Thursday, July 3, 2014
Post-Hobby Lobby, Court Says Religious Non-Profit Need Not Notify Insurer that It Objects to Coverage
The Court has taken a number of actions already since issuing its decision in Hobby Lobby that suggest future directions on the issue in that case. First, the Court acted on six cert. petitions. As Lyle Denniston notes on ScotusBlog, the court remanded three cases to the courts of appeal, and denied cert in three. All six cases involved employers who objected to coverage for all forms of contraception, as well as sterilization for women, and pregnancy counselling. In the three won by employers, the Court denied cert. In the three won by the government, the Court ordered the courts of appeal to reconsider in light of the Hobby Lobby decision.
And today, the Court issued an additional order. In Wheaton College v. Burwell, the Court granted an injunction to this religious educational institution against enforcement of the women's preventive care provisions objected to, absolving the College from filling out the government's form and delivering notice to its insurer. The government's brief in opposition is here.
Particularly notable was a dissent by Justice Sotomayor, joined by Justices Ginsburg and Kagan. In it, the three justices note that the Court had indicated in Hobby Lobby that the accommodation which required an employer to notify its insurer that it objected to certain coverage was less restrictive, implying that it would satisfy RFRA. As Justice Sotomoayor noted,
After expressly relying on the availability of thereligious-nonprofit accommodation to hold that the contraceptive coverage requirement violates RFRA as applied to closely held for-profit corporations, the Court now, as the dissent in Hobby Lobby feared it might . . . , retreats from that position. That action evinces disregard for even the newest of this Court’s precedents and undermines confidence in this institution.
The whole dissent is worth a read.
Cesar Rosado (Chicago-Kent) writes to let us know that he's writing an amicus brief in the NLRB's Northwestern case. In case you've been in a cave for the year, that's the case in which a Regional Director concluded that collegiate football players on scholarship at Northwestern were employees under the NLRA and could seek to unionize.
In a story which manages to offend two different protected groups, a 16-year-old gay employee of a South Dakota fast food taco restaurant alleges that he we was forced to wear a name tag referring to himself as “Gaytard”. The worker maintains that he feared for his job if he declined to put on the offensive badge. From the story at Huffingtonpost, the worker stated:
“ ‘I put it on because I didn't want to upset [the manager] and I felt that if I did do anything to upset him, it would cause me to lose my job because he'd be looking for ways to fire me,’ . . . He said he tried to remove the tag during the day but that the manager forced him to wear it in front of customers for his shift. . . A manager at the restaurant has denied the allegation.”
The facts of employment discrimination cases never cease to amaze me, even in our current day and age. If true, these allegations are both offensive and incredible.
-- Joe Seiner
There is an interesting new case out of the Eighth Circuit: EEOC v. Audrain Health Care, Inc., 2014 WL 2922212, (June 30, 2014). In that case, a male nurse inquired about transferring to a new nursing position in the operating room (“OR”). According to the evidence as recited by the Eighth Circuit, a female clinical coordinator told the male nurse that she wanted to fill the position with a woman to have the right mix of patients to staff based on gender. She then continued, “I hate to discriminate against you because you're a man, but the doctors want more female nurses in the OR.” Id. at 2. The clinical coordinator disputed saying she would “hate to discriminate against you,” but admitted that she said that she wanted a woman to fill the position because she wanted “to fill the position with a woman to have the right mix of patients to staff.” Id. The district court granted summary judgment in favor of the employer and the Eighth Circuit affirmed.
The case is interesting on two fronts. First, the district court found that the EEOC failed to present any direct evidence of discrimination. This is strange because the worker presented evidence where a decisionmaker directly commented that a protected trait was related to the job action. The Eighth Circuit refused to consider whether or not the statement constituted direct evidence.
Instead, the Eighth Circuit held that the male nurse did not suffer an adverse action because the nurse did not formally apply for the position after his conversation with the clinical coordinator. The EEOC argued that the nurse was not required to apply for the position, because the conversation with the clinical coordinator showed that his application would be futile. The Eighth Circuit interpreted the Teamsters decision as only allowing an applicant to allege futility if there was evidence of “gross and pervasive discrimination.” The Eighth Circuit’s opinion would require an employee to apply for a position, even the employee is told by the relevant decisionmaker that she will be denied the position.
These facts do supply a great question about whether sex was a BFOQ, but the district court’s ruling on the direct evidence question and the appellate court’s holding related to adverse action seem contrary to existing law.
Wednesday, July 2, 2014
We are pleased to feature a two-part posting by Professor Sachin Pandya of the University of Connecticut. Although Sachin's bio is here, most readers of Workplace Prof will know him from an active publication record across a wide range of employment law topics. This post consider the effect of a recent California Supreme Court decisiondeals on a variety of remedies questions at the intersection of state antidiscrimination law and federal immigration law .
Last week, the California Supreme Court decided Salas v. Sierra Chemical. In Salas, that Court declared that the Immigration Reform and Control Act of 1986 (IRCA) preempted California employment law remedies to a limited extent. It also concluded that the doctrines of after-acquired-evidence and unclean-hands do not preclude liability, but do restrict otherwise available remedies, under the California Fair Employment and Housing Act (FEHA). Here, I’ll describe the opinion. Later, I’ll offer some guesses on how Salas will affect employment litigation.
