Articles Posted in SCOTUS

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On April 2, 2018, the U.S. Supreme Court held in Encino Motorcars, LLC v. Navarro that an auto dealership’s service advisors were exempt from overtime under the Fair Labor Standards Act (FLSA), which excludes “any salesman, partsman or mechanic primarily engaged in selling or servicing automobiles” from the FLSA’s overtime provisions. While the case turned on this fairly specific overtime exemption question, however, the Court’s decision has much greater implications, laying out a new standard for analyzing overtime exemptions under the FLSA and rejecting the longstanding precedent that FLSA exemptions be “narrowly construed” in favor of a broader “fair reading” standard.

The FLSA is a federal wage-and-hour statute which establishes, among other things, minimum wage and overtime requirements for covered employers. Under the FLSA, most employees are entitled to overtime premium pay—pay at one-and-a-half times the regular hourly rate for hours worked in excess of 40 in a given work week. Some workers, however, are exempt from the FLSA’s overtime provisions, including executives, administrative employees, learned professionals (such as doctors and lawyers), and creative professionals (such as musicians and actors), among a number of others.  Encino Motorcars dealt with a less common, more obscure FLSA exemption, set forth in § 213(b)(10)(A) of the FLSA, which states that “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements” is exempt from overtime under the FLSA.

In Encino Motorcars, a group of current and former service advisors at an auto dealership brought suit under the FLSA, alleging that they were owed back pay because their employer had misclassified them as exempt from overtime under the FLSA. The defendant then successfully moved to dismiss on the grounds that the plaintiffs fell within the “selling or servicing automobiles” FLSA exemption, which decision plaintiffs appealed to the U.S. Circuit Court of Appeals for the Ninth Circuit. The Ninth Circuit reversed the district court’s ruling, finding the language of the FLSA “ambiguous” and the legislative history “inconclusive.” Encino Motorcars then appealed the Ninth Circuit’s holding to the U.S. Supreme Court, which reversed and remanded in a 5-4 decision.

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On February 21, 2018, the U.S. Supreme Court ruled in favor of petitioner Digital Realty Trust (“Digital Realty”) in Digital Realty Trust Inc. v. Somers, narrowing the definition of “whistleblower” under the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act (“Dodd–Frank”). The decision clarifies that Dodd–Frank’s anti-retaliation provisions do not apply to employees who only report violations internally within their company. In order to be covered by Dodd–Frank’s employee whistleblower protections, employees reporting securities law misconduct must go to the Securities and Exchange Commission (SEC).

Dodd–Frank was passed in 2010 in response to the 2007–2008 financial crisis with the aim of increasing responsibility and transparency in the financial industry, ending bailouts and “too-big-to-fail” banks, and creating restrictions on abusive financial services practices that hurt consumers. The law made many significant changes to financial regulations in government agencies, banks, and other financial services entities, including creating whistleblower protections for those who report unlawful activities in the financial industry. As the SEC explains, Dodd–Frank “expressly prohibits retaliation by employers against whistleblowers and provides them with a private cause of action in the event that they are discharged or discriminated against by their employers in violation of the Act.”

In Digital Reality Trust, Paul Somers alleged that his former employer—Digital Realty, a real estate investment trust—terminated his employment after he internally reported suspected violations of securities law to Digital Realty’s management. Somers then brought suit against his former employer alleging whistleblower retaliation claims under Dodd–Frank, which Digital Realty moved to dismiss on the grounds that Somers was not covered by Dodd–Frank because he had brought his concerns only to internal management, not the SEC. The district court and U.S. Circuit Court of Appeals for the Ninth Circuit denied Digital Realty’s motion, allowing Somers’s whistleblower claim to proceed. Digital Realty then appealed to the U.S. Supreme Court, which reversed the Ninth Circuit’s decision and dismissed Somers’s Dodd–Frank whistleblower claim.

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Earlier this year, we reported on the Eleventh Circuit’s decision in Evans v. Georgia Regional Hospital affirming the dismissal of a former security guard’s claims that her employer had discriminated against her because she is a lesbian and did not conform to gender stereotypes. This Monday, December 11, 2017, the U.S. Supreme Court declined to review the Eleventh Circuit’s ruling in Evans, leaving unanswered the question of whether Title VII covers sexual orientation discrimination.

