The Supreme Court will weigh in on the National Labor Relations Board’s aggressive efforts to expand its powers beyond enforcing union issues, singling out its moves to block companies from requiring their employees to settle disputes through arbitration instead of the courts.
Traditionally, the National Labor Relations Act has been invoked only in cases that directly involved unions or efforts to form one. But under former President Obama’s administration, the National Labor Relations Board, the main labor enforcement agency, aggressively applied it to non-union cases.
One of the labor board’s most notable efforts has been using the act to invalidate employee contracts that require workers to waive the right to engage in class-action lawsuits in favor of binding arbitration.
The “right to act concertedly for mutual aid and protection (contained in the NLRA) is not limited to supporting a labor union and pursuing collective bargaining with employers,” the board said in a 2012 case called Murphy Oil. That, it argues, includes issues such as class actions.
“It’s an argument that I don’t think a lot of people would have even thought of before a few years ago,” said Scott Nelson, a lawyer for the nonprofit group Public Citizen, which supports the labor board’s efforts.
While actual statistics are hard to come by, there is little dispute that requiring workers to sign waivers requiring arbitration is a common and growing practice among employers. Businesses like it because it allows them to deal with worker complaints quickly and quietly.
“It doesn’t take away worker rights,” argued Michael Lotito, co-chairman of the pro-business Workplace Policy Institute. They can still bring actions against their employers, just not in court, he said. “It merely substitutes another forum.”
The labor board disagrees, arguing that arbitration tends to favor employers precisely because it is quieter and therefore takes away the ability of workers to put pressure on their employers.
The board has acted aggressively to stop businesses despite having been knocked down by appeals courts several times. It has rejected the courts’ determinations and continued to pursue cases on the grounds that only the Supreme Court can tell it not to — a legal policy known as “nonacquiescence.”
The board kept pushing in hopes that a different appeals court would rule in its favor, which would force the Supreme Court to intervene to settle the matter. That strategy paid off last year when the board won cases in the 9th and 7th circuits. The justices officially put it on their docket Jan. 13.
All sides are eager to see the issue resolved. “The enforceability of class waivers currently depends on what circuit you are in, and the Supreme Court needs to bring certainty to the issue,” said a source for an industry trade association who requested anonymity.
At the heart of the case is which law takes precedence: The labor act or the Federal Arbitration Act, both of which date to at least the 1930s. The labor board’s critics note, among other things, that the text of the labor act, which was created in 1935, does not mention arbitration.
“That fact alone is dispositive of the issue,” said the Chamber of Commerce in an amicus brief filed with the Supreme Court. It added that even if the act “could be read, on balance, to protect access to class- or collective-action mechanisms, that would not be sufficient to override” the arbitration act.
Joshua Parkhurst, a New York labor-side lawyer who handles arbitration cases, counters that the Federal Arbitration Act, which was enacted in 1925 and allows for arbitration of private disputes, doesn’t mention class actions, either. Which act takes precedence is a genuine legal gray area, he argued.
“I don’t think the drafters of either of the statutes had the other one in mind at the time,” Parkhurst said.
Where the Supreme Court will come down on this issue is hard to say. The conventional wisdom is that the court is split evenly between its conservative and liberal wings on the issue and the deciding vote will be cast by whoever replaces the late Justice Antonin Scalia. That assumes that Scalia’s replacement will be on the bench by the time the court hears the issue, which isn’t a sure thing.
“Now we have to wait and see,” Lotito said.