The facts: In 2007, plaintiff Vicente Salas sued his former employer, Sierra Chemical, under FEHA. He alleged that (1) when employed there, Sierra had failed to reasonably accommodate his disability—multiple back injuries suffered when he had previously worked for Sierra—and (2) after a layoff, Sierra had not rehired Salas because he was disabled and to retaliate for his filing of a workers compensation claim. After the trial date was set, in one of his motions in limine, Salas stated that he would testify at trial and assert his Fifth Amendment privilege against self-incrimination if asked about his immigration status. And he asked for permission to “assert the privilege outside the jury’s presence and that the court and counsel not comment at trial on his assertion of the privilege.”
Thereafter, Sierra sought summary judgment on the ground that Salas had used another man’s Social Security number and card to get his past job with Sierra. This misconduct, Sierra argued, defeated FEHA liability, because of the after-acquired-evidence and unclean hands doctrines. In support, Sierra submitted a North Carolina man’s declaration that it was his Social Security number that Salas had submitted when he had applied for a job with Sierra. Sierra’s president also declared that Sierra had “a long-standing policy” of not hiring people that federal law would not let work in the US and of immediately firing any employee discovered to have provided false information or documents to establish work eligibility in the US. In opposing the motion, Salas submitted, among other things, his declaration that Sierra’s production manager, “after learning that several employees had supplied incorrect Social Security numbers, assured them they would not be terminated as long as the company’s president was satisfied with their work.” The trial court ultimately granted summary judgment, and the California Court of Appeals affirmed.
The California Supreme Court reversed and remanded. First, the Court considered a federal preemption challenge to California Senate Bill No. 1818 (SB 1818). Enacted in 2002 in the wake of Hoffman Plastics, SB 1818 added, among other provisions, this one: “All protections, rights and remedies available under state law . . . are available to all individuals regardless of immigration status who have applied for employment, or who are or who have been employed, in this state.” Cal. Gov't Code § 7285(a) (emphasis added).
The Salas Court found conflict preemption on the ground that it was “impossible” for an employer to comply with SB 1818 and IRCA, albeit only to the extent that SB 1818 allows for an award for lost wages for any time after the employer knew of the employee’s unauthorized immigration status (the “post-discovery” period). Under IRCA, once an employer “know[s]” that its employee is an “unauthorized alien”—ineligible to work in the US—that employer may not “continue to employ” that employee. 8 U.S.C. § 1324a(a)(2); 8 C.F.R. § 274a.3. That prohibition, the Salas Court reasoned, “directly conflicts” with “any state law award that compensates an unauthorized alien worker for loss of employment during the post-discovery period . . . . Such an award would impose liability on the employer for not performing an act (continuing to employ a worker known to be an unauthorized alien) expressly prohibited by federal law.”
In contrast, the Court concluded, federal immigration law does not prohibit an employer from paying an employee wages for employment “wrongfully obtained by false documents, so long as the employer remains unaware of the employee’s unauthorized status.” Accordingly, to the extent SB 1818 “allow[s] lost wages” for the pre-discovery period---the time the employer did not yet know of the employee’s unauthorized status— it is “not impossible” to comply with immigration law and SB 1818.
Moreover, the Salas Court rejected conflict-preemption on the ground that allowing lost wages for the pre-discovery period would unduly frustrate IRCA’s purposes. SB 1818 at best only “minimal[ly]” encourages unauthorized aliens to seek a job in the US or use false documents to get a job. “[T]he typical unauthorized alien wage earner is not familiar with the state law remedies available for unlawful termination and . . . job seekers rarely contemplate being terminated in violation of the law.” And even if they did, they would know that by pursuing such State law remedies, “they would risk discovery of their unauthorized status,” and with that, prosecution and deportation. If undocumented workers could not recover even pre-discovery lost wages, the Salas Court reasoned, employers in effect would enjoy immunity when they illegally discriminate, retaliate, or commit illegal wage-and-hour practices against undocumented workers, thereby undermining IRCA’s goal of “eliminating employers’ economic incentives to hire such workers.” (In a separate “concurring and dissenting” opinion, Justice Baxter disagreed with this ruling, relying on Hoffman Plastics to conclude that if Salas is an unauthorized alien, IRCA preempts any State law award to compensate him for the loss of employment.)
Second, the Court declared that the after-acquired-evidence defense from McKennon v. Nashville Banner Publishing Co., 513 U.S. 352 (1995), “applies with equal force to” FEHA claims. McKennon was a lawsuit under the federal Age Discrimination in Employment Act (ADEA) for an illegal firing. The defendant-employer discovered---during a deposition—that the plaintiff had stolen confidential company documents while she was on the job. The US Supreme Court held that this misconduct did not defeat her ADEA claim, but that Court also read the ADEA to require taking “due account of the lawful prerogatives of the employer in the usual course of its business and the corresponding equities that it has arising from the employee’s wrongdoing.” Accordingly, it declared, if the defendant-employer proves that the plaintiff-employee’s misconduct was so severe that “the employee in fact would have been terminated on those grounds alone if the employer had known of it at the time of the discharge,” then the plaintiff cannot get certain remedies in its ADEA suit: reinstatement and front pay, as well as any back pay otherwise owed for the time after the employer in fact discovered the employee’s misconduct. The trial judge could then further adjust the back pay award based on “extraordinary equitable circumstances that affect the legitimate interests of either party.”
