Tag Archives: U.S. Supreme Court

Supreme Court Rules Class Action Waivers Enforceable Ending Uncertainty for Employers

Contributed by Suzanne Newcomb, May 21, 2018

36419114 - hand about to bang gavel on sounding block in the court room

The U.S. Supreme Court ruled this morning that employers can enforce class action waivers included in employment-related arbitration agreements. An arbitration agreement is a contract through which an employee and an employer agree in advance to resolve any disputes that may arise through binding arbitration rather than in court. The issue before the Supreme Court was whether an employer could enforce an arbitration agreement provision requiring each employee to arbitrate his or her disputes individually rather than collectively or as part of a class action. The Court ruled that so called “class action waivers” are enforceable.

For several years the general counsel for the National Labor Relations Board (NLRB) has argued that class action waivers violate Section 7 of the National Labor Relations Act which protects employees’ right to engage in “concerted activity.” The Federal Court of Appeals for the Fifth Circuit rejected this argument, but the Seventh and Ninth Circuits agreed with the NLRB prompting the Supreme Court to look at the issue.

The Supreme Court sided with the Fifth Circuit ruling that employees and employers can agree that future disputes arising between them will be resolved only through binding one-on-one arbitration. The decision provides welcome clarity to employers and their counsel and unequivocally returns a useful tool to the employers’ risk-management toolbox.

Still, the larger question of whether an arbitration agreement is right for your particular business remains. The fact that you can require employees to sign arbitration agreements does not always mean that you should. Employers who are considering asking their employees to sign arbitration agreements should seek the advice of experienced legal counsel and carefully evaluate the pros and cons of submitting various types of employment-related disputes to binding arbitration.

Arbitration agreements – like all contracts – can be challenged on other grounds. If an employer decides, after careful consideration, that an arbitration agreement best fits its needs, care must be taken in drafting and implementing the agreement to guard against allegations that the agreement is unfair or unconscionable, or that the employee’s acceptance of the agreement was the result of fraud or duress.

Supreme Court Rules Improper Motive Good Enough for First Amendment Violation

Contributed by Carlos Arévalo,  May 4, 2016

“The First Amendment generally prohibits government officials from dismissing or demoting an employee because of the employee’s engagement in constitutionally protected activity. In this case a government official believed, but incorrectly believed, that the employee had supported a particular candidate for mayor.” So begins Justice Stephen Breyer’s decision in Heffernan v. City of Paterson, which the United States Supreme Court issued on April 26, 2016.

34432449_sHeffernan was a police officer working for the Paterson Police Department in New Jersey. His supervisor and the Chief of Police had both been appointed by the City’s incumbent mayor, who was running for re-election. The challenger in the mayoral race, Lawrence Spanola, was a friend of Heffernan. Although Heffernan was not directly involved in campaigning, his bedridden mother asked him to pick up a Spagnola yard sign for her. While at Spagnola’s campaign distribution point, fellow police officers saw Heffernan holding the yard sign in hand and word of it spread throughout the Department. The next day Heffernan was demoted as punishment for his “overt involvement” in Spagnola’s campaign. Heffernan filed suit claiming the Department violated his constitutional right to free speech.

The District Court found that because Heffernan had not actually engaged in any First Amendment conduct he had not been deprived of any constitutionally protected rights. On appeal, the Third Circuit affirmed and noted that Heffernan could have maintained his lawsuit only if his demotion had been prompted by Heffernan’s “actual, rather than perceived, exercise of constitutional rights.”

The U.S. Supreme Court, however, disagreed and concluded that the Department’s motivation for demoting Heffernan was the critical issue. Thus, “when an employer demotes an employee out of a desire to prevent the employee from engaging in protected political activity, the employee is entitled to challenge that unlawful action under the First Amendment…even if, as here, the employer’s actions are based on a factual mistake about the employee’s behavior.” The Supreme Court remanded the case to the lower courts for a determination as to whether Heffernan was demoted in adherence to a neutral policy prohibiting police officers from engaging in political activity and whether such policy is constitutional.

