An Uneven Balance

By Kaiya Lyons

(Originally published in the 75th Anniversary issue of Trial magazine in December 2021)

Over the last 75 years, AAJ and its members have engaged in an uphill battle to thwart efforts to undermine workers’ rights. Employers have amassed a variety of tools to cut their costs and circumvent legal protections originally intended to balance the distribution of power between employer and employee. Now, in an economy increasingly dominated by short-term independent contracts, American employers have turned to worker misclassification, forced arbitration agreements, and other strategies to shirk their responsibilities under the law. These trends, which discourage or disqualify workers from pursuing legal claims, have placed millions of workers at risk of discrimination, retaliation, sexual harassment, wage theft, and threats to their health and safety on the job.

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Employment laws and workplace safety requirements affect workers’ lives every day—and when they are violated, trial lawyers help vindicate workers’ rights and generate change to protect future workers. From the right to equal pay and fair compensation to the right to be free from discrimination to the right to be safe in the workplace—trial lawyers give a voice to millions, ensuring that labor laws serve those they were enacted to protect.

Enhancing Worker Safety

Along with industrialization came an increase in the use of machinery in the workplace and demands for efficiency—resulting in countless worker injuries and deaths. The battle for workplace safety was twofold: Workers pushed to increase employer accountability for on-the-job injuries through workers’ compensation laws and for the establishment of safety standards to prevent these injuries from happening in the first place.

The Federal Employers’ Liability Act (FELA) was enacted in 1908 to protect railroad workers injured on the job. While railroad workers must establish negligence when bringing a FELA claim, the law eliminated railroads’ contributory negligence and “fellow-servant” defenses—and after 1939 amendments, their defense that workers had assumed the risk by accepting employment. (For more, see p. 21.)

State workers’ comp laws soon followed, with most states enacting them by 1921. While they vary somewhat from state to state, they generally cover employees for workplace injuries regardless of fault—but in return, employers’ liability is limited.

But despite increased employer accountability for injuries, workplace injuries and deaths continued to rise, with 2.2 million injured and 14,000 dying on the job annually in the 1960s. These grim statistics led to the passage of the Occupational Safety and Health Act (OSH Act) in 1970. The act gave the federal government the authority to set and enforce safety and health standards for U.S. workers, while also protecting from retaliation workers who report violations.

Since then, laws and regulations to make workplaces safer have expanded at the federal and state levels. Trial lawyers help ensure that these laws and regulations are enforced—whether they pertain to warehouse and construction site safety, chemical and hazardous substance exposure, or other dangerous workplace products and machinery. (For more, see p. 94.)

Trial lawyers give a voice to millions of workers, ensuring that labor laws serve those they were enacted to protect.

For example, in 2018, the Fifth Circuit overturned more than 37 years of precedent denying the enforcement of OSHA’s multi-employer citation policy. Under the policy, the agency can issue administrative citations and penalties to employers at a job site who have the right to exercise control and the power to rectify unsafe conditions and practices—even if the affected workers are employed by someone else.

In Acosta v. Hensel Phelps Construction Co., the Fifth Circuit reversed its long-standing refusal to enforce this policy and recognized OSHA’s authority to do so. That decision brought the Fifth Circuit in line with the other circuit courts, resulting in a now universal understanding that OSHA has this authority.

The plaintiff bar and civil litigation also have pushed industry to create testing and performance standards for equipment through the American National Standards Institute and ASTM (formerly the American Society for Testing and Materials). These industry-developed standards are not perfect, but they are a step toward widespread mandates for features that make construction and other worksite equipment safer.

Wage and Hour Laws

Federal and state wage and hour laws provide powerful legal rights to many types of workers—ensuring minimum wages, meal and rest breaks, and appropriate overtime compensation.

One issue of note recently is worker pre- and post-shift activities that employers fail to compensate for—such as time spent undergoing security screenings or donning and doffing required protective gear.

For example, in Tyson Foods v. Bouaphakeo, an Iowa jury delivered a verdict against the poultry processor for failing to pay its workers overtime wages they were due for time spent putting on and taking off protective gear. Tyson Foods attempted to evade the verdict by arguing that workers should not have been allowed to use statistical evidence to demonstrate the average time they spent on this task, even though it failed to keep such records for individual employees—an argument the U.S. Supreme Court struck down.

Combating worker misclassification. Another way employers attempt to dodge wage and hour laws is by classifying employees as independent contractors. This misclassification deprives workers of rights and benefits duly afforded to them under federal and state law—including protections from discrimination and harassment, minimum wage and overtime pay, Social Security contributions, workers’ comp and safety requirements, and collective bargaining rights.

Plaintiff attorneys regularly oppose these tactics through misclassification lawsuits. Early misclassification claims involved package delivery drivers improperly classified by their employers as independent contractors. Litigation against FedEx, for example, stemmed from drivers being denied employee status despite the company’s requirements that the workers wear uniforms, drive approved vehicles, and make deliveries at dictated times.