However incomplete and incoherent its reasoning, many appellate courts have read McKennon into other employment discrimination statutes. In Salas, the California Supreme Court joined this herd by reading McKennon’s defense into FEHA. This, in turn, required a remand. The McKennon defense demands that Sierra show that, had it rehired Salas, it would have subsequently fired him once Sierra learned that “his name did not match the Social Security number he had provided.” This was a triable issue of fact, the Court concluded, because some evidence suggested that Sierra “deliberately chose to look the other way when put on notice of [other] employees’ unauthorized status,” and thus would have likely done the same for Salas.
Similarly, the Court concluded that although unclean hands doctrine was not a “complete defense” to Salas’s FEHA claims, “equitable considerations may guide the court in fashioning relief in cases involving a legislatively expressed public policy.” In support, the Court referred to cases applying equitable principles “to reduce ordinary tort damages imposed for violation of antidiscrimination laws.” It did not explain how, if at all, these equitable considerations differ from the McKennon defense.
Coming up next—four guesses about the world after Salas.
Tuesday, July 1, 2014
The 2014 Marco Biagi Award
The winner of the 2014 Marco Biagi Award is Lilach Lurie (Bar-Ilan University, Israel) for a paper entitled Do Unions Promote Gender Equality? In this paper, the author conducts a careful and extensive empirical study of Israeli collective bargaining agreements and concludes (in line with studies in other countries) that existing “family-friendly” policies are more attributable to the political process than to collective bargaining, and that trade unions are still surprisingly willing to tolerate collective agreement provisions which embody illegal gender discrimination.
Another paper was selected by the judges for special commendation: Corporate Social Responsibility as Work Law? A Critical Assessment in the Light of the Principle of Human Dignity by Isabelle Martin (University of Montreal, Canada). With an eye to the difficulties that labour law faces today in carrying out its traditional functions of furthering mínimum standards and giving employees a collective voice, the author offers a novel and theoretically grounded consideration of whether corporate social responsibility (CSR) is well suited to take on any of these functions. She concludes that CSR does more to protect employee rights which are easily measured and already relatively well protected by law, in contrast to those (such as freedom of association) which are harder to measure.
The International Association of Labor Law Journals sponsors the Marco Biagi Award in honor of one of the founders of the Association: Marco Biagi, a distinguished labor lawyer and a victim of terrorism because of his commitment to social justice. A list of the member journals of the International Association can be found at http://www.labourlawjournals.com.
This year’s winners were chosen by an academic jury composed of Bernard Adell (Canada), Jesús Cruz Villalón (Spain), and Frank Hendrickx (Belgium). The winners were chosen from twenty papers which were submitted for the competition.
Prior winners of the Marco Biagi Award were:
2013 Aline Van Bever (University of Leuven, Belgium), The Fiduciary Nature of the Employment Relationship
2012 Diego Marcelo Ledesma Iturbide (Buenos Aires University, Argentina), Una propuesta para la reformulación de la conceptualización tradicional de la relación de trabajo a partir del relevamiento de su especificidad jurídica
Specially Noted ̶ Apoorva Sharma (National Law University, India), Towards an Effective Definition of Forced Labor
2011 Beryl Ter Haar (Universiteit Leiden, the Netherlands), Attila Kun (Károli Gáspár University, Hungary) & Manuel Antonio Garcia-Muñoz Alhambra (University of Castilla-La Mancha, Spain), Soft On The Inside; Hard For the Outside.An Analysis of the Legal Nature of New Forms of International Labour Law
Specially Noted ̶ Mimi Zou (Oxford University, Great Britain), Labour Relations With “Chinese Characteristics”? Chinese Labour Law at an Historic Crossroad
2010 Virginie Yanpelda, (Université de Douala, Cameroun), Travail décent et diversité des rapports de travail
Specially Noted ̶ Marco Peruzzi (University of Verona, Italy), Autonomy in the European social dialogue.
2009 Orsola Razzolini (Bocconi University, Italy), The Need to Go Beyond the Contract: “Economic” and “Bureaucratic” Dependence in Personal Work Relations
CAS (courtesy of Steve Willborn)
The analyses here of yesterday's decisions, Jeff's in Harris v. Quinn and Charlie's in Burwell v. Hobby Lobby were spot-on and highlighted many of the legal implications of the cases going forward. There were some interesting facets that they did not discuss that I would like to think through a bit more.
One of the things that struck me about both decisions is their effect on women and particularly women of color. The workforce at issue in Harris is primarily female and heavily women of color. Similarly, lack of contraceptive access affects women most directly, and has larger impacts on women of color. Nearly half of the pregnancies in this country are unintended (a higher rate than other developed nations), and result in a large number of abortions and poorer health and economic, workplace-related consequences for the women who choose to continue their pregnancies and the children they deliver. The rates of unintended pregnancies among African American and Hispanic women are significantly higher than for white women because of lack of access to low cost, highly reliable contraception. And the health risks of pregnancy are significantly greater for women of color -- African American women are four times more likely to die in childbirth than are white women. Easy access (financially and logistically), reduces these effects significantly.
