How Employers Fared With the Supremes This Term and What the Future May Hold


During its recently concluded 2013 term, the U.S. Supreme Court issued decisions in two labor and employment cases, three constitutional or quasi-constitutional cases that impact labor and employment concerns, and one tax case that is no surprise to employers.

Of these six decisions, and in stark contrast to the Executive branch's ever-increasing regulations and employee-friendly laws, only one decision expanded rights for employees and the holding was limited to its facts, for now. Four decisions (two of them unanimous) came out as wins for the employers.

The Employer "Wins"

Sandifer v. U.S. Steele Corp.: a unanimous Court found that it is lawful under the Fair Labor Standards Act for an employer and union to agree in a collective bargaining agreement that donning and doffing protective gear before and after a work shift is non-compensable time. The decision leaves little room for future controversies over this issue, but brings with it possible challenges to what constitutes "changing clothes," how much time suffices as a majority of time, and in what circumstances it would be appropriate to apply the de minimis doctrine, if any. Compensation for donning and doffing claims outside of the union context remains an open issue.

N.L.R.B. v. Noel Canning: another unanimous Court held that the President's NLRB appointments during a three-day Senate break were unconstitutional because they exceeded his powers under the recess appointments clause of Article II of the U.S. Constitution. As a result, a number of important decisions affecting employer and union rights may have to be reconsidered by the now properly-appointed Board.

Burwell v. Hobby Lobby Stores, Inc.: a close 5:4 decision held that the Affordable Care Act's contraceptive mandate violates religious freedom rights, codified by the Religious Freedom Restoration Act of 1993, of closely-held for-profit corporations that conduct business in conformity with the owners' religious principles. At least two questions remain for another day: (1) whether the decision can be stretched to invalidate other medical procedure requirements, and (2) whether the decision can reach companies owned by more than one family or to public entities owned by diverse shareholders.

Harris v. Quinn: another 5:4 decision in which the Court held that the fee-paying requirement under Illinois law—that quasi-public employee, non-union members pay dues to the public union—violates the First Amendment because the State's interest does not overcome the home care workers' right not to be forced to contribute to the union with which they disagree. The decision in this case can lead to future challenges by other quasi-government employees who are subject to similar public union fee requirements under other state statutes.

The Employee "Wins"

Lawson v. FMR: a 6:3 majority expanded the scope of liability for whistleblower retaliation claims by holding that the Sarbanes-Oxley Act of 2002 protects not only employees of public companies, but also protects employees of contractors and subcontractors of public companies from retaliation by their contractor-employers. The 4-justice majority opinion directed its holding as applied to the specific facts at hand—employees alleging retaliation by an employer-contractor of a public company after they complained about a covered fraud in the work they were doing under the contract for the public company that implicated the public company and its shareholders. However, two of the more conservative justices, Scalia and Thomas, submitted a separate concurring opinion wherein they interpreted the statute, as written, to afford much broader protection. Accordingly, private employers who contract with public entities must be more cautious when their employees complain.

U.S. v. Quality Stores: a unanimous Court held that severance payments by employers to employees that are not tied to the receipt of state unemployment benefits are wages subject to FICA (social security and Medicare) withholdings.

This term presented some differences from last term. In 2012, all five of the major decisions impacting labor and employment concerns were employer-friendly, but all five were the result of close 5:4 opinions. In light of the three unanimous decision and one 6:3 decision in 2013, one might speculate that the Court, at least on these issues, is becoming more united. This news will be good for employers if the balance remains in their favor through 2014.

Next Term

The Court has already granted five petitions related to labor and employment. The Court is continuing to hear more FLSA cases—likely a natural result of a burst in FLSA litigation in recent years. The Court will hear at least two FLSA cases—one regarding the compensability of time spent by hourly employees in security screenings (Integrity Staffing Solutions v. Busk) and one regarding the Department of Labor's authority to change its stance on the exempt status of a class of employees (mortgage loan officers) without going through the notice and comment procedure (Nickols v. Mortgage Bankers Ass'n).

Consistent with another trend in litigation, the Court also has granted a petition to hear a case challenging the Arkansas Department of Corrections' no-beard-growing policy under federal law and the First Amendment (Holt v. Hobbs). The Court last week granted certiorari in Young v. UPS to clarify an employer's obligation to provide accommodations under the Pregnancy Discrimination Act if it has an accommodation policy for disabilities and on-the-job injuries. It also granted certiorari in Mach Mining v. EEOC to decide a court's authority to enforce the EEOC's duty to conciliate discrimination claims prior to filing a lawsuit.

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.

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