Federal Courts Disregard Longstanding Worker Rights

Workers continue to lose ground in federal courts, where judges are disregarding a ruling by the National Labor Relations Board (NLRB) that says companies cannot require workers to sign away their right to bring class action arbitrations and lawsuits.

 The NLRB’s  administrative decision in January  served as a theoretical  counterpoint to an earlier 5-to-4  decision by the U.S. Supreme Court in AT&T Mobility v. Concepcion.

 The Concepcion case involved alleged false advertising by AT&T and a $30 claim by a California plaintiff, who sought to prosecute the case as  class  arbitration . As the  dissent noted in Concepcion: “What rational lawyer would have signed on to represent the Concepcions in litigation for the possibility of fees stemming from a $30.22 claim?”

 The Supreme Court majority held that the Federal Arbitration Act of 1925 preempts state laws that prohibit contracts from disallowing class action lawsuits  – which means that contracts can exclude class action arbitration. 

 The NLRB ruling involved national homebuilder D.R. Horton’s practice, begun in 2006, of forcing all employees to agree as a condition of employment, not to pursue class or collective litigation of claims in any forum –  arbitral or judicial.  In its ruling, the NLRB said it has long held –  “with uniform judicial approval” –  that the National Labor Relations Act “protects employees’ ability to join together to pursue workplace grievances, including through litigation.”  

According to Thompson Reuters’ journalist Nate Raymond,  courts generally are rejecting the NLRB decision, some on the grounds that the  Federal Arbitration Act controls, and others cite the Supreme Court’s Concepcion decision. For example, in recent months:

  •  U.S. District Judge Gene Pratter in Philadelphia agreed with Tenet Healthcare and confirmed an arbitrator’s finding that a nurse could not bring classwide wage-and-hour claims in arbitration. The nurse’s lawyer had cited D.R. Horton in arguing that the arbitrator had erred.
  •  U.S. District Judge D.P. Marhsall in Little Rock, Arkansas, on Aug. 1, 2012 concluded that the FAA trumped the NLRA. and compelled individual arbitration in a putative class action of guards suing Securitas Services Inc.   Marshall said that accepting the NLRB’s reasoning would mean favoring litigation over arbitration, in contrast to the federal policy of favoring arbitration.
  •  Employees at Waffle House Inc. cited D.R. Horton in an effort to convince U.S. District JudgeCarlos Murguia of Kansas City, Kansas, to not compel individual arbitration. They lost. “Although Concepcion may not speak directly to the issue before the court,” the judge wrote, “it does illustrate a guiding principle: arbitration agreements are enforceable even when they prohibit the use of a class action.”

 Thomas Reuter News Service reports that  judges in New York, California, Pennsylvania, Florida and Georgia have refused to allow employee class actions to move forward on the basis of the NLRB’s holding, in cases against Jenny Craig, Citigroup, P.F. Chang’s and UBS, among others.

The Concepcion decision likely will have a devestating impact upon workers who are cheated by unscrupulous employers out of overtime pay or hourly wages.

“Class claims frequently offer the only vehicle for consumers or employees to challenge unlawful actions that cause limited damages to each individual while often reaping millions for business,” law professor Ann C. Hodges writes in an American Constitutional Society blog analysis of D.R. Horton. “… In the workplace, Fair Labor Standards Act cases seeking minimum wage or overtime payments are most likely to be abandoned on this basis and Horton involved such a claim, alleging that the nonunion employer misclassified employees as exempt from overtime pay.”

The Progressive States Network (PSN) in a recent report entitled, Where Theft is Legal: Mapping Wage Theft Laws in the 50 States, estimates that more than 60 percent of low-wage workers suffer wage violations each week. On average, the PSN reports, low-wage workers lose $51 per week to wage theft, or $2,634 per year. For low-wage workers, that amounts to 15% of their annual income, at average earnings of $17,616 per year.

Federal judges are appointed for life (in good behavior) and earn annual salaries of $174,000..

* See earlier reporting by this blog on federal court judges’ hostility to employment discrmination lawsuits.

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