Unionization has been good, in general, for the home health care workers in Illinois. These are workers not covered by safety net statutes like the Fair Labor Standards Act and the Occupational Safety and Health Act, nor are most covered by anti-discrimination statutes like Title VII. They are not covered by the National Labor Relations Act, either, which is one reason that these workers have had little luck bargaining for better wages or working conditions. These workers who were allowed to organize in Illinois and to bargain with the state have seen their wages increase significantly, nearly tripling for some (from as low as $3.35 to now over $11 and set to reach $13 by the end of the year). They also have health insurance and other workplace benefits. The result has been good for the majority of those women, although the named plaintiff, a woman who cared for her own son at home, perceived the deduction from her paycheck as a reduction in medicaid benefits for her son. Overall, most people who need in home care, like the elderly -- who again, are disproportionately women, although white women, based on aggregate life expectancy data -- and people with disabilities, also benefitted by being able to retain workers long-term who can be reliable (able to rely on this as their primary income and not look for other or better paying work) and better trained. Those people who need care could remain in their homes and not have to live in institutional settings.
To the extent that the gender pay gap and the racial pay gap (and the racialized gender pay gap) are driven by horizontal labor force segregation, organization seemed the most promising force for change. The decision in Harris seems to minimize the effects of that progress. To the extent that these pay gaps are driven by either horizontal or vertical workplace segregation that results from pregnancy and caregiving responsibilities, or by the higher cost of health care for one sex, easy access to contraception seems a way to reduce those indirect and direct effects. The decision in Hobby Lobby seems to threaten that. If insurers do not continue to agree to absorb the costs of contraceptives, who will? And finally, aside from the effects on individuals (workers, those who need home health care, and the families of both), to the extent that these pay gaps lead to wealth disparities, health outcomes disparities, and an inability to live independently, the states face greater expenses in supporting those who need help.
The Court's opinion in Hobby Lobby contained some additional food for thought on the interaction of RFRA and other federal laws. The Court stated in the early part of its opinion that the decision was confined in a number of ways, including that it was confined to the contraceptive mandate of the ACA. But the logic of the opinion and the language in the bulk of it has few bounds. As Justice Ginsburg's dissent pointed out, the logic of the opinion would allow any corporation, regardless of it's organization or corporate purposes, to challenge any federal law of general applicability, including, for example, Title VII. While the majority explained that Title VII's prohibition on racial discrimination in hiring was the least restrictive means to ensure equal opportunity in employment on the basis of race, the court left its analysis at that. Title VII also prohibits classifying and segregating employees in any way that would tend to deprive them of opportunities based on race. Is that narrowly tailored enough? Is the way that language has been interpreted to include disparate impact narrowly tailored enough?
Moreover, what about the other classes protected by Title VII? Sex is notably absent from that language. Is the Court anticipating the Title VII action brought by Hobby Lobby's female employees or the EEOC itself challenging a lack of access to contraception as sex discrimination? Such a suit could be a ways off if insurers will go along with the accommodation worked out for nonprofit religious entities and religious organizations in this context. However the process to take advantage of that opt-out is also currently being challenged. And based on the Court's decision, the Eleventh Circuit has suggested that it thinks that process will definitely fail. Yesterday, just hours after the Court's decision, the Eleventh Circuit granted the Eternal Word Television Network an injunction against complying with the opt-out because signing or indicating to an insurer or the government in any way that the Network would refuse to comply with the mandate would trigger that coverage to be provided in another way, thus facilitating the Network's employees in possibly engaging in acts the Network finds immoral--including having sex for any reason other than for procreation. Judge Pryor's concurrence quoted the majority's language at length, stating that it was clear the requirement would violate RFRA. It is no real stretch to extend that to for-profit corporations as well.
Moreover, what of the burgeoning case law on sex as including gender identity and sexual orientation at least when what is at issue is gender nonconforming behavior by the employee? Is that cut off at the knees for any company asserting that it finds gender nonconformity immoral for religious reasons?
These are just some preliminary thoughts of the additional effects of the two cases--and I didn't even get into the government efficiency, corporate law, corporate personhood, or issues of religion also running through the one or the other decisions I'd love to hear thoughts on any of this in the comments or follow-up posts.
Monday, June 30, 2014
Burwell v. Hobby Lobby Stores, Inc., came down -- as expected -- as the last decision of this Term. And, as is often true of the final decisions of any Term, it was the usual 5-4 split -- albeit with a concurrence by Justice Kennedy that may caution against too broad an application of the majority opinion.
The Religious Freedom Restoration Act, of course, prohibits the federal government from imposing a substantial burden on "a person's exercise of religion" unless the government demonstrates that it has a compelling interest in doing so and that its method is the "least restrictive means" of furthering that compelling interest.
The Affordable Care Act, or at least the regulations promulgated pursuant to it, require most employers to provide comprehensive health insuance for their workers or, in the alternative, to pay a tax. Comprehensive insurance includes contraceptive coverage, which is itself objectionable to some religious observers; but others, while not opposing contraception per se, have religiously-based objections to methods they view as abortion. This was the position of the plaintiffs (two companies and their controlling individuals).
