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An Update on Supreme Court Labor and Employment Cases

By Damien Munsinger – April 23, 2015

Midway through its present term, the U.S. Supreme Court has already weighed in on several important labor and employment matters. Decisions about compensable time, retiree health benefits, and pregnancy discrimination have been issued, while critical questions about Equal Opportunity Employment Commission conciliation and religious accommodation await answers. Here is a quick breakdown of the top decisions and cases granted certiorari that all labor and employment lawyers should be aware of:

Integrity Staffing Solutions, Inc. v. Busk examined whether employees at a warehouse and order-fulfillment center for Amazon.com should be compensated for time spent in a daily security screening. In a procedure to prevent inventory theft, warehouse employees must line up and remove all metal from their persons before passing through a metal detector. This procedure took place after the hourly employees clocked out but before they left the warehouse facility. The two hourly workers who filed the class-action suit alleged that wait times to be searched reached 25 minutes at times.

While the district court found for the employer, the Ninth Circuit reversed and held that the time was compensable because the employer required the screening and because the screening was done for the employer’s benefit. The employer (joined by the federal government as an amicus) argued that the Ninth Circuit got the test wrong and that security screenings are not compensable because they are not “an integral and indispensable part of the principal activities” of the employees.

The Supreme Court reached the same conclusion as the district court and other circuits that have considered the issue. The Court held that the time spent in security screenings is not compensable because it is not an “integral” part of the job. Justice Thomas noted in his opinion that the warehouse employees were hired to pick and pack items for shipment to Amazon customers, not to undergo security screenings. Focusing on whether or not the employer required the activity, as the Ninth Circuit had done, was incorrect. Integrity Staffing builds on the Supreme Court’s January 2014 decision that time spent donning and doffing protective gear is not compensable.

M&G Polymers USA, LLC v. Tackett settled a circuit split on the duration of retiree health-care benefits. The Sixth Circuit had held that a collective bargaining agreement’s silence regarding the duration of retiree health benefits shows the parties intended such benefits to continue indefinitely. The Third Circuit, meanwhile, had held that retiree health-care benefits do not continue beyond the termination of a collective bargaining agreement unless the parties manifest a clear intention to the contrary. In the Seventh and Second Circuits, courts construing collective bargaining agreements look for language that could reasonably support an interpretation that benefits continue beyond the life of the agreement.

Two interesting amicus briefs were filed in this case, neither of which advocated a particular interpretation standard. The first brief provided context for the retiree health-care benefit issue by pointing out that several decades ago, when defined-benefit plans were the norm, retiree health-care costs were so minor as to be negligible. These benefits were commonly vested (they did not expire along with the collective bargaining agreement). Only after defined-contribution plans began to dominate defined-benefit plans, and health-care costs skyrocketed, did vested retiree health-care benefits become a rarity. The second amicus brief offered an empirical study of the types of language collective bargaining agreements employ and argued that most are silent or ambiguous as to the duration of retiree health benefits.

The Supreme Court found that the Sixth Circuit was wrong to place a thumb on the scales in favor of lifetime retiree health benefits and held that ordinary principles of contract interpretation should decide the issue. At oral argument, both sides argued that those principles favored their position. The Supreme Court did not actually apply any contract interpretation principles to the contested agreement before it; it merely remanded the case back to the Sixth Circuit.

The opinion by Justice Thomas cited several instances where the Sixth Circuit impermissibly favored employees when construing the agreement, suggesting that employers may have the upper hand when litigating whether retiree health benefits have vested. However, a concurrence penned by Justice Ginsburg and joined by Justices Breyer, Sotomayor, and Kagan highlighted several examples from the agreement that supported the employees when ordinary contract interpretation principles were applied.

Young v. United Parcel Service arose under the Pregnancy Discrimination Act and requires the justices to consider whether, and in what circumstances, an employer providing work accommodations to non-pregnant employees with work limitations must accommodate pregnant employees who are similarly situated as to their ability (or inability) to work.

