As 2017 winds down, there are a few developments that may change the legal landscape for employers:
Class-Action Waivers in Employment Arbitration Agreements. Arbitration agreements, in which employees agree to submit disputes with their employer to arbitration rather than to court, have become common. Often, the agreement stipulates that all claims must be submitted on an individual basis, thus precluding class actions. The National Labor Relations Board (NLRB) opposes such class action waivers, arguing that they violate employees’ rights under the National Labor Relations Act (NLRA). Federal appellate courts are divided on the issue: the Fifth Circuit has held that such arbitration clauses are lawful, whereas the Seventh and Ninth Circuits have held that they are prohibited by the NLRA. On October 2, the U.S. Supreme Court heard arguments in three cases on this issue that have been consolidated before the Court. Depending on the Court’s decision, employers may need to revise their employment agreements.
Joint Employer Bill. The Save Local Business Act (H.R. 3441) is progressing through the House of Representatives with bipartisan support. This bill, if it passes, will restrict the definition of “joint employer,” thereby reversing the NLRB’s infamous Browning Ferris decision. “Joint employer” is the legal doctrine whereby one business can be held legally liable for the employment law