WASHINGTON — The U.S. Supreme Court ruled 5-4 Monday that companies may require workers to accept individual arbitration for wage and other workplace disputes rather than banding together in collective actions.
The case was considered the most important business case of the term, and could affect as many as 25 million contracts.
The ruling extends the Supreme Court's decisions that make room for corporations to require that wage disputes, and probably other actions such as job-discrimination claims, be handled through arbitration, rather than litigation.
Justice Neil Gorsuch, writing for the conservative majority, posed the question presented by the case: Should employers be allowed to insist that disputes be handled in one-on-one arbitration, or should employees always be permitted to bring their claims in class or collective actions?
"As a matter of policy these questions are surely debatable," Gorsuch wrote. "But as a matter of law the answer is clear. In the Federal Arbitration Act, Congress has instructed federal courts to enforce arbitration agreements according to their terms — including terms providing for individualized proceedings."
Gorsuch was joined by Chief Justice John G. Roberts Jr. and Justices Anthony M. Kennedy, Clarence Thomas, and Samuel A. Alito Jr.
Workers had contended that another federal law, the National Labor Relations Act, makes illegal any contract that denies employees the right to engage in "concerted activities" for the purpose of "mutual aid and protection." That means that some sort of collective action cannot be prohibited, the workers say.
That was the thrust of a forceful dissent from Justice Ruth Bader Ginsburg, who underlined her objections by reading part of her dissent from the bench.
"The court today holds enforceable this arm-twisted, take-it-or-leave-it contracts — including the provisions requiring employees to litigate wage and hours claims only one-by-one," she said. "Federal labor law does not countenance such isolation of employees."
Trying to arbitrate such claims individually would be too expensive to be worth it, she wrote, and "the risks of employer retaliation would likely dissuade most workers from seeking redress alone."
She was joined by Justices Stephen G. Breyer, Sonia Sotomayor, and Elena Kagan.
The advocacy in the case was changed by the political turnover in Washington. The National Labor Relations Board, an independent government agency, had agreed with the workers. But after President Trump took office in 2017, the Justice Department switched sides, and filed a brief siding with the companies.