor, attorneys general. They need additional resources to enforce the law, because, of course, they didn’t sign any arbitration agreement, and they’re free to bring cases looking at a pattern or practice or an entire workforce. And there are also some proposals, some innovative proposals, coming up at the state level to allow private lawyers to kind of step in the shoes of the government and bring a case similar to False Claims Act or a law in California, the Private Attorneys General Act. So, there are—in New York, there’s a law called the—a bill called the Empire Act, that proposes this kind of new right of action, where a private lawyer could sue, but standing in the shoes of the state, and therefore not being bound by the arbitration agreement, because it would augment the state’s own resources. So there are some potential solutions. But again, really, the most straightforward way to resolve this would be through Congress.
AMY GOODMAN: And the Me Too movement is really challenging this, showing, exposing. You just have Uber and Lyft saying, OK, they can’t force people into arbitration; it’s just because people are so furious about what’s happening. A 2015 Cornell University study found workers win just 21 percent of arbitration cases, compared to 57 percent of cases in state court. Workers won in arbitration like $109,000, on average; $575,000 in state court. As we wrap up, the significance of this? And this coming along with Janus, explain that.
TERRI GERSTEIN: Well, I think all of these cases together just really represent an attack by this court on working people, on working people’s ability to exercise their rights, to come together to protect themselves and improve their working conditions. There have been trends in the economy that the unionization rate is at an 80-year low. Workers are in a really difficult position right now. And—
AMY GOODMAN: And you have—yet, you have this massive militancy, for example, of teachers across the country.
TERRI GERSTEIN: Right. I think it’s a moment of real peril, but also a moment of real opportunity, because there is movement and energy and dynamism and militancy among workers and unions that we haven’t seen in a long time, as well. So, it’s a depressing moment, but a hopeful one, too.
AMY GOODMAN: Well, Terri Gerstein, we want to thank you for being with us, former labor bureau chief for the New York State Attorney General’s Office. We will link to your piece in The New York Times, your op-ed on this latest decision. This is Democracy Now! Stay with us.