Corporate Governance

  • September 27, 2017
    Guest Post

     

    *This piece originally appeared on the EPI blog.

    by Celine McNicholas, Labor Counsel, Economic Policy Institute

    Today, EPI released a new paper by Cornell professor Alexander J.S. Colvin, which shows that more than half of all private sector non-union workers are currently subject to mandatory arbitration agreements—denying them access to the court system to resolve workplace disputes. Colvin also found that 41 percent of employees subject to mandatory arbitration also have waived their right to pursue work-related claims on a collective or class basis. Next week, the Supreme Court will consider whether arbitration agreements that include class and collective action waivers of all work-related claims are prohibited by the National Labor Relations Act (NLRA). The Court is scheduled to hear argument in National Labor Relations Board v. Murphy Oil USA (along with two other cases Ernst & Young LLP v. Morris and Epic Systems v. Lewis) on October 2.

    The NLRA guarantees workers the right to stand together for “mutual aid and protection” when seeking to improve their wages and working conditions. Employer interference with this right is prohibited. However, as Colvin’s report shows, employers are increasingly requiring workers to sign arbitration agreements that force them to waive their rights to collective actions and instead handle all workplace disputes as individuals. In practice, that means that even if many workers faced the same type of dispute at work, each individual employee must hire their own lawyer, and must resolve their disputes out of court, behind closed doors, with only their employer and a private arbitrator.

  • July 11, 2017
    Guest Post

    *This piece originally appeared on the Economic Policy Institute’s Working Economics Blog.

    by Celine McNicholas, Labor Counsel, Economic Policy Institute

    Yesterday, the Consumer Financial Protection Bureau (CFPB), an independent agency that serves as a watchdog for consumers, issued a rule that would ban companies from using mandatory arbitration clauses to deny Americans their day in court. The rule would restore consumers’ ability to band together in class-action suits. Without the ability to pool resources, many people are forced to abandon claims against financial institutions and other powerful companies. Consider that hundreds of millions of contracts for consumer financial products and services include mandatory arbitration clauses. Yet, The New York Times found that between 2010 and 2014, only 505 consumers went to arbitration over a dispute of $2,500 or less. By prohibiting class actions, companies have dramatically reduced consumer challenges to predatory practices.

    Mandatory arbitration clauses are also used by employers. Employees are forced give up their right to sue in court and accept private arbitration as their only remedy for violations of their legal rights. Private arbitration clauses tilt the system in the business’s favor: the company is often allowed to choose the arbitrator, who will thus be inclined to side with the business; arbitration also cannot be appealed, leaving workers and consumers in much worse shape than if they had access to the courts. As such, employees who bring grievances against their employers are much less likely to win in arbitration than in federal court. Employees in arbitration win only about a fifth of the time (21.4 percent), whereas they win more than a third (36.4 percent) of the time in federal courts.

  • June 19, 2017
    Guest Post

    *This piece originally appeared on the EPI blog.

    by Celine McNicholas, Labor Counsel, Economic Policy Institute


    Today, the Acting Solicitor General switched the government’s position in National Labor Relations Board v. Murphy Oil USA, Inc, from arguing in favor of working people to arguing in favor of big business. The move is deeply disappointing, and represents a stark departure from standard practice. It is the clearest indication yet of where the Trump administration stands: with corporate interests and against working people.

    The Murphy Oil case is significant for workers. It will determine whether mandatory arbitration agreements with individual workers that prevent them from pursuing work-related claims collectively are prohibited by the National Labor Relations Act (NLRA). These agreements have become increasingly common.

    The NLRA guarantees workers the right to join together to improve their terms and conditions of employment and prohibits employers from interfering with or restraining the exercise of these rights. In Murphy Oil, the National Labor Relations Board is arguing that agreements that force workers to waive their right to pursue work-related claims on a class or collective basis interfere with workers’ rights under the NLRA and are prohibited. The Solicitor General argued this position just last October, and there has been no change in the law since then. As a matter of fact, just last month the United States Court of Appeals for the Sixth Circuit held that these mandatory arbitration agreements and class action waivers are prohibited by the NLRA. The only thing that has changed is the administration.

  • August 11, 2016
    Guest Post

    by Michael Vargas, Associate at Rimon

    In his Citizens United v. FEC dissent, Justice Clarence Thomas sent up a signal flare that could have far greater repercussions than the landmark decision itself. In his dissent, Justice Thomas argued that disclosure requirements on corporations were unconstitutional compelled speech because they opened up corporations to public reprisal for the information found in those disclosures, and he steadfastly rejected the argument that these disclosure requirements could be justified on the grounds that they simply “provided voters with additional information.” This startling pronouncement, if applied to all corporate “speech,” would effectively nullify all corporate disclosure laws currently on the books, including most if not all Wall Street regulations. This fear was largely an academic one, until the D.C. Circuit ruled, in National Association of Manufacturers v. SEC, that the Securities and Exchange Commission (SEC) rules on Conflict Minerals were unconstitutional in an opinion that sounds remarkably similar to Justice Thomas’ Citizens United dissent. There can be no doubt that all federal regulation that uses disclosure as a means of oversight is now in very real peril from conservative judges who adhere to Thomas’ beliefs.

    The Battle to Prohibit Conflict Minerals

    For the people of Zaire, 1996 brought with it the end of the repressive and corrupt dictatorship of Joseph Mabutu, and the beginning of a series of civil wars that continue to rage today. The country, renamed the Democratic Republic of the Congo (DRC) in 1997, is a humanitarian nightmare, as warlords and mercenaries use rape and murder to enslave the population and put them to work in mines extracting minerals such as gold, tin, tungsten and tantalite (3TG). These 3TG minerals, used to manufacture many high-tech devices such as cellphones and computers, are then sold in western markets with the proceeds used to finance the civil war in the DRC. International human rights organizations and even the United Nations have long identified these “conflict minerals” as one of the most important humanitarian crises in the world today.

  • November 13, 2015
    Guest Post

    by Justin Pidot, Associate Professor of Law, University of Denver Sturm College of Law

    News broke last week that the New York Attorney General is investigating Exxon Mobil for providing false information about climate change to investors and the public. Similar investigations of other energy companies may be on the horizon.

    Specifics about the investigation are in short supply. This could be, as an article in Forbes suggests, the opening salvo in a billion dollar litigation campaign like that brought against big tobacco for concealing information about the health risks of smoking. Or it could be a more limited effort to ensure that energy companies fully comply with their obligations to disclose information under securities laws.

    My guess is the latter is true. Just four days ago, the New York AG’s office announced that it had entered a settlement with Peabody Coal under which the company would revise shareholder documents and more fully disclose climate risk in the future. In 2008 and 2009, the New York AG entered similar settlements with three other energy companies. These settlements do not involve million or billion dollar payments, but rather, simply require better information about the risks that climate change poses to the financial health of the companies involved. Frankly, they look a lot like run-of-the-mill settlements of potential securities violations. No one would pay any attention except they involve the words “climate change.”

    Not only does this investigation seem relatively unremarkable, it also seeks to vindicate principles upon which we should generally be able to agree. Legal regimes that require information disclosure need enforcement to stay vigorous.