Case On January 13 2017 the Supreme Court granted certiorari in three cases involving the validity of the National Labour Relations Board's (NLRB) position that Section 7 of the National Labour Relations Act prohibits arbitration agreements that require employment disputes to be arbitrated on an individual basis, thereby precluding class and collective actions. The Supreme Court's ruling will resolve a circuit split that started with the DR Horton case, with the Second, Fifth and Eighth Circuits rejecting the NLRB's position and the Seventh and Ninth Circuits siding with the NLRB.
Comment The three cases have been consolidated for argument. Ordinarily, a decision would be expected by the end of June, although that will depend on whether the Supreme Court – which has been operating without a ninth justice – is at full strength.
Decision In a case of first impression, the Fifth Circuit held on December 19 2016, in Pineda v JTCH Apartments LLC (15-19032), that prevailing plaintiffs in retaliation cases brought under the Fair Labour Standards Act may recover emotional distress damages. The plaintiff sued the owner of the apartment complex where he lived to recover overtime pay for maintenance work that he performed at the complex. After receiving notice to vacate his apartment shortly after filing his Fair Labour Standards Act claim, the plaintiff amended his complaint to add a retaliation claim. Although the plaintiff prevailed at trial on both claims, the district court refused to instruct the jury on – or allow it to award – emotional distress damages on the retaliation claim.
On appeal, the Fifth Circuit held that the district court had erred in refusing to instruct the jury that the plaintiff could recover emotional distress damages on his retaliation claim. Noting that several other circuits allow prevailing plaintiffs to recover emotional distress damages for retaliation under the Fair Labour Standards Act, the Fifth Circuit agreed that the "expansive" language of the act allowing "such legal or equitable relief as may be appropriate" includes the "compensation for emotional distress that is typically available for intentional torts like retaliatory discharge". Accordingly, the Fifth Circuit remanded the case for a new trial on the plaintiff's entitlement to emotional distress damages on his retaliation claim.
Comment The Fifth Circuit joins the First, Second, Sixth, Seventh and Ninth Circuits in allowing Fair Labour Standards Act retaliation plaintiffs to seek emotional distress damages. In addition to increasing the cost of defence by forcing the employer to investigate and litigate potentially complex and fact-intensive damages claims, the Fifth Circuit's ruling increases the employer's potential exposure because plaintiffs may now seek substantial emotional distress damages, even when the underlying economic damages are limited.
Decision On December 7 2016, in EEOC v St. Joseph's Hospital Inc, the Eleventh Circuit rejected the Equal Employment Opportunity Commission's (EEOC) position that the Americans with Disabilities Act of 1990 requires employers to reassign qualified individuals to a vacant position as a reasonable accommodation, so long as the individual is minimally qualified for the position. In its decision, the Eleventh Circuit held that disabled employees in need of a reasonable accommodation must compete with other qualified candidates for the vacancy.
In St Joseph's, the plaintiff was a nurse who needed to use a cane. The cane posed a safety hazard in the psychiatric ward where she worked, so she was given the opportunity to apply for other jobs, but without any preference due to her disability. After obtaining no other position, her employment was terminated and the EEOC brought suit on her behalf.
At summary judgment, the trial court held as a matter of law that the Americans with Disabilities Act does not mandate reassignment without competition and determined that there were genuine issues of material fact as to whether the plaintiff was entitled to reassignment to specific positions. After a jury trial that resulted in a defence verdict and a court-mandated mediation that did not result in a reinstatement, the EEOC appealed the trial court's summary judgment that the act does not mandate reassignment. On appeal, the Eleventh Circuit concluded that the act does not mandate non-competitive reassignment because the statute states that reasonable accommodations "may include", among other things, "reassignment to a vacant position", and the use of "may" implies that reassignment is reasonable in some circumstances, but not others.
Comment This decision adds to the existing circuit split regarding the question of whether the Americans with Disabilities Act requires reassignment without competition. The Eleventh Circuit's decision is consistent with decisions of the Fifth and Eighth Circuits, but is contrary to decisions of the Seventh, Tenth and DC Circuits, which agree with the EEOC's position. The Sixth Circuit has held that an employee needing reasonable accommodation is not entitled to preferential treatment in reassignment.
Decision In Augustus v ABM Security Services Inc, security guards filed a putative class action against their employer, claiming that it had failed to provide them with uninterrupted rest periods as mandated by California law because they were required to keep their radios and pagers on during rest breaks, to remain vigilant and to respond to emergencies. The trial court awarded a class of more than 14,000 guards approximately $90 million in damages for missed meal period premiums. The court of appeal reversed the decision, ruling that on-call rest periods do not violate California law.
A split California Supreme Court disagreed, holding that: "state law prohibits on-duty and on-call rest periods. During rest periods, employers must relieve their employees of all duties and relinquish any control over how employees spend their break time."
The court explained that "a rest period means an interval of time free from labour, work or any other employment-related duties". Accordingly, an employer cannot meet its rest period obligations by requiring employees to remain on-call because the employee is forced to remain "vigilant… and at the ready", which indicates a "broad and intrusive degree of control". The court explained that its ruling does not circumscribe "an employer's ability to reasonably reschedule a rest period when the need arises". Indeed, if a rest period is interrupted, an employer can provide a replacement rest period or pay the premium for the missed rest break, but such interruptions "should be the exception rather than the rule". In sum, California law requires employers to "relinquish any control over how employees spend their [rest] break time, and relieve their employees of all duties – including the obligation that an employee remain on call" because "[a] rest period, in short, must be a period of rest".
Comment The court's decision resolves ambiguity regarding the requirements of California's rest period statutes and provides employers with more clarity regarding their obligations to employees. Because the decision presents significant practical challenges for many employers, particularly those in industries where employees must be able to respond quickly to emergencies, some creativity will be needed to ensure both compliance with the law and public safety.
For further information on this topic please contact Grant T Miller, Andrea Maldonado Weiss or Ruth Zadikany at Mayer Brown LLP's Los Angeles office by telephone (+1 213 229 9500) or email (firstname.lastname@example.org, email@example.com or firstname.lastname@example.org). Alternatively contact Richard E Nowak at Mayer Brown LLP's Chicago office by telephone (+1 312 782 0600) or email (email@example.com). The Mayer Brown International LLP website can be accessed at www.mayerbrown.com.
Lori Zahalka assisted in the preparation of this update.
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