Heffernan’s victory may be short-lived as the policy prohibiting political activity may indeed pass constitutional muster. To minimize potential liability, public employers should,: 1) adopt and publish a neutral, constitutionally compliant policy regarding political activity; 2) conduct a proper investigation in the event of a violation of that policy; and 3) issue reasonable, fair and consistent discipline if a violation is found.

The Supreme Court’s Abercrombie Decision Reminds That Neutral Work Rules Will Not Save You

Contributed by Steven Jados

On June 1, 2015, the U.S. Supreme Court decided EEOC v. Abercrombie & Fitch Stores, Inc., ruling that it was unlawful for an Abercrombie clothing store to reject an otherwise qualified applicant because, as a practicing Muslim, she wore a headscarf.

That rejection arose from Abercrombie’s unfortunate application of the company’s “Look Policy,” which prohibited employees from wearing “caps”—a term that the Look Policy did not specifically define.  Abercrombie believed—but was not certain, as there was no discussion of the issue with the applicant—that the applicant wore the headscarf for religious reasons.  Nevertheless, also believing that the Look Policy was non-discriminatory because all headwear, religious or not, violated the policy, Abercrombie rejected the applicant because of her headscarf.

If the applicant had come to interview at Abercrombie wearing her favorite baseball cap, then Abercrombie likely would have been free to reject her in line with the Look Policy.  That is not what happened.  Abercrombie did not believe that the applicant simply made a fashion choice to wear a headscarf.  Instead, what was clear to the court was that Abercrombie believed that the applicant wore the headscarf because she was a Muslim—and the court deemed that a violation of Title VII of the Civil Rights Act of 1964.

Here’s the first lesson:  Do not assume that your company complies with the law because it has neutral policies.  Neutral policies often must yield to religious practices—unless the company can make a showing of undue hardship.  And although it is not expressly addressed, this case carries the implicit warning to employers that maintaining an “image” or “look” is unlikely to be an undue hardship or otherwise justify application of a neutral policy that does not contain exceptions for religious practices or other legally protected characteristics.

This issue is analogous in many respects to the concept of employment at-will.  Yes, an employer can generally terminate an employee for any reason or no reason at all—unless the reason is the employee’s race, national origin, or other protected characteristic.  Similarly, an employer is generally allowed to have any number of seemingly neutral rules, and that is perfectly acceptable until those rules conflict with an employee’s religious practices.

Here’s the second lesson: Employers should not wait for a request for an accommodation when the company already believes it is making a decision that implicates an individual’s religious practice (or any other legally protected characteristic for which an accommodation may be required).  The fact that the applicant never raised the issue of her need for a religious exemption to Abercrombie’s Look Policy made no difference to the court.  Bearing that in mind, when an employer has reason to believe that a religious practice could be linked to an employment decision, the employer will be best-served by taking a proactive approach to determine whether the practice is one that can or should be accommodated.

Reasonable Accommodation for Pregnant Employees

Contributed by Noah A. Frank

On March 25, 2015, the U.S. Supreme Court issued the highly anticipated Pregnancy Discrimination Act (PDA) and Americans with Disabilities Act (ADA) decision, Young v. UPS, no. 12-1226.

The Court found a genuine issue of facts as to whether UPS failed to accommodate in 2006 a part-time delivery driver, restricted from 70 to 20 pounds lifting during her pregnancy, even though it accommodated other drivers injured on the job or otherwise disabled, as well as drivers who temporarily lost DOT certification.  As a result, the Court remanded the case to the appellate court to determine whether pregnancy-blind policies tended to discriminate against pregnant workers despite their similar abilities (or inabilities) to work as non-pregnant workers.

The Court specially noted that 2008 ADA amendments expanded the definition and interpretation of “disability,” likely requiring an employer to provide accommodations to an employee with temporary lifting restrictions originating off the job (e.g., such as pregnancy and related conditions).

What This Means For Employers:

Frustration continues for U.S. companies as there is no “one size fits all” application of law to formation of employment policy and practices.

