Both President Donald Trump and #MeToo swung for the fences on the same issue: employee arbitration. Here’s the box score. Arbitration class waivers got the green light, but there’s a new move to push sexual harassment claims out of arbitration and into court.
Where does that leave employers? Arbitration looks better than ever. An employer who doesn’t give arbitration a hard look may regret it.
Trump nominated Neil Gorsuch to the Supreme Court because he “respects our laws.” In Epic Systems, a class waiver in an employee arbitration policy tested Justice Gorsuch’s mettle. Detractors said that class waivers, which force employees to settle the score in individual actions, violate their statutory right to engage in “concerted activity.” Speaking for a five-justice majority, Gorsuch wrote that Section 7 of the National Labor Relations Act doesn’t stretch that far. Class waivers are in.
Class claims come at employers from all angles. Overtime lawsuits jump to mind first. Small wonder: Class certification is fairly easy and, on key defenses, the employer shoulders the burden of proof. Don’t forget background check claims under the Fair Credit Reporting Act or good old-fashioned discrimination claims. With a class waiver, Walmart wouldn’t have needed to fight the Dukes discrimination class all the way to SCOTUS.
Class waivers keep disputes mano-a-mano. That’s a huge edge right off the bat. Overtime pay disputes can be contained to a single plaintiff or a tightly knight group, instead of mushrooming into all-out class warfare.
Arbitration isn’t all sunshine and roses. Inspired by #MeToo, some lawmakers are working to exclude sexual harassment claims from arbitration. New York and Washington have passed laws on it. Several other states have tinkered with the idea, but come up short of a law so far. But state laws may be dead on arrival. Back in Concepcion, SCOTUS drop-kicked a California Supreme Court opinion that wiped out arbitration class waivers. Justice Antonin Scalia wrote that California’s rule couldn’t survive pre-emption because it posed an “obstacle” to the Federal Arbitration Act.
#MeToo turned to Congress. There, representatives from both sides of the aisle introduced a bill aiming to invalidate any arbitration program that covers sexual harassment or discrimination claims. That would include claims for equal pay. The push got momentum in February from a letter to Congress signed by the attorneys general of all 50 states. They urged Congress to exclude sexual harassment claims from arbitration. Since then, the bill has gone nowhere.
Swayed by #MeToo, some companies choose to carve out sexual harassment claims from their arbitration programs. Uber and Lyft are two examples. They hope that resolving these disputes in open court will bolster the transparency that could let repeat offenders avoid detection. Arbitration, though, doesn’t have to be a black hole. An employee-turned-plaintiff often files suit in court first, publicizing her allegations before moving into arbitration. And an arbitration policy can limit confidentiality to certain types of claims, or ditch it entirely. Arbitration and #MeToo can co-exist peacefully.
Employers warmed up to arbitration, even before SCOTUS backed class waivers. Back in September 2017, 56 percent of American workers were part of an employer’s arbitration program. That’s according to a study of nonunion employees in the private sector by the Economic Policy Institute.
Arbitration’s popularity has everything to do with its flexibility. Employers get to pick where and how they resolve employee disputes. Discovery limits and venue selection clauses in arbitration policies are deadly enforceable. Done right, arbitration can streamline and centralize dispute resolution where a company is headquartered.
Flexibility should make both #MeToo and Trump crack a smile. For #MeToo, arbitration promises swift justice for sexual harassment victims, certainly faster than a federal lawsuit. And Trump would appreciate arbitration’s efficiency.
Many large employers agree that arbitration is the way to go. Will the president and #MeToo see eye to eye on arbitration too?
Alan Bush, posted on The Woodlands Waterway with the Bush Law Firm, represents companies in labor and employment matters. He speaks and writes extensively, breaking the law down into actionable business points.