Unions Or Class Actions, Or Both?

Around the start of the last century, collective action by workers who were abused by the bosses gave rise to a belief that by joining together, the workers would have the power to stand up to bosses, to force them to negotiate, to challenge the powerful on equal footing. Lives were lost to the cause, but it eventually produced the Wagner Act, the National Labor Relations Act, which mandated that employers negotiate with the union as the lawful representative of its workers.

But as Stanford lawprof David Freeman Engstrom remind us, there were other forces at play at the same time.

In 1938, a 42-year-old autoworker named Florence St. John was angry about being paid less than men doing the same job on a General Motors assembly line in Lansing, Mich. Banding together with two dozen other women, she sued one of the world’s most powerful companies and — to the astonishment of all — won history’s first big damages award in a discrimination case.

An amazing win, at a time when the notion of paying women less than men, particularly when there were no variables upon which to hinge the distinction, would have been shrugged off by most people. But that was 1938. In 1935, Congress changed the game by enacting the NLRA, which gave exclusive representation to unions, and compelled the bosses to negotiate the terms of employment collectively. One huge advance was the negotiated term of mandatory arbitration, forcing employers to submit disputes to labor arbitration. 

St. John’s story might feel like dusty history, but it goes to the heart of three far-reaching cases that are scheduled to be argued on Monday at the Supreme Court. The question in these cases is whether workers are bound by company-imposed employment contracts requiring that they bring workplace complaints via arbitration rather than lawsuits, and that, further, they waive their right to bring these complaints in arbitration as class actions.

Engstrom likens this to the contracts of adhesion imposed by corporations on consumers of their goods, where there’s an arbitration clause buried somewhere within the fine print that no one ever reads until it’s too late. That’s hardly the case. In labor arbitration, the terms are the subject of some very serious negotiation by labor unions on behalf of their members as an expedited means of resolving disputes. For the employer to refuse would be an unfair labor practice. The employee would have her grievance brought by her union. This was a huge win for unions and their members. People died to achieve this goal.

But there’s a wrinkle in the employment context. The National Labor Relations Act, which came after the arbitration act and established the current system of union-based collective bargaining, also protects “other concerted activities” by workers. Now the justices must ask: What exactly was Congress thinking — and also, what were unions, companies and workers like St. John thinking — those many decades ago when the labor relations act was passed into law? Should class actions count as “other concerted activities” and enjoy protection?

Unions are against this, for obvious reasons. First, it undermines their exclusive power to represent the workers within a collective bargaining unit. Second, it puts the union at odds with its members, which means that the unions are now the enemy much like the bosses.

Engstrom’s argument, that unionized workers shouldn’t be bound by mandatory arbitration agreements, is, to be blunt, lame.

First, St. John helps us to see the current cases as a pivotal battle in a much longer fight over how best to make the American workplace safe and fair. There are many ways to protect workers: union- and company-negotiated collective bargaining agreements dictating wages and work conditions; regulatory agencies making and enforcing workplace rules; or courts and lawsuits that allow workers to enforce such rules themselves.

You can drive on the left side of the street or the right. Either one works just as well as the other. What you cannot do is drive on both. Engstrom points out the unionism is at an all-time low in America, which speaks to how people feel about unions. But if there is no union, there is no collective bargaining agreement that compels arbitration.

This would be tragic because of a second lesson history teaches us: Litigation is often the only weapon individuals like St. John have against institutions with powerful incentives to block or blunt their claims of right. Over time these institutions have included discriminatory unions and predatory corporations, but they have also included the government itself, as when citizens sue an administrative agency that violates the Constitution or Congress’s instructions to do or not do something.

This is certainly true, and has been a source of individual outrage since the inception of unions. The union acts on behalf of the collective. It negotiates terms for everyone in the unit, even though there are almost always differences of opinion as to what would be best for the group. Young workers want pay raises. Older workers want pension increases. Employees are often antagonistic to each other’s desires because of self-interest. The union represents them all, so someone ends up getting a deal they don’t love. It’s the nature of collective bargaining.*

Engstrom argues for two bites, first the mandatory negotiation by the union on behalf of the collective bargaining unit, and then a class action by those who didn’t get what they want out of the negotiations for their individual desires. It’s a great deal if you can get it, circumventing arbitration when it doesn’t help you while enjoying its mandatory imposition on the bosses when it does.

Except you can’t have it both ways. You can go union and compel arbitration. You can go class action litigation. But if arbitration is mandatory when it’s in your interest, then it’s mandatory all the time. No one forces a group of employees to unionize, and perhaps they don’t want to and have no interest in being represented by a union. Fair enough. But you can’t have it both ways.

*If an employee belives that the union has failed to support her position, her recourse is to sue the union, for its failure to adequately represent her. There is recourse, even if it’s not quite the direction the employee prefers to go.

4 thoughts on “Unions Or Class Actions, Or Both?

  1. wilbur

    It’s been almost two score since Wilbur took his labor law courses.

    But if I remember anything that is black letter law, it’s that collective bargaining agreements are considered entered into freely, and that labor is bound by the terms thereof just as much as management. If the parties agreed to limit the legal remedies available to the work force, then the courts will not look beyond the CBA because someone claims it’s not fair to them. These are not like consumer contracts of adhesion.

    Or am I missing something?

    1. SHG Post author

      No, you’re not missing anything. By trying to characterize this as akin to a consumer contract of adhesion, he’s being grossly misleading and legally disingenuous.

  2. CB

    I thought the issue was the enforceability of class action waivers in NON-unionized workplaces. And the tension between the FAA and the NLRA’s protection of concerted activities by nonunion employees. I read both articles a couple times, albeit without coffee.

    1. SHG Post author

      Those are issues raised by the cases before the Supreme Court, which has nothing to do with the argument made in the op-ed.

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