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An Epic Decision – SCOTUS Limits Class-Action Lawsuits by Employees

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Wage-theft, a billion dollar money maker for companies who cheat their workers, is an often ignored claim in our for-profit legal system. One worker’s claim may amount to less than a few thousand dollars. While for the worker this amount reflects the precarious plank on which they balance between having a home (or food) or not, it may not warrant a lawyer’s second glance – it just isn’t worth their time.

One way to get over this hurdle is to use a time-tested working-class tactic – band together. While one wage-theft claim may not be worth much to your average lawyer, wage theft rarely happens to a single individual — it’s a pattern of behavior and many workers are affected. Class-action lawsuits allow workers with similar complaints against the same company to unite in a single suit where one stands in for all those affected. The class-action lawsuit is an important tactic of working-class legal activism.

That was until May 21, 2018.

That day, Trump-appointed Supreme Court Justice Neil Gorsuch announced the court’s 5-4 split decision in the case of Epic Systems v. Lewis. The decision was clear: in principal, most employees no longer have the right to sue their employer collectively, thereby severely undercutting their ability to access the legal system in the one meaningful way they can – together.

For-Profit Epic Systems

Epic Systems is an electronic medical record (EMR) company based in Verona, Wisconsin. It’s one of the biggest players in that industry, with $2.5 billion in revenue in 2016. Many of Epic’s competitors of similar size are public corporations, but Epic is privately held, with founder Judith Faulkner and her family owning 43%. Epic is the largest private employer in Dane County, with nearly 10,000 employees. Not unlike Amazon in Seattle, Epic enjoys great power when it comes to local political and economic issues, a power which it wields directly – as when it moved from Madison to Verona because the city could not zone enough space for its planned expansions – and indirectly -as we have seen with the growth of housing developments in Madison and near Epic’s new campus, and the rising rents tied to this activity.

Epic is one of the best-paying employers in the area but it is known for its grueling work culture, with employees often working 60+ hours per week during crunch times and 50+ hours otherwise. Almost all of its software-related employees are salaried, meaning that they receive no extra compensation when these long hours are required of them – Epic also employs a large number of laborers, including cooks, landscapers, maintenance, cleaning staff, and others.

One of these groups of software-related employees, technical writers, had been classed as salaried while being worked like hourly employees, including strenuous overtime. These technical writers were not unionized, but decided to pursue a class-action lawsuit to get themselves re-classed as hourly and paid a fair overtime wage for overtime work. The technical writers, along with all other Epic employees, received an updated employment contract in 2014 stating that they must pursue all disputes with the company through individual arbitration. They continued with their suit under the legal argument that the Fair Arbitration Act of 1925 contained a clause meant to ensure that the law did not permit an employer to violate other labor law, and that their classification as salaried violated the Fair Labor Standards Act of 1938. Though the technical writers received a favorable judgment in a Wisconsin circuit court, Epic appealed the case several times until it reached the Supreme Court which sided with Epic.

SCOTUS Decisions

The Court made it clear that the workers had themselves, “freely,” signed agreements upon their employment (or in April 2014 if employed before then) that forfeited their right to take their employer to court. Basically these arbitration agreements say that employees agree not to sue their bosses for claims such as wage theft or discrimination, but rather to pursue an arbitration proceeding – essentially a private, for-profit court system. It also includes a waiver on collective claims, accepting that all arbitration will be conducted on an individual basis.

This decision could also impact sexual harassment cases which workers have tried to take through the court system and employers have tried to isolate in arbitration. Former FOX News host Gretchen Carlson attempted to sue network boss Roger Ailes for a pattern of sexual harassment over a period of several years. The network filed an injunction ordering her to address her claims through private arbitration instead. Her contract also stipulated that the content of the arbitration had to remain secret. FOX made every attempt not only to defeat Carlson’s suit, but to prevent other employees from learning that a high-ranking man was a sexual abuser.

It is no secret that the United States has very weak worker protection and labor law. The massive and militant strike wave of the 1930s forced the Roosevelt administration to adopt New Deal labor reforms. These included the creation of the National Labor Relations Board (NLRB), tasked with enforcing protections for unionizing workers, collective bargaining, and other activities described in the National Labor Relations Act of 1935.

But right after World War II, the bosses’ pushback began with the passing of the Taft-Hartley Act of 1947 which made many of the basic tactics essential to the unions’ success, like solidarity strikes and secondary boycotts, illegal. Taft-Hartley also directly attacked the driving force behind the unions’ victories – radical leadership – by requiring elected union officers to sign anti-Communist affidavits.

Despite these legal constraints, unions were able to continue to grow in numbers through the late 1970s. A perfect storm of national and international economic and political events tipped the historic scale against the philosophy and leadership of American business unionism, emboldening the employers to escalate their class war, no longer in fear of the unions’ response. The latest volley in this 40-year campaign to eliminate unions is the Court’s Janus v. AFSCME case, which came down on June 27. Unlike Epic, Janus will affect workers already in unions.

