People For the American Way Foundation

5-4 Roberts Court Empowers Corporations to Nullify Federal Labor Protections

News and Analysis
5-4 Roberts Court Empowers Corporations to Nullify Federal Labor Protections

On Monday morning, in a 5-4 ruling authored by Justice Neil Gorsuch, the five-justice conservative majority on the Supreme Court stripped working people of a vitally important right that Congress specifically guaranteed in the National Labor Relations Act (NLRA): the right to engage in concerted activities for mutual aid or protection (basically, class actions). The case is Epic Systems Corp. v. Lewis.

Concerted action by employees substantially reduces the inequality of bargaining power between employer and employee (or job applicant). Although Congress has specifically guaranteed this right, employers are frequently requiring their employees to sign that right away as a condition of employment, exactly what the NLRA was enacted to prevent. They do this through employment agreements requiring employees to resolve conflicts with the employer through one-on-one arbitration. With this case, the Roberts Court has given businesses the green light to use their unequal bargaining power to pressure employees into surrendering a tool Congress guaranteed in order to reduce that gap.

Justice Ruth Bader Ginsburg wrote the dissent, joined by Justices Breyer, Sotomayor, and Kagan. She described the history of labor relations in our country dating back to the late 1800s, describing the problem that Congress acted to end:

Under economic conditions then prevailing, workers often had to accept employment on whatever terms employers dictated. Aiming to secure better pay, shorter workdays, and safer workplaces, workers increasingly sought to band together to make their demands effective.

Employers, in turn, engaged in a variety of tactics to hinder workers’ efforts to act in concert for their mutual benefit. Notable among such devices was the “yellow-dog contract.” Such agreements, which employers required employees to sign as a condition of employment, typically commanded employees to abstain from joining labor unions. Many of the employer-designed agreements cast an even wider net, proscribing all manner of concerted activities. As a prominent United States Senator observed, contracts of the yellow-dog genre rendered the “laboring man absolutely helpless” by “waiv[ing] his right . . . to free association” and by requiring that he “singly present any grievance he has.”  (Internal quotation marks and citations removed)

As a result, Congress acted in 1935, establishing the right to collective action and, even more, prohibiting employers from coercing their employees or otherwise interfering with that right.

But the conservative majority essentially nullified those protections. They rely on a 1925 law called the Federal Arbitration Act (FAA), which directs federal courts to respect the results of out-of-court arbitration agreements, unless grounds exist to make the contract revocable. As the dissent points out, what Congress had in mind involved situations where parties of equal bargaining power reached agreement about how to resolve disputes involving commercial transactions.

But, as discussed in our Supreme Court 2017 term preview, the far right has in recent years weaponized the FAA, issuing a series of 5-4 rulings that have empowered large corporations to use arbitration agreements to prevent consumers and businesses they harm from filing class actions against them.

At the end of her powerful dissent, Ginsburg laments that it is not Congress’s policy choice that the Court is imposing, but its own:

But the edict that employees with wage and hours claims may seek relief only one-by-one does not come from Congress. It is the result of take-it-or-leave-it labor contracts harking back to the type called “yellow dog,” and of the readiness of this Court to enforce those unbargained-for agreements. The [Federal Arbitration Act] demands no such suppression of the right of workers to take concerted action for their “mutual aid or protection.”

Epic Systems is an epic loss for working people, particularly for women, people of color, and LGBTQ people, who are disproportionately in lower-paying jobs with little bargaining power. As the NAACP Legal Defense and Educational Fund warned in an amicus brief:

For civil rights, the consequences of permitting unrestrained and ubiquitous use of arbitration clauses in individual employment agreements will be profound.

Although no one can know for sure how a Justice Merrick Garland would have ruled in this case, it seems unlikely that he would have staked out a policy enabling the powerful to exempt themselves from statutory restrictions on the exercise of their power.

But with decisions like Epic Systems, the corporate secret money that went into nullifying the Garland nomination and elevating Gorsuch to the bench is an investment that will bring them enormous returns.


arbitration, class actions, corporate court, Epic Systems Corp. v. Lewis, Neil Gorsuch, Ruth Bader Ginsburg, SCOTUS, Supreme Court, workers' rights