Reading the #SCOTUS tea leaves: headscarves, religious accommodations, and Abercrombie

Yesterday, the Supreme Court heard oral argument in EEOC v. Abercrombie & Fitch Stores, Inc. (transcript here [pdf]), which will hopefully determine the circumstances under which an employer must, as a religious accommodation, grant an exception to its “Look Policy” for a hijab-wearing job applicant. More broadly, employers hold out hope for some more generalized guidance on what they should do when a corporate policy conflicts with an employee’s sincerely held religious belief.

What an interesting argument. The Justices seemed very skeptical of requiring employees to raise the issue of a reasonable accommodation in a job interview, and instead suggested that the burden should fall on an employer to bring up the issue. For example, Justice Kagan asked:

You’re essentially saying that the problem with the rule is that it requires Abercrombie to engage in what might be thought of as an awkward conversation…. But the alternative to that rule is a rule where Abercrombie just gets to say, “We’re going to stereotype people and prevent them from getting jobs. We’ll never have the awkward conversation because we’re just going to cut these people out.”

The criticism of the employer, however, was not limited to the Court’s left wing. Justice Alito also seems skeptical that an employer can simply ignore an obvious potential need for an accommodation simply by denying employment.

All right.  Let’s say …­­ four people show up for a job interview at Abercrombie…. So the first is a Sikh man wearing a turban, the second is a Hasidic man wearing a hat, the third is a Muslim woman wearing a hijab, the fourth is a Catholic nun in a habit. Now, do you think … that those people have to say, we just want to tell you, we’re dressed this way for a religious reason. We’re not just trying to make a fashion statement….

I want to know the answer to the question whether the employee has to say, I’m wearing this for a religious reason, or whether you’re willing to admit that there are at least some circumstances in which the employer is charged with that knowledge based on what the employer observes.

Justice Alito then offered a very practical solution:

Well, couldn’t the employer say, we have a policy no beards, or whatever, do you have any problem with that?

Reading the tea leaves, I predict another employee-side victory from this conservative-majority court. If we are assigning burdens, it seems to me that the Court thinks it makes sense to place the burden on the party with more information (the employer) to explain the job requirements to determine if a potentially obvious religious belief conflicts. Otherwise, you are requiring the employee to guess at whether an accommodation is needed at all.

Stay tuned. This will be a very interesting opinion to read when it is released later this year.

#SCOTUS unanimously holds that post-work security checks are unpaid

Integrity Staffing Solutions v. Busk asks the question of whether the FLSA entitles hourly employees to be paid for post-shift time spent undergoing mandatory security screenings. The case was brought by two employees of a warehousing company with employee theft issues. To combat the problem, the company implemented mandatory (and time consuming, but unpaid) post-shift security checks.

When I wrote about this case following oral argument, I commented that “I would be surprised … if the employees walk away with a win. This case will hinge on whether the security screenings are key to the nature of the employment…. [T]he employer has the better of this agreement.”

I love it when I’m right.

Yesterday, the Court handed employers a unanimous victory (opinion [pdf] here):

The security screenings at issue here are noncompensable postliminary activities. To begin with, the screenings were not the “principal activity or activities which [the] employee is employed to perform.” Integrity Staffing did not employ its workers to undergo security screenings, but to retrieve products from warehouse shelves and package those products for shipment to Amazon customers.

The security screenings also were not “integral and indispensable” to the employees’ duties as warehouse workers…. The screenings were not an intrinsic element of retrieving products from warehouse shelves or packaging them for shipment. And Integrity Staffing could have eliminated the screenings altogether without impairing the employees’ ability to complete their work.

Shortly after the Court delivered its opinion, I read the following tweet:

#SCOTUS OKs #WageTheft at Amazon http://t.co/DvSuWmLEqO

— N. William Metke (@metkelaw) December 9, 2014

While I understand that employee advocates are trying to make a point by using the phrase, “wage theft,” their continued use of this misnomer does their cause a disservice. It is not wage theft if a court concludes that time is not compensable. In fact, it’s the opposite of wage theft. Labeling every instance that an employer does not pay an employee as “wage theft” waters down the plight of the minimum-wage worker (which, I understand, is the point of labor’s wage-and-hour efforts). If you want us to take you seriously, you can’t cry thief every time you see an employer carrying a stack of pay envelopes.

Reading the #SCOTUS tea leaves: Young v. UPS and pregnancy accommodations

Yesterday, the Supreme Court heard oral argument in Young v. UPS, which will decide whether Title VII requires an employer to accommodate pregnant workers the same as non-pregnant workers similar in their inability to work.

UPS required Peggy Young to be able to lift up to 70 pounds as part of her job as a package delivery driver. After she became pregnant, her doctor limited her lifting. Ms. Young requested that UPS move her to a light duty assignment. UPS’s collective bargaining agreement allowed an employee to work a light duty assignment only because of an “on-the job” injury or when “disabled” under the ADA. Because Ms. Young did not meet either of these categories UPS denied her request.

Ms. Young’s lawsuit argued that UPS violated Title VII because the Pregnancy Discrimination Act required UPS to provide her with a “reasonable accommodation” to the same degree it accommodated a disabled employee. The 4th Circuit disagreed, finding that UPS’s policies did not treat pregnant workers less favorably, but the same as any other worker who did not meet the specific requirements for light duty under the CBA. 

The case may hinge on where the justices fall on the right comparator for UPS’s pregnant workers. Is it those employees who are ADA-disabled or otherwise injured on-the-job, whom UPS accommodates, or those non-ADA employees injured off-the-job, whom UPS does not accommodate.

