Nearly 3,000 current and former Chipotle employees just became some of the first low-wage workers to get stiffed by the Supreme Court’s landmark decision on arbitration.
The court ruled 5-4 in May that it’s legal for employers to require workers to sign class-action waivers in order to get a job. By agreeing to these clauses, workers give up their right to sue their employer as a group over wage theft or workplace discrimination, and they instead have to take their claims to arbitration as individuals.
After the decision was issued, HuffPost reported that it jeopardized a huge lawsuit brought by Chipotle workers against the famous burrito chain. Of the roughly 10,000 plaintiffs who claimed Chipotle didn’t pay them their full wages, 2,814 had signed a class- and collective-action waiver the company first implemented in 2014 to reduce its legal liabilities.
Now those workers have officially been kicked out of the lawsuit. In an order issued last week, Senior U.S. District Judge John Kane said that the Supreme Court ruling, known as Epic Systems Corp. v. Lewis, left him no choice but to give those folks the boot.
“I am thus compelled to find that the class and collective action waiver in Chipotle’s Arbitration Agreement does not violate [labor law] or render the Agreement unenforceable,” Kane wrote.
That means the remaining 7,000 or so plaintiffs can still pursue their back wages in federal court, while those who’d signed the class-action waiver would have to go to arbitration individually.
Chipotle said it doesn’t comment on pending litigation.
In the Supreme Court case, workers argued that the waivers violated their right under the National Labor Relations Act to band together with other workers in “mutual aid or protection.” But the court’s conservative majority, in a decision penned by Justice Neil Gorsuch, a Trump nominee, ruled that arbitration law required that the waivers be “enforced as written.”
A low-wage worker who believes she’s owed a few hundred bucks probably wouldn’t be able to find a lawyer willing to take on such a low-stakes arbitration case, at least not on contingency. And if she were paying the lawyer by the hour, she would quickly amass more in legal fees than her claim is worth.
“Expenses entailed in mounting individual claims will often far outweigh potential recoveries,” Justice Ruth Bader Ginsburg said in her dissent.
That’s why the decision outraged so many worker advocates who say it would take away a crucial form of legal recourse from vulnerable workers. Employment lawyers suspect companies will ramp up their use of the waivers now that the court has given them a green light.
Expenses entailed in mounting individual claims will often far outweigh potential recoveries. Justice Ruth Bader Ginsburg
The Chipotle lawsuit was first filed in 2014, when workers alleged that the company required them to work “off the clock.” In their complaint, they said Chipotle gives its managers so little in payroll that the managers force workers to punch out early and keep working or start working before punching in. The claims ranged from $50 to a few thousand apiece.
The company soon put a class-action waiver in its onboarding materials, along with the employee handbook and handwashing guide, among other papers. Prospective employees were required to sign it if they wanted to work at Chipotle. As the wage theft lawsuit grew, Chipotle argued in court that anyone who’d signed the agreement should be barred from the proceedings.
Companies like Chipotle ― as well as the Supreme Court’s conservative justices ― argue that these waivers are voluntary and mutually agreed upon. But David Gottlieb, Chipotle’s director of compliance, explained in court how much agency the worker really has.
“[I]f you choose not to agree to the arbitration agreement, for example, once you have been given notice and an opportunity to look at it, read it, ask any questions, download it, save it, whatever you want to do ― if you don’t, then you don’t have to be an employee,” Gottlieb said.
Kent Williams, a lawyer for the plaintiffs, told HuffPost in May that “virtually none of them” even remembered signing the agreement.
Williams declined to comment on Kane’s order expelling the 2,814 plaintiffs from the lawsuit last week. Although such workers would normally have a hard time finding a lawyer for arbitration, this situation is a bit unusual in that Williams and his colleagues have already built their case for them in court.
Williams told HuffPost on Thursday that his team is willing to represent any of those workers in arbitration if they choose to pursue it.