Articles Posted in Labor & Employment Law

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Plaintiffs alleged that the Mount Lemmon Arizona Fire District terminated their employment as firefighters in violation of the Age Discrimination in Employment Act (ADEA). The District responded that it was too small to qualify as an “employer” under the ADEA, which provides that “‘employer’ means a person engaged in an industry affecting commerce who has twenty or more employees . . . . The term also means (1) any agent of such a person, and (2) a State or political subdivision of a State” 29 U.S.C. 630(b). The Supreme Court ruled in favor of the plaintiffs. Section 630’s two-sentence delineation and the expression “also means” establish separate categories: persons engaged in an industry affecting commerce with 20 or more employees and states or political subdivisions with no attendant numerosity limitation. Reading section 630(b) to apply to states and political subdivisions regardless of size gives the ADEA broader reach than Title VII, but this disparity is a consequence of the different language Congress chose to employ. The Court noted that the Equal Employment Opportunity Commission has, for 30 years, interpreted the ADEA to cover political subdivisions regardless of size, and a majority of the states impose age discrimination proscriptions on political subdivisions with no numerical threshold. View "Mount Lemmon Fire District v. Guido" on Justia Law

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If a union is designated as the exclusive representative of Illinois public sector employees it represents even those who do not join; individual employees may not be represented by another agent or negotiate directly with their employer. Nonmembers are required to pay an “agency fee,” a percentage of the full union dues to cover union expenditures attributable to activities “germane” to the union’s collective bargaining activities, but may not cover the union’s political and ideological projects. The union sets the agency fee annually and sends nonmembers notices explaining the basis for the fee. Janus, a state employee represented by a public-sector union, challenged the constitutionality of the state law authorizing agency fees. The Seventh Circuit affirmed the dismissal of his suit. The Supreme Court reversed, overruling its 1977 holding, “Abood,” as inconsistent with First Amendment principles. Illinois law compelled nonconsenting workers to subsidize the speech of other private speakers and cannot be justified by asserted interests in “labor peace,” which can readily be achieved through less restrictive means, or in avoiding “the risk of free riders,” because unions are willing to represent nonmembers without agency fees. Interests in bargaining with an adequately funded agent and improving the efficiency of the workforce do not suffice; unions can be effective without agency fees. The union speech at issue does not cover only matters of private concern but covers critically important public matters such as the state’s budget crisis, taxes, and collective bargaining issues related to education, child welfare, healthcare, and minority rights. The government’s proffered interests must, therefore, justify the heavy burden of agency fees on nonmembers’ First Amendment interests. They do not. The uncertain status of Abood, known to unions for years; Abood's lack of clarity; the short-term nature of collective-bargaining agreements; and the ability of unions to protect themselves if an agency-fee provision was crucial to operations, undermine the force of reliance on that decision. States and public-sector unions may no longer extract agency fees from nonconsenting employees. View "Janus v. State, County, and Municipal Employees" on Justia Law

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Congress adopted the Railroad Retirement Tax Act of 1937 in response to the Great Depression, federalizing private railroad pension plans. Private railroads and their employees pay a tax based on employees’ incomes; the federal government provides employees a pension often more generous than the social security system supplies employees in other industries. At the time of the Act’s adoption, railroads compensated employees not just with money but also with food, lodging, and railroad tickets. Railroads typically did not count these in-kind benefits when calculating an employee’s pension; neither did Congress in its new statutory pension scheme. Nor did Congress seek to tax these in-kind benefits, defining “compensation” as “any form of money remuneration.” Some railroads subsequently adopted employee stock option plans. The Supreme Court held that employee stock options are not taxable “compensation” under the Railroad Retirement Tax Act because they are not “money remuneration.” When Congress adopted the Act, “money” was understood as currency “issued by [a] recognized authority as a medium of exchange.” While stock can be bought or sold for money, it is not usually considered a medium of exchange. Congress wanted to tax monetary compensation in any of the many forms an employer might choose but did not want to tax things, like stock, that are not money. Congress knew the difference between “money” and “all” forms of remuneration and chose to use the narrower term in the context of railroad pensions. View "Wisconsin Central Ltd. v. United States" on Justia Law

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Despite employment contracts providing for individualized arbitration to resolve employment disputes, employees sought to litigate Fair Labor Standards Act claims through collective actions. The Federal Arbitration Act generally requires courts to enforce arbitration agreements, but the employees argued that its “saving clause” removes that obligation if an arbitration agreement violates some other federal law and that the agreements violated the National Labor Relations Act (NLRA). The National Labor Relations Board ruled that the NLRA effectively nullifies the Arbitration Act in such cases. The Supreme Court disagreed. The Arbitration Act requires courts to enforce the arbitration terms the parties select, 9 U.S.C. 2-4. The saving clause allows courts to refuse to enforce arbitration agreements only on grounds that exist for the revocation of any contract, such as fraud, duress, or unconscionability. The NLRA, which guarantees employees “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively . . . , and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection,” 29 U.S.C. 157, does not mention class or collective actions nor indicate a clear and manifest wish to displace the Arbitration Act. The catchall term “other concerted activities” should be understood to protect the things employees do in exercising their right to free association in the workplace. The Board’s interpretation of the Arbitration Act, which it does not administer, is not entitled to Chevron deference. View "Epic Systems Corp. v. Lewis" on Justia Law