Since Occupy Wall Street ignited this recent wave of fightbacks, the mounting legal obstacles to organizing into a union and the historic weakness of the existing unions pushed millions of workers to seek solutions to their workplace grievances outside of the traditional union movement, turning to tactics like class action suits and Workers’ Centers, Fight for 15, Restaurant Opportunities Center, OUR Walmart and other organizing models. This Supreme Court decision severely curtails one of those work-arounds, narrowing the space within which workers can fight the boss outside of a traditional union.

Wisconsin Jobs

Back at Epic, workers are gaining a clearer understanding of their position as they realize their bosses went all the way to the Supreme Court just to avoid paying overtime. Epic will be emboldened by its victory and try to steal more wages and violate more labor laws unless countered by strong organizing efforts.

Unions are not popular in the tech sector, but the Epic v. Lewis decision eliminates class action suits as an alternative method of fighting for workplace rights. A strong union organizing drive, though difficult, may become the only open pathway.

Beyond Epic, millions of other not-yet-union workers will find their options narrowed by this ruling, their tactics limited in the fight for living wages and livable working conditions. Unions could turn back this assault with a bold campaign of sweeping workplace organizing coupled with a community campaign to tax the rich to fund education, improved Medicare for All, affordable housing, free state college, and a massive green jobs infrastructure project. The real fears so many workers shared about unionizing are increasingly being replaced by anger and a determination to set things right and, in effect, rebalance the wealth gap.

Epic’s Influence in U.S. Politics

The Epic ruling will also affect the general population of Dane County. Epic has long positioned itself as a model corporation for a metro area like Madison’s, where the population is highly educated, liberal, and the local political scene heavily favors Democrats. The company’s founder and CEO, Judy Faulkner, has donated thousands to Democratic Party politicians at the local and national level. She’s in good with the local Democratic establishment, and has donated generously to Sen. Tammy Baldwin (D-WI), former Sen. Russ Feingold (D-WI), Sen. Elizabeth Warren (D-MA), and Barack Obama. Despite the pro-worker rhetoric coming from the politicians she supports, Faulkner is clearly aware of her own class interests, and is not interested in making concessions to her own workers that threaten her personal, sizeable share of Epic’s profits.

Given Epic’s power as Dane County’s largest private employer and their clear disdain for the ordinary folks they themselves employ, we should look with suspicion on their plans for our cities. Socialist Alternative and Seattle’s socialist councilmember, Kshama Sawant, were at the forefront of the #TaxAmazon campaign, which sought to expose how Amazon’s growth allowed them to bully and mistreat the people of Seattle.

In Madison, we see a similar pattern with Epic’s profits enriching a very small group of already-rich people while their presence drives up rents for everyone else. This in and of itself is a problem that can be addressed, but we should not expect Epic to help unless compelled. We need a #TaxEpic campaign for Dane County, where affordable housing is in ever-shorter supply. Epic benefits massively from public investment in the Madison area, from our roads to our top-notch University. We must not fear to compel Epic to contribute to other useful public investment. Judy Faulkner is worth $3.7 billion. A few million or a few hundred million from Epic’s privately-owned profits will not impact her excellent quality of life one whit. But that money might save the lives of some of the Madison’s many homeless, who huddle in doorways and on sidewalks in the bitter Wisconsin winters.

The National Democratic Party

While Epic Systems v. Lewis was decided by Trump’s supreme court appointment Neil Gorsuch, the case itself has much more bipartisan support. Epic has many friends in the Democratic Party: former Democratic Wisconsin governor Jim Doyle sits on the board and CEO Judy Faulkner has donated to many Democrats in congress. Epic has also profited immensely due to provisions in Obama’s signature Affordable Care Act that subsidize and otherwise encourage hospitals to adopt electronic medical record (EMR) systems. The medical industry had been slow to do this; in 2009, only 17% of doctors used digital records. Epic got to play a major role in the envisioned digital transition: Faulkner was given a seat on Obama’s Health IT Policy Committee.

Today, Epic manages medical records for about 56% of the patients in the U.S. Their system has been frequently criticized for its lack of interoperability with competitor’s systems, leading to a “walled garden” effect: it’s possible to straightforwardly share information from one Epic-equipped hospital to another, but not to anyone else. Epic leverages this to gain more customers and block its competitors. Though the EMR-focused portion of the ACA envisioned a world of efficient, seamless data sharing between hospitals that could make lifesaving medical information easily available and eliminate wasteful duplicate testing, this world has not come to be.

Epic used their influence with the administration and the Democrats to position themselves better in the market. They are a for-profit company so this should not be surprising; after all, profit is their true purpose and the reason they exist. Making medical software is merely the means they have chosen to achieve their goal of profitability.

But we can see clearly what Epic does with its influence: push policy in a direction that benefits its bottom line over the interests of patients while exploiting its workforce. Democratic and Republican Party politicians are too reliant on the donations from Epic and similar companies to truly confront them about these abuses. This whole situation points to why working people need their own political party whose representatives would refuse any corporate donations.

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