As one would expect, the Justices appear to be split down ideological (maybe gender) lines, and, as is often the case, Justice Kennedy may be the key that will unlock this issue. He, however, was relatively quiet during the argument, only asking a handful of questions, which failed to shed any light on his thought process. Truth be told, it was a very curious argument, and the case, at least based on the Justice’s queries, is not easily predictable.

I am hopeful that the court will side with working parents and rule in favor of the employee in this case. A ruling for UPS would, I fear, promote the unequal treatment of pregnant workers, which is anathema to the spirit, if not the letter, of the Pregnancy Discrimination Act. No employer should be allowed to act as if it is exempt from the law.

A PDF of the compete oral argument transcript is available here.

Are post-work security checks compensable? #SCOTUS and Integrity Staffing Solutions v. Busk

Yesterday, the Supreme Court heard oral argument in its first employment law case of this term, Integrity Staffing Solutions v. Busk.

To wage-and-hour geeks (like me), this case presents an interesting issue under the Fair Labor Standards Act: whether the FLSA entitles hourly employees to be paid for post-shift time spent undergoing mandatory security screenings. The case was brought by two employees of a warehousing company that was having employee theft problems. To combat the issue, the company implemented mandatory (and unpaid) post-shift security checks, which included passing through metal detectors, which kept employees at the plant for up to 30 extra minutes.

FLSA, as amended by the Portal-to-Portal Act, generally precludes compensation for “preliminary” (pre-shift) and “postliminary” (post-shift) activities, unless the activities are “integral and indispensable” to an employee’s principal activities. To be “integral and indispensable,” an activity must be (1) “necessary to the principal work performed” and (2) “done for the benefit of the employer.”

In this case, the 9th Circuit held that the security screenings were “integral and indispensible” because the company required them “to prevent employee theft, a concern that stems from the nature of the employees’ work.” In so ruling, the court distinguished cases involving non-compensable pre- and post-shift screenings at airports and nuclear power plants, which did not benefit the employer because they were otherwise mandate by federal law.

In its brief, the employer argued that the screenings take place away from the work area after the workday, and did not affect their work activity of pulling product off shelves. The employer also argued that the unpaid screenings are no different than unpaid time walking from their cars, through the parking lot, and into the warehouse. Contrarily, the employees argued that the employer’s required security screenings, for which the employees had no choice, triggered a legal duty to pay.

During oral argument (transcript) the conservative wing of the Court seemed to advocate for a narrow interpretation of “principal.”

Chief Justice Roberts: But no one’s principal activity is going through security screening.  The employer doesn’t hire somebody, I need somebody to go through employee screening.  He hires them to do something else…. You’re saying everything that is related somehow to the job is principal. I would have thought principal has to do with things that are more significantly related.

Justice Alito: You wouldn’t pay anybody just to come in and go through security.

Meanwhile, the more employee-friendly Justices attempted to argue that because “inventory control” is “important” to the business, it is integral and indispensable:

I mean, what makes it Amazon? It’s a system of inventory control that betters everybody else in the business. And what’s really important to Amazon is that it knows where every toothbrush in the warehouse is. And that’s just as integral to what Amazon does and to what it requires its employees to do….

In handicapping this case, you have to keep in mind that earlier this year, this same Court, in Sandifer v. U.S. Steel, decided that the time spent putting on and taking off certain protective gear is not compensable. While Sandifer is a different case, decided under a collective bargaining agreement, I would be surprised, especially given the tenor of oral argument, if the employees walk away from Busk with a win. This case will hinge on whether the security screenings are key to the nature of the employment. I, along with what I perceive as a majority of the Court, believe that the employer has the better of this agreement. We’ll find out for sure early next year when the Court issues its opinion.

Hear me on The CYA Report discussing Hobby Lobby

Today we’re going to try something a little different. Usually, you get to read my thoughts on the employment law issues of the day. Today, you get to hear my voice, waxing philosophical on the Supreme Court’s Hobby Lobby decision.

Last week, Kris Dunn (old friend, and proprietor of, among other things, The HR Capitalist) asked if I’d appear on his podcast, The CYA Report, to discuss the case.

Kris and I discussed: What does Hobby Lobby mean? Are corporations people? And, what employment law areas can we expect its holding to challenge?

Take a listen here.

Will Hobby Lobby give Title VII fits?

Yesterday, the Supreme Court decided Burwell v. Hobby Lobby Stores [pdf], holding that a closely held corporation is a “person” that can hold a religious “belief” for purposes of the Religious Freedom Restoration Act (which prohibits the federal government from taking any action that substantially burdens the exercise of religion unless it is the least restrictive means possible). Thus, the plaintiff was able to rely on its religious beliefs to opt out of the requirement of the Affordable Care Act (aka Obamacare) to provide healthcare coverage for contraceptives. 

The opinion is long, but worth the time to read. I want to focus, however, on Justice Ginsburg’s scathing dissent.

Justice Ginsburg believes that the majority’s opinion is not limited to the ACA’s contraceptive mandate, but instead will enable any company to opt out of any non-tax law on the basis of a religious belief:

In a decision of startling breadth, the Court holds that commercial enterprises, including corporations, along with partnerships and sole proprietorships, can opt out of any law (saving only tax laws) they judge incompatible with their sincerely held religious beliefs. 

What about Title VII and the other ant-discrimination laws? What if a company has a sincerely held religious belief that it is okay to discriminate based on race? Or, how about a company, that, because of its religious beliefs, segregates its men and women? Would Hobby Lobby permit those employers to opt out of Title VII? Hobby Lobby does not answer these questions. Instead, it leaves them to lower courts to interpret in future cases. We will have to watch and see how these issues play out down the road.

I agree, however, with Justice Ginsburg, that we need to worry about how companies will try to use this opinion to opt out of laws they do not like. I am concerned that this opinion could lead to a slippery slope of companies using religion to pick and choose laws based on their socio-political beliefs, which could undermine our civil-rights laws, and is antithetical to the First Amendment religious freedoms upon which out country was founded.

