The U.S. Supreme Court on Monday began hearing arguments in a closely watched case over the validity of employment agreements that curb the ability of workers to join together to sue companies over overtime pay and a variety of labor disputes.
The nine justices opened their new nine-month term after a three-month break, with a series of major cases lined up in the coming months regarding voting rights, religious liberty, union funding and other issues.
The court, with a 5-4 conservative majority since Republican President Donald Trump’s appointee Neil Gorsuch was confirmed by the Senate in April, opened the term with its biggest business case.
Lawyers began arguments in the case in which the Trump administration is siding with companies that contend that agreements requiring workers to arbitrate disputes with their employers individually, rather than bringing class-action lawsuits collectively with their co-workers, are valid.
The three consolidated cases coming before the justices involve professional services firm Ernst & Young LLP, gas station operator Murphy Oil USA Inc and healthcare software company Epic Systems Corporation.
In an unusual twist, the administration faced off against an independent agency of the federal government, the National Labor Relations Board (NLRB), in the justices’ ornate courtroom.
The Justice Department in June reversed the government’s previous position taken in the case under Democratic former President Barack, deciding not to defend the NLRB’s stance that employment agreements requiring workers to waive their rights to bring class action claims are invalid.
The NLRB argues that those agreements violate federal labor law and let companies evade their responsibilities under workplace statutes.
Class-action litigation can result in large damages awards by juries and is harder for businesses to fight than cases brought by individual plaintiffs.
At stake is the future of so-called class-action waivers, which employers have increasingly required employees to sign as part of their arbitration agreements to guard against a rising tide of worker lawsuits seeking unpaid wages.
Many attorneys representing businesses say that resolving workplace disputes through arbitration with individual employees is a speedy and cost-effective alternative to class-action litigation.
About one in four private-sector non-union employees — nearly 25 million workers — have signed arbitration agreements with class-action waivers, according to a study by the left-leaning Economic Policy Institute think tank.
Workers have fought back against the waivers, arguing that the cost of pursuing their cases individually in arbitration is prohibitively expensive. The prospect of winning a large damages award in a class action can be the only way for workers to find lawyers to take their cases, they argue.
The NLRB has invalidated dozens of class-action waivers for violating workers’ legal right to band together to improve the workplace.
(Reporting by Lawrence Hurley and Robert Iafolla; Editing by Will Dunham)