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Encino Motorcars' current and former service advisors sought backpay under the Fair Labor Standards Act (FLSA) overtime-pay requirement, 29 U.S.C. 213(b)(10)(A). The requirement exempts “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements.” The Supreme Court reinstated the dismissal of the suit. Service advisors are “salesm[e]n . . . primarily engaged in . . . servicing automobiles." The ordinary meaning of “salesman” is someone who sells goods or services, and service advisors “sell [customers] services for their vehicles,” Service advisors are also “primarily engaged in . . . servicing automobiles.” “Servicing” can mean either “the action of maintaining or repairing” or “[t]he action of providing a service.” Service advisors satisfy both definitions. They meet customers; listen to their concerns; suggest repair and maintenance services; sell new accessories or replacement parts; record service orders; follow up with customers as services are performed; and explain the work when customers return for their vehicles. While service advisors do not spend most of their time physically repairing automobiles, neither do partsmen, who are “primarily engaged in . . . servicing automobiles.” The Ninth Circuit invoked the distributive canon—matching “salesman” with “selling” and “partsman [and] mechanic” with “[servicing]” but the word “or” is “almost always disjunctive.” Using “or” to join “selling” and “servicing” suggests that the exemption covers a salesman primarily engaged in either activity. FLSA gives no textual indication that its exemptions should be construed narrowly. View "Encino Motorcars, LLC v. Navarro" on Justia Law

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Somers alleged that Digital terminated his employment after he reported suspected securities-law violations to senior management. Somers sued, alleging whistleblower retaliation under the Dodd-Frank Act. The Ninth Circuit affirmed denial of a motion to dismiss. The Supreme Court reversed. Dodd-Frank’s anti-retaliation provision does not extend to an individual, like Somers, who has not reported a violation to the Securities and Exchange Commission. While the Sarbanes-Oxley Act applies to all “employees” who report misconduct to the SEC, any other federal agency, Congress, or an internal supervisor. 18 U.S.C. 1514A(a)(1), Dodd-Frank defines a “whistleblower” as “any individual who provides . . . information relating to a violation of the securities laws to the Commission, in a manner established, by rule or regulation, by the Commission,” 15 U.S.C. 78u– 6(a)(6). A whistleblower is eligible for an award if original information provided to the SEC leads to a successful enforcement action; he is protected from retaliation for “making disclosures that are required or protected under” Sarbanes-Oxley or other specified laws. An individual who falls outside the protected category of “whistleblowers” is ineligible to seek redress under Dodd-Frank, regardless of the conduct in which that individual engages. The statute’s retaliation protections, like its financial rewards, are reserved for employees who have done what Dodd-Frank seeks to achieve by reporting unlawful activity to the SEC. View "Digital Realty Trust, Inc. v. Somers" on Justia Law

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In 1998, CNH agreed to a collective-bargaining agreement (CBA), providing health care benefits under a group benefit plan to “[e]mployees who retire under the . . . Pension Plan.” “All other coverages,” such as life insurance, ceased upon retirement. The group benefit plan was “made part of ” the CBA and ran concurrently with it. The agreement contained a general durational clause stating that it would terminate in 2004 and stated that it “dispose[d] of any and all bargaining issues, whether or not presented during negotiations.” When the agreement expired, a class of CNH retirees sought a declaration that their health care benefits vested for life. In 2015, while their lawsuit was pending, the Supreme Court decided “Tackett,” requiring interpretation of CBAs according to “ordinary principles of contract law.” The Sixth Circuit concluded that the 1998 agreement was ambiguous and that extrinsic evidence supported lifetime vesting. The Supreme Court reversed. The Sixth Circuit erred in finding that the agreement was ambiguous based on a presumption, from pre-Tackett precedent, that lifetime vesting was inferred whenever “a contract is silent as to the duration of retiree benefits” and in declining to apply the general duration clause. Such inferences are inconsistent with ordinary principles of contract law. A contract is not ambiguous unless it is subject to more than one reasonable interpretation. View "CNH Industrial N. V. v. Reese" on Justia Law