The Supreme Court’s opinion on cell phone privacy is a must-read for all employers

It’s a rare day that I write a post of which the vast majority is a 900-word quote from a court opinion. Yesterday’s decision by the U.S. Supreme Court in Riley v. California [pdf], however, is significant enough to cede my space to the words of Chief Justice Roberts:

Cell phones differ in both a quantitative and a qualitative sense from other objects.… The term “cell phone” is itself misleading shorthand; many of these devices are in fact minicomputers that also happen to have the capacity to be used as a telephone. They could just as easily be called cameras, video players, rolodexes, calendars, tape recorders, libraries, diaries, albums, televisions, maps, or newspapers.

One of the most notable distinguishing features of modern cell phones is their immense storage capacity.… Most people cannot lug around every piece of mail they have received for the past several months, every picture they have taken, or every book or article they have read—nor would they have any reason to attempt to do so.…

But the possible intrusion on privacy is not physically limited in the same way when it comes to cell phones. The current top-selling smart phone has a standard capacity of 16 gigabytes (and is available with up to 64 gigabytes). Sixteen gigabytes translates to millions of pages of text, thousands of pictures, or hundreds of videos.… Cell phones couple that capacity with the ability to store many different types of information: Even the most basic phones that sell for less than $20 might hold photographs, picture messages, text messages, Internet browsing history, a calendar, a thousand entry phone book, and so on.… We expect that the gulf between physical practicability and digital capacity will only continue to widen in the future.

The storage capacity of cell phones has several interrelated consequences for privacy. First, a cell phone collects in one place many distinct types of information—an address, a note, a prescription, a bank statement, a video—that reveal much more in combination than any isolated record. Second, a cell phone’s capacity allows even just one type of information to convey far more than previously possible. The sum of an individual’s private life can be reconstructed through a thousand photographs labeled with dates, locations, and descriptions; the same cannot be said of a photograph or two of loved ones tucked into a wallet. Third, the data on a phone can date back to the purchase of the phone, or even earlier. A person might carry in his pocket a slip of paper reminding him to call Mr. Jones; he would not carry a record of all his communications with Mr. Jones for the past several months, as would routinely be kept on a phone. 

Finally, there is an element of pervasiveness that characterizes cell phones but not physical records. Prior to the digital age, people did not typically carry a cache of sensitive personal information with them as they went about their day. Now it is the person who is not carrying a cell phone, with all that it contains, who is the exception.According to one poll, nearly three-quarters of smart phone users report being within five feet of their phones most of the time, with 12% admitting that they even use their phones in the shower. See Harris Interactive, 2013 Mobile Consumer Habits Study (June 2013).… Today … it is no exaggeration to say that many of the more than 90% of American adults who own a cell phone keep on their person a digital record of nearly every aspect of their lives—from the mundane to the intimate.… 

Although the data stored on a cell phone is distinguished from physical records by quantity alone, certain types of data are also qualitatively different. An Internet search and browsing history, for example, can be found on an Internet-enabled phone and could reveal an individual’s private interests or concerns—perhaps a search for certain symptoms of disease, coupled with frequent visits to WebMD. Data on a cell phone can also reveal where a person has been. Historic location information is a standard feature on many smart phones and can reconstruct someone’s specific movements down to the minute, not only around town but also within a particular building.…

Mobile application software on a cell phone, or “apps,” offer a range of tools for managing detailed information about all aspects of a person’s life. There are apps for Democratic Party news and Republican Party news; apps for alcohol, drug, and gambling addictions; apps for sharing prayer requests; apps for tracking pregnancy symptoms; apps for planning your budget; apps for every conceivable hobby or pastime; apps for improving your romantic life. There are popular apps for buying or selling just about anything, and the records of such transactions may be accessible on the phone indefinitely. There are over a million apps available in each of the two major app stores; the phrase “there’s an app for that” is now part of the popular lexicon. The average smart phone user has installed 33 apps, which together can form a revealing montage of the user’s life.… 

To further complicate the scope of the privacy interests at stake, the data a user views on many modern cell phones may not in fact be stored on the device itself.… Cloud computing is the capacity of Internet-connected devices to display data stored on remote servers rather than on the device itself. Cell phone users often may not know whether particular information is stored on the device or in the cloud, and it generally makes little difference.… Moreover, the same type of data may be stored locally on the device for one user and in the cloud for another.

Riley is a 4th Amendment search-and-seizure case. It’s not an employment case. So, why, you ask, is it so important? For the first time, our highest court is recognizing, in great detail, the significant privacy interests we expect in our mobile devices. Does your company have a cell phone or mobile device policy? Does it explain to your employees that they are giving up certain expectations of privacy if they accept your phone or connect their own phones to your network? In light of Riley, if you don’t have this policy containing these disclaimers, you better, because courts are going to become increasingly hostile to claims that individuals do not have privacy expectations in their mobile devices.

What Ben Franklin teaches us about employment law (the #SCOTUS edition)

Some people head to the beach for Spring Break. I head to Philadelphia. An extended school break for my kids provides a good opportunity to visit my family. Plus, we have had a German daughter in our house since August (a 10th grade exchange student), and we promised her that we’d show her some good old fashioned American history.

In walking around Old City, is becomes very apparent that Philly is Ben Franklin’s city.

Among Franklin’s pithy quotes, his most memorable might be, “In this world nothing can be said to be certain, except death and taxes.”

