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(Reuters) — The U.S. Supreme Court delivered a blow to the rights of workers on Monday by allowing companies to require them to sign away their ability to bring class action claims against management, agreements already in place for about 25 million employees.
The justices, in a 5-4 ruling with the court’s conservatives in the majority, endorsed the legality of the growing practice by companies to compel workers to sign arbitration agreements waiving their right to bring class action claims on issues such as overtime wages or gender-based pay disparities, either in court or before private arbitrators.
President Donald Trump’s administration last year reversed the government’s stance in the case, siding with the companies after former President Barack Obama’s administration had supported a U.S. National Labor Relations Board decision invalidating such employment agreements.
Justice Neil Gorsuch, President Trump’s appointee to the court, wrote the ruling, saying federal arbitration law trumps the National Labor Relations Act.
Writing on behalf of the four liberal justices in dissent, Justice Ruth Bader Ginsburg said that the ruling was “egregiously wrong” and called for Congress to take action to protect workers’ rights.
Growing numbers of employers have mandated that their employees sign waivers to guard against a rising tide of worker lawsuits on wage issues. Class action litigation can result in large damages awards by juries and is harder for businesses to fight than cases brought by individual plaintiffs.
The NLRB argued that the waivers violate federal labor law and let companies evade their responsibilities under workplace statutes. Workers have fought back against the waivers, arguing that the cost of pursuing their cases individually in arbitration is prohibitively expensive.
The three consolidated cases that came before the court involved professional services firm Ernst & Young L.L.P., gas station operator Murphy Oil USA Inc. and health care software company Epic Systems Corp.
A Supreme Court case involving class action waivers in employment agreements could be the most consequential labor and employment case decided by the court in decades, but employers’ ability to use the waivers is likely to be upheld by the court, according to a law professor.