In the days since Neil Gorsuch issued his opinion in in Epic Systems v. Lewis — which will allow employers to force their workers to sign away many of their legal rights under pain of termination — things escalated quickly, with two news stories that broke in the immediate aftermath of the decision pointing the way to a grimmer future to come.
The first of these items is the news that big box store Lowe’s immediately seized full advantage of the power Gorsuch just gave them over their employees. As the Huffington Post’s Dave Jamieson reported, Lowe’s told its store managers and assistant managers that they must give up their right to sue the store in a real court of law or to join a class action suit against their employer. Workers who wouldn’t agree to give up these rights risked losing their 2018 bonuses and their “continued employment at Lowe’s.”
Under the new arrangement for Lowe’s managers, any dispute that arises between the store and those employees must be handled by a privatized arbitration system where workers are less likely to prevail than in real courts, and where workers who do prevail typically are awarded less money than litigants who did not sign away their rights.
The second story involved Munger, Tolles & Olson, an elite law firm that hires top graduates from many of the best law schools in the country. Last week, Ian Samuel, a fellow at Harvard Law School, tweeted out excerpts from a forced arbitration agreement to which the firm wanted all of its summer associates to agree. Among other things, the agreement appeared designed to protect senior lawyers who engage in sexual harassment.
As Samuel put it, “if some bothersome woman should tell people that some Munger partner got handsy at a firm event, fear not: there’s a clause for that.”
Yet this second story ended very differently than the saga at Lowe’s is likely to end. After Samuel made the law firm’s forced arbitration agreement public, the firm backed down.
Munger, Tolles & Olson is committed to the highest standards of conduct. In this case, we were wrong, and we are fixing it. We will no longer require any employees, including summer associates, to sign any mandatory arbitration agreements.
— MTO (@mungertolles) March 25, 2018
It’s not hard to guess why these two stories played out so differently. Lowe’s store managers aren’t exactly living in poverty, but they aren’t fantastically rich either. According to two websites that crowdsource salary information on various employers, a store manager typically earns between $80,000 and $90,000. That’s enough to own a home in many parts of the country, but it’s not the sort of salary companies typically pay to top employees who have serious bargaining power if their employer makes an unreasonable demand.
Law firms like Munger, on the other hand, compete for a small pool of top graduates from mostly elite law schools. The leading firms pay $180,000 annual salaries to their first year associates, and their pay only goes up from there. A firm that gets a reputation for imposing coercive agreements on its employees will have a tough time recruiting the best associates — and the people the firm wants to hire have the power to go elsewhere.
Which brings us back to Epic Systems. Gorsuch begins his opinion with a question which assumes that the workers and bosses in that case reached a real agreement that the workers should give up their rights — “Should employees and employers be allowed to agree that any disputes between them will be resolved through one-on-one arbitration?” The reality was very different. Employees at two of the companies at issue in Epic Systems were literally told that they agreed to give up their rights if they continued to work there.
Workers had to chose between their right to sue, and their job.
It is likely that this will soon be the fate of the overwhelming majority of the workforce. Even employees who are fairly comfortably ensconced in the middle class, such as Lowe’s store managers, will be caught up in forced arbitration agreements and class action bans.
Meanwhile, a handful of senior executives, highly-compensated professionals, and other extraordinarily fortunate employees will enjoy the full panoply of rights available to them under federal and state law. The sort of people who least need the protection of the law will become its most protected class.
Indeed, this dynamic is already starting to play out. Students at at least one of America’s top law schools are organizing to protect themselves against abusive arbitration.
Students @GeorgetownLaw organizing against Munger-esque mandatory arbitration clauses for sexual harassment. Any other campuses? @isamuel pic.twitter.com/pCASD4ewow
— Laura K. Donohue (@Laura_K_Donohue) May 30, 2018
Georgetown should adopt this policy, and its peer law schools should emulate it. If a handful of elite law schools band together, they could effectively shield large law firm associates throughout the industry from abusive arbitration agreements. And lawyers deserve to have their rights protected too.
Yet there will also be a terrible irony if these schools succeed in banishing forced arbitration from big law. Some of the same law firm associates who benefit from such a campaign will go on to draft forced arbitration agreements for their firm’s clients. And those agreements are likely to reshape the workforce for everyone except for its biggest winners.