Last week, the U.S. Supreme Court reminded us of this fact in United States v. Quality Stores [pdf]. The issue in the case was whether severance payments made by an employer to an employee are “wages” for purposes of FICA’s payroll tax. The Court unanimously ruled that severance payments are “wages” subject to FICA, reversing the 6th Circuit. IF you are looking for a more detailed analysis of the Court’s reasoning, head over to SCOTUSblog.

This decision seems to be common sense. If, however, you had previously been following the reversed ruling of the 6th Circuit, you need to change your practices and start withholding FICA’s payroll taxes from the severance payments you make to employees. There are lots of radars on which you, as an employer, do not want to appear. As certain as Mr. Franklin was about death and taxes, I am certain that the IRS’s radar tops that list.

When are preliminary and postliminary compensable? Supremes to let us know (maybe).

Yesterday, the Supreme Court agreed to hear Busk v. Integrity Staffing Solutions, to answer the following question (via SCOTUSblog):

Whether time spent in security screenings is compensable under the Fair Labor Standards Act, as amended by the Portal-to-Portal Act.

“What does this mean,” you ask? In Busk, the plaintiffs claimed their employer illegally failed to compensate them for the time they spent passing through a required security check at the end of each shift. According to the plaintiffs, employees waited up to 25 minutes to be searched; removed their wallets, keys, and belts; and passed through metal detectors. They claimed that the checks were “necessary to the employer’s task of minimizing ‘shrinkage’ or loss of product from warehouse theft.”

The FLSA, as amended by the Portal-to-Portal Act, generally, precludes compensation for activities that are activities that are preliminary or postliminary to the employees’ principal activities. Preliminary and postliminary activities—those that are “integral and indispensable” to an employee’s principal activities—are compensable. To be “integral and indispensable,” an activity both must be (1) necessary to the principal work performed and (2) done for the benefit of the employer.

In Busk, the court concluded that the plaintiffs had sufficiently alleged that the security clearances were necessary to their primary work as warehouse employees and done for their employer’s benefit. Therefore, the district court erred in dismissing the wage-and-hour claim.

This  case is the second in as many years that the Supreme Court will hear on this issue. Earlier this year, in Sandifer v. U.S. Steel, the Court concluded that the time employees spent donning (putting on) and doffing (taking off) their protective gear was not compensable under their collective bargaining agreement.

There are lots of other examples of preliminary of postliminary activities that could be occurring in your workplaces besides putting on and taking off protective gear, or security screenings. For example, your employees might spend time logging on to their computers before their work days officially begin. Or they might spend time at the end of their shifts transitioning to the next shift. I am hopeful that Busk will provide employers needed guidance on the compensability of these activities. Stay tuned!

Clothes make the man, and the wage-and-hour lawsuit

Last week the U.S. Supreme Court heard oral argument in its first employment law case of its October 2013 term, Sandifer v. United States Steel Corp., which asks under what circumstances employers are required to treat as compensable the time employees spend putting on and taking off protective clothing.

The heart of the dispute in the definition of “clothes.” Under the Fair Labor Standards Act, the time changing into and out of clothing is not compensable, while time putting on and taking off “protective gear” is.

So, what qualifies as clothing and what qualifies as protective gear?

The employees’ attorney argued to the Court that anything that employees wear for their jobs is “protective gear,” even if it looks like ordinary clothing. Justice Alito, however, was skeptical of that definition:

I don’t know when a human being first got the idea of putting on clothing. Probably the main reason, was for protection. It’s for protection against the cold, it’s for protection against the sun. It’s for protection against thorns. So you want us to hold that items that are worn for purposes of protection are not clothing?

Yet, other Justices expressed equal skepticism over the employer’s argument that anything an employee wears for work is clothes, not protective gear.

• Justice Sotomayor: “Your definition would include somebody spending an hour of putting on a suit of armor if he’s going to be a jouster.”

• Justice Scalia: “The word of the statute is ‘clothes.’ And nobody would consider eyeglasses or a wristwatch or some of this other specialized equipment to be clothes.”

Reading the tea leaves, this is a case that cries out for a compromised result. Neither side seemed to persuade the Court that either polarized position was a reasonable interpretation of the FLSA. Instead, look for the Court to craft a rule that any gear, whether typically worn as clothing or not, is compensable “protective gear” if it’s intended use is for protection for the specific needs of the job in question.

I’ll report back on the Court’s decision when it is published sometime next year.

Ohio Supreme Court strikes blow to class action lawsuits

In recent terms, the U.S. Supreme Court has shown some hostility to class action lawsuits. 

• In Wal-Mart v. Dukes, the Court concluded that a district court must examine the underlying merits of a claim to determine if class certification is appropriate, and that a class must have some glue binding disparate decisions to justify certifying all of those decisions for consideration in one class. 
• In Comcast v. Behrend, the Court expanded upon Dukes by concluding that a class that requires individualized proof to establish damages for each class member cannot survive as a class action.

The impact of these two decisions might to send class litigants, if possible, to state court. Dukes and Comcast are federal decisions under Federal Civil Rule 23. If a state’s class-action-certification rules are more lenient, then the class’s attorney will do whatever it takes to keep the class in state court. 

Yesterday, however, the Ohio Supreme Court made this strategy much more difficult. Stamcco, LLC v. United Telephone Co. of Ohio [pdf], is not an employment case. It involves allegations of cramming — claims that the defendant added unauthorized charges the class members’ telephone bills. Yet, this case has huge implications for how all class actions are litigated under Ohio law, including classes alleging, for example, violations of Ohio’s employment discrimination or wage and hour laws.

With extensive citations to, and discussion of, Dukes, the Court held:

At the certification stage in a class-action lawsuit, a trial court must undertake a rigorous analysis, which may include probing the underlying merits of the plaintiff’s claim, but only for the purpose of determining whether the plaintiff has satisfied the prerequisites of Civ.R. 23.