The majority, authored by Justice Alito, found little to argue about in this collision of RFRA and the ACA. Despite reams of ink spilled on the issue, he held that RFRA protects the religious interests of "persons" who direct closely-held corporations, even if the corporations as such are for profit and not explicitly religious. Second, the majority determined that ACA imposed substantial burdens on the plaintiffs since one of the companies would have to pay as much as $475 million per year if it failed to comply with the ACA mandate to provide insurance to its employees. Finally, although assuming -- without deciding -- that providing health insurance with contraceptive coverage furthered a compelling governmental interest, the Court held that the ACA scheme did not employ the least restrictive means of pursuing that objective. For the majority, the government's use of a different approach to "respect the religious liberty of religious nonprofit corporations" pointed the way to how the government could accommodate the religious liberty concerns of the plaintiffs.
The majority went to pains to describe its opinion as "very specific," rejecting the principal dissent (authored by Justice Ginsburg, who was joined in great part by Breyer, Kagan, and Sotomayor) which feared that the Court's construction of RFRA would open the door to for-profit corporations opting out of laws with which they disagree.
The principal dissent found RFRA did not reach the case before the Court: although the for-profit corporations might be "persons" within the meaning of the statute, they could not, as such, "exercise religion." The Court held otherwise, and, although it believed that large, publicly traded corporations are "unlikely" to assert RFRA claims, it did not rule out that possibility.
The majority opinion has a number of subsidiary points well worth considering, but maybe not in this post. For example, it purportedly refused to consider, as not properly raised, the argument that the plaintiffs were not burdened because the tax they would have to pay were they to discontinue insurance would be less than their cost savings. But it nevertheless "would find it unpersuasive" were it considered! And then there's the question of whether the religous objection to the contraceptive methods was "too attenuated." The Court's basic answer was that the judiciary doesn't pass on the plausibility of a religious claim.
Perhaps the most interesting aspect of the majority is its canvassing of less restricitive alternatives, including the government's providing the contraceptives in question to woman who need them. This would be "minor when compared to the overall cost of the ACA"! A true statement, but a bar that almost any alternative would meet. The Court, however, avoided deciding whether that alternative would suffice. Instead, it found sufficient the government's approach to contraceptive coverage for religious nonprofits. When the nonprofit has a religiously-based objection, its insurance company must provide such coverage to employees independently of the policy. In that context, the accommodation was viewed as win-win-win (contraceptivess for employees; no payment by the nonprofit; and the insurance company's costs would be less for contraception than for childbirth). The Court saw no reason that alternative could not be used for for profit corporations as well.
I said at the outset that Justice Kennedy's concurrence might be the most interesting part of the opinion. Although he joined the Alito opinion, thus creating a majority on the issue decided, his concurrence seemed to stress that the majority's opinion did not require the government to "create an additional program." Rather, all HHS needed to do was extend the accommodation already provided religious nonprofits to for profit companies with religious objections. That was a very different matter from a situation "in which it is more difficult and expensive to accommodate a governmental program to countless religious claims."
In short, whether or not the principal dissent is right as to the potential reach of the majority, Justice Kennedy clearly marked out a potential stopping point.
While we all digest today's rulings in Hobby Lobby and Harris v. Quinn, here is a brief look ahead to the next Term. An update on the cert petitions highlighted in my last post:
Cert was granted in EEOC v. Mach Mining. The question presented is "Whether and to what extent a court may enforce the Equal Employment Opportunity Commission's mandatory duty to conciliate discrimination claims before filing suit." The Seventh Circuit held that the EEOC's purported failure to conciliate was not judicially reviewable and could not be raised as a defense to a discrimination claim. This conciliation issue has been percolating in the lower courts for years, primarily in systemic cases. Both the employer and the EEOC urged the Court to grant cert in this case. Commissioner Feldblum offered her thoughts on the case in a guest post here.
Cert was denied in Family Dollar Stores v. Scott. We do not yet have a ruling on the cert petition in Young v. United Parcel Service. According to SCOTUSBlog, we can expect an order in that case tomorrow.
UPDATE: This morning the Court granted cert in Young v. UPS. This issue presented is: "Whether, and in what circumstances, the Pregnancy Discrimination Act, 42 U.S.C. § 2000e(k), requires an employer that provides work accommodations to non-pregnant employees with work limitations to provide work accommodations to pregnant employees who are “similar in their ability or inability to work.”
The Supreme Court just announced in Harris v. Quinn that it will not apply Abood to the employees at issue. In other words, the dissenting employees cannot be required to pay any dues. Interestingly, although the Court has lots of strong language questioning Abood, it refuses to overrule it. The key is that the employees here are "partial public employees," to whom Abood doesn't apply. Very odd distinction.
My guess is that the four Justices couldn't get Kennedy to join in overruling Abood. In fact, the language attacking Abood sounds a lot like a majority decision that was set to overrule it but was undercut by a change of heart by one Justice. Of course, it's impossible to know for sure (indeed, no Justices wrote a concurrence to overturn Abood), but it's possible that the ramifications of overruling Abood gave Kennedy (or others) pause. Among those, think about what would've been raised had Adood been overruled:
- The holding would liekly have been applied in the private sector. If opt-in was constitutionally required, it would almost certainly have applied to private workplaces, as long as the NLRB's enforcement of union security clauses is considered state action. However, the majority does briefly note that the issue is more troublesome in the public sector than in the private sector.
- Would overruling Abood open the door to minority (or "members only") collective-bargaining? This question goes to the heart of the exclusivity regime that, up to now at least, has been the foundation of modern American labor law. The NLRB has been reluctant to act on the arguments of Charlie Morris and others that the NLRA imposes on employers a duty to bargain with minority unions. If opt-in was the new regime, the Board might well have finally acted.
