Monday, September 3, 2018

After Epic Systems, It’s Striking What’s Left for Workers…Literally!

Suppose you think that your employer is engaging in wage theft by intentionally misclassifying you as exempt from overtime (or substitute many other possible grievances that are shared by co-workers, such as being misclassified as contractors, enduring systematic discrimination or harassment, or being forced to work off the clock). In the absence of a union, what alternatives do you have?

One classic response is “if you don’t like your job, quit.” But this is far from satisfactory. This puts most of the burden on the employee. Even if it is possible to find a similar job relatively easily (which isn’t always the case), there are still significant adjustment costs like switching health insurance providers. Indeed, employers have increasingly forced workers to sign non-compete agreements which makes it even harder for workers to find comparable new jobs. Moreover, if the worker has been denied something they are entitled to, like overtime, then quitting doesn’t make them whole. And if an employer has broken the law, quitting doesn’t hold it accountable, nor does it provide a deterrent against other violators. So we shouldn’t force workers to rely on quitting.

Instead of quitting, perhaps a worker can complain internally. But let’s be realistic. If an organization is intentionally misclassifying workers, engaging in systematic gender or racial discrimination, or other unethical practices, it’s hardly likely to respond positively to an internal complaint.

So, of course, the natural venue for trying to redress potential legal violations is to file a lawsuit. But over half of the U.S. workforce is now forced to sign a mandatory arbitration agreement. This prevents them from filing a lawsuit. To be fair, arbitration could have some advantages for employees, primarily in terms of being able to access a more affordable venue for resolving this issue. But there are potential drawbacks because employers have the resources and expertise to dominate the arbitration process. In fact, it’s the employer that determines the structure of the process that will be used. Within some modest boundaries, the employer can structure the process as it desires, and presumably does so in ways that serves its own interests, not those of aggrieved workers. Moreover, note that the employee has to sign away his or her rights to file a lawsuit in very unfair circumstances: they won’t get the job if they don’t sign, they haven’t yet experienced the workplace firsthand, and they are waiving their rights far in advance of any grievance materializing so they don’t really know what they are giving away or signing up for.

Because of these disadvantages, some workers have filed class action lawsuits in order to get to their case into court, even when seemingly prevented by a mandatory arbitration provision. For example, employees at Epic Systems, a Wisconsin-based health IT company, filed a class action lawsuit accusing Epic Systems of denying them overtime due to intentional misclassification. Even though they had previously been required to agree to submit wage-and-hour claims to individual arbitration, they argued that filing a class action lawsuit is a form of collective activity protected by the National Labor Relations Act (NLRA). Indeed, this argument was successful in the lower courts.

But Epic Systems appealed to the Supreme Court, which then ruled earlier this year that the arbitration agreements must be enforced. So employees who are forced to sign individual arbitration agreements—far in advance of any actual dispute—are prevented from any kind of legal action. Rather, they must seek justice in individual arbitration hearings. Low-paid workers are unlikely to be able to afford an attorney, and broad-based violations are less likely to come to light. And since the employer but not workers are repeat players in arbitration, arbitrators have incentives to favor employers.

So what’s left for workers? Well, they could try to unionize but that’s very time consuming. So perhaps ironically, it’s striking what’s left after the Epic Systems ruling. Yes, I mean that literally. Employees who face a similar grievance such as misclassification or discrimination can go on strike. The NLRA seeks to protect workers who band together to enhance their collective power and voice in determining wages, hours, and terms and conditions of employment. This is because the NLRA is premised on a belief that the employment relationship is an unequal one, and it will work better for all if workers act together rather than individually to better balance corporate power.

So collective activities to have a voice over wages, hours, and terms and conditions of employment are protected, which means that workers cannot be discharged, disciplined, or other discriminated against for engaging in these activities. When multiple workers feel aggrieved by work-related issues, they should remember these protections. If things are so bad that workers are ready to quit, they should instead think about going on strike. That is, as a group, they can collectively refuse to work until their grievances are resolved. The company doesn’t have to pay them or give into their demands. But it cannot fire them for this protected activity.

When there are mandatory arbitration agreements in place, the employer would likely claim that these would trump the right to strike. So we’d have a similar legal controversy as faced in Epic Systems. But unlike class action lawsuits, going on strike is clearly protected by the NLRA so I would expect a different legal outcome that allows striking even in the presence of an arbitration agreement (though I’m not a lawyer…so maybe I’m missing something).

In any case, going on strike isn’t ideal. Workers lose their pay and they can be replaced. Business and customers suffer, too. In fact, one of the major goals of the NLRA is to promote labor peace, along with a more balanced and therefore healthier employment relationship. Rulings like Epic Systems and Janus v. AFSCME, push us in exactly the opposite direction. So what may look like victories for employers might actually turn out differently in the longer run if the quality of employment relationship deteriorates and workers become more desperate. Those championing these rulings should be careful for what they wish for. Instead, our Labor Day 2018 wish should be for a healthier balance in the world of work.

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