Mandatory individual arbitration. It’s a tactic used by some employers who want to quickly and secretly settle employee complaints and prevent employees from coming together to challenge widespread violations such as failure to pay overtime or provide rest breaks.
Last month, the U.S. Supreme Court ruled in Epic Systems Corp. v. Lewis that when workers sign a mandatory individual arbitration agreement as a condition of employment, employers can limit workers’ rights to seek redress against workplace violations through class action ligation or collective arbitration action.
This decision will inevitably make it more difficult for employees to hold companies accountable for wage-and-hour or other workplace violations.
“This stunning court decision overwhelmingly favors employers who repeatedly or systematically mistreat their workers,” Gov. Jay Inslee said. “Forced individual arbitration reduces transparency, accountability and access to justice. It means those with power and money are more likely to win, while most employees are left to manage a confusing and intimidating arbitration process. And if the employer’s unlawful practice is widespread, this decision means you can’t stand with others. You are on your own.”
In response to the Court’s decision, Inslee today issued Executive Order 18–03: “Supporting Workers’ Rights to Effectively Address Workplace Violations,” establishing new state procurement procedures that allows agencies to consider whether a company seeking to contract with the state requires its employees, as a condition of employment, to sign a mandatory individual arbitration clause or collective action waiver.
“In our state, we value companies that respect workers’ rights,” Inslee continued. “There is power in numbers. There is power in transparency. And there is power in our pocketbook to influence companies to do the right thing. We can’t change the Supreme Court’s ruling but we can change how we do business.”
In addition, state Rep. Drew Hansen, D-Bainbridge Island, plans to pursue legislation in the upcoming session to provide more tools for employees to address wage-and-hour violations.
“We already have a state law that lets whistleblowers enforce the laws against Medicaid fraud; we should also have a state law that provides more options to enforce violations of the state’s wage-and-hour laws,” Hansen said. “I plan to introduce legislation along these lines in the upcoming session.”
Inslee says the Court’s decision does not affect the Washington Department of Labor & Industries’ ability to investigate and enforce workplace rules. Workers who think their employer is violating wage-and-hour rules can contact the agency’s Employment Standards Office.