The drivers brought class actions such as Alexander v. FedEx Ground Package System, Inc. and Slayman v. FedEx Ground Package System, Inc., with federal circuit rulings resulting in settlements for the class members. Additional misclassification claims brought by plaintiffs across the country against the delivery company were consolidated in multidistrict litigation, which FedEx settled for approximately $240 million.

Now, approximately one-third of U.S. workers are part of the growing gig economy. Class actions against the ride-hailing giants Uber and Lyft have alleged that workers were misclassified as contractors—and in California and Massachusetts these suits led to settlements for workers and case law establishing that they should be classified as employees. (For more, see p. 15.)

In 2018, the California Supreme Court in Dynamex Operations West v. Superior Court of Los Angeles County adopted a strict three-factor, worker-friendly “ABC” test for whether a worker is an employee or an independent contractor. The decision immediately impacted gig workers, since many of these gig economy startups are based in California. At least 20 states and the District of Columbia follow the ABC test in some form, and efforts to clarify the standard for employee status have galvanized in response to these cases.

Dynamex also illustrates how civil justice leads to legislative change. Recognizing the severe costs and pervasive impacts misclassification has on workers, their families, and government programs, some state legislatures have attempted to rein in employee misclassification and corporate payroll fraud. Most notably, in the fall of 2019, Gov. Gavin Newsom signed into law California’s groundbreaking, albeit controversial, Assembly Bill 5 (AB5), which required companies to reclassify most independent contractors as employees.

Gig economy heavy hitters DoorDash, Lyft, and Uber launched the most expensive ballot measure campaign in state history to successfully pass Proposition 22 in 2020, exempting the companies’ drivers from AB5’s employee presumption. However, this August, a state trial court struck down the new law as unconstitutional. This underscores the importance of the tireless efforts of trial lawyers to combat employer fraud and restore essential employment rights and benefits to misclassified members of the labor force.

Antidiscrimination Protections

Another significant way trial lawyers help ensure fairness in the workplace is by helping workers when federal and state antidiscrimination laws are violated. Title VII of the Civil Rights Act of 1964 protects employees from discrimination in the workplace or in hiring based on sex, race, religion, and national origin. Protection from discrimination based on age was extended to older workers under the Age Discrimination in Employment Act of 1967. And in 1990, the Americans with Disabilities Act extended hiring and workplace protections to those with disabilities and required that employers provide reasonable accommodations.

Often, workplace discrimination is cloaked in employer pretexts for adverse employment actions such as retaliation and wrongful termination—and trial lawyers play a crucial role in uncovering this. These cases may reveal a pattern of discrimination at a large corporation or occur at the individual level for thousands of workers across industries and business sizes.

For example, a lawsuit against State Farm Insurance Co. led to a record multimillion dollar settlement in the 1990s for hundreds of women who alleged the insurer’s hiring practices for sales agents constituted sex discrimination under Title VII. In Walmart v. Dukes, a class of female employees at the retail giant brought to light systemic discrimination against highly qualified women who were underpaid and passed over for promotions in favor of their male colleagues. And in a case involving a 52-year-old college professor who was recommended for tenure but ultimately denied it at the last step in the process, a jury found that she had been discriminated against because of her age and awarded her $1.3 million in damages.

AAJ and its members also advocate for broad discrimination protections for all workers through amicus curiae briefs at the Supreme Court—such as supporting LGBTQ plaintiffs in Bostock v. Clayton County; Altitude Express, Inc. v. Zarda; and R.G. & G.R. Harris Funeral Homes Inc. v. Equal Employment Opportunity Commission. In those cases, the Court ultimately extended Title VII protections to workers facing discrimination based on their gender identity and sexual orientation.

The fight for equity doesn’t end there. Trial lawyers support workers who band together to fight for equal pay—such as hundreds of female attorneys employed by Farmers Insurance and players from the U.S. Women’s National Soccer Team—and for protections from pregnancy discrimination and violations of the Family and Medical Leave Act.

If trends continue, by 2024, more than 80% of all private-sector, nonunion workers would be covered by forced arbitration clauses containing class and collective action waivers.

Ending Forced Arbitration

In recent years, employers have turned to forced arbitration agreements as a first line of defense when faced with workplace discrimination and harassment, wage and hour, and unsafe work environment claims. From food service workers denied wages they were owed to a woman sexually harassed while training to be a manager at her retail job to an employee who was fired for reporting racial discrimination to her employer—forced arbitration is used to curtail access to the courts for workers every day.

The dramatic increase in the use of forced arbitration agreements in employment contracts over the last two decades has disproportionately impacted the rights of women and people of color in the workforce, who are more likely to work in fields with higher use of forced arbitration clauses. Furthermore, evidence suggests that this fundamental change to the balance of corporate power deters workers from reporting illegal employment practices. (For more, see justice.org/ForcedArbitrationLacksDiversity.)

And in 2018, the Supreme Court’s opinion in Epic Systems Corp. v. Lewis effectively allowed private employers to escape class action liability by holding that under the Federal Arbitration Act (FAA), class and collective action waivers in arbitration agreements required as a mandatory condition of employment are enforceable. A year after Epic Systems was decided, the Center for Popular Democracy and the Economic Policy Institute released a joint report projecting that by 2024, more than 80% of all private-sector, nonunion workers would be covered by forced arbitration clauses containing class and collective action waivers.

