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Bar News - April 16, 2014


Labor & Employment Law: High Court Employment Law Roundup and Cases to Watch

By:

Several US Supreme Court decisions issued over the past year will have a significant impact on the practice of employment law, including some that are considered big wins for employers.

There also are a few decisions on the horizon that employment attorneys will want to follow closely. Here’s a recap of some of the more notable employment law decisions from the past year and some high-stakes cases with decisions expected soon.
Vance v. Ball State
Vance, a catering worker, filed suit against Ball State claiming that another employee, Davis, was harassing her. While Davis was not Vance’s supervisor, Vance argued that the strict liability standard applicable to supervisory harassment (as opposed to the negligence standard for coworker harassment) should apply to her claims, because Davis told Vance what to do and did not clock in/out like “regular” employees.

In a 5-4 decision, the Court held that a worker is a “supervisor” only if given employer authorization to take tangible employment actions against the complainant. With this holding, the Court rejected the EEOC definition of supervisor (having the “ability to direct another employee’s tasks...”).

This decision is certainly helpful for employers because it limits the group of workers that may subject a company to the strict liability standard. However, there are some additional takeaways from this decision for employers. They should carefully craft job descriptions to ensure that only those employees who are intended to have supervisory authority actually have supervisory authority. Additionally, training those employees who fall into the definition of “supervisor” is critical to avoiding harassment claims.
University of Texas Southwestern Medical Center v. Nassar
The number of retaliation claims under Title VII filed by employees has skyrocketed in the past few years, but courts have been divided on what standard of proof to use. The courts have provided two options: (1) “but for” - meaning an employer would not have taken an adverse employment action but for an improper motive; and (2) “motivating factor” - meaning an improper motive was one of multiple reasons for the adverse action.

In Nassar, the plaintiff argued that he was denied permanent employment after complaining about discrimination by his supervisor. The employer responded that it would not have hired him anyway based on legitimate reasons. The Court was tasked with determining which of the above standards is appropriate for a retaliation claim. After reviewing the statutory history of Title VII (specifically focusing on the differing language regarding retaliation and status-based discrimination), it held that the “but for” standard was appropriate.

This decision (5-4) is again favorable to employers because it makes it harder to prove a retaliation claim. The Court appeared to take the rise in retaliation claims into consideration in its decision, stating that the lesser standard could lead to the “filing of frivolous claims...”
Sandifer v. US Steel Corp.
In Sandifer, steel workers argued that the time they spent donning and doffing protective gear was compensable time under the Fair Labor Standards Act (FLSA). US Steel argued that this time was non-compensable because the FLSA allows time for “changing clothes” to be considered non-compensable under a collective bargaining agreement (CBA). The Court reviewed the legislative history of the FLSA and the definitions of the words “clothes” and “changing,” and reached the conclusion that the time the workers spent donning and doffing protective gear was non-compensable under the CBA because it constituted time spent “changing clothes.”

This decision has limited application to those employers who (1) require protective gear and (2) have employees governed by a CBA. However, those who fall into this group should be certain to analyze the protective gear they require employees to wear, determine whether or not the employees are changing clothes “on the whole,” and have a CBA that is clear on whether time changing clothes is compensable or not.
US V. Windsor
In Windsor, the Court held that, for purposes of federal law, the definition of “marriage” set forth in the Defense of Marriage Act (DOMA) is unconstitutional. DOMA defined marriage as a union between one man and one woman only. In a 5-4 decision written by Justice Anthony Kennedy, the Court noted that certain states have opted to recognize same-sex marriage and that DOMA’s definition discriminated against same-sex married couples by denying them the same federal rights and privileges afforded to opposite-sex married couples. Essentially, the decision holds that same-sex couples be treated the same under federal law as opposite-sex married couples.

While this may seem fairly straightforward, there are certainly some difficulties in applying the Windsor decision to state and federal employment laws. The Windsor decision did not invalidate the provision of DOMA that allows a state that does not recognize same-sex marriage to refuse to recognize a same-sex marriage lawfully obtained in another state.

With respect to federal laws, each federal agency has been tasked with determining the appropriate state’s laws to follow to determine whether or not a couple is married. For example, for purposes of the Family and Medical Leave Act, the US Department of Labor looks to the state of residence. However, for purposes of ERISA, it looks to the state of celebration. Employment practitioners need to be cautious and understand the effect of Windsor on employment benefits before providing advice to employers and employees alike.
CASES TO WATCH
Sebelius v. Hobby Lobby Stores Inc. and Conestoga Wood Specialties Corp. v. Sebelius
The Court recently heard oral arguments on two cases challenging the Affordable Care Act (ACA) on religious grounds. Hobby Lobby is owned by Evangelical Christians and Conestoga Wood Specialties by devout Mennonites. In both cases, the companies argue that the ACA’s mandate requiring group health plans to cover contraceptives violates the companies’ religious rights based on the views of their respective owners.

The Hobby Lobby case will address whether a corporation is a “person” under the Religious Freedom Restoration Act (RFRA) while Conestoga focuses on whether a business can exercise rights under the First Amendment based on the religious beliefs of its owners. These decisions will certainly impact the implementation of the ACA. Should the Court find in favor of either Hobby Lobby or Conestoga, the decision would essentially create a religious exemption for non-religious institutions.
US v. Quality Stores Inc.
In January 2014, the Court heard oral arguments in Quality Stores, a case where it is tasked with determining whether severance payments made to involuntarily terminated employees are taxable as “wages” under the Federal Insurance Contributions Act (FICA).

In 2001, Quality Stores filed for bankruptcy and offered its employees severance packages. The payments were identified in the severance agreements as related to an involuntary termination, not tied to state unemployment compensation, and not attributable to any services provided. Quality Stores initially remitted $1 million in tax payments to the IRS, but later sought a refund. The IRS declined and litigation followed.

The dispute between the parties is based on very detailed and specific statutory interpretation of FICA and the Internal Revenue Code. The outcome however is a big deal to the IRS. If the Court does not find in its favor, the IRS will owe more than $1 billion to employers.


Katie Kiernan Marble is an employment attorney and owner of Marble Law Firm. Katie can be reached at 603-769-3136 or katie@nhemploymentlaw.com. For more information about Katie, please visit www.nhemploymentlaw.com.

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