  • As we previously reported, as of January 1, 2015, Illinois Human Rights Act amendments require all Illinois employers to provide accommodations to pregnant employees, and those affected by conditions related to pregnancy (775 ILCS 5/2, et seq.).  Because federal employment discrimination law is instructive to Illinois’ administrative agencies, the Court’s ruling means that employers should evaluate their neutral leave and accommodation policies for potential of pregnancy discrimination.
  •  In all states, employers should ensure that they use a case-by-case evaluation of an employee’s medical- and pregnancy-related leave and accommodation requests.
  • Employers should engage in the ongoing, individualized interactive process with the employee to determine what, if any, accommodation can or must be made with the goal of reducing barriers to performing work.
  • Employers should also carefully evaluate their Workers Compensation Light Duty Programs immediately.


Supreme Court Rules No Pay for Employees’ Time Waiting in Security Line

Contributed by Sara Zorich

On December 9, 2014, the U.S. Supreme Court handed down a victory for employers in Integrity Staffing Solutions, Inc. v. Busk, No. 13-433, 2014 WL 6885951 (U.S. Dec. 9, 2014) when the Court held that time spent by employees waiting for and undergoing security screenings before leaving the employer’s workplace was not compensable under the Fair Labor Standards Act (FLSA).

Plaintiffs sued Integrity Staffing Solutions alleging that it required hourly workers to undergo anti-theft screening, taking about 25 minutes per day, before leaving the warehouse and the end of each shift and that such time was compensable time under the FLSA.

The Supreme Court overturned the Ninth Circuit by deciding that the security screenings were noncompensable postliminary activities under the FLSA.  The Court stated that the screenings were not the principal activities the employees were employed to perform.  Instead, employees were hired to retrieve products from warehouse shelves and package such for shipment.  Furthermore, the Court held that the activities were not “integral and indispensable” to the employee’s job activities.  The Court noted that “an activity is therefore integral and indispensable to the principal activities that an employee is employed to perform if it is an intrinsic element of those activities and one with which the employee cannot dispense if he is to perform his principal activities.”

The Court’s decision rejected the Ninth Circuit’s test focusing on whether the activity was required by the employer and instead looked to whether the activity was tied to the productive work the employee was hired to perform.  The Court held that a test that turns on whether the activity is for the benefit of the employer is overbroad and would make activities compensable that the Portal-to-Portal Act was enacted to address.  The Court provided further guidance noting that an activity is compensable if the employee could not perform his/her principal activities without putting on certain clothes but would not be compensable if changing clothes was merely for the convenience of the employee and not directly related to his/her principal activity.

Conclusion: This decision clarifies and limits what are compensable activities under the FLSA.  If the pre or post activity is something the employee must do in order to perform the principal activities of his/her job then it is compensable.  In light of this decision, employers should review their pay policies and procedures and consult with employment counsel regarding the applicability of the Portal-to-Portal Act.


Eleventh Circuit Strikes a Blow to the EEOC’s Broad Subpoena Power

Contributed by Jill Cheskes

As most employers are aware, the EEOC has been on a multi-year campaign aimed at ferreting out alleged systemic discrimination by using an individual charge of discrimination as a springboard to investigating company-wide practices.  The EEOC has been doing this by issuing broad requests for information, and then subpoenas, that seek company-wide information even though there is only an individual charge.  Employers often balk at producing this information articulating a lack of relevance to the individual charge.

By and large, the federal courts have enforced the EEOC subpoenas and required employers to produce company-wide information citing the broad relevance standard articulated by the U.S. Supreme Court in the case of EEOC v. Shell Oil Co. (1984). That case found that “relevant” was to be broadly construed and the commission was entitled to “virtually any material that might cast light on the allegations against the employer.”

However, the Eleventh Circuit recently reversed that trend by upholding a district court opinion that found that the EEOC’s company-wide subpoena was not relevant to the individual charge and that it was unduly burdensome to produce the information in the case of EEOC v. Royal Caribbean Cruises, Ltd.

