March 21, 2022

By Kalpana Kotagal and Brendan Schneiderman

Approaching the halfway mark in the Supreme Court’s 2021– 2022 term, the Court continues to consider critical questions that implicate labor and employment law, including those relating to forced arbitration, workplace safety, and class and representative actions. These cases will undoubtedly have a major impact on workers, employers, and the attorneys who represent both.

Forced Arbitration

In mid-December, the Court added Viking River Cruises v. Moriana to its growing arbitration docket. The case began when a sales representative sued her employer for state labor law violations under California’s Private Attorneys General Act (PAGA). PAGA allows an aggrieved employee to seek a monetary award on behalf of herself and other employees, somewhat akin to class actions. The cruise line sought to compel individual arbitration, per an agreement Moriana signed when she took the job. The California high court held that PAGA superseded the forced arbitration provision. The Ninth Circuit affirmed, finding that the Federal Arbitration Act (“FAA”) does not preempt PAGA because the decision to allow the representative action does not prohibit or disfavor arbitration. The Supreme Court will now clarify whether the FAA preempts this use of PAGA. Other similar petitions have been filed and await decision.

In Robyn Morgan v. Sundance, Inc., the Court will consider an additional issue arising from the use of forced arbitration in the employment setting: whether requiring the party compelling arbitration to do so immediately or waive that right violates the Court’s instruction in the 2011 decision AT&T Mobility LLC v. Concepcion, to keep arbitration provisions on “equal footing” with other contracts. Morgan sued a Taco Bell franchisee for wage theft, claiming the franchisee redistributed Morgan’s hours worked to avoid paying her overtime. After eight months of litigation in court, the franchisee moved to compel arbitration. While the district court held that the franchisee had waived its right to compel arbitration, the Eighth Circuit reversed, holding that the franchisee did not prejudice the worker’s case by remaining silent on invoking the arbitration agreement and therefore had not waived its right to arbitrate. The worker petitioned the Supreme Court to decide whether this arbitration-specific “prejudice analysis” violates Concepcion’s requirement that arbitration provisions be treated equally to other contracts.

Both cases present an opportunity for the Court to expand the footprint of Concepcion, in which the Supreme Court held that the FAA preempts state laws prohibiting joint or collective action waiver provisions. In Concepcion, the Court concluded that arbitration provisions should be evaluated on “equal footing” with other contracts. In Moriana, the Court may determine whether the FAA and Concepcion preempt plaintiffs’ use of the PAGA. If the Supreme Court affirms the Eighth Circuit in Morgan, that would raise concerns among those who represent workers and oppose forced arbitration that the Supreme Court has further privileged arbitration, as other contracts are not subject to the “prejudice” analysis the Eighth Circuit employed when deciding that the franchisee had not waived its ability to compel arbitration.

Pending Petitions related to Worker Protection and Class Certification

Whether workers are properly classified as employees or independent contractors remains a hot issue for labor and employment practitioners and is before the Court as well. The Solicitor General’s office is expected to weigh in on whether the Court should review California’s ABC test for classifying workers. That test, formalized in Dynamex Operations West, Inc. v. Superior Court, 4 Cal.5th 903 (Cal. 2018), looks to whether the company controls the worker, whether the company and worker are in the same line of business, and whether the worker relies on the company for work, to determine a worker’s proper classification. The Ninth Circuit’s decision that the Federal Aviation Administration Authorization Act (“FAAAA”) does not preempt the ABC test creates a circuit split with the First Circuit’s decision in Schwann v. FedEx Ground Package System, Inc. that Massachusetts’ similar test is preempted by the FAAAA. Whether the Court takes the case will impact other states’ attempts to articulate clearer standards for classifying workers and on President Biden’s endorsement of a federal ABC test.

In Rocket Mortgage, LLC, fka Quicken Loans Inc., et al. v. Phillip Alig, et al., petitioner asked the Supreme Court to clarify its recent opinion in TransUnion LLC v. Ramirez, 594 U.S. __ (2021), in which the Court held that under the Fair Credit Reporting Act, only class members whose credit reports were actually disseminated to third parties suffered injuries that would establish Article III standing. Petitioner appealed the Fourth Circuit’s certification of a class that included plaintiffs at risk of harm, and the Supreme Court recently remanded for reconsideration in light of TransUnion.

Pending Decision from the Court

The Supreme Court is expected to rule shortly on the Occupational Safety and Health Administration’s (OSHA’s) COVID-19 vaccine-or-test mandate, after two cases came to the Court in mid-December on an emergency basis and were argued the first week of the year: Biden, President of U.S., et al. v. Missouri, et al. and Becerra, Sec. of H&HS, et al. v. Louisiana, et al. OSHA currently requires that employers with at least 100 employees mandate that employees either receive COVID-19 vaccinations or undergo weekly testing.1 While the Fifth Circuit stayed the regulation, the Sixth Circuit dissolved that stay, resulting in an emergency petition to the Supreme Court. The rule covers approximately 84 million workers and will impact the health and safety of America’s workforce.

While the exact contours of the Supreme Court’s docket are still being drawn, the cases before the Court make clear that this year’s term will certainly have ramifications on the labor and employment field. 

Click through to read “A Review of the Supreme Court’s 2021–2022 Term from the Labor and Employment Perspective” on the ABA Labor & Employment Section's website.