Plaintiff Jameka Evans, who is a lesbian, worked at an Atlanta regional hospital as a security officer. She was open about her sexual orientation with her coworkers and dressed in a masculine manner, wearing the men’s security guard uniform, men’s shoes, and a short haircut. According to Evans’s complaint, the hospital discriminated against her because of her sexual orientation and nonconformity with gender stereotypes by denying her equal pay, harassing her, physically assaulting her, and targeting her for termination, then retaliated against her after she complained about the discriminatory treatment.

Evans brought sex and sexual orientation discrimination claims in the U.S. District Court for the Southern District of Georgia under Title VII, which is a federal statute that protects employees against discrimination on the basis of sex, race, color, national origin, and religion.  The district court dismissed Evans’s sexual orientation discrimination claim, holding that Title VII “was not intended to cover discrimination against homosexuals,” and Evans appealed the ruling to the Eleventh Circuit.

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Leah Kessler

On Tuesday, November 28, 2017, the U.S. Supreme Court heard oral arguments in the case of Digital Realty Trust, Inc. v. Paul Somers. While the Supreme Court’s ruling on this case is not expected until next June, the outcome, as well as the arguments made this week, have serious ramifications for the accepted legal definition of “whistleblowing” and the protections that definition provides.

Paul Somers was the Vice President at Digital Realty Trust, Inc., from 2010 to 2014, during which time he filed reports to senior management about possible securities law violations by the company. When Digital Realty fired Somers, he filed suit in the U.S. district court for California, alleging that Digital Realty fired him for his reports of securities law violations in violation of the anti-retaliation protections created by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Dodd-Frank was passed in 2010 in the wake of the 2008 financial crisis and expanded the whistleblower incentives and protections under the 2002 Sarbanese-Oxley Act. (Here is a side-by-side comparison of these two whistleblowing acts, including both the definitions they use and the protections they provide.) Although the district court held Somers to be a “whistleblower” under the statute, and the Ninth Circuit affirmed the district court’s decision on behalf of Somers, Digital Realty appealed to the Supreme Court on the grounds that Somers was not a “whistleblower” as defined by Dodd-Frank because Somers did not report his concerns to the Securities and Exchange Commission (SEC) before he was terminated.

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Owen H. Laird, Esq.

We recently wrote about two labor and employment law cases that will be heard by the United States Supreme Court in its current session: Janus v. American Federation of State, County and Municipal Employees and Encino Motorcars, LLC, v. Hector Navarro, et al. These cases, however, were not the only labor and employment law cases submitted to the Court for certiorari. The Supreme Court only takes a small fraction of the cases that are submitted to it each year, and, this year, the Court elected not to weigh in on several significant employment law cases. Because the Court decided not to hear the appeals, the decisions of the circuit courts in those cases will stand.  Two cases in particular, Stevens v. Rite-Aid Corp. and Bartels v. 402 East Broughton Street Inc., could have a significant impact on employees.

In Stevens v. Rite-Aid Corp., the Second Circuit addressed the question of what constitutes an essential job function for the purposes of the Americans with Disabilities Act (ADA). The ADA prohibits discrimination in employment against a “qualified individual” on the basis of their disability. A “qualified individual” is defined as someone who, with or without reasonable accommodations, can perform the “essential functions” of their job. In short, employers may not discriminate against employees with disabilities that do not prevent job performance, but when an employee cannot perform the essential functions of the job, even with an accommodation, the employer can terminate the employee.

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Owen H. Laird, Esq.

The U.S. Supreme Court recently agreed to hear two cases that will have major ramifications for workers across the country. One case threatens one of organized labor’s most important rights, and the other impacts employees of car dealerships nationwide.

The Court agreed to hear arguments on Janus v. American Federation of State, County and Municipal Employees, which concerns a union’s right to take dues from non-members who are in the same bargaining unit as members the union represents. This issue of union dues has been long, and corporate interests have been successful in gradually rolling back organized labor’s ability to raise funds.

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Edgar M. Rivera, Esq.

Arbitration between employees and employers favors employers’ interests at employees’ expense. Ostensibly, arbitration merely requires that any employment claims be litigated in a private forum; in reality, it discourages employees from suing their employers because, as compared to litigation, employees are less likely to win and generally recover lower damages. As such, many employers require their employees to sign arbitration agreements.