A United Parcel Service (UPS) driver took leave to undergo a round of in vitro fertilization, which was successful. A medical restriction on lifting anything over 20 pounds prevented her from returning as a driver because lifting up to 70 pounds is an essential job function. UPS also determined she was ineligible for a light-duty assignment because pursuant to UPS policy and a collective bargaining agreement, light-duty was available only to employees injured at work, employees eligible for accommodation under the Americans with Disabilities Act (ADA), and employees who had lost their Department of Transportation certification. (UPS has since changed this policy.) The employee took unpaid leave and lost her medical coverage before her child was born.

The Fourth Circuit reasoned that the policy did not discriminate on the basis of sex because it “treats pregnant workers and nonpregnant workers alike” and that the driver’s situation was too different from the situation of those who were accommodated for accommodated individuals to qualify as similarly situated comparators. Therefore, the employee could not rely on or receive the more favorable treatment afforded workers with temporary lifting restrictions who had been injured at work, were eligible for ADA accommodations, or who had lost their Department of Transportation certification. As the Supreme Court considered the case, the Equal Employment Opportunity Commission signaled that it may issue new enforcement guidance on this exact issue.

A divided Supreme Court vacated the Fourth Circuit’s grant of summary judgment for UPS in an opinion by Justice Breyer. The Supreme Court held that the driver created a genuine dispute as to whether UPS provided more favorable treatment to other employees whose situation could not be reasonably distinguished from hers. The Supreme Court also held that a pregnant worker with indirect evidence of disparate treatment may make use of the McDonnell Douglas framework.

The following two cases have had oral argument before the Supreme Court, but as of this writing, no opinion has issued.

Mach Mining v. Equal Employment Opportunity Commission considers the congressionally mandated step-by-step plan the Equal Employment Opportunity Commission must use to enforce the Equal Employment Opportunity Act. One of those steps requires the commission, upon finding reasonable cause to support charging a violation of the act, to “endeavor to eliminate any such alleged unlawful employment practice by informal methods of conference, conciliation, and persuasion.” If the commission is unable to secure a satisfactory settlement during conciliation, it may then file suit.

After Mach Mining was accused of refusing to hire a miner because of her gender, the commission sued the company following an unsuccessful conciliation. Mach Mining asserted a “failure-to-conciliate” affirmative defense, arguing that the suit should be dismissed because the commission did not expend sufficient efforts toward conciliation. The district court found that the commission’s efforts toward conciliation were reviewable, but the Seventh Circuit reversed, finding that an alleged failure to conciliate is not an affirmative defense to a discrimination suit and that judicial review was unwarranted.

This case should resolve a persistent circuit split on whether the commission’s efforts at conciliation are subject to judicial review as an implied affirmative defense to a discrimination suit. Oral argument was heard on January 13, 2015.

Equal Employment Opportunity Commission v. Abercrombie & Fitch Stores, Inc., should determine how much knowledge an employer must have before the duty to explore whether a religious accommodation must be provided is triggered. The Tenth Circuit in this case held that only when an employer has “particularized, actual knowledge of the key facts” is the duty to accommodate triggered. Four other circuits have held that the duty to accommodate is triggered when the employer has sufficient understanding about an employee’s religious needs to understand that those needs may conflict with the employer’s practices.

Here, an applicant for a position as a “model” at an Abercrombie & Fitch clothing store wore a black headscarf during her job interview. The interviewer did not inquire, and the applicant did not state, that the headscarf was worn for religious reasons. However, the interviewer assumed that the headscarf was worn for religious reasons, and the applicant was not offered the job because of a company policy prohibiting store “models” from wearing “caps.” The district manager interpreted the policy to include headscarves.

While the district court granted summary judgment for the commission, on appeal the Tenth Circuit reversed, finding that the employer had inadequate notice of the need for an accommodation. This case should provide guidance on how to balance employees’ superior knowledge about their own religious beliefs with the employer’s superior knowledge about which company policies may be in conflict. Oral argument was heard on February 25, 2015.

Keywords: litigation, employment law, labor relations, Supreme Court, compensable time, retiree health benefits, pregnancy discrimination

Damien Munsinger is an associate with Barran Liebman LLP in Portland, Oregon.

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