Category Archives: Supreme Court decisions

Supreme Court To Determine Permissibility of Class Waivers In Employment Arbitration Agreements

pillarsLast month, the Supreme Court agreed to resolve a circuit split over whether class action waivers — mandating that any claims brought against the employer be brought individually rather than as a class — contained in employment arbitration agreements violate employees’ rights under the National Labor Relations Act. The Court recently announced that it would decide the highly-anticipated case in its 2017 term, beginning in October. Both the Seventh and Ninth Circuits have struck down class action waivers in arbitration agreements. The Fifth, Second, and Eighth Circuits have held the opposite. We will update when the Supreme Court has made its decision. In the meantime, companies should consider the rule in their circuit before rolling out new employment arbitration agreements.

 

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What Does The Supreme Court’s Same-Sex Marriage Ruling Mean For You?

On June 26th, in a ground-breGay_flag_svgaking decision, the Supreme Court ruled that same-sex couples have a constitutional right to marry. Full text of the Court’s decision in Obergefell, et al. v. Hodges, et al. can be found here.

But beyond the general public response, employers need to consider how the ruling will impact employment policies and practices — especially in states that previously have not recognized same-sex marriages.  Following are some of the areas where employers might see Obergefell’s impact:

Employee Benefit Plans

If you offer any employee benefit plans through a separate insurance company, all “spousal” benefits must now be extended equally to same-sex spouses as they are to opposite-sex spouses. You may not be under the same restraints if you are self-insured, but if you deny benefits to same-sex spouses in this instance, you run a high risk of discrimination lawsuits.

It’s a good time to review your employee benefit plans and the costs associated with these plans. You should anticipate that the Court’s ruling may add some new couples — and associated costs — to your plans, especially if you did not previously offer benefits to domestic partners or same-sex spouses.

Equal Employment Opportunity

Marital status is a protected class under many state and local laws. These laws now protect all married people, including those in same-sex marriages.

Family and Medical Leave Act

As we discussed in a previous post, the FMLA has recently been amended to include same-sex spouses in the definition of “spouse.” Given the heightened publicity of the Court’s ruling, be sure to review your FMLA policies and practices to ensure that same-sex spouses are included.

Additional Policies and Practices

We recommend reviewing your employee handbook and any other employment policies to make sure that the policies as written – and in practice – apply equally to employees in same-sex marriages or rely on a qualification other than marriage.

Supreme Court Speaks on Religious Accommodation

supreme court sealYesterday, the Supreme Court handed down its decision in EEOC v. Abercrombie & Fitch Stores, Inc., ruling in favor of a Muslim woman who claimed that she was denied employment at an Abercrombie & Fitch (A&F) store because she wore a headscarf.  With this decision, the Supreme Court sent a clear message: an employer may not make a hiring decision based on an applicant’s need for a religious accommodation, regardless of whether the employer had actual knowledge of such a need.

Samantha Elauf (Elauf) is a practicing Muslim who wears a headscarf for religious reasons. Elauf claims that she applied for a job at an A&F store and that, although she was otherwise qualified to be hired, she was ultimately denied employment because her headscarf would violate A&F’s “Look Policy.” The Look Policy prohibits “caps” because they are too informal for A&F’s desired image. Elauf never identified her headscarf as religious to anyone at A&F, nor did she ever communicate a need for any religious accommodation.  The EEOC sued A&F on Elauf’s behalf, claiming that A&F’s refusal to hire her violated Title VII.  In response, A&F argued that it could not be found to have discriminated against Elauf by failing to priovide a religious accommodation unless it had “actual knowledge” of Elauf’s need for a religious accommodation.  The district court disagreed with A&F’s argument and held in favor of Elauf the EEOC.  However, the Tenth Circuit reversed, agreeing with the “actual knowledge” standard put forth by A&F.

The Supreme Court reversed the Tenth Circuit and remanded the case for further consideration, holding that, under Title VII, an applicant only needs to show that her need for an accommodation was a “motivating factor” in the employer’s decision — she need not show that the employer had actual knowledge of the need for an accommodation. In other words, an “employer may not make an applicant’s religious practice, confirmed or otherwise, a factor in employment decisions” [emphasis added]. The Court gave as an example a situation where an employer thinks (but doesn’t know for sure) that a job applicant may be an orthodox Jew who will observe the Sabbath and thus unable to work on Saturdays. If the applicant actually does require accommodation of that religious practice and the employer’s wish to avoid the accommodation is a motivating factor in its decision to not hire the applicant, the employer violates Title VII. The Court was clear in its decision that its ruling only applies to accommodation under Title VII, and not to accommodation under the Americans with Disabilities Act (ADA), which follows a different framework.

The take away here?  Employers need to avoid basing employment decisions on any protected characteristic — whether confirmed or suspected. Although this case centered on a hiring decision and the anticipated need for an accommodation, it should apply equally to other terms and conditions of employment.

