On May 21, the U.S. Supreme Court ruled 5-4 that employees who have signed an arbitration agreement with a class action lawsuit waiver cannot band together to sue their employer for unfair wages or working conditions. A 2011 Supreme Court ruling in favor of the Federal Arbitration Act legally upheld that companies could bypass class actions by enforcing individual arbitration.
The majority of non-union employees have signed an employment contract that forces them into arbitration, some without even knowing it. The number of American workers bound by an employment arbitration agreement continues to rise, going from 2% just 16 years ago to 54% today. Arbitration agreements are notorious for being embedded in pages upon pages of new hire paperwork. Even when the legal language used to explain arbitration agreements and class action waivers is recognized by an employee, most feel forced to sign it for fear of losing their job.
The ruling upholding the use of arbitration agreements and class action bans in employment agreements has many worried that the law will extend to cases of discrimination and harassment. The major concern is that these disputes are handled secretly, with an arbitrator chosen by the company themselves. The process is known to heavily favor the corporation accused of wrongdoing, with the outcome rarely yielding the same results as a legal settlement or trial by jury.
Ruth Bader Ginsburg Strongly Disagrees with Ruling
Chicago has played a part in this debate. In 3 separate cases argued before federal appeals courts in Chicago, San Francisco, and New Orleans, attorneys argued on behalf of their clients that employees who have been wronged by their employers have the right to join together to file a class action lawsuit, regardless of the agreement they signed in their employment contract. The courts in Chicago and San Francisco agreed, but a federal appeals court in Louisiana disagreed, forcing the argument all the way to the U.S. Supreme Court.
Arbitration agreements and class action waivers aren’t just found in employment contracts. They’re nearly always found in cell phone, credit card, nursing home, gyms, pools, and extracurricular activity agreements and contracts. Nowadays a parent can’t enroll their child in school, camp, or other activities without being forced to sign an agreement that waives their right to sue in case of injury, even if the result is severe injury, disfigurement, or death as a result of a company’s negligence.
Justice Ruth Bader Ginsburg, along with Justices Stephen G. Breyer, Elena Kagan, and Sonia Sotomayor were in the minority, with Justice Ginsburg writing the minority opinion. Giving her opinion from the bench, she said, “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.” Justice Ginsburg has a history of fighting against the agreements, writing against them in 1992 and again in 2015. In 2015 she wrote that arbitration agreements give mighty corporations the ability to shelter themselves from financial harm at the expense of consumers.
The latest Supreme Court ruling is expected to increase the number of employer-required arbitration and class action agreements. As one of the top personal injury law firms in Chicago, the attorneys of Levin & Perconti encourage avoiding signing arbitration agreements of any kind, in any situation. The court of law exists to provide justice and uphold our rights. Agreeing to arbitration instantly tips the scales of justice in the wrong direction and right into the hands of those with the most power.