Implicitly adopting the logic of Comcast, the Court also held:

We now recognize that the need for individualized determinations is dispositive in concluding that the class does not comport with Civ.R. 23.

Rejecting the plaintiff’s claim that a court could apply a simple formula to data provided by the defendant to determine each member’s claim, the Court concluded that this case cried out for individualized determinations:

Unauthorized third-party charges are better resolved on an individual basis with the third party or UTO. UTO’s phone bills identify third-party charges, the entity responsible for the charge, and a toll-free number for billing inquiries. Moreover, UTO claims that it has a policy of removing third-party charges for the purpose of maintaining good will with its clients. Finally, for larger charges or where the charge cannot be resolved over the phone, small-claims court is also an option. Accordingly, because ascertaining whether third-party charges are authorized will require individualized determinations, common issues do not predominate.

One could apply the same logic to wage and hour claims. If an employer has, for example an open-door policy, and will consider providing redress to employees on a case-by-case basis for complaints about missing wages, one cannot apply a simple formula to calculate class-wide damages. Moreover, while the plaintiffs’ bar will lose their minds over the idea of small-claims court, it remains a viable option for employees to inexpensively litigate their right to missing wages. The $3,000 limit for small claims will cover the vast majority of individual wage and hour claims.

Stamcco is a huge victory for Ohio businesses. It is now that much harder to establish a class action, confirming that Ohio’s class-action rules fall in line with their federal counterparts.

Vance v. Ball St. narrows employer liability for harassment

In its prologue to yesterday Supreme Court opinion in Vance v. Ball. St. Univ. [pdf], Justice Alito, writing for the five-member majority, frames the importance of the issue facing the Court:

Under Title VII, an employer’s liability for such har­assment may depend on the status of the harasser. If the harassing employee is the victim’s co-worker, the employer is liable only if it was negligent in controlling working conditions. In cases in which the harasser is a “supervisor,” however, different rules apply. If the supervisor’s harassment culminates in a tangible employment action, the employer is strictly liable. But if no tangible employ­ment action is taken, the employer may escape liability by establishing, as an affirmative defense, that (1) the em­ployer exercised reasonable care to prevent and correct any harassing behavior and (2) that the plaintiff unrea­sonably failed to take advantage of the preventive or corrective opportunities that the employer provided. Under this framework therefore, it matters whether a harasser is a “supervisor” or simply a co-worker.

Ultimately, the Court held that to qualify as a supervisor for purposes of vicarious liability for harassment, one must be able to impart a “significant change in [the] employment status” of the plaintiff:

An employer may be vicariously liable for an employee’s unlawful harassment only when the em­ployer has empowered that employee to take tangible employment actions against the victim, i.e., to effect a “sig­nificant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a signifi­cant change in benefits.”

Make no mistake, this is a huge victory for employers. Vicarious liability for unlawful harassment is a huge problem for employers. It means that that if the unlawful harassment occurred, the employer is liable, whether or not it knew about it, should have known about, or even took efforts to stop it from occurring. This case limits that vicarious liability only to those are in an actual position to affect the plaintiff’s terms and conditions of employment/

The majority made it clear that it was drawing this bright line to aid parties embroiled in harassment litigation:

The interpretation of the concept of a supervisor that we adopt today is one that can be readily applied. In a great many cases, it will be known even before litigation is commenced whether an alleged harasser was a supervi­sor, and in others, the alleged harasser’s status will be­ come clear to both sides after discovery. And once this is known, the parties will be in a position to assess the strength of a case and to explore the possibility of resolv­ing the dispute. Where this does not occur, supervisor status will generally be capable of resolution at summary judgment.

In other words, the court’s bright-line rule is meant to weed out for resolution those cases in which vicarious liability exists. As Kevin Russell correctly pointed out at SCOTUSblog, these cases “will provide judges greater authority to prevent the case from getting to a jury in the first place.”

To ensure that employers avail themselves of the benefits of this decision as often as possible, it is best that businesses review organizational charts, chains of authority, and job descriptions. Businesses should spell out, in detail, those supervisors who have the authority to effect a “sig­nificant change in employment status.” They should also spell out which supervisors have the express authority to hire, fire, demote, or reassign which employees. Businesses should spell out which supervisors lack that authority. By establishing clear chains of authority, employers will place themselves in the best position to limit the risk of vicarious liability.

The importance of Vance as a win for employers cannot be understated. When you couple this decision with the Court’s retaliation decision in Nassar, it’s fair to say that yesterday, employers had their best day in recent memory at the Supreme Court.

BREAKING: SCOTUS decides on but-for causation standard for retaliation under Title VII

In a busy, end-of-term day at the Supreme Court, the Court has issued its decision in University of Tex. S.W. Med. Ctr. v. Nassar. In this 5-4, partisan-line decision, the Court decided that but-for causation is the appropriate standard for retaliation claims under Title VII.

Thus, going forward, an employee cannot succeed on a Title VII retaliation claim without proving that the employer would not have taken the adverse employment action but for an improper, retaliatory motive.

Needless to say, this is huge win for employers by narrowing an employee’s likelihood of proving retaliation. It eliminates mixed-motive retaliation. Retaliation must be the cause for an employee to prove retaliation.

Aside from its legal implications, this case is significant because it is the first retaliation case that this Court has decided in favor of the employer.

Perhaps the most curious part of the opinion, however, comes from Justice Ginsberg, who calls for passage of a “Civil Rights Restoration Act” in light of this opinion and the opinion in Vance. Given the political climate in Congress, I’d say this is unlikely. The drumbeats of employment-law reform, however, will begin to beat loudly from the left.

The Court’s opinion is available for download here.

BREAKING: SCOTUS issues decision in Vance v. Ball St. Univ.

