SCOTUS Upholds Workplace Arbitration Contracts Barring Class Actions

From today’s New York Times:

 The Supreme Court on Monday ruled that companies can use arbitration clauses in employment contracts to prohibit workers from banding together to take legal action over workplace issues.

The vote was 5 to 4, with the court’s more conservative justices in the majority. The court’s decision could affect some 25 million employment contracts.

Writing for the majority, Justice Neil M. Gorsuch said the court’s conclusion was dictated by a federal law favoring arbitration and the court’s precedents. If workers were allowed to band together to press their claims, he wrote, “the virtues Congress originally saw in arbitration, its speed and simplicity and inexpensiveness, would be shorn away and arbitration would wind up looking like the litigation it was meant to displace.”

Justice Ruth Bader Ginsburg read her dissent from the bench, a sign of profound disagreement. In her written dissent, she called the majority opinion “egregiously wrong.” In her oral statement, she said the upshot of the decision “will be huge under-enforcement of federal and state statutes designed to advance the well being of vulnerable workers.”

Justice Ginsburg called on Congress to address the matter.

Brian T. Fitzpatrick, a law professor at Vanderbilt University who studies arbitrations and class actions, said the ruling was unsurprising in light of earlier Supreme Court decisions. Justice Gorsuch, he added, “appears to have put his cards on the table as firmly in favor of allowing class actions to be stamped out through arbitration agreements.”

As a result, Professor Fitzpatrick said “it is only a matter of time until the most powerful device to hold corporations accountable for their misdeeds is lost altogether.”

But Gregory F. Jacob, a lawyer with O’Melveny & Myers in Washington, said the decision would have a limited impact, as many employers already use the contested arbitration clauses. “This decision thus will not see a huge increase in the use of such provisions,” he said, “but it does protect employers’ settled expectations and avoids placing our nation’s job providers under the threat of additional burdensome litigation drain.”

Read the complete article here.

California’s top court makes it more difficult for employers to classify workers as independent contractors

From today’s Los Angeles Times:

In a ruling that could change the workplace status of people across the state, the California Supreme Court made it harder Monday for employers to classify their workers as independent contractors.

The unanimous decision has implications for the growing gig economy, such as Uber, Lyft and other app-driven services — but it could extend to nearly every employment sector.

In recent years, the hiring of workers as independent contractors — not subject to government rules on minimum wage, overtime and rest breaks — has exploded. A 2016 study by economists at Harvard and Princeton universities estimated 12.5 million people were considered independent contractors, or 8.4% of the U.S. workforce.

The ruling is likely to lead many employers in California to immediately question whether they should reclassify independent contractors rather than face stiff fines for misclassification, employment lawyers said.

“A huge number of businesses will be calling their lawyers saying ‘What should I do?'” said Michael Chasalow, a professor at the USC Gould School of Law.

To classify someone as an independent contractor, the court said, businesses must show that the worker is free from the control and direction of the employer; performs work that is outside the hirer’s core business; and customarily engages in “an independently established trade, occupation or business.”

“When a worker has not independently decided to engage in an independently established business but instead is simply designated an independent contractor … there is a substantial risk that the hiring business is attempting to evade the demands of an applicable wage order through misclassification,” Chief Justice Tani Cantil-Sakauye wrote for the court.

A worker may be denied the status of employee “only if the worker is the type of traditional independent contractor — such as an independent plumber or electrician — who would not reasonably have been viewed as working in the hiring business,” the court said.

Instead, an independent contractor would be understood to be working “in his or her own independent business,” Cantil-Sakauye wrote.

The court offered examples: A plumber temporarily hired by a store to repair a leak or an electrician to install a line would be an independent contractor. But a seamstress who works at home to make dresses for a clothing manufacturer from cloth and patterns supplied by the company, or a cake decorator who works on a regular basis on custom-designed cakes would be employees.

Read the complete article here.

House GOP passes bill that rolls back “joint employer” protections for workers

From yesterday’s New York Times by Christine Owens:

House Republicans on Tuesday took another step in their campaign to cheat workers out of fair pay and workplace rights. On a vote largely along party lines, the House advanced a bill to roll back longstanding “joint employer” protections for workers contracted by big companies like Apple or Alaska Airlines.

For years, when two companies both control the terms and conditions of employment, they are also both considered responsible for workplace violations like wage theft, sexual harassment or safety problems. So if a window washer working for a contractor fell because safety equipment was improperly installed by the company whose building he was cleaning, he could sue both the contractor and the larger company for damages.

But under the bill passed on Tuesday, large corporations that outsource jobs would get virtually full immunity from workplace violations, while the typically smaller, poorly capitalized local businesses that provide the workers would bear all the liability. This could leave these small businesses exposed to bankruptcy, leaving workers in danger of having no remedies at all.

Contracting out work is not necessarily bad; it’s often a smart way for companies to efficiently handle certain tasks, like payroll administration and cleaning work.

But the problem is that many companies also contract out to lower compensation costs and, sometimes, to avoid basic legal responsibilities to workers. Even when such cost-cutting is not the top reason a company outsources, workers usually suffer.

Read the entire article here.