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Under the Civil Service Reform Act, the Merit Systems Protection Board (MSPB) has the power to review certain personnel actions against federal employees. If an employee asserts rights under the CSRA only, MSPB decisions are subject to judicial review exclusively in the Federal Circuit, 5 U.S.C. 7703(b)(1). If the employee invokes only federal antidiscrimination law, the proper forum is federal district court. An employee who complains of a serious adverse employment action and attributes the action, in whole or in part, to bias based on race, gender, age, or disability brings a “mixed case.” When the MSPB dismisses a mixed case on the merits or on procedural grounds, review authority lies in district court, not the Federal Circuit. Perry received notice that he would be terminated from his Census Bureau employment for spotty attendance. Perry agreed to early retirement. The settlement required Perry to dismiss discrimination claims he had filed separately with the EEOC. After retiring, Perry appealed to the MSPB, alleging discrimination based on race, age, and disability, and retaliation for his discrimination complaints. He claimed the settlement had been coerced. Presuming Perry’s retirement to be voluntary, an ALJ dismissed his case for lack of jurisdiction. The MSPB affirmed, stating that Perry could seek review in the Federal Circuit. Perry instead sought review in the D.C. Circuit, which transferred the case to the Federal Circuit. The Supreme Court reversed. The proper review forum when the MSPB dismisses a mixed case on jurisdictional grounds is district court. A nonfrivolous claim that an agency action appealable to the MSPB violates an antidiscrimination statute listed in section 7702(a)(1) suffices to establish district court jurisdiction. Had Congress wanted to bifurcate judicial review, sending merits and procedural decisions to district court and jurisdictional dismissals to the Federal Circuit, it could have said so. View "Perry v. Merit Systems Protection Board" on Justia Law

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Ochoa worked in a physically demanding job for McLane, which requires new employees in such positions and those returning from medical leave to take a physical evaluation. When Ochoa returned from three months of maternity leave, she failed the evaluation three times and was fired. She filed a sex discrimination charge under Title VII of the Civil Rights Act. The Equal Employment Opportunity (EEOC) began an investigation, but McLane declined its request for names, Social Security numbers, addresses, and telephone numbers of employees asked to take the evaluation. After the EEOC expanded the investigation’s scope, it issued subpoenas under 42 U.S.C. 2000e–9, requesting information relating to its new investigation. The district judge declined to enforce the subpoenas. The Ninth Circuit reversed, holding that the lower court erred in finding the information irrelevant. The Supreme Court vacated. A district court’s decision whether to enforce or quash an EEOC subpoena should be reviewed for abuse of discretion, not de novo. The Court noted “the longstanding practice of the courts of appeals," to review a district court’s decision to enforce or quash an administrative subpoena for abuse of discretion. In most cases, the enforcement decision will turn either on whether the evidence sought is relevant to the specific charge or whether the subpoena is unduly burdensome under the circumstances. Both tasks are well suited to a district judge’s expertise. Deferential review “streamline[s] the litigation process by freeing appellate courts from the duty of reweighing evidence and reconsidering facts already weighed and considered by the district court,” something particularly important in a proceeding designed only to facilitate the EEOC’s investigation. Not every decision touching on the Fourth Amendment is subject to searching review. View "McLane Co. v. Equal Employment Opportunity Commission" on Justia Law

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Jevic filed for Chapter 11 bankruptcy after its purchase in a leveraged buyout. Former Jevic drivers were awarded a judgment for violations of state and federal Worker Adjustment and Retraining Notification (WARN) Acts, part of which was a priority wage claim under 11 U.S.C. 507(a)(4), entitling them to payment ahead of general unsecured claims. In another suit, a court-authorized committee representing unsecured creditors sued Sun Capital and CIT for fraudulent conveyance in the buyout; the parties negotiated a structured dismissal of Jevic’s bankruptcy, under which the drivers would receive nothing on their WARN claims, but lower-priority general unsecured creditors would be paid. The Bankruptcy Court reasoned that the proposed payouts would occur under a structured dismissal rather than an approved plan, so failure to follow ordinary priority rules did not bar approval. The district court and Third Circuit affirmed. The Supreme Court reversed. The drivers have standing, having “suffered an injury in fact,” or “likely to be redressed by a favorable judicial decision.” A settlement that respects ordinary priorities remains a reasonable possibility and the fraudulent-conveyance claim could have litigation value. Bankruptcy courts may not approve structured dismissals that provide for distributions that do not follow ordinary priority rules without the consent of affected creditors. Section 349(b), which permits a bankruptcy judge, “for cause, [to] orde[r] otherwise,” gives courts flexibility to protect reliance interests, not to make general end-of-case distributions that would be impermissible in a Chapter 11 plan or Chapter 7 liquidation. Here, the priority-violating distribution is attached to a final disposition and does not preserve the debtor as a going concern, nor make the disfavored creditors better off, promote the possibility of a confirmable plan, help to restore the status quo ante, or protect reliance interests. There is no “rare case” exception, permitting courts to disregard priority in structured dismissals for “sufficient reasons.” View "Czyzewski v. Jevic Holding Corp. " on Justia Law