An Epic Supreme Court Decision on Employment

The 5-4 ruling in Epic Systems Corp. v. Lewis could weaken workplace protections—and the justices on both sides knew it.

False dichotomy, meretricious piety, and pay-no-attention-to-that-man-behind-the-curtain misdirection are vital arrows in the quiver of any lawyer or judge, no matter of what persuasion. These tricks were on particularly egregious display in Epic Systems Corp. v. Lewis, a 5-4 decision announced Monday in which the Supreme Court’s conservative majority continued its drive to narrow protection for employee rights. (The opinion, written by Justice Neil Gorsuch, was joined by Chief Justice John Roberts and Justices Anthony Kennedy, Clarence Thomas, and Samuel Alito; the dissent, by Justice Ruth Bader Ginsburg, was joined by Justices Stephen Breyer, Sonia Sotomayor, and Elena Kagan.)

The issue in Epic Systems was this: Can an employer require its employees, as a condition of keeping their jobs, to submit to individual arbitration of wage-and-hour and other workplace-condition claims—not only without an option to go to court, but without an option to pursue even private arbitration in common with other employees making the same claim? Employees’ objection to a “no group arbitration” clause is that individual arbitration may concern amounts too small to make pursuing them worthwhile. Thus, these clauses make it easier for employers to maintain unfair or even unlawful employment structures and salary systems.

The question required the court to interpret two federal statutes—the Federal Arbitration Act (1925) and the National Labor Relations Act (1935). The FAA says that “a written provision in … a contract evidencing a transaction involving commerce” requiring the parties to arbitrate instead of litigate disputes “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” The NLRA provides that “employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”

Thus, the issue is whether the no-group-arbitration clause, by violating that provision of the NLRA, provides “grounds as exist at law” to bar the employer-imposed requirement of individual arbitration.

Gorsuch accused Ginsburg, author of the dissent, and the other three moderate liberals—Breyer, Sotomayor, and Kagan—of improperly consulting their own policy preferences, refusing to harmonize two easily reconcilable federal statutes, and illicitly smuggling extra-legal commentary—legislative history—into judicial decisions. But this was purest rhetorical Pecksniffery. Gorsuch himself quite cheerfully invoked a pro-arbitration policy preference; did no more to harmonize the two statutes than did the dissents; and ignored actual history, and the text of the NLRA, in favor of a spurious extra-legal non-textual narrative of the FAA.

Begin with text: the NLRA states that it is designed to counter “inequality of bargaining power between employees who do not possess full freedom of association or actual liberty of contract and employers who are organized in the corporate or other forms of ownership association.” There is no language like this in the FAA. The best histories of the FAA’s adoption suggest that it was designed to efficiently settle disputes among merchants—business interests with comparable bargaining power. The Act itself says it should not be read to affect “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” The sponsors stated during deliberations that it was not designed to cover labor agreements

Over the past 35 years, however, the Court’s conservatives have reinterpreted the Act to include what they call a “liberal federal policy favoring arbitration agreements.” This is a judge-made policy invention, reflecting conservative justices’s empathy for corporations and large employers facing lawsuits by consumers and employees. Interpreting the FAA and the NLRA in favor of the employer does harmonize the two statutes—that is, reads them not to conflict with each other. But the alternate reading does that at least as well. That is, a judge could read the NLRA to bar employer-imposed contracts requiring individual arbitration. How? Under the NLRA, these clauses could be considered as unfairly restricting “other concerted activities for the purpose of ... mutual aid or protection.” That doesn’t do violence to the FAA; its text explicitly allows an exception when contracts violate “grounds as exist in law.”

Each interpretation has its merits and its problems; Gorsuch, however, refused to concede any merit, or even simple good faith, to the other side. The employees and the National Labor Relations Board were attempting a “interpretive triple bank shot,” which was “enough to raise a judicial eyebrow.” The NLRB’s argument wasn’t worth refuting, because it was the product of “an agency eager to advance its statutory mission” and “diminish [a] second statute’s scope in favor of a more expansive interpretation of its own.” When Ginsburg’s dissent suggested that the contracts at issue are “yellow dog” anti-labor contracts, specifically outlawed by another statute, the Norris-La Guardia Act;, Gorsuch’s condescending response: “Like most apocalyptic warnings, this one proves a false alarm.”

Gorsuch began and ended the opinion with the same statement: “The policy may be debatable but the law is clear.” Why repeat this twice? It smacks of judicial unease: No, really, we are right, we know we’re right, why won’t you admit we’re right? In fact, the reverse—unclear law, clear judicial policy preference—seems closer to the truth. The NLRA’s explicit pro-labor policy is not beloved of the judicial right; the FAA’s imaginary pro-arbitration policy is.

In her dissent, Ginsburg questioned the majority’s framing of the issue. It is, Gorsuch had written, whether “employees and employers [should] be allowed to agree” on individual arbitration clauses. Are these contracts really mutual agreements, or are they imposed on workers? “The Court ignores the reality that sparked the NLRA’s passage: Forced to face their employers without company, employees ordinarily are no match for the enterprise that hires them.” Many of the particular clauses involved in this case, she noted, were emailed to employees already on the job, with a statement that “continued employment would indicate their assent.” In other words, the “agreement” was, in effect: You have taken a job and now count on it to support yourself; mutely consent to new our conditions right now or security will escort you to the parking lot.

As numerous studies and amicus briefs made clear, the court’s decision in Epic Systems will inevitably lead to an explosion of these imposed contracts. This, Ginsburg wrote, will lead to “the underenforcement of federal and state statutes designed to advance the well-being of vulnerable workers.”

Her opinion closed with a foretaste of the next battle in the majority’s arbitration offensive: “It would be grossly exorbitant to read the FAA to devastate Title VII of the Civil Rights Act of 1964”—which covers sex discrimination on the job.

Exorbitant? Perhaps. But today’s majority may not see it that way. Why would they stop now? They are armed with their policy preference; and their precedent; and—since the partisan annexation of Gorsuch’s seat—the most important argument: five votes.