U.S. Supreme Court Issues Three Decisions Favorable to Employers

by Wilson Sonsini Goodrich & Rosati
Contact

By the end of this year’s term, the United States Supreme Court had issued three “employer-friendly” decisions. While the decisions do not dramatically alter the employment law landscape, employers will still welcome the rulings, as they generally make it more difficult to prevail in Title VII suits, as well as to pursue class actions in the face of an arbitration agreement that precludes class claims. The decisions also highlight the Court’s reluctance to construe and apply employment-related statutes in a broad fashion.

1. Court Opts for a Narrow Definition of “Supervisor” in Title VII Harassment Suits

In Vance v. Ball State, the Court addressed the proper test for determining who is a “supervisor” for purposes of Title VII harassment claims. In summary, this determination matters because a supervisor’s harassment can, under some circumstances, lead to “vicarious” or “strict” liability for an employer. The broader the definition, the easier it is for an employee alleging harassment to establish employer liability. In Vance, the employee alleged that her supervisor subjected her to racial harassment and discrimination. However, the lower court found that the person she alleged was responsible for harassing her was not her supervisor, and therefore the employee could not recover unless she proved that her employer was negligent in responding to her complaint, which the court said was not proved.

The Supreme Court set aside as ambiguous the U.S. Equal Employment Opportunity Commission’s definition of a “supervisor” as anyone who exercises discretion over an employee’s daily work. The Court ruled that an employer can only be strictly liable for an employee’s unlawful harassment “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.’” In doing so, the Court opted for a narrower definition of “supervisor,” requiring the individual in question to be “empowered by the employer to take tangible employment actions against” the employee.

In Title VII matters, the ruling in Vance is significant for employers because it limits the number of employees that can be deemed supervisors and, in turn, whose actions can subject an employer to strict liability. Following Vance,employers should review the job descriptions of those employees whose duties might make them candidates for the status of “supervisor,” and assess whether revisions are appropriate in the interest of reducing the potential for strict liability. It should be noted that in California (or any jurisdiction that defines “supervisor” differently under state law), the Vance decision will likely have little practical effect. The California Fair Employment & Housing Act defines “supervisor” more broadly and includes those employees that possess “the responsibility to direct” other employees, or effectively recommend certain actions. Similarly, other federal statutes have their own, broader constructions of the term “supervisor.” So, while Vance is generally a pro-employer decision, employers must nevertheless remain vigilant and attentive to employee co-worker interactions. In addition to adopting and following anti-harassment policies, training remains essential (in California many employers are required to provide such training for “all supervisory employees”). Employers should promptly respond to any harassment complaints, including investigating the complaints and taking appropriate remedial action.

2. Title VII Retaliation Claims Require a Showing of “But-For” Causation

In another Title VII ruling, the Court clarified that retaliation claims must be proved according to traditional principles of “but-for” causation rather than the lower “motivating factor” standard applicable to most status-based discrimination claims (e.g., discrimination based on race or gender). In University of Texas Southwestern Medical Center v. Nassar, the plaintiff claimed that he was denied permanent employment at a medical center after complaining about discrimination by his supervisor. In 1991, Congress amended Title VII by adding a new subsection to §2000e-2, which stated that “an unlawful employment practice is established when the complaining party demonstrates that race, color, religion, sex, or national origin was a motivating factor for any employment practice, even though other factors also motivated the practice.”1 In Nassar, the Court majority reasoned that Congress inserted the motivating-factor provision only with respect to status-based discrimination and not retaliation and, as such, acted deliberately in omitting retaliation claims from §2000e-2(m). Post-Nassar, “Title VII retaliation claims must be proved according to traditional principles of but-for causation, not the lessened causation test stated in §2000e-2(m)." 

According to the Court, proving Title VII retaliation claims will require “proof that the unlawful retaliation would not have occurred in the absence of the alleged wrongful action or actions of the employer”—in other words, proof that the desire to retaliate was the “but-for” cause of the challenged employment action. Such a standard will of course make it more difficult for Title VII plaintiffs to prevail on retaliation claims. Here too, however, state-law retaliation prohibitions may not hold employees to such a high standard. For example, in California, an employee wishing to prove retaliation generally does not need to prove that retaliatory animus was the sole (or “but-for”) factor motivating an adverse employment decision; the employee needs only to prove that it was a substantial or motivating factor. Therefore, prudent employers should remain mindful of the danger of retaliation claims, which often are worse than the underlying discrimination claims.

3. Court Upholds Enforcement of Arbitration Agreements Containing Class Waivers Even Where Cost of Arbitrating Individual Claims Would Be Prohibitively Expensive

In American Express Co. et al. v. Italian Colors Restaurant et al., a merchant sued American Express, alleging the violation of federal antitrust laws. The lower court of appeals rejected AmEx’s move to enforce the parties’ arbitration agreement that required the dispute to move forward as an individual arbitration, rather than the class action the plaintiff filed. The arbitration agreement expressly provided that “[t]here shall be no right or authority for any Claims to be arbitrated on a class action basis.” The Supreme Court reversed that decision, ruling that the Federal Arbitration Act requires courts to enforce arbitration provisions as written, including where they contain a class action waiver. The Court stated that this was true even if the cost of individually pursuing a federal statutory claim in arbitration will exceed the potential recovery and notwithstanding the fact that enforcing the arbitration agreement had the practical effect of denying an aggrieved party’s effective vindication of his or her federal rights. The Court made clear that only under narrow circumstances (e.g., fraud or duress in the formation of the agreement, or where Congress has dictated otherwise) will a class action waiver not be enforced. In reaching its result, the Court reiterated that arbitration agreements are a matter of contract and that courts must rigorously enforce them according to their terms, including terms specifying with whom the parties choose to arbitrate their dispute (e.g., an individual and not a class). A more detailed discussion regarding the effect of American Express on class arbitration waivers may be found here.

The use of class action waivers is on the rise, including by employers. Despite the fact that their use by employers in some jurisdictions (including California) remains uncertain and potentially risky, it is expected that American Express will accelerate the use of class waivers by employers with their employees. Post-American Express, employers opting for explicit class waivers in their arbitration agreements will have an easier time enforcing those agreements in most jurisdictions. In jurisdictions where the use of a class waiver raises questions as to the enforceability of the arbitration agreement even in the individual case, employers will need to assess whether that is a risk worth taking.

1 §2000e-2(m).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Wilson Sonsini Goodrich & Rosati | Attorney Advertising

Written by:

Wilson Sonsini Goodrich & Rosati
Contact
more
less

Wilson Sonsini Goodrich & Rosati on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!