In 2012, Sheila Hobson and three coworkers at Murphy Oil, a gas station and convenience store chain, learned they were among them. But in the hands of employers who refuse to take responsibility for their adverse employment actions or hostile work environments, these agreements can leave workers vulnerable to all types of abuses from sexual harassment to unjust terminations.
The Supreme Court kicked off its new session Monday morning, with Justice Neil Gorsuch on the bench for his first full term and the justices immediately diving into a hot-button labor dispute. Upon signing up for these products, customers are required to forfeit this right and instead agree to go before arbitrators hired by corporations.
But the workers contended that another federal law, the National Labor Relations Act, makes illegal any contract that denies employees the right to engage in "concerted activities" for the goal of "mutual aid and protection".
As the case has come to the Supreme Court, the focus is on whether Phillips, who regards his custom-made cakes as works of art, can be compelled by the state to produce a message with which he disagrees.
A study by the left-leaning Economic Policy Institute shows that 56 percent of nonunion private-sector employees are now subject to mandatory individual arbitration procedures under the 1925 Federal Arbitration Act, which allows employers to bar collective legal actions by employees.
If you haven't had an anxiety attack yet, the Supreme Court will also hear what is likely to be one of the most important digital privacy cases in decades. Companies have a significant incentive to do so.
The high court's arbitration decisions offer a "well trod path" for resolving the issue, argued Kirkland & Ellis partner Paul Clement, counsel to the three employers. The waivers compel workers to individually arbitrate disputes with employers rather than bringing collective lawsuits with co-workers. At the end of June, the justices signaled they were divided 4-4 on at least some aspects of the case and wanted Gorsuch to weigh in.
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Justice Stephen Breyer said he could not see how the employers could win their case without "changing radically" what the law has been, going "back to the New Deal".
"And the driving force of the NLRA was the recognition that there was an imbalance, that there was no true liberty of contract, so that's why they said, in the NLRA, concerted activity is to be protected against employer interference", she said. "We have to protect the individual worker from being in a situation where he can't protect his rights".
His influence as the court's "swing" member - the deciding vote on a range of high-profile cases from gay marriage to immigration to abortion - has left his seat coveted by those on the right and left. "Lots of burglaries are done with open doors or with jimmying without injuring a lock", liberal Justice Sonia Sotomayor said. The Immigration and Nationality Act defines "aggravated felonies" expansively to include "any ... offense that is a felony and that, by its nature, involves a substantial risk that physical force against the person or property of another may be used in the course of committing the offense". As the late federal judge Richard Posner wrote in 2004, "The realistic alternative to a class action is not 17 million individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30".
Justice Anthony M. Kennedy seemed to be ready to side with employers. In a bad sign for workers, Kennedy said the fact that employees can use the same lawyer for individual arbitration hearings means they effectively constitute collective action. The National Labor Relations Act, he said, requires the availability of a forum for collection actions.
Justice Neil Gorsuch on Monday grilled a Justice Department lawyer about a provision of immigration law that requires the mandatory removal of some lawful permanent residents who have committed crimes.
The ruling in the case could help clarify the crimes for which non-citizen immigrants may be expelled, affecting the Trump administration's policy of stepping up the removal of those with criminal records. Both the drop in membership and in non-members paying fees would lead to a massive drop in union fundraising, cutting their power even more so.
Clement claimed the employees could proceed jointly before they get to arbitration.