Despite the current hurdles to accessing the courtroom, trial lawyers continue to expose the inherent unfairness of this secretive, rigged system and challenge forced arbitration clauses in employment contracts. Often, workers have no real choice—if they want a job, they have to sign these agreements, which often are buried in piles of onboarding paperwork so employees may have no idea they’ve signed away their constitutional rights until a dispute arises.

One avenue that trial lawyers have taken to protect workers is challenging forced arbitration agreements that violate traditional principles of state contract common law. In these cases, plaintiffs argue that employment contracts containing forced arbitration agreements were improperly formed or lacked mutual consent—or that the agreements cannot be enforced because they are unconscionable. For example, in Burnett v. Pagliacci Pizza, Inc., the Washington Supreme Court held that a forced arbitration agreement for a class of delivery drivers was unenforceable because they did not have proper notice of the agreement buried in an employee handbook and its one-sided terms were unconscionable.

AAJ and its members also are pushing hard for a legislative fix to protect workers’ rights. The Forced Arbitration Injustice Repeal (FAIR) Act is intended to prohibit the enforcement of mandatory predispute arbitration agreements in cases involving employment, consumer, antitrust, or civil rights claims.

A bar to justice for those who serve our country. Forced arbitration also is used against the men and women of the U.S. armed forces who are wrongfully terminated from their civilian jobs when they are called up for active duty, in violation of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). By invoking forced arbitration clauses in employment agreements when servicemembers bring USERRA claims, employers create a huge obstacle for those who have served our country.

In 2016, the Ninth Circuit joined the Fifth and Sixth Circuits in holding that USERRA did not prohibit mandatory arbitration of claims in Ziober v. BLB Resources, Inc. Naval Reservist Kevin Ziober was terminated from his civilian job after receiving deployment orders. When Ziober returned from Afghanistan and attempted to sue his former employer for violating his rights under USERRA, the company moved to compel arbitration. The Ninth Circuit’s decision granting the motion to compel arbitration underscores the importance of specific statutory language anticipating and precluding the use of forced arbitration to resolve employment discrimination claims—and helped to raise awareness of efforts to prohibit forced arbitration of USERRA claims through legislation.

The FAA transportation exemption. The unflagging work of trial lawyers led to a 2019 victory for transportation workers. The Supreme Court held in New Prime, Inc. v. Oliveira that the FAA’s exemption for transportation workers engaging in interstate commerce—including seamen, airline and railroad workers, and many commercial motor vehicle drivers—applies to all transportation worker arbitration agreements, regardless of whether the contractual relationship is that of an independent contractor or employee.

The focus is now on whether the FAA requires delivery drivers to arbitrate their claims against gig economy companies like Amazon, GrubHub, and other commonly app-based enterprises. Several circuit courts have considered whether gig drivers who do not cross state lines themselves but who deliver goods that have crossed state lines qualify as transportation workers “engaged in foreign or interstate commerce” under the FAA. The First and Ninth Circuits have interpreted the transportation exemption liberally in favor of AmazonFlex delivery drivers, but courts in other circuits have held otherwise—and the Supreme Court so far has declined to intervene and settle the issue.

Sexual harassment and assault. The #MeToo movement has also brought the dangers of forced arbitration in employment contracts to the forefront—especially in cases of sexual harassment and assault. One prominent case involved former Fox News reporter Gretchen Carlson, who sued Fox News chairman and CEO Roger Ailes for sexual harassment in 2016. By enforcing the arbitration clause in Carlson’s employment contract, Ailes successfully prevented her from taking him to court and—perhaps more importantly—from making public the full details of her time at the network.

Trial lawyers fight for the rights of all who have experienced workplace sexual harassment and assault to have their day in court. In a 2013 victory, a Florida federal jury found in favor of a female firefighter who experienced years of hostility, inappropriate comments, and adverse treatment based on her sex. And in 2020, AAJ joined the National Women’s Law Center and 46 other organizations in filing an amicus brief in Pambakian v. Blatt after a California federal district court enforced a retroactive arbitration provision related to the plaintiff’s claims that her boss sexually harassed and assaulted her.

AAJ also supports the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act—legislation that would empower sexual assault and harassment survivors by allowing them to seek justice in court. Some states, including California, Maryland, New Jersey, New York, Vermont, and Washington, have already enacted laws prohibiting the enforcement of arbitration provisions in employment agreements in relation to sexual harassment claims. However, some courts have found that these state laws are preempted by the FAA—so supporting the federal legislation may be key to ensuring survivors have access to the courts.

As the nation recovers from the effects of the COVID-19 pandemic on the economy and workforce, employment lawyers and their clients face significant obstacles to contesting, investigating, and litigating employer misconduct. But plaintiff attorneys and AAJ continue to fight against laws aimed at narrowing the reach of key employment rights and protections to fewer classes of workers, tirelessly pursuing justice for all.