- Bye, bye duty of fair representation? If the Court held that is unconstitutional to require dissenting employees to pay for representation, would it also be unconstitutional to make unions provide services to those employees for free? Now that unions--like corporations--are basically people for First Amendment purposes (see also Hobby Lobby from today), the logical answer would be that the duty of fair representation to dissenters falls away.
- Building on the concept of stronger First Amendment protection for unions, there are several limitations on union expressive conduct/speech that would be open to challenge. The 8(b) restrictions on secondary boycotts and picketing are particularly vulnerable. Up to now, they have been upheld because they supposedly involve more conduct than speech and have economic impact. But those arguments seem to have lost their luster over the last few years in other contexts. Will unions finally be moved to go on the offensive with these arguments? (It would seem they have little to lose.) If so, will the Court be receptive?
All in all, public-sector (and probably private-sector) unions dodged a huge bullet today. Honestly, this is as good an outcome as unions could've realistically hoped for.
Saturday, June 28, 2014
Image from EEOC.gov
The EEOC recently settled an interesting national origin/religion harassment case with an Illinois based GMC/Cadillac car dealership. The complaint had alleged widespread harassment against three Arab Muslim workers. The allegations included that “managers allegedly used offensive slurs, such as 'terrorist,' 'sand n----r' and 'Hezbollah,' and made mocking and insulting references to the Qur'an and the manner in which Muslims pray." From the EEOC's press release:
“The affected employees will share $100,000 in monetary relief, and Rizza Cadillac will be taking affirmative steps to ensure a change in the work environment at the dealership, including providing training to all employees regarding compliance with Title VII; submitting periodic reports to the EEOC about any complaints of national origin or religious discrimination; and posting a notice regarding the outcome of the lawsuit on its employee bulletin board for two years.”
As this case demonstrates, national origin discrimination continues to be a problem and one that is continually monitored by the Commission.
-- Joe Seiner
Friday, June 27, 2014
This term at the Supreme Court has already seen some key labor and employment decisions, including a public employee speech case, Lane v. Franks; an ERISA decision involving the responsibilities of ESOP plan fiduciaries, Fifth Third v. Dudenhoeffer; and yesterday's Noel Canning decision, which invalidated the President's recess appointments to the NLRB made while the Senate was holding pro forma sessions.
Yet, Monday is shaping up to be a big day for labor and employment law at the Court. The Court has only two opinions remaining to be issued: the high-profile Hobby Lobby case involving a corporate employer's assertion of a religious freedom exemption from providing its employees with contraceptive health care coverage, and Harris v. Quinn, a public employee collective bargaining case that has potentially huge ramifications as detailed by Charlotte Garden here. Decisions in both of these cases are expected on Monday.
But, wait, there's more! Two employment discrimination cases await rulings on petitions for certiorari: Mach Mining v. EEOC and Family Dollar Stores v. Scott. The issue in Mach Mining is whether the EEOC's failure to adequately conciliate claims before filing suit can be raised as an affirmative defense. Both the employer and the EEOC have asked the Court to review the 7th Circuit's ruling that failure to conciliate cannot be raised as an affirmative defense, which created a circuit split. The Family Dollar case could, interestingly, involve the review of a Fourth Circuit ruling that denial of leave to amend a complaint was an abuse of discretion. The purported class action involved allegations of nationwide sex discrimination in pay, and the district court believed that Wal-Mart made an amendment futile. That case would raise questions about the reach of Wal-Mart; does it foreclose class certification in cases where discretion is exercised at higher management levels, or is it limited to the store manager level discretion that was at issue in Wal-Mart?
One potentially significant note on these two cases: both were relisted for yesterday's conference at the Court, after being scheduled for the June 19 conference. As SCOTUSBlog has detailed, the Court this term has a streak (or new practice?) of granting cert only for cases that have been relisted at least once. I will hold off on predictions for these cases, save this one: I think the petition in Mach Mining will be granted.
But wait, there's even more: thanks to Sam Bagenstos for noting that another pending cert petition had been relisted for yesterday's conference: Young v. United Parcel Service, a Pregnancy Discrimination Act case raising the issue whether an employer that provides accommodations to nonpregnant employees with work limitations must provide similar accommodations to pregnant employees who are "similar in their ability or inability to work."
A recent article at Fortune.com takes an interesting look at age discrimination in the technological sector. Silicon Valley is certainly one of those areas where youth is perceived as an advantage. One particular practice focused on in the article is the emphasis on hiring "new" college graduates, which can arguably be seen as a proxy for seeking younger workers. From the article:
"Apple..., Facebook, Yahoo, Dropbox, and video game maker Electronic Arts all recently listed openings with “new grad” in the title. Some companies say that recent college graduates will also be considered and then go on to specify which graduating classes—2011 or 2012, for instance—are acceptable. . . 'In our view, it’s illegal,' Raymond Peeler, senior attorney advisor at the Equal Employment Opportunity Commission, the federal agency that enforces workplace discrimination laws said about the use of “new grad” and “recent grad” in job notices. 'We think it deters older applicants from applying.'"
