In Supreme Court Case, Trump Sides with the Forgotten Corporation


So much for Trump’s forgotten man. It’s the poor and forgotten corporation he’s truly worried about.

President Trump’s Justice Department has switched sides in a major labor law case headed to the Supreme Court, announcing that it will no longer argue in favor of wronged employees and will instead line up behind corporations that hope to further strip workers of their legal leverage and funnel them into management-friendly arbitration schemes.

It’s just the latest move in the Trump administration’s crusade to undo labor advances made during former President Barack Obama’s administration and give corporations greater flexibility to push around workers.

The case, NLRB v. Murphy Oil, centers on whether employment contracts that waive an employee’s right to join a class-action lawsuit—and compel them to settle disputes through mandatory arbitration—violate the National Labor Relations Act. The Obama White House had filed an amicus brief in favor of the National Labor Relations Board’s ruling that such clauses are illegal. In a nearly unprecedented reversal, Trump’s solicitor general changed the federal government’s position, arguing in a brief filed Friday that mandatory arbitration is legal.

The change in position puts Trump on the opposite side of the table—the side of management—of the forgotten American worker whom he so fervently campaigned for during his presidential run.

Through the systemic spread of forced arbitration clauses, employees have seen their collective power decimated while corporations have become ever more emboldened. Over the past few decades, more and more companies have inserted clauses that force employees into mandatory arbitration, and forbid the joining of class-action lawsuits over violations of minimum-wage, overtime, discrimination, and other employment laws. Instead, employees must settle such claims in arbitration meetings where they are less likely to prevail—and if they do, damages are often far less than what would be collected through court actions. One judge has called these clauses a “get out of jail free” card for unscrupulous companies.

“These clauses appear to be innocuous, or even beneficial, to consumers and employees, but they pack a powerful punch,” labor law professors Katherine V.W. Stone and Alexander J.S. Colvin wrote in a 2015 report on what they dubbed “the arbitration epidemic.” “They prevent customers and employees from going to court if they have a dispute. Instead, when there is an arbitration clause, consumers and employees are required to take their complaints to a privatized, invisible, and often inferior forum in which they are less likely to prevail—and if they do, they are less likely to recover their due.”

In the case headed to the Supreme Court, Murphy Oil required that employees at its gas stations sign away their right to bring cases to court, instead mandating all disputes be resolved through individual arbitration. Sheila Hobson signed this contract when she began working at a Murphy Oil station in 2008. Two years later, she filed a collective action alleging that the company had failed to pay her for work-related activities done off the clock. Murphy tried to compel arbitration and throw out Hobson’s claims, in accordance with the contract she had signed. Hobson eventually filed an unfair labor practice with the NLRB, which took up the case and ruled in 2014 that Murphy Oil’s mandatory arbitration clauses did, in fact, violate the National Labor Relations Act. Murphy Oil appealed to the Supreme Court, which is expected to hear the case in its next session.

While using mandatory arbitration clauses to block class-action lawsuits has become more controversial as it’s become more clear just how pervasive and pernicious they can be, the courts have largely done management’s bidding. In an investigative series, The New York Times examined nearly 1,200 federal class actions that companies sought to compel into arbitration and found that judges ruled in their favor four out of five times. In consequence, few complainants actually pursue arbitration, given the long odds of fully recouping their losses.

As the share of private-sector employees working in unionized shops has plummeted since the 1970s from nearly 30 percent to now less than 7 percent, the class-action lawsuit has become one of the last routes for them to exercise collective power to resolve workplace violations. In turn, corporations, along with their powerful trade associations, have lobbied hard to shift case law in the courts and policy in Washington, D.C., in favor of privatized arbitration—and away from public justice. The U.S. Chamber of Commerce in particular has aimed its high-powered legal arm directly at the civil justice system and any sort of attempts to rein in the use of mandatory arbitrations.

With courts increasingly out of the picture and federal government enforcement weakened by austerity, companies are often free to engage in rampant wage theft and other labor law violations with little fear of reprisal.

It’s hard to imagine a better instance for the Trump White House to prove its supposed populist bona fides than with a case that quite literally pits the exploited worker against the powerful employer. But Trump and his team have proven time and time again that his promises of giving back power to the forgotten man and woman really comes down to less regulation and less accountability for corporate America.

At the same time, Trump has continued to pick apart Obama’s pro-worker policies.

Trump’s Department of Labor has allowed Obama’s overtime rule—which would expand overtime pay access to millions of struggling workers—to languish in the courts, signaling that it intends to let it die or replace it with a weak-tea alternative. The Labor Department has also walked back an Obama-era guidance that sought to crack down on employee misclassification by increasing the responsibility of companies for the employees of their contractors and franchisees. Trump’s Labor Department also killed Obama's "persuader rule," which would have required companies to disclose whom they pay to help with union-busting campaigns. Trump’s agencies have also rescinded a slew of Obama’s workplace safety regulations, including those that help the government crack down on companies that operate dangerous worksites and prohibit companies with a track record of violations from getting federal contracts.

With the 180-degree turn on Murphy Oil, Trump is taking another step away from workers—and into a full-fledged embrace of Republican orthodoxy.

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