The Supreme Court’s ruling Monday that employers may require workers to sign arbitration agreements and forego class-action cases against them represents the latest blow to the Obama administration’s efforts to expand the reach of federal workplace laws.
Critics argue that the Obama administration’s overreach has made it easy for courts to systematically shoot down former President Barack Obama’s reinterpretations of existing rules.
The justices ruled, 5-4, in Epic Systems Corp. v. Lewis, that the National Labor Relations Board, the main federal labor law enforcement agency, was wrong when it tried to prohibit employers from requiring workers to agree to forego filing class- action cases and instead agree to arbitration to settle any grievances.
A representative for the Chamber of Commerce, who requested anonymity, said the decision was hardly a surprise since the law had been settled prior to the board’s move. “Today’s Supreme Court decision does little more than restore the law to where it was prior to the NLRB’s overreaching 2012 determination that the National Labor Relations Act overrides the Federal Arbitration Act,” the source said.
The text of the NLRA doesn’t mention arbitration, the Chamber and other critics argued, so it was bizarre for the labor board to say that it took precedence over the main federal law for arbitration.
“It was a really aggressive interpretation of the NLRA that could not be squared with the Supreme Court’s prior rulings” on arbitration, said Robert Friedman, co-chairman of the alternative dispute resolution practice group for the law firm Littler Mendelson. “They should have known.”
Obama administration allies fumed over the ruling, arguing the board’s reading of the law was correct. “The National Labor Relations Act guarantees workers the right to collectively stand together to improve their wages and working conditions. However, today the Supreme Court ignored the plain text of the law,” said Rep. Bobby Scott of Virginia, the top Democrat on the House Education and the Workforce Committee.
In another 5-4 decision last month, the Supreme Court threw out an effort by the Labor Department to expand the coverage of overtime laws to a special class of workers at auto dealerships known as “service advisers.” The exception for those dealership workers had existed for four decades before the department attempted to eliminate it in 2011. The court’s conservative justices said Congress clearly intended the exemption when it wrote the law.
A Texas court last year declared unconstitutional the Obama-era Labor Department’s “persuader rule,” which forced lawyers to publicly divulge whenever they were hired by businesses to advise on labor issues. Previously, the contracts only had to be divulged when lawyers spoke directly with workers. The Trump administration told the court it would seek to rescind the rule.
Labor Secretary Alexander Acosta formally announced this year that the department will revisit the Obama administration’s expansion of the number of workers covered by the federal overtime rule. The prior administration said the rule covered any employee who makes up to $47,000 annually, more than twice the level under previous administrations, a move that was struck down by a Texas court in 2016.
The NLRB, now with a President Trump-appointed majority, announced this month it would issue a formal rulemaking clarifying its controversial “joint employer” policy. The policy determines when one business can be held legally responsible for workplace violations at a company it has ties to. Under Obama, the NLRB said it could apply to cases of “indirect control,” a move loudly opposed by business groups. The current board attempted to return it to the pre-Obama standard of “direct control” in a December case, but vacated the decision after the board’s inspector general argued that board member William Emanuel should have recused himself from the case.
The Occupational Health and Safety Administration quietly withdrew a rule last year that allowed union representatives to accompany agency officials during inspections of non-union workplaces. Federal law allows OSHA inspectors to have worker representatives accompany them during inspections. Dubbed the “walk around” rule, it had been restricted to employees at the workplace being inspected, but the Obama administration changed that in 2013, a standard the withdrawal restores.
Trump also has made extensive use of the Congressional Review Act to nullify actions by the Obama administration, such as a 2015 rule that forced bidders on federal contracts to disclose whether they had ever been charged with labor violations. Business groups labeled it a “blacklisting” rule, since it could allow a union to undermine a company’s chances at winning a bid just by filing a complaint.
