Posted June 5, 2018
A lot of people have been talking about the recent Supreme Court case Epic Systems and its effect on workers across the country. But what does the Court’s decision really mean? NELP Staff Attorney Ceilidh Gao breaks it down and answers some frequently asked questions about how this case will affect working people.
What did the Supreme Court decide in Epic Systems?
In short, the Supreme Court decided that it’s legal for an employer to force you—as a requirement of keeping your job—to give up your right to go to court and instead go to individual, private arbitration. This means that if your boss or employer did something illegal—for example, sexually harassing women in the office, discriminating against people based on race, or failing to pay you the legally required wage—you wouldn’t be able to go to a judge or court. You also wouldn’t be able to band together with any of your coworkers experiencing the same kind of abuse. Instead, you would have to bring your case alone.
So, I would have to go to arbitration. What is arbitration?
Arbitration is essentially a private court. When you sign an arbitration clause, you waive your right to bring your claims in a public court of law, and instead must bring them before an arbitrator—a private individual who decides the case. Instead of a courtroom, your case gets heard in a conference room and the arbitrator decides who wins. There’s no judge, no jury, and the case usually happens in secret.
The big problem is that arbitration and court are not the same for workers—no matter what the Supreme Court says. Working people lose more often in arbitration—and even when they win, they win lower amounts. This makes a lot of sense when we think about how arbitration works. When a company uses forced arbitration, it writes the arbitration clause and the terms are totally one-sided. It then forces all of its workers to sign. That’s why we call these clauses forced arbitration—the worker has no choice in the matter, and the company gets to write the rules in its favor.
The big problem is that arbitration and court are not the same for workers—no matter what the Supreme Court says.
With a one-sided arbitration clause, it’s no surprise that the company has more pull with the arbitrator. The company is essentially the one who hires—and fires—the arbitrator. If you get to decide whether someone has a job tomorrow, do you think you’re more likely to get a decision in your favor? For arbitrators, workers come and go, but it’s the company that stays the same—and pays the bills. Unfortunately, despite arbitrators’ stated duty to be neutral, we see companies’ role as the repeat players does sway arbitrators’ decisions.
That’s why we call these clauses forced arbitration—the worker has no choice in the matter, and the company gets to write the rules in its favor.
You also said that arbitration is individual and private. What does that mean?
The big effect of this case is that the Supreme Court has now said that your boss can force you into individual arbitration—meaning you have to go it alone when you bring your claim. You might wonder, does this really matter? The answer is that it matters a lot—and has a lot of far-reaching consequences.
Forcing you to bring cases one-by-one often means you can’t bring your case at all.
First, it is often much harder to prove your case by yourself. Let’s say you and your colleague were all sexually harassed by the same manager, and you want to prove that the company has been discriminating against women. Forcing you all to bring your cases one-by-one means that it will be much harder to show that there has been a pattern of discrimination. It also goes against a core belief we have in this country that workers have a right to join together. It’s a lot harder to stand up to the boss when you have to go by yourself, and risk retaliation, termination, or worse. As we’ve seen in the #MeToo movement, it often takes a first courageous voice to encourage other people to speak up—and we’re much more willing to bring our voices together when we have someone who’s saying #MeToo.
This also has a much bigger consequence that might not be obvious if you’ve never had a legal problem. Forcing you to bring cases one-by-one often means you can’t bring your case at all. Bringing a legal case is so expensive and resource-intensive that for most working people, it’s too expensive to bring a case on your own. That’s the exact reason that we have class, collective, and group lawsuits. Usually, if you and your colleagues are facing the same kind of wage theft or discrimination, you can hire a lawyer together and pool resources. And workers often get lawyers to work on contingency fees—where lawyers only get paid if they win the case—but attorneys will usually only do this for cases involving multiple workers.
Forced arbitration means employers can steal from workers with no repercussions?
Yes, forcing us to go it alone means that thousands of cases will never get heard at all. Bosses often steal from workers by failing to pay the required minimum wage or treating workers as “overtime exempt” managers when they shouldn’t be.
If your boss steals $5,000 from you, that’s a lot of money—but if it would cost $10,000 to arbitrate your case, you probably wouldn’t do it—it just wouldn’t be worth it.
Forcing workers to go it alone means that bosses can steal from workers without any consequence, so long as they only steal a little at a time. One law professor estimates that when there is forced arbitration, only 2 percent of the cases we would expect to be filed ever make it to arbitration at all. The Supreme Court’s decision effectively means that millions of workers in this country are no longer protected by our workplace laws.
Wow. How do I know if I’m covered by an arbitration clause?
Unfortunately, the odds are high that you are subject to forced arbitration by your employer. A recent study finds that over 60 million workers in this country are subject to forced arbitration clauses—that’s over 56 percent of private sector, non-union employees. That means if you work in the private sector and don’t have a union, it is more likely than not that you are subject to one of these clauses. Of Fortune 500 companies, over half appear to impose forced arbitration. Employers from Chipotle, to Waffle House, to fancy white shoe law firms use these clauses.
That means if you work in the private sector and don’t have a union, it is more likely than not that you are subject to one of these clauses.
These terms are usually buried in the fine print—for example, in a stack of paperwork you receive on your first day at work, or in a long online form with an “I agree” checkbox at the end. Many workers have no idea that they have signed away their right to a day in court.
Many workers have no idea that they have signed away their right to a day in court.
When does this decision go into effect?
The Supreme Court’s decision went into effect immediately—and we are already seeing the consequences. Just hours after the decision, one employer-side law firm launched a new online service that allows employers to “generate arbitration agreements in under five minutes.” Courts are now applying the law in the Supreme Court’s decision, and forcing workers out of the courtroom and into arbitration. Now that the Supreme Court has opened the door, we will only see more and more companies using these secretive clauses.
Are people fighting back against this terrible decision? What can we do to ensure our workplace rights are protected?
Yes! We need Congress to fix the Supreme Court’s radical reading of the law through bills like the Arbitration Fairness Act—companies shouldn’t be able to break the law without consequence, and send lawsuits to secret arbitration where the deck is stacked against working people. At the state level, we are also seeing bills that would strengthen the ability of state enforcement officials, who can sue employers even when there are arbitration clauses, to hold companies accountable for workplace violations.