It is interesting how different sectors of the economy have distinct cultures that can raise problems under federal law. This will be an interesting issue to follow …
-- Joe Seiner
Thursday, June 26, 2014
The issue is whether courts should apply a presumption of prudence or reasonableness (sometimes called the Moench presumption based on a similar case by that name in another circuit court) when a company, like Fifth Third, decides to retain investments in its own securities for its ESOP (employee stock ownership plan) when the stock's price dropped 74 percent because of the company's involvement in subprime mortgage lending. The employees in the retirement plan claim they were never alerted to the company's new riskier investment course.
Participants in Fifth Third's ESOP filed an ERISA class action, asserting that the company's actions violated their fiduciary responsibilities to plan participants and beneficiaries by imprudently investing in company stock. Initially, the U.S. District Court for the Southern District of Ohio had determined that Fifth Third did not violate ERISA because plan fiduciaries are entitled to a “presumption of prudence” permitting investment in their own stock and the plaintiffs had not overcome that presumption by showing that the company had plausibly abused their discretion in investing the ESOP money in the company stock.
A unanimous Court reversed the Sixth Circuit and remanded for further proceedings. Justice Breyer wrote the opinion. From the Supreme Court's syllabus:
1. ESOP fiduciaries are not entitled to any special presumption of prudence. Rather, they are subject to the same duty of prudence that applies to ERISA fiduciaries in general, §1104(a)(1)(B), except that they need not diversify the fund’s assets, §1104(a)(2). This conclusion follows from the relevant provisions of ERISA. Section 1104(a)(1)(B) “imposes a ‘prudent person’ standard by which to measure fiduciaries’ investment decisions and disposition of assets.” Massachusetts Mut. Life Ins. Co. v. Russell, 473 U. S. 134, 143, n. 10. Section 1104(a)(1)(C) requires ERISA fiduciaries to diversify plan assets. And §1104(a)(2) establishes the extent to which those duties are loosened in the ESOP context by providing that “the diversification requirement of [§1104(a)(1)(C)] and the prudence requirement (only to the extent that it requires diversification) of [§1104(a)(1)(B)] [are] not violated by acquisition or holding of [employer stock].” Section1104(a)(2) makes no reference to a special “presumption” in favor of ESOP fiduciaries and does not require plaintiffs to allege that the employer was, e.g., on the “brink of collapse.” It simply modifies the duties imposed by §1104(a)(1) in a precisely delineated way. Thus, aside from the fact that ESOP fiduciaries are not liable for losses that result from a failure to diversify, they are subject to the duty of prudence like other ERISA fiduciaries. Pp. 4–15.
2. On remand, the Sixth Circuit should reconsider whether the complaint states a claim by applying the pleading standard as discussed in Ashcroft v. Iqbal, 556 U. S. 662, 677–680, and Bell Atlantic Corp. v. Twombly, 550 U. S. 544, 554–563, in light of the following considerations. Pp. 15–20.
(a) Where a stock is publicly traded, allegations that a fiduciary should have recognized on the basis of publicly available information that the market was overvaluing or undervaluing the stock are generally implausible and thus insufficient to state a claim under Twombly and Iqbal. Pp. 16–18.
(b) To state a claim for breach of the duty of prudence, a complaint must plausibly allege an alternative action that the defendant could have taken, that would have been legal, and that a prudent fiduciary in the same circumstances would not have viewed as more likely to harm the fund than to help it. Where the complaint alleges that a fiduciary was imprudent in failing to act on the basis of inside information, the analysis is informed by the following points. First, ERISA’s duty of prudence never requires a fiduciary to break the law, and so a fiduciary cannot be imprudent for failing to buy or sell stock in violation of the insider trading laws. Second, where a complaint faults fiduciaries for failing to decide, based on negative inside information, to refrain from making additional stock purchases or for failing to publicly disclose that information so that the stock would no longer be overvalued, courts should consider the extent to which imposing an ERISA-based obligation either to refrain from making a planned trade or to disclose inside information to the public could conflict with the complex insider trading and corporate disclosure requirements set forth by the federal securities laws or with the objectives of those laws. Third, courts confronted with such claims should consider whether the complaint has plausibly alleged that a prudent fiduciary in the defendant’s position could not have concluded that stopping purchases or publicly disclosing negative information would do more harm than good to the fund by causing a drop in the stock price and a concomitant drop in the value of the stock already held by the fund. Pp. 18–20.
692 F. 3d 410, vacated and remanded.
The Supreme Court today affirmed the D.C. Circuit's opinion in Noel Canning (Breyer wrote the unanimous decision, with Scalia writing a concurrence, joined by Roberts, Thomas, and Alito). However, the Court did not limit the President's recess appointment power as much as the appellate court, which had defined "recess" as only a forma inter-session recess and an opening that occured during the recess (not surprisingly, given that it was supported by a strict originalist reading of the recess clause, the concurrence agreed with the D.C. Circuit opinion). Instead, relying on historical practice extending over 150 years, the Court held that both inter- and intra-session recess appointments are valid as long as the recess was of "sufficient length." That length, according to the Court, is presumptively at least ten days. Moreover, the vacancy doesn't have to occur during the recess. The Board ultimately loses in Noel Canning because the pro forma recess at issue was only three days.
