ILR Research Cited in Court

Mandatory arbitration impacts more than 60 million workers
U.S. Supreme Court
Thursday, October 5, 2017

Showing that mandatory arbitration is more widespread than previously thought, research by Professor Alexander J.S. Colvin was cited in U.S. Supreme Court oral arguments Monday.

Colvin’s research, published Sept. 27 by the Economic Policy Institute, shows that 56 percent of non-union employees are covered by mandatory arbitration and that 41 percent of the procedures include class action waivers.

In a trend driven by Supreme Court decisions dating to 1991, American employers are increasingly requiring workers to sign mandatory arbitration agreements that bar workers whose rights are violated from pursing their claims in court.

More than 60 million American workers must submit to arbitration procedures implemented by their employers, according to research by Colvin, ILR’s associate dean for academic affairs, diversity, and faculty development, and the school’s Martin F. Scheinman Professor of Conflict Resolution.

Daniel R. Ortiz, a University of Virginia law professor arguing on behalf of workers, on Monday cited figures generated by Colvin’s research.

Justice Stephen G. Breyer said that a ruling favoring the employers in the case could cut out “the entire heart of the New Deal” and unravel the construct of labor relations that began under President Franklin D. Roosevelt’s administration, according to The New York Times.

Mandatory arbitration is a controversial practice in which a business requires employees or consumers to agree to arbitrate legal disputes with the business through a procedure established by the company rather than going to court, Colvin explains in his research.

Although seemingly voluntary in that the employee or consumer can choose whether or not to sign the arbitration agreement, signing the agreement is required if the individual wants to get the job or to obtain the cellphone, credit card or other consumer product.

Earlier research had found that the share of workers subject to mandatory arbitration was about two percent in 1992, then rose to almost 25 percent of the workforce by the early 2000s. Colvin’s new research finds that this expansion has continued to the point that most nonunion workers in America are now subject to mandatory arbitration.

To obtain the data, Colvin surveyed 627 non-union private-sector employers between March and July of 2017 and found that more than 56 percent of workers are now subject to mandatory arbitration.

“This trend has weakened the position of workers whose rights are violated, barring access to the courts for all types of legal claims, including those based on Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Family and Medical Leave Act, and the Fair Labor Standards Act,” he writes in “The growing use of mandatory arbitration.”

Class action waivers, which many mandatory arbitration procedures include, bar employees from participating in class action lawsuits to address widespread violations of workers’ rights in a workplace, Colvin explains in his paper.

The court on Monday consolidated three cases to argue whether class action waivers in arbitration agreements are a violation of the National Labor Relations Act.

The cases are Epic Systems Corporation v. Lewis, No. 16-285, Ernst & Young v. Morris, No. 16-300 and National Labor Relations Board v. Murphy Oil USA, No. 16-307.

Justices were divided on their opinions Monday. But, their decision “could have wide-reaching implications for workers’ rights going forward,” Colvin said.

Key findings from the study include:

  • More than half—53.9 percent—of nonunion private-sector employers have mandatory arbitration procedures. Among companies with 1,000 or more employees, 65 percent have mandatory arbitration procedures.
  • Among private-sector nonunion employees, 56 percent are subject to mandatory employment arbitration procedures; 60 million American workers no longer have access to the courts to protect their legal employment rights and instead must go to arbitration.
  • Of employers who require mandatory arbitration, 30 percent also include class action waivers in their procedures—meaning that in addition to losing their right to file a lawsuit on their own behalf, employees also lose the right to address widespread rights violations through collective legal action.
  • Large employers are more likely than small employers to include class action waivers, so the share of employees affected is significantly higher than the share of employers engaging in this practice: of employees subject to mandatory arbitration, 41 percent have also waived their right to be part of a class action claim. Overall, this means that 23 percent of private-sector nonunion employees, or 24.7 million American workers, no longer have the right to bring a class action claim if their employment rights have been violated.