Hot off the presses, the Supreme Court just issued its decision in Vance v. Ball St. Univ.

Via SCOTUS Blog, the Court held that “an employer is a supervisor for vicarious liability under Title VII only if she has the power given by the employer to take tangible employment actions against the victim.”

The opinion was 5-4, split down partisan lines.

You can download a pdf of the opinion here. The case background is here and here.

I’ll have analysis of the opinion later today.

Debunking myths of a pro-business Supreme Court

Conventional wisdom says that the current iteration of the United States Supreme Court is pro-business. In support of this position, Adam Liptak penned an article in Sunday’s New York Times, arguing that the Court led by Chief Justice John Roberts is the most business-friendly since World War II. A recent study published in the Minnesota Law Review [pdf] by Judge Richard Posner of the 7th Circuit Court of Appeals, University of Chicago economist William Landes, and University of Southern California law professor Lee Epstein (h/t ABA Journal) makes the same argument, albeit in painstaking law-review detail.

In employment cases, however, the realities of the court’s rulings have often bucked this conventional wisdom. Repeatedly, this Court had sided with the employee in cases deciding substantive individual rights under the various federal anti-discrimination statutes:

• Crawford v. Metropolitan Gov’t of Nashville — Retaliation for participating in internal discrimination or harassment investigations
• Staub v. Proctor Hospital — The cat’s paw: holding employers liable for the discriminatory animus of non-decision-makers
• Kasten v. Saint-Gobain Performance Plastics Corp. — Protecting oral wage and hour complaints under the FLSA’s anti-retaliation provision
• Thompson v. North American Stainless — Protecting oral wage and hour complaints under the FLSA’s anti-retaliation provision
• Hosanna-Tabor Evangelical Lutheran Church and School — Allowing non-ministerial employees to sue religious organizations for discrimination

Mr. Liptak recognizes, “Employees suing over retaliation for raising discrimination claims have fared quite well, for example.” Yet, much of the rest of his nearly 3,000-word opus takes the Court to task for its pro-business leanings.

The most insightful comment in the entire Times article is courtesy of Case Western Reserve School of Law Professor Jonathan Adler, who notes that the distinction is not one between business and the individual, but instead between enforcing established rights versus creating new ones. Per Professor Adler, the Roberts Court has not been “particularly welcoming to efforts by plaintiffs’ lawyers to open new avenues of litigation, but it has not done much to cut back on those avenues already established by prior cases.”

Professor Adler is correct. Those who take too great of a license to brand this Court as pro-business are ignoring the Court’s protections of key individual liberties in employment decisions. In procedural matters, this Court has, time and again, sided with the employer (Genesis Healthcare: offers of judgment mooting wage and hour collective actions; Comcast v. Behrend: the scope of class actions for claims seeking individualized damages; AT&T Mobility v. Concepcion: the enforceability of arbitration agreements). These are procedural cases. In cases deciding the application of already established rights, such as the right to be free from retaliation by one’s employer, the Court, over and over, sides with the employee.

There are still two key employment cases pending this term—Vance v. Ball St. Univ., which will decide the meaning of “supervisor” under Title VII, and University of Texas Southwestern Medical Center v. Nassar, which will decide the proper causation standard for retaliation claims under Title VII. These two rulings will help determine this Court’s developing legacy as either pro-individual or pro-business in deciding employment cases.

SCOTUS: Picking off individual plaintiffs moots wage and hour collective action

The pickoff is one of the most dramatic defensive plays in baseball. It can single-handedly kill a rally. The tying run on first? One deft move by the pitcher to first base, coupled with a lead that’s one step too cocky? Rally over.

We love baseball in part because it can be a metaphor for much that happens in our lives. Today, it’s a metaphor for wage and hour law.

The issue the Supreme Court faced in Genesis Healthcare Corp. v. Symczyk (4/16/13) [pdf] was whether a case becomes moot when the lone plaintiff receives an offer from the defendants to satisfy all of the plaintiff’s claims. Last December, I predicted an employer loss in this case (the link also provides all the case background you’ll need).

I’m happy to report that my prediction was very wrong. In a partisan 5-4 decision, the Court held as follows:

Because respondent had no personal interest in representing putative, unnamed claimants, nor any other continuing interest that would preserve her suit from mootness, her suit was appropriately dismissed for lack of subject-matter jurisdiction.

In other words, because there was nothing left for the plaintiff to litigate after the rejected offer of judgment, the plaintiff had no right to pursue the remaining collective claims.

Here’s the money quote from the Court:

In this case, respondent’s complaint requested statutory damages. Unlike claims for injunctive relief challenging ongoing conduct, a claim for damages cannot evade review; it remains live until it is settled, judicially resolved, or barred by a statute of limitations. Nor can a defendant’s attempt to obtain settlement insulate such a claim from review, for a full settlement offer addresses plaintiff’s alleged harm by making the plaintiff whole. While settlement may have the collateral effect of foreclosing unjoined claimants from having their rights vindicated in respondent’s suit, such putative plaintiffs remain free to vindicate their rights in their own suits. They are no less able to have their claims settled or adjudicated following respondent’s suit than if her suit had never been filed at all.

There is perhaps no greater threat facing employers than the risk of a wage and hour collective action—both because of the difficulty in complying with the FLSA’s maze of anachronistic rules and regulations, and because of the expense incurred in defending such a claim. Genesis Healthcare confirms that employers have a powerful weapon at their disposal to cut these dangerous claims off at their knees—a Rule 68 offer of judgment.

Much like a baserunner failing to anticipate a deft pitcher’s move to first base, the Court confirmed that a valid offer of judgment can catch your opponent off-guard and end their hopes of a successful collective action.

