In 2008, Sheila Hobson began working at an Alabama gas station owned by Murphy Oil, a chain that operates in several states. There, she was regularly denied overtime and required, without pay, to drive around town, surveying the competition. “It just hit me,” she told Reuters. “This is not right. I’m working off the clock.”
In 2010, Hobson filed an action in federal court to be paid the overtime she was owed. For eight years, she and her lawyers fought Murphy Oil in a battle that became increasingly untethered from her original claim. Her fight ended Monday when the Supreme Court handed down its opinion in Epic Systems vs. Lewis, a decision that will devastate the rights of workers to seek redress of labor law violations.
It’s a story of the failures of the New Deal labor regime and one more omen that the environment for labor is radically changing. Whether it’s for the good, and for whose good it will be, is yet to be seen.
When Hobson was hired by Murphy Oil in 2008, she was required to sign an agreement that forced labor disputes to be settled by arbitration, not the courts, and to be settled individually, rather than collectively with her colleagues. So when she and three of her coworkers filed an action in a federal district court in 2010, demanding that they be paid the wages they had earned but never been paid, the judge sent it to arbitration.
Individual arbitration puts workers at a disadvantage in several reticulating ways. For starters, the damages that an individual worker is entitled to may be too small to make a protracted legal battle worth it. A case worth a couple thousand dollars in back pay may cost tens of thousands of dollars in lawyers’ fees. By banding together, workers are able to pool resources. But forced to go it alone, workers may simply decide to absorb the loss.
Arbitration itself is tilted against the individual bringing a claim. Because arbitrators are hired by the company, they have an incentive to rule against workers so that they can get repeat business. The outcomes are stark: The Economic Policy Institute found that between 2003 and 2007, workers won 57 percent of the employment cases they filed in state court and only 21 percent of the cases that were sent to mandatory arbitration. Median damages won through arbitration were less than half what workers won in state court.
When Hobson was told that she would have to go through individual arbitration in order to get the back pay that she was entitled to, Hobson argued that the clause was illegal under the 1935 National Labor Relations Act. The NLRA protects what we might call the procedural rights of workers: It carves out the methods by which workers can fight for substantive benefits. It guarantees the right to form a union, to collectively bargain and to “engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”
Her case was kicked around the courts and the National Labor Relations Board, the federal body that rules on labor violations. The NLRB decided that the arbitration clause violated the NLRA; federal courts disagreed. The case eventually wound up, with two other similar cases, in front of the Supreme Court.
In deciding against the workers in an opinion released Monday, Justice Neil Gorsuch reasoned that the workers voluntarily accepted the arbitration clause. (In other two cases bundled with Hobson’s, workers who had already been working at their companies for years were given the clause as a new condition of employment; they could take it or be fired.) He argued that the lawmakers who passed the NLRA could have explicitly protected collective arbitration if they had wanted to, while also arguing that collective arbitration didn’t exist as a concept at the time the NLRA was passed. And he argued that joining together in group arbitration is not covered by the NLRA’s protection of “concerted activities,” even though, as Justice Ruth Bader Ginsburg points out in her dissent, it is a concerted activity according to any plain reading of the language.
In fact, collective action is the beating heart of the entire New Deal corpus. As the NLRA puts it, a core goal is “protecting the exercise by workers of full freedom of association.” Because individual workers are powerless before the machinery of the corporation, labor law provides a space for solidarity. As Ginsburg puts it in her Epic dissent, “Forced to face their employers without company, employees ordinarily are no match for the enterprise that hires them.”
But another core goal of the New Deal regime was to protect the interests of capital. The NLRA was passed, in its own words, to “eliminate the causes of certain substantial obstructions to the free flow of commerce.” The law and its siblings like the Federal Labor Standards Act were passed after decades of disruptive and often violent labor unrest. As law professor Laura Weinrib has observed, “The situation then, it bears remembering, was a world on the brink of revolution.” The labor laws passed as part of the New Deal regime protected labor, but they also protected labor’s bosses and the broader marketplace. Legislators balanced the free speech and associational rights of workers against the contractual rights of businesses and the nation’s interest in a stable economy.
In the years following the passage of New Deal labor laws, the courts also struck a series of compromises between employers, employees, and unions. These compromises have created a body of law full of constitutional anomalies. For example, the courts regularly end labor pickets, even though picketing in any other context would be fully protected by the First Amendment.
But through this compromise, workers also won the right to organize and to have exclusive representation, along with all the substantive benefits, like higher wages and better working conditions, that flow from being in a union.
That compromise has eroded as the courts give more and more rights to corporations and legislatures take more and more rights away from workers. It’s tempting to place Epic in the context of Janus vs. AFSCME, a Supreme Court case heard earlier this year in which the Court is expected to rule that public sector unions are constitutionally forbidden to collect fees from workers that they are legally required to represent. I think of Epic more as the logical next step after Burwell vs. Hobby Lobby, which found that the religious freedom rights of a corporation superseded the healthcare rights of its workers.
With the Epic ruling, the Court has given free rein to employers to remove any viable avenues to seek redress of labor law violations. If taken to an extreme, this will effectively dismantle labor law and, with it, the New Deal compromise. The question is what comes after.
From where I stand, I can see three paths forward. The first is a workforce increasingly atomized and cut off from labor protections, an Uberization of labor and the Lochnerization of the Constitution. This is the future imagined by the majority in Epic and it is, for obvious reasons, untenable.
The second is the liberal reform path and may best be exemplified by Senator Bernie Sanders and his proposed Workplace Democracy Act. The bill would make it easier for workers to form a union, and it would impose penalties on employers who retaliate against them. But except for some strengthened protections for workers in the gig economy, it’s a bill that largely looks backward, substituting a gauzy memory of a ‘50s-era workforce for a vision of labor empowerment. And despite its ambition, union density is so low, and the legal hurdles to forming a union so high, that it might be time to rethink the model rather than tinkering with its pieces.
I suspect that what comes after the New Deal compromise is dismantled will look a lot more like Fight for 15, Black Lives Matter and this year’s teacher protests than either the atomized workforce or the liberal reformist vision. If workers cannot organize within the law, they will organize outside the law. The result may be a better deal for workers than the New Deal compromise was able to give them.
There is a sense of justice that Epic was handed down the same spring that teachers walked out. They didn’t strike – in the states affected by protests, strikes are illegal – but they did provide a model for what we might call unorganized labor. As one teacher told Sarah Jaffe of the New Republic, “To heck with the law. We are out. Replace us if you can.”