Among the many important legacies Justice Ruth Bader Ginsburg leaves behind is a critical labor law legacy that shines a light on the inequality of bargaining power between employees and employers.
One particular Ginsburg dissent is now driving a movement to shatter the notion that employees and employers have equal bargaining power.
In 2018, Ginsburg highlighted the inherent power imbalance in employment contracts as the key fault line between liberal and conservative legal opinion on employment regulation in her dissent in Epic Systems v. Lewis. By a 5-4 majority, the Supreme Court held that an employer may lawfully require its employees to agree, as a condition of employment, to take all employment-related disputes to private arbitration on an individual basis, and to waive their right to participate in a class action or class arbitration, i.e. collective action.
The majority opinion, written by Justice Gorsuch, framed the issue as one of ”freedom to contract” between equal parties: “Should employees and employers be allowed to agree that any disputes between them will be resolved through one-on-one arbitration? Or should employees always be permitted to bring their claims in class or collective actions, no matter what they agreed with their employers?”
In her dissent, Ginsburg wrote:
“To explain why the Court’s decision is egregiously wrong, I first refer to the extreme imbalance once prevalent in our nation’s workplaces, and Congress’ aim in the NLGA [Norris-LaGuardia Act] and the NLRA [National Labor Relations Act] to place employers and employees on a more equal footing.”
“Recognizing employees’ right to engage in collective employment litigation and shielding that right from employer blockage are firmly rooted in the NLRA’s design. Congress expressed its intent, when it enacted the NLRA, to ‘protect the exercise by workers of full freedom of association,’ thereby remedying ‘the inequality of bargaining power’ workers faced.”
Ginsburg appropriately ridiculed the majority’s analysis noting:
“The Court’s opinion opens with the question: ‘Should employees and employers be allowed to agree that any disputes between them will be resolved through one-on-one arbitration?’ Were the ‘agreements’ genuinely bilateral? Petitioner Epic Systems Corporation e-mailed its employees an arbitration agreement requiring resolution of wage and hours claims by individual arbitration. The agreement provided that if the employees ‘continue[d] to work at Epic,’ they would ‘be deemed to have accepted th[e] agreement.’”
Her analysis “was apt—not just because the court’s decisions have undermined the enforcement of democratically adopted worker protections, but also because those decisions have rested on a view of consent that ignores the imbalance of bargaining power in the workplace,” writes Samuel Bagenstos, a former Ginsburg clerk and the author of a forthcoming paper on the “Lochner era” named for the 1905 Lochner v. New York labor case, which led to a period in which judges invalidated labor laws based on their view that those laws prevented employers and workers from striking the best deal they could with each other.
The paper is part of a new EPI initiative called the Unequal Power project that highlights the flawed but pervasive assumption that workers and employers have equal power.
There’s a need to make Justice Ginsburg’s assessment of “unequal workplace bargaining power” the core framework in economics, employment law, philosophy, and political science, says Lawrence Mishel, distinguished fellow at the Economic Policy Institute, who is heading up the project.
The Unequal Power project, to be launched on Oct. 7, is dedicated to Ginsburg because her dissent in Epic Systems inspired the initiative.
“The core of the project is to replace the idea that employers and employees are on an equal footing in the labor market (and therefore anything that ‘interferes’ in the labor market creates inefficiencies and ends up doing more harm than good) with an understanding that an inherent imbalance of power exists in favor of employers over their workers,” notes Mishel.
“This imbalance,” he continues, “can only be addressed with policies that provide countervailing power to workers. Identifying mechanisms that stratify the workforce through systemic racism and sexism will be presented as an inseparable component of this initiative. This would be a return to a framework of an unbalanced labor market that guided economists, policymakers, and the courts for important periods of American history, but was actively suppressed with free market assumptions becoming embedded in the law.”
Ginsburg understood this and the history. In her dissent, she wrote:
“Forced to face their employers without company, employees ordinarily are no match for the enterprise that hires them. Employees gain strength, however, if they can deal with their employers in numbers. That is the very reason why the NLRA secures against employer interference employees’ right to act in concert for their ‘mutual aid or protection.’”
Indeed, there are many present-day examples of adverse actions by employers that shine a light on the worker-employer imbalance, many of which are only remedied when workers act in concert.
Ironically, a recent one involved Epic Systems, the Verona, Wis., healthcare software firm at the heart of the aforementioned case.
In August, as COVID-19 cases were rising in Wisconsin, Epic Systems management made the decision to bring back thousands of its employees who had been working remotely because of the pandemic, even those who were considered high-risk.
To justify the change, Epic CEO Judy Faulkner wrote that “It’s hard to retain our culture when working from home.”
Hundreds of workers complained about the plan on social media, and CBS Sunday Morning did a segment on the outcry on August 4. News also spread that employees were looking to unionize as a result, according to an August 5 article in The Capital Times in Madison, Wis.
On August 12, Epic Systems’ management reversed their decision in an email to employees saying workers could continue to work from home, at least through the end of the year, and in a letter to employees Faulkner stated that “we appreciate the constructive feedback from many of you.” That, as Ginsburg once said, shows the importance of employees gaining strength in numbers.