Three labor-law developments: Harvard grad students win in First Circuit; AI data trainers sue for employee status; Trader Joe’s liable under ERISA

Overview

Harvard Graduate Student Union — What happened

Why it matters

The ruling preserves union membership for a group of graduate students and reinforces the enforceability of arbitration outcomes that find misclassification. Practically, the decision keeps collective bargaining leverage in place and signals that employers face an uphill battle overturning arbitration awards in this context.

AI data trainers — The wave of misclassification suits

Workers who label data, annotate content, and perform related tasks for AI firms have filed at least five cases in California and one in Texas. Plaintiffs did work tied to major clients, including large tech firms. The lawsuits mirror earlier fights against gig platforms by arguing workers were intentionally labeled independent contractors to avoid minimum wage, overtime, and benefits obligations.

Key factual claims pled in these cases include pervasive electronic monitoring, automated scheduling, and performance tracking. Plaintiffs' lawyers are adapting tactics used against ride‑hail and delivery platforms, emphasizing platform control over day‑to‑day work. Discovery will be critical because the work and oversight happen through digital systems.

California's ABC test presumes workers are employees unless the company proves otherwise, making California a particularly risky forum for companies that rely on contractor models. If courts reclassify large numbers of annotators or trainers, companies could face substantial back pay, tax, and benefit liabilities and may need to change staffing models.

Trader Joe's ERISA ruling

U.S. District Judge William G. Young held that Trader Joe's violated ERISA by failing to control recordkeeping fees for its 401(k) plan. After trial, the judge ordered the company to pay $1.2 million to plan participants. The court found the company's oversight was imprudent and disloyal because it neither sought competing bids for recordkeeping services nor pressured providers to lower fees.

The plaintiffs also advanced a novel theory that employers illegally used forfeited 401(k) funds to cover employer contributions. Judge Young rejected that theory in this case. That particular legal question remains pending in other federal courts and circuits.

Practical takeaways

• Employers with collective bargaining obligations should treat arbitration outcomes as durable and plan for bargaining leverage to resume after adverse arbitration rulings.

Next steps to watch

• Whether Harvard's unionized students authorize another strike and how bargaining proceeds.
• Discovery results in the AI trainer cases and any early rulings on classification tests in California and Texas.
• How other circuits rule on the forfeiture-to-employer-contributions theory in ERISA disputes.