In sum, this is about as good as the NLRB could expect. The pro forma recess was always iffy and the NLRB can reconsider the now-invalidated decisions, as it did after New Process Steel (although the earlier invalidated cases were easier because two, ideologically different, members had agreed on them). As for the future, there are a couple of practical considerations. First, the President's recess appointment power is now largely determined by the houses of Congress, which can both control when, or if, there is a sufficient recess for appointment purposes. However, that control isn't absolute; the Court emphasized that if the Senate simply says it is in session isn't enough. That statement is given great deference, but if it "is without the capacity to act, under its own rules, it is not in session even if it so declares." Second, control over recesses doesn't matter as much as it did when the Court granted cert. in Noel Canning. Under the Senate's new filibuster rules, the President's power to appoint depends less on whether there is a recess and more on which party controls the Senate. If it's the President's party, there is no need for a recess appoinment, assuing no defections that change the outcome. If it's the other party, then the appoint is dead without getting agreement between both sides. All in all, this was a very interesting constitutional case that will waste a lot of hours of work at the NLRB, but is unlikely to have a big impact on appointments in the future, as long as the current Senate rules remain--no matter what many reports have been saying.
Wednesday, June 25, 2014
Image from eeoc.gov
The EEOC recently published an interesting news release about a settlement that the agency reached with Chapman University (San Diego) with regard to a race discrimination claim filed by a professor that failed to receive tenure from the business and economics school. The school agreed to pay $75,000 and provide other affirmative relief. From the press release:
"According to the consent decree settling the suit, aside from the monetary relief, Chapman agreed to designate an internal equal employment opportunity officer; train all [Chapman's George L. Argyros School of Business & Economics] employees on their rights and responsibilities on discrimination in the workplace; maintain a centralized system to track complaints by ASBE faculty members about denial of tenure and discrimination; revise its policies on discrimination and retaliation; and post a notice on the matter at ASBE. The EEOC will monitor compliance with the two-year consent decree."
It is very interesting to see the agency pursue these claims in the academic arena.
Tuesday, June 24, 2014
This is not directly a labor and employment law paper, but it should be of interest to those of us who teach these and other classes. Paula Schaefer (Tennessee) has posted on SSRN her article, A Primer on Professionalism for Doctrinal Professors, which be published in the Tennessee Law Review The absract:
Legal education reform advocates agree that law schools should integrate “professionalism” throughout the curriculum. Ultimately, it falls to individual professors to decide how to incorporate professionalism into each course. This can be an especially difficult task for doctrinal professors. The law — and not the practice of law — is the focus of most doctrinal casebooks. Law students typically do not act in role as lawyers in these classes, so they are not compelled to resolve professional dilemmas in class, as students would be in a clinic or simulation-based course. As a result, it takes some additional preparation and thought to introduce professionalism issues into these courses. Some professors may resist making this change — not knowing which aspect or aspects of professionalism should be the focus, fearing that time spent on professionalism will detract from the real subject matter of the class, or believing professionalism is adequately covered elsewhere in the curriculum.
This Article considers how and why doctrinal professors should address the challenge of integrating professionalism into the classroom. Part I briefly discusses the multitude of meanings ascribed to attorney professionalism and argues that the lack of a clear, concise, and shared definition is a substantial barrier to effectively incorporating professionalism into the law school curriculum. Next, Part II provides a more coherent, streamlined definition of attorney professionalism. This Part also identifies and describes three primary aspects of lawyer professionalism: fulfilling duties to clients, satisfying duties to the bar, and possessing core personal values essential to being a good lawyer. This simplified conception of professionalism should begin to address the concerns of professors who do not know where to begin to incorporate professionalism into their classes. It is also intended to persuade skeptics that professionalism is something they can and should teach as part of their doctrinal classes.
Thereafter, Part III provides guidance for developing course outcomes that connect course subject matter and professionalism. Questions prompt doctrinal professors to look for the natural connections between their course subject matter and issues of professionalism. Then, Part IV considers various methods doctrinal professors can use to introduce professionalism topics into their courses. Integrating professionalism into the classroom does not require professors to abandon their casebooks; using case law can be an effective method. This Part also considers other teaching methods and materials for combining doctrine, skills, and professionalism. Finally, Part V concludes with thoughts on how students benefit when professors make the effort to incorporate professionalism into every law school classroom.
Check out the article--it's really useful, especially for folks like me who still get chills thinking about the MPRE.
I recently posted on this blog a recent study of those states that provide paid leave to workers to care for themselves or a family member. As many of you likely saw, President Obama came out yesterday in support of this type of paid leave system on a federal basis. From the AP article:
"The president is touting paid maternity in the midst of a midterm election campaign focused on women voters, without describing the details of how he would fund such a system. 'If France can figure this out, we can figure this out,' Obama said."
It is interesting that this issue is now taking on a political dimension in the struggle to attract voters during the midterm elections. This will be an interesting issue to follow . . .
Monday, June 23, 2014
Some recent news items:
- The New York Times looks at what me the new Taylorism: the use of workplace surveillance to monitor workers and quantify their effectiveness.
- Serious allegations of illegal actions at popular Kum Gang San restaurant in New York. It's almost like someone wanted to see how many different ways they could violate FLSA.
- Union drive at Bloomberg Law fails. Also brings up possible tension between unions' willingness to press NLRB charges and the allegations of retaliation from employees.
- OSHA and NLRB enter into agreement to share information about charges that pass the OSHA statute of limitations, but may raise NLRA issues.
Hat Tips: Michael Duff, Alan Hyde, Patrick Kanvanagh