Indeed, a report from the Economic Policy Institute has found that, since the early 2000s, the number of workers subject to mandatory arbitration has more than doubled, covering 60 million U.S. private-sector non-union workers. These agreements prevent 55 percent of U.S. workers from accessing the courts to protect their employment rights.  This figure increases to 65.1 percent among large companies—those with 1,000 or more employees.  Of the employers who require mandatory arbitration, 30.1 percent also include class action waivers in their procedures—meaning that about 25 million employees also lose the right to address widespread employment rights violations through class action.  For large companies, the number of employees subject to class action waivers increases to 41.1 percent. In total, 23.1 percent of private-sector non-union employees no longer have the right to bring or participate in a class action against their employers.

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Owen H. Laird

The Harman Firm blog has run several stories over the past year about the evolving case law concerning sexual orientation discrimination under Title VII of the Civil Rights Act.  Last week, a plaintiff in a sexual orientation discrimination case in the Eleventh Circuit, Evans v. Georgia Regional Hospital, requested that the United States Supreme Court take up the issue.

To recap: Title VII is one of the foundational federal anti-discrimination statutes; it protects employees against discrimination on the basis of sex, race, color, national origin, and religion.  Sexual orientation is not one of the protected statuses enumerated in Title VII.  In 2016, however, the U.S. Equal Employment Opportunity Commission (“EEOC”) – the federal agency tasked with administering Title VII – filed two lawsuits asserting sexual orientation discrimination claims under Title VII.  This was a major change, as both the EEOC and nearly every federal court had previously taken the position that sexual orientation discrimination was not prohibited under Title VII.

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Last week, on June 26, 2017, the U.S. Supreme Court denied plaintiff Richard Villarreal’s petition for a writ of certiorari, declining to review the U.S. Circuit Court of Appeals for the Eleventh Circuit’s decision in Villarreal v. R.J. Reynolds Tobacco Co., a case arising under the Age Discrimination in Employment Act of 1967 (ADEA). In Villarreal, the court was asked to consider whether the ADEA permits job applicants who have been disadvantaged in the hiring process because of their age to bring disparate impact claims. The Eleventh Circuit ruled against Villarreal, holding that the ADEA only creates a disparate impact cause of action for existing employees, not job applicants. The Supreme Court’s refusal to grant certiorari means that the Eleventh Circuit’s decision will stand and, for now, the issue will remain open to interpretation by lower courts and the other Circuits.

In 2007, Richard Villarreal applied for a position as a territory manager at R.J. Reynolds, a large tobacco manufacturer and distributor. R.J. Reynolds rejected Villarreal, who was 49 years old at the time, based on a set of standardized internal guidelines. These guidelines stated that the ideal candidate for the territory manager position would be “2–3 years out of college” and instructed reviewers to “stay away from” applicants whose résumés stated that they had been “in sales for 8–10 years.”

In April 2010, attorneys who had learned of R.J. Reynolds’s hiring guidelines contacted Villarreal, informing him that the company’s refusal to hire him might constitute age discrimination. Villarreal filed a charge of discrimination with the Equal Employment Opportunity Commission (EEOC) shortly afterward. Over the next two years, Villarreal applied for employment at R.J. Reynolds five more times, always without success.

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Owen H. Laird, Esq.

Today, the United States Senate will hold its second day of confirmation hearings for Supreme Court Nominee Neil M. Gorsuch. Judge Gorsuch currently serves on the United States Court of Appeals for the 10th Circuit. Although his confirmation hearings have been contentious, President Trump’s nominee is likely to be confirmed, as Republicans control enough votes in the Senate to do so. As the Supreme Court is presently split 4-4 between liberal and conservative Justices, Judge Gorsuch would likely represent the swing vote on the Court.

Judge Gorsuch has a long history of judicial decisions and legal writing to parse for clues as to what type of a Supreme Court Justice he might be. Putting aside some of the judicial issues that have received more attention recently—such as abortion, gay marriage, healthcare, use of force by the police—the incoming Supreme Court Justice will have a significant impact on the state of employment law in the U.S. in light of the Court’s current mixed political makeup.

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