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Contracts, court rulings give employers legal upper hand

Companies are requiring workers to sign away their rights in return for a job.

July 06, 2013|Alana Semuels
  • Jose Tadeo Gamez Flores can't sue his employer over unpaid wages because when he was hired he signed away his right to file a lawsuit against his employer.
Jose Tadeo Gamez Flores can't sue his employer over unpaid wages because… (Mark Boster, Los Angeles…)

When Jose Tadeo Gamez Flores realized that his employer had failed to pay him for all the hours he was working as a janitor, he did what many other employees might do in the same situation: He tried to sue to recover the lost wages.

But Flores, 34, ran into an obstacle when he tried to file a class-action lawsuit to get back his and other janitors' wages. He had signed away his right to file a lawsuit against his employer.

After being hired, Flores had been presented with a pile of papers to sign. And he had unknowingly agreed not to take any legal problem with his bosses to the courts, but instead go to a private arbitrator handpicked by his employer.

"This is the equivalent to saying you have to give up your right to vote in an election," said Ari Moss, Flores' attorney. "It's about punishing the poor and the weak, and saying you don't have the right to come and seek redress."

Emboldened by a series of Supreme Court decisions and an employers' job market, many companies are starting to require workers to sign away their rights in return for a job. It is a trend that experts worry could further wear away employees' power in the workplace. The contracts make it harder for employees to join class-action lawsuits, take their employers to court, or leave to go work somewhere else.

"You can see this common thread of making it more difficult to have your day in court," said David Yamada, a professor at Suffolk University Law School in Boston. "The legal climate for employees is a tough one."

Employers defend arbitration agreements as a low-cost way to resolve disputes while freeing up space in the overburdened court system. But some lawyers label arbitrators "corporate courts" because the arbitrator is hired by the employer, and because employers statistically win much more in arbitration than they do in courts.

"It unevens the playing field," said Paul Bland, a senior attorney at Public Justice. "It used to be if you took away a right that you would have under normal law, the courts would throw it out."

The use of these arbitration agreements has become more common since a 2011 Supreme Court decision, AT&T Mobility vs. Concepcion, that made it easier to prevent workers from participating in class-action lawsuits, Bland said. That further complicates things for employees who have small claims that aren't big enough for a lawyer to take on unless they turn into a class-action lawsuit.

Mazhar Saleem is bound to his employer by a number of contracts that made it hard to earn enough money to live, but also hard to go work anywhere else. He drives a town car for a company in New York as an independent contractor, rather than as a full-time employee. That means he doesn't get benefits, never gets overtime, and isn't guaranteed set hours.

But he also signed a non-compete contract when he started working, meaning he can't drive a car for anyone else in New York. So even if his employer doesn't give him any work, he's not allowed to go find it elsewhere, says his attorney, Michael Scimone, with the law firm Outten and Golden.

"It ties into the larger theme of employers trying to use contracts to alter pieces of the employment relationship that are supposed to be governed by law," Scimone said.

Non-compete clauses, once a staple of the high-tech world, are being extended to cover hairdressers, auto mechanics, exterminators and other professions that courts would traditionally not uphold them for, lawyers say. They essentially mean an employee can't leave a job to take another one nearby, unless he or she wants to stop working for a year or so.

It's a way to keep promising employees from leaving, said Matt Marx, an MIT professor who has studied these contracts.

"Given the increased job mobility of today's world, companies are saying, 'We can't count on people to be here forever. We have to lock them up with contracts," he said.

In a recent case in Worcester, Mass., three women working at a hair salon tried to leave after their conditions at work deteriorated. All three received cease and desist letters when they started working elsewhere, because they had signed non-compete clauses. They had to wait a year for the clauses to expire before they could work in the area again.

In other contracts being distributed at the workplace, employees agree to pay the costs of litigation if they lose, and employers shorten the amount of time in which employees can sue them. All of these contracts make it less likely for employees to win against their bosses in court -- if they are even allowed to take them to court.

That means lawyers will be more hesitant to take on workplace cases because it has gotten more difficult for them to win them, said Catherine Fisk, an employment law professor at UC Irvine's law school.

"The less likely an employee is to file a claim, the less incentive a company has to extend money and other resources to prevent the illegal discrimination from happening," she said.

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