In the last two months, the U.S. Supreme Court has decided three different cases, all of which have significant implications for employers as discussed below.
1. Young v. UPS: Broad Pregnancy Accommodations at the Federal Level
Although many states’ laws already require broad accommodation policies for pregnancy related disabilities, the recent Supreme Court decision in Young v. UPS, indicates federal law favors and may require the same. In Young v. UPS, UPS denied a pregnant employee’s request for light duty assignment because she was “equivalent to an employee injured off the job,” and thus, did not qualify for light duty assignment under UPS’ accommodation policy. The employee, therefore, filed claims against UPS for violation of the Pregnancy Discrimination Act and for sex discrimination under Title VII. The District Court of Maryland found that UPS’ policy was not discriminatory and granted UPS’ Motion for Summary Judgment – because no similarly situated comparator was treated more favorably, and the employee could not show UPS’ non-discriminatory reason was pretext. The Fourth Circuit affirmed, and the employee appealed to the Supreme Court.
On March 25, 2015, the Supreme Court ultimately sided with the employee and remanded to give her another chance to prove that UPS violated the Pregnancy Discrimination Act. The Supreme Court found that if an employer accommodates some temporary disabilities, it must accommodate pregnancy and cannot treat pregnancy worse than it treats other temporary disabilities. Perhaps most importantly, this decision sets forth specific requirements for proving discrimination under the Pregnancy Discrimination Act. A plaintiff must show a pattern of unequal treatment by proving: (1) she sought an accommodation, (2) her company refused, and (3) the employer granted accommodations to others suffering from similar restrictions. Then, it becomes the employer’s burden to prove its reasons for excluding pregnancy disabilities from its accommodation policy were legitimate.
Takeaway: In addition to the states with laws already require broad pregnancy accommodation policies, employers in every state must now reevaluate the scope of their pregnancy disability policy to ensure pregnancy related disabilities are treated equally to other temporary disabilities.
2. EEOC v. Mach Mining: EEOC’s Conciliation Efforts Subject to Limited Judicial Review
The recent decision by the Supreme Court in Equal Employment Opportunity Commision v. Mach Mining establishes that “failure to conciliate” can be asserted as an affirmative defense by employers facing discrimination claims filed by the EEOC.
In Mach Mining, the Equal Employment Opportunity Commission filed a complaint for gender discrimination against Mach Mining. Title VII requires the EEOC to attempt to eliminate alleged unlawful employment practices “by informal methods of conference, persuasion and conciliation” before filing suit. Based on this requirement, Mach Mining asserted “failure to conciliate” as an affirmative defense, claiming the EEOC did not make a good faith attempt to conciliate as required by Title VII. The U.S. District Court’s Southern District of Illinois found that “failure-to-conciliate” was a proper affirmative defense. The Seventh Circuit, however, reversed, finding that failure to conciliate is not an affirmative defense because the statute does not provide for judicial review of EEOC’s conciliatory efforts; there is no standard to evaluate conciliation efforts; and review undermines conciliation efforts. Mach Mining then appealed to the Supreme Court.
On April 29, 2015, the Supreme Court unanimously held that “failure-to-conciliate” can be asserted as an affirmative defense, and courts may review whether the EEOC has fulfilled its statutory duty to conciliate discrimination allegations. However, the power to review is narrow. A court may only review the EEOC’s conciliatory efforts when presented with concrete evidence that the EEOC: (1) did not provide sufficient information about a charge, or (2) did not attempt to engage in a discussion about conciliating the claim. This holding resolves a multi-circuit split and clarifies the standard for reviewing the EEOC’s conciliatory efforts under Title VII.
Takeaway: This decision shows that when responding to a Title VII complaint by the EEOC, employers should pay close attention to whether the EEOC complied with the foregoing requirements to evaluate whether “failure to conciliate” is an appropriate affirmative defense.
3. Tibble v. Edison: ERISA Fiduciary Duties and Limitations Period Still Unclear
Unfortunately, the highly anticipated Supreme Court decision in Tibble v. Edison provides little insight or guidance on the broad, yet important, issues regarding the “continuing-violation” defense to the ERISA six-year limitation period and the scope of plan administrators’ fiduciary duties under ERISA.
In Tibble, the plaintiffs, on behalf of current and former 401(k) plan beneficiaries, claimed that Edison and its individual investment committee members violated their fiduciary duties of prudence by offering more expensive “retail class” shares of mutual funds, instead of relatively cheaper “institutional class” shares of the same funds. The U.S. District Court’s Central District of California granted summary judgment for the defendants, holding that, although the ERISA fiduciaries had acted imprudently by selecting more expensive retail-class shares, ERISA’s six-year statute of limitations barred plaintiffs’ claims. On appeal, the Ninth Circuit affirmed finding that the “act of the designating the investment for inclusion” triggers the six-year limitation period absent evidence that “changed circumstances.” The Supreme Court granted certiorari to decide the broad issue of whether the claim, that ERISA plan fiduciaries “breached the duty of prudence by offering higher priced retail-class mutual funds when the same investments were available as lower priced institutional-class mutual funds,” is barred by 29 U. S. C. §1113(1), when fiduciaries initially chose the higher-cost mutual funds as plan investments more than six years before the claim was filed.
On May 19, 2015, the Supreme Court vacated the Ninth Circuit’s ruling and remanded for additional consideration of the “fiduciaries’ ongoing duty to monitor” the prudence of its investments. The Supreme Court’s unusually concise opinion leaves much to be desired regarding these important issues and is restricted in the scope of its application. Specifically, the Supreme Court did not discuss whether ERISA recognizes a “continuing-violation” defense to the six-year limitation period; and its focus on the Uniform Prudent Investors Act indicates its holding may be limited to imprudent-investment claims with a clearly established, ongoing duty to monitor or where there is a recognized fiduciary duty of an ongoing nature.
Takeaway: Although continuing to reevaluate and monitor all plan investments is the best practice, it is important for plan administrators and investment committee members to keep an eye out for the forthcoming Ninth Circuit decision on remand, as it may offer guidance regarding judicial scrutiny of certain plan investments.