For more analysis of this decision, please read the thoughts of some of my fellow bloggers:

• SCOTUS Blog — Opinion recap: A “pick off” strategy works
• Phil Miles’s Lawffice Space — SCOTUS Decides FLSA Pick-Off Case 
• Eric Meyer’s The Employer Handbook Blog —Employee caught in a pick, Supreme Court scratches her FLSA claims
• Workplace Prof Blog — Supreme Court Holds That Employer's Offer Moots FLSA Class Action Prior To Certification
• Michael Fox’s Jotting’s By An Employer’s Lawyer — Genesis Healthcare Corp. v. Symczyk — A Wasted Opportunity?
• Daily Kos — Conservative Supremes thwart fair wages claim, and Kagan lets 'em have it
• The Wage & Hour Litigation Blog — Genesis of A Clearer Distinction Between Class and Collective Actions? Supreme Court Decides Symczyk

photo credit: Chicago Man via photopin cc

Who is a supervisor under Title VII? (Vance v. Ball St. Univ.)

On Monday, the Supreme Court heard oral argument in one of the key employment cases it will hear this term—Vance v. Ball St. Univ. This case asks whether one can qualify as a supervisor under Title VII if one is given any authority to direct and oversee another’s daily work, or if supervisory status is limited to those who have the power to hire, fire, demote, promote, transfer, or discipline others.

This distinction is an important one. Under Title VII, employers are vicariously liable for actionable harassment committed by supervisors that results in a tangible employment action.

The appellate court in Vance drew a bright line, and concluded that “supervisor” means “direct supervisor,” with the power to directly affect the terms and conditions of the plaintiff’s employment via hiring, firing, demoting, promoting, transferring, or disciplining; the mere authority to direct an employee’s daily activities is not enough.

Yet, in the Supreme Court, not even the employer, who won in the court of appeals, could argue that the 7th Circuit got the standard right. At oral argument, the employer argued that the bright line drawn by the appellate court is too rigid:

[S]omeone who does control virtually all aspects of one’s schedule but yet lacks the authority to hire, fire, or demote, nevertheless still would be qualified….

By way of example, the employer’s counsel referred to the following hypothetical posed by Justice Kagan:

There’s a professor, and the professor has a secretary. And the professor subjects that secretary to living hell, complete hostile work environment on the basis of sex, all right? But the professor has absolutely no authority to fire the secretary. What would the Seventh Circuit say about that situation?

Even though no one argued in support of the bright-line rule articulated by the 7th Circuit, I predict that the 7th Circuit’s rule will carry the day when the Court issues its opinion sometime next year. The Justices were clearly looking for a bright line to guide future cases, and appear to be wary of adopting a middle-of-the-road approach that will only serve to muddle the issue in future cases. If we are lining up Justices to get aboard one line or the other, the 7th Circuit’s stricter approach should garner more votes than the loosey-goosey standard the plaintiff sought.

For any additional background on this case, visit SCOTUSblog. The oral argument transcript is available from the Supreme Court’s website [pdf].

Will the Supreme Court (re)define employer liability for harassment by supervisors? Vance v. Ball St. Univ.

An employer’s liability for unlawful harassment depends, in part, on whether the alleged perpetrator of the harassment is a supervisor or a co-worker. Employers are strictly liable for unlawful harassment committed by a supervisor, but only liable for harassment committed by a non-supervisory co-worker if the company was negligent in discovering or remedying the harassment.

In Vance v. Ball St. Univ. (7th Cir. 6/3/11), the court concluded that for the purpose of imposing strict liability for harassment, “supervisor” means “direct supervisor.” That is, if the alleged harasser is a supervisor in title, but lacks the power to directly affect the terms and conditions of the plaintiff’s employment, strict liability cannot attach, and the court must analyze the employer’s liability under a negligence standard.

Yesterday, the U.S. Supreme Court agreed to hear the appeal of this case. The Court will decided the following two-part issue:

Whether the “supervisor” liability rule … (i) applies to harassment by those whom the employer vests with authority to direct and oversee their victim’s daily work, or (ii) is limited to those harassers who have the power to “hire, fire, demote, promote, transfer, or discipline” their victim.

This case has the potential to be significant for employers. As the plaintiff argued in support of the Supreme Court hearing the case:

These issues are no small matter. During the twelve-month period ending September 30, 2010, 14,543 employment discrimination cases were filed in United States courts—the third-largest category of civil cases…. And in 2010 alone, the EEOC received more than 30,000 harassment charges…. Employers agree that this issue is “an important and recurring issue of federal law.” In the modern workforce, where many acts of discrimination are committed by intermediate-level individuals in a large hierarchical organization such as Ball State University, resolution of this issue will undoubtedly add clarity to a great many employment discrimination disputes.

This case presents an excellent opportunity to settle this important issue.

Indeed, the federal appellate courts are split on this issue. The 1st, 3rd, 6th (which includes Ohio), and 8th agree with the 7th Circuit’s opinion in Vance v. Ball St. Univ., while the 2nd, 4th, and 9th Circuits, in addition to the EEOC, conclude that a supervisor is a supervisor regardless of the degree of oversight or control over the alleged victim of the harassment.

Hopefully, this case will settle this dispute and provide much needed clarity on the scope of an employer’s liability for unlawful harassment. This supposedly business-friendly Court has proven itself to be an ally of employees in recent cases. Will this trend continue? Much more on this case in the coming months, including an attempt to handicap the outcome after oral argument.

[Hat tip: Phil Miles’s Lawffice Space]

BREAKING: SCOTUS rules pharmaceutical reps are exempt outside salespeople

Today brings a bonus second post, because the Supreme Court just released its long-awaited ruling in Christopher v. SmithKline Beecham Corp. [pdf] The Supreme Court, by a 5-4 margin, held that pharmaceutical sales representatives are exempt, outside salespeople to whom employers need not pay overtime.

