The Supreme Court dealt a huge blow to restaurant workers in a recent ruling. The court ruled in Epic Systems Corp v. Lewis that workers bound by certain types of arbitration agreements are no longer allowed to enter class-action lawsuits or group arbitration proceedings against their employers. This ruling has four major implications for restaurant workers, as described below.
Holding employers accountable
Violations such as unpaid wages, overtime, and tip theft are rampant in the restaurant industry. Compounding these factors are the lack of resources available to restaurant workers to fight employers who violate the law. Some options include petitioning their state Attorney General or the National Labor Relations Board to intervene on their behalf, or paying a lawyer to sue the employer. In all three of these cases, class action lawsuits are typically suggested. As a result of the Epic Systems Corp ruling, restaurant employees are no longer allowed to enter into such proceedings.
Justice may be inherently biased against restaurant workers
The Employee Rights Advocacy Group recently authored a study showing “thousands of workers who have been unlawfully treated in the workplace lack any meaningful access to justice” because of forced arbitration clauses.
Class action lawsuits typically hold more weight in court because of the size of plaintiffs they can represent. Now that this option has been removed from the restaurant workers’ toolkit to fight injustices against them, restaurant workers will have to undergo individual, forced arbitration against companies that have more money and resources than they do. This inevitably makes the arbitration process more expensive for employees, who are also dealing with stagnant wages and a rising cost of living.
Laws protecting restaurant workers are now unenforceable
The Supreme Court’s decision held that the Federal Arbitration Act of 1925 overrules the National Labor Relations Act of 1935. In layman’s terms, this means that any arbitration clause existing in a contract can be enforced, even if an employee doesn’t sign the contract.
In her dissent, Justice Ruth Bader Ginsberg predicted “the inevitable result of [the] decision will be the underenforcement of federal and state statutes designed to advance the well-being of vulnerable workers.”
Restauranteurs may decide to underpay workers as part of a cost-benefit analysis
A report by NBCNews found that the service and food preparation industry is the lowest-paying industry in America with average hourly wages hovering around $8.71 hourly, or just shy of $18,000 annually.
The Epic Systems Corp ruling essentially incentivizes employers to underpay their workers as a means of making up for lost profit, or increased business costs. It also de-incentivizes lawyers from taking on individual arbitration cases against employers because they will not be able to file class action suits, which bring home larger paydays than individual cases.