May 24, 2018

Worse Than Lochner? U.S. Supreme Court Workplace Law Decisions Use Interpretative Tools to Reach Conservative Outcomes

Ruben Garcia Professor of Law and Co-Director of the Workplace Law Program, University of Nevada Las Vegas William S. Boyd School of Law

The 1905 United States Supreme Court case Lochner v. New York was rhetorically volleyed back and forth in the Court’s opinion released May 21 in Epic Systems v. Lewis by Justice Neil Gorsuch writing the majority opinion, and in the dissenting opinion penned by Justice Ruth Bader Ginsburg.  In Epic Systems, the Court ruled 5-4 that mandatory arbitration agreements that require individual employees to waive the right to join together with fellow employees in class or collective arbitrations do not run afoul of the National Labor Relations Act of 1935’s (NLRA) protections for concerted activity. This is because these waivers, according to the Court, are authorized by another statute passed by Congress 10 years earlier, the Federal Arbitration Act of 1925 (FAA). However,  neither the text of the FAA nor NLRA mention these waivers at all.

Justice Ginsburg called the majority’s opinion (joined by all justices appointed by Republican presidents) a return to Lochner, while Justice Gorsuch countered that it was the dissenting justices, Ginsburg, Breyer, Sotomayor and Kagan (all appointed by Democratic presidents) who were trying to use the case to enact their own policy preferences.

Who is right? In a sense, Epic Systems is different than Lochner, because this case involved how two federal statutes should be interpreted together, and Lochner was a constitutional challenge to legislative enactment. Joseph Lochner challenged the labor law in New York that prevented employees from working more than 10 hours a day in bakeries at the turn of the 20th Century as a violation of his constitutional right to due process under the Fourteenth Amendment to the U.S. Constitution. The Court agreed that he had freedom of contract to work more than ten hours a day and invalidated the law.  Since then, Lochner has symbolized constitutional intervention by a court substituting its own policy preferences for that of the legislature.  But in constitutional cases, Lochner has wide use because the language of the Constitution is sparse, much of it is over two hundred years old, and like all language is subject to varying interpretations.

In the Epic Systems case, and in the Encino Motor Cars v. Navarro decision last month, the Court majority used statutory canons of construction to reach results contrary to decades of practice under federal labor and employment statutes.   Although the NLRA has, since its inception, been interpreted broadly in its coverage but also in the kinds of “concerted activities for mutual aid and protection” that it protects, Justice Gorsuch in his Epic Systems opinion employs the canon ejusdem generis to conclude that the act of nonunion employees joining together in a class arbitration is not “concerted activity “ within the statute because it is unlike the activities previously referred to in the statute, i.e. “organizing and bargaining collectively.”  The very act of seeking higher wages, or simply seeking wages promised, are bedrock concerted activities that are often a precursor to collective bargaining contracts which is a good indication as to why Congress left the language broad.  The National Labor Relations Board, under both Republican and Democratic administrations, has held that joining a lawsuit or collective action is activity protected by Section 7 of the NLRA for nonunion workers.  The Court’s conclusion here is worse than Lochner, because rather than simply choosing a different interpretation of what language like “due process” means, the Court uses interpretative tools to rewrite both the language of the statute and decades of interpretations and settled expectations about how and why it applies.

Last month, in Encino Motor Cars v. Navarro, the Court, by a 5-4 vote, ruled that “service advisors” who work at car dealerships are exempt from overtime law even though the terms of the statutory exemption apply only to “partsmen, mechanics and those primarily engaged in the selling and servicing of automobiles.”   The plaintiffs argued that a canon of construction called the distributive canon worked in their favor, but the Court rejected that interpretation and held that employers were free to employ the service advisors without paying time and a half for hours over 40 in a work week.  Writing for the Court majority, Justice Clarence Thomas went further and refused to construe the exemption to the overtime rules narrowly, even though numerous prior Supreme Court decisions have done so and that has been the practice of the Department of Labor under both Democratic and Republican administrations.

These statutes – the NLRA enacted in 1935 and the FLSA enacted in 1938 – were part of the New Deal and Congress has never reversed or amended certain core interpretations central in these cases that the Courts have repeatedly reaffirmed  1) that employee protections and employee status are to be broadly construed in favor of coverage; and 2) that “concerted activities” should be broadly construed to encourage the practice and procedure of collective bargaining, which Congress adopted as a policy goal in the preamble to the NLRA in 1935.

True, most of the time when the Court makes a statutory decision there is little movement in Congress to change or amend it.  Congressional response to these cases may show either that Congress is fine with the interpretations, or that Congress is too polarized to get any legislation to the President. Nonunionized workers, as I have argued elsewhere, have diffuse and individualized interests that make it hard for them to mobilize political power to change workplace law for their own benefit.  Tellingly, the only time that federal workplace law has been amended in the last ten years it was because of a Supreme Court decision—Ledbetter v. Goodyear Tire & Rubber Co.—that cut back on the ability of workers to bring pay discrimination claims under Title VII of the Civil Rights Act of 1964.

These cases, Epic Systems and Encino Motorcars, seem to signal the beginning of radical retrenchment of protective labor laws in ways that Congress never intended, using canons of construction that can be chosen at will to suit any particular outcomes.  The interpretive tools give an air of democratic legitimacy to conservative policy choices that run contrary to the will of Congress and the purposes of the statutes. If that is true, then that is a sin worse than Lochner’s.

Labor and Employment Law, Workers’ Rights