The Eleventh Circuit noted that the EEOC essentially relied on the Shell Oil case and language to argue relevancy (which has been a winning argument for it) but the court noted that the disputed portions of the subpoena were aimed at discovering members of a potential class of employees who suffered from a pattern of discrimination rather than fleshing out the individual charge.  The court held that while statistical information could demonstrate that discrimination occurred, the EEOC was “required to make some showing that the requested information ‘bears on the subject matter of the individual complainant.’’

The EEOC focused much of its briefs on an argument that it is entitled to expand the investigation to uncover other potential violations and victims of discrimination – again there has been a great deal of support for this type of argument – but the Eleventh Circuit held that it did “not construe the relevancy standard so broadly.”  Further the court found that the EEOC could issue a commissioner’s charge alleging a pattern and practice and attempt to obtain the information there but the Eleventh Circuit found that “the EEOC may not enforce a subpoena in the investigation of an individual charge merely as an expedient bypass of the mechanisms required to file a Commissioner’s Charge.”

This case did present some facts that could have made the court’s opinion easier such as the information sought was primarily about foreign nationals rather than U.S. citizens and the employer admitted that they terminated due to the complainant’s medical condition (pursuant to certain international standards for cruise ships that prohibit certain conditions) but nonetheless an employer faced with an overbroad EEOC investigation or a subpoena, especially if within the Eleventh Circuit, should look to this case for support in objecting to the requests and subpoena.

Union’s “Fair Share” Found Unfair

Contributed by Larry Smith and Rita Gitchell

In March 2003, former Illinois Governor Rod Blagojevich issued an executive order calling for state recognition of a union as the exclusive representative of home health care personal assistants employed in the “rehabilitation program.” The executive order was subsequently codified by the Illinois legislature, which declared personal assistants to be “public employees” of the state of Illinois “solely for the purposes of coverage under the Illinois Public Labor Relations Act.” Subsequently, the personal assistants selected SEIU as their exclusive representative for purposes of collective bargaining.

The collective bargaining agreement required non-union personal assistants to pay a “fair share” of the union dues in return for the representation they received from the collective bargaining unit. These “fair share” payments were deducted directly from the Medicaid payments to the personal assistants. In 2009, Governor Pat Quinn signed another executive order that expanded the pool of home-care workers to include disability home health aides. Under the legislation enacted after Governor Blagojevich’s executive order, these disability care workers, whether union or non-union, were subject to the same “fair share” payments as other caregivers governed by the program.

One of these disability care workers, Pamela Harris, filed a class action suit that argued that the compulsory payments constituted a free speech violation, under the First and Fourteenth Amendments.

In Harris v. Quinn, the U.S. Supreme Court decided that non-union home health care disability care workers in Illinois were not required to pay so-called “fair share” fees to SEIU for the union’s role in handling collective bargaining on behalf of both union and non-union members alike.

The Harris decision discussed the difference between being labeled a state employee by either executive order or statute compared to the practical situation in place with these workers in Illinois. The Supreme Court noted that the disabled individuals had the hiring and firing decisions, not the state. These home health care workers do not receive the same benefits as full time state of Illinois employees. It is not clear if the decision would have been the same if the home health care workers were clearly employees of the state.

The decision raises many questions for non-government employers who have home health care disability workers on their payrolls. Harris does not provide much guidance to the private sector that employs home health care workers represented by a collective bargaining union such as SEIU. Does such an employer have the obligation or authority to advise those non-union members, who are subject to fair share payments to a collective bargaining representative, of the Harris decision?

At least, eighteen other states have similar “schemes” in place, which are subject to the ruling in Harris. Anti-union groups were disappointed that the Supreme Court did not go further in striking “fair share” payments in other settings. There are, however, other cases pending both in district courts and before the Supreme Court, which will hopefully clarify those affected by the rationale employed by the court in Harris.

There are two large groups that may be affected by the Harris decision: non-union workers who make “fair share” contributions to collective bargaining representatives; and all workers who disagree with the way in which “fair share” payments are used for political contributions. Politically, both the unions and those who receive political contributions from the unions lose in the wake of the Harris decision.

U.S. Supreme Court Rules NLRB Appointments Were Invalid

Contributed by John Lynch

The U.S. Supreme Court ruled on Thursday that President Obama’s three appointments to the NLRB in January 2012, made without the “advice and consent” (i.e., approval) of the Senate, were invalid appointments.  The case is NLRB v. Noel Canning, and affirms a prior decision of the court of appeals for the D.C. circuit.

As a result, hundreds of cases decided by the NLRB from January 2012 through July 2013 have been rendered void – as if they never happened – because the NLRB did not have a quorum and could not lawfully act.  The NLRB may have to reconsider those cases anew.  That could take a great deal of time, which may take away from the NLRB’s ability to implement its pro-labor agenda while also handling its already increased workload.

NLRB Chairman Mark Gaston Pearce has issued a statement that reads, in part, “We are analyzing the impact that the Court’s decision has on Board cases in which the January 2012 recess appointees participated. Today, the National Labor Relations Board has a full contingent of five Senate-confirmed members who are prepared to fulfill our responsibility to enforce the National Labor Relations Act. The Agency is committed to resolving any cases affected by today’s decision as expeditiously as possible.”

An ERISA Plan’s Contractual Limitations Period Is Enforceable, Says The U.S. Supreme Court

Contributed by Kelly Haab-Tallitsch

The U.S. Supreme Court continues to rule in favor of the ERISA plan document.

A disability plan’s three-year limitations period doesn’t violate the Employee Retirement Income Security Act (ERISA), a unanimous Court ruled on December 16, 2013 in Heimeshoff v. Hartford Life & Accident Ins. Co. “[A] participant and a plan may agree by contract to a particular limitations period, even one that starts to run before the cause of action accrues,” held the Court. ERISA itself does not specify a statute of limitations for claims brought under covered plans.

 In Heimeshoff, the plaintiff challenged her disability plan’s limitations period because it began to run before she could exhaust her administrative remedies. The plan requires participants to bring suit within three-years after “proof of loss” is due. Proof of loss is due before a claim can be processed, and therefore before a plan’s administrative remedies are exhausted. Because courts generally require a participant to exhaust all administrative remedies before seeking judicial review, this overlap can shorten the period of time in which a suit can be filed.

In her appeal, the plaintiff argued that permitting a limitations period to begin before the exhaustion of administrative remedies conflicts with the general rule that limitations periods begin upon the accrual of the cause of action. The Court rejected the argument, holding that parties can not only agree to the length of time of a limitations period, as long as it is reasonable and there is no controlling statute to the contrary, as previously held in Order of United Commercial Travelers of America v. Wolfe, 331 U.S. 586 (1947), but also as to when that limitation period begins.

The Court rejected the plaintiff’s argument that the limitations period conflicted with ERISA’s two-tiered remedial scheme by undermining the administrative review process and limiting judicial review. It found the suggestion that the scheme encourages participants to “shortchange their own rights” during the administrative review process “highly dubious,” noting that plan participants have an interest in a thorough administrative review process.

Finding the availability of judicial review to be largely unaffected by limitations periods, the Court stated that in the handful of cases identified by the plaintiff where participants’ claims were barred by a limitations period, the participants had not “diligently pursued their own rights.” The Court added that existing judicial doctrines, such as estoppel and equitable tolling, are available to district courts to address situations in which a plan participant’s rights have been adversely affected by a limitations period.

What Does This Mean?

On a practical note, if your ERISA plan has a three-year limitations period, it is most likely enforceable. If it doesn’t have a limitations period, now is the time to speak with your counsel about putting one in.

But more importantly, this was another decision by the Supreme Court illustrating its preference for enforcing ERISA plan provisions as written, following its decision in US Airways, Inc. v.McCutchen earlier this year and a signal that courts will likely continue to enforce ERISA plan documents as written. This is good news for plans sponsors and participants as it keeps administration and litigation costs down, keeping plans available and affordable.