For all of the background on this case you could want, click through the following from my archives:

• Supreme Court to hear case on scope of outside sales exemption (and hopefully scope of DOL’s power)
• 2nd Circuit issues groundbreaking ruling on sales reps and overtime payments
• Do you know? The FLSA’s exemptions for salespeople

In summary, the Court concluded the following:

     1. To be considered a salesperson, one need to actually consummate a transaction. It is sufficient that the promotional work performed by the employee can lead to a sale.

This rationale rebukes the argument of the Department of Labor, which the Court called “quite unpersuasive” and lacking the hallmarks of thorough consideration.”

     2. Non-binding commitments from physicians to prescribe certain drugs qualify as sales under the FLSA’s outside sales exemption.

This rationale applies a common-sense approach to a statute that is often confusing and too rigidly applied.

To me, the following is the million dollar quote from the Court:

Our holding also comports with the apparent purpose of the FLSA’s exemption for outside salesmen. The exemp­tion is premised on the belief that exempt employees “typically earned salaries well above the minimum wage” and enjoyed other benefits that “set them apart from the nonexempt workers entitled to overtime pay.” … It was also thought that exempt employees per­formed a kind of work that “was difficult to standardize to any time frame and could not be easily spread to other workers after 40 hours in a week, making compliance with the overtime provisions difficult and generally precluding the potential job expansion intended by the FLSA’s time­ and-a-half overtime premium.” … Petitioners—each of whom earned an average of more than $70,000 per year and spent between 10 and 20 hours outside normal busi­ness hours each week performing work related to his as­ signed portfolio of drugs in his assigned sales territory—are hardly the kind of employees that the FLSA was intended to protect. And it would be challenging, to say the least, for pharmaceutical companies to compensate detailers for overtime going forward without significantly changing the nature of that position.

I have long argued that the FLSA is an anachronistic maze of rules and regulations that does not well fit within the realities of the 21st century workplace. It seems that at least 5 members of the Supreme Court are inclined to agree with me. This excerpt provides hope for businesses that in the face of an overly-active Department of Labor and an overly confusing statute, courts can provide relief by adopting common sense interpretations.

For more on this important SCOTUS ruling, you can read the early reactions of some of my blogging friends (I’m certain more of the employment law blogging illuminati will weigh in today and tomorrow):

• Dan Schwartz’s Connecticut Employment Law Blog
• Phil Miles’s Lawffice Space

Supreme Court finds religion, dismisses discrimination lawsuit

Any decision issued by the Supreme Court in an employment case is newsworthy. Thus, even though Hosanna-Tabor Evangelical Lutheran Church & School v. EEOC [pdf] concerns the viability and applicability of the narrow ministerial exception under Title VII, it is still worthy of discussion.

Hosanna-Tabor employed Cheryl Perich as an elementary teacher. She started her employment as a “lay” teacher, and later received her “diploma of vocation” as a commissioned minister “called” by God. As a teacher, she spent approximately 45 minutes per day teaching religious studies, and the rest teaching secular subjects. Hosanna-Tabor terminated her employment after she began suffering from narcolepsy and threatening to sue for discrimination. The EEOC sued on her behalf under the ADA.

Last year, the 6th Circuit permitted Perich to continue with her lawsuit, finding dispositive the fact her primary job functions were secular, not religious. The Supreme Court unanimously disagreed, recognized that a constitutional ministerial exception exists under Title VII, and that because Perich was a religious employee she could not sue for discriminatory termination.

Other bloggers, who got to this case before me, have admirably recapped the Court’s opinion:

• Supreme Court recognizes “ministerial exception” to employment law protections – from Adam Bonin at Daily Kos
• Just In: SCOTUS Rules 1st Amendment Bars Minister's Discrimination Claim – from Phil Miles’s Lawffice Space
• Ministerial exception bars minister's termination suit against church – from LawMemo Employment Law Blog
• Opinion recap: A solid “ministerial exception” – from SCOTUSblog
• BREAKING: U.S. Supreme Court Supports Fairly Broad “Ministerial Exception” to Anti-Discrimination Laws – from Dan Schwartz’s Connecticut Employment Law Blog
• SCOTUS Upholds and Applies Ministerial Exception – from Workplace Prof Blog
• Ministerial Exception to Employment Discrimination Laws Upheld by Supreme Court in Hosanna-Tabor Evangelical Lutheran Church and School v. E.E.O.C. – from George’s Employment Blawg
• First Supreme Court Employment Decision of 2012 – from Manpower Employment Blawg

Instead of retreading their ground, I thought I’d focus on what this case means going forward. Chief Justice Roberts, writing for the majority, made it clear that this case only addressed an employment discrimination claim, and not other possible claims a “minister” might bring against a religious institution:

The case before us is an employment discrimination suit brought on behalf of a minister, challenging her church’s decision to fire her. Today we hold only that the ministerial exception bars such a suit. We express no view on whether the exception bars other types of suits, including actions by employees alleging breach of contract or tortious conduct by their religious employers. There will be time enough to address the applicability of the exception to other circumstances if and when they arise.

***

The interest of society in the enforcement of employment discrimination statutes is undoubtedly important. But so too is the interest of religious groups in choosing who will preach their beliefs, teach their faith, and carry out their mission. When a minister who has been fired sues her church alleging that her termination was discriminatory, the First Amendment has struck the balance for us. The church must be free to choose those who will guide it on its way.

Wage and hour claims? A church employee fired after being wrongly accused of molesting a child? Given the Court’s reliance on the right of a church, conferred by the Constitution, to “control … the selection of those who will personify its beliefs,” it will be hard to imagine a different result in future cases.