We recommend that managers, supervisors and those involved in the hiring process be trained on the legal requirements surrounding equal employment opportunity and on how to appropriately respond to requests for  — or other information suggesting that there is a need for — an accommodation.

Full text of the EEOC v. Abercrombie & Fitch Stores, Inc. decision can be found at:  http://www.supremecourt.gov/

Supreme Court Rules Amazon’s Workers Don’t Have to be Paid for Security Checks

iStock_000006056297SmallYesterday, the Supreme Court ruled 9-0 (in a rare, labor and employment law unanimous decision) that workers supplied by a staffing agency for positions in Amazon’s warehouses do not have to be paid for time spent in security screening lines, reversing a federal appeals court ruling that found workers should be paid because the screenings were a necessary part of their jobs and benefited their employer. The Supreme Court disagreed. “The security screenings at issue are noncompensable postliminary activities,” the Justices wrote. “The workers were employed not to undergo security screenings, but to retrieve products from warehouse shelves and package them for shipment.”

The case is Integrity Staffing Solutions, Inc v. Jesse Busk and Laurie Castro, U.S. Supreme Court, No. 13-433.

Supreme Court Rules on Affirmative Action

iStock_000006056297SmallYesterday’s Supreme Court decision in Schuette v. Coalition to Defend Affirmative Action is attracting a fair amount of attention in the news media. From an employment law perspective, the case likely will have little impact. In a decision drafted by Justice Kennedy, the Court held that states are free (in this circumstance, through a ballot referendum) to decide that they will not take race or gender into consideration in making admissions decisions to public universities.  The Court’s decision did not affect the legality of voluntary affirmative action programs maintained by private employers or the federal government’s affirmative action rules. Indeed, coverage of the decision often treats all “affirmative action” as meaning either explicit quotas or overt consideration of race or gender in decision-making. However, the type of affirmative action carried out by private employers (except in cases where the affirmative action is ordered as a remedy for past discrimination) typically involves only increased efforts to reach out to underrepresented minorities and eliminate obstacles to their hiring and advancement. This type of affirmative action is likely to continue regardless of the increasing number of decisions and state laws limiting the use of quotas and preferences.  The full Supreme Court’s decision in Schuette can be read here.

Supreme Court Rules Severance Payments Are Wages Subject to Payroll Taxes

gavelpictureOn March 25, 2014, the U.S. Supreme Court ruled that severance payments made to workers who were terminated as part of a Chapter 11 bankruptcy were “wages” subject to Federal Insurance Contributions Act (FICA) taxes (United States v. Quality Stores).

This ruling likely will not be news to most employers that have been paying FICA on severance payments for years.  However, the issue was thrown into doubt by various rulings in connection with the Quality Stores bankruptcy.  The lawyers involved in that case hit on a theory, based on a close reading of the statutory language, that severance payments are not “wages” for purposes of FICA.  They then sought a refund of FICA taxes that had been paid in connection with various layoffs.

Somewhat surprisingly, the bankruptcy court, the district court, and the 6th Circuit all agreed with Quality Stores’ arguments. Though a legally narrow issue, it is one with substantial revenue implications. If the lower court decisions had stood, the IRS would have been flooded with refund filings (to the tune of $1 billion according to court documents).  However, the Supreme Court shot the theory down 8-0.

For most employers, this decision won’t change anything about the way they handle severance payments and FICA.  For those that were hoping they could piggyback off of Quality Stores and seek their own FICA refunds, that hope is now over.

A Big (Bad?) Week for Employers Under the FLSA

overtimeIt was a big week for the Fair Labor Standards Act.

On March 7th, the Supreme Court let stand a decision that the owner, president and CEO of a supermarket chain in New York is personally liable for his company’s failure to make required payments on a FLSA settlement agreement.  The owner argued that to be held personally liable he had to be responsible for the violations (rather than just have general control over corporate operations). However, the Supreme Court refused to hear his arguments against the court of appeals’ decision, which can be interpreted broadly to suggest that an individual may be held personally liable for FLSA violations by virtue of general control of over corporate affairs.

On March 10th, the Supreme Court declined to review an appeals court decision finding that undocumented workers can sue — and recover wages owed — under the FLSA.

Then, on March 13th, President Obama directed the Secretary of Labor to update the FLSA’s overtime exemptions to provide more employees with overtime pay.  Some have speculated that the change will be to significantly raise the minimum weekly salary for an employee to be considered exempt under most exemptions (currently $455/week), but changes could also include rewrites of the job duties tests for the frequently used “white collar exemptions” or other limitations on current exemptions.  It remains to be seen what changes will be proposed by the administration and whether they can be implemented before the end of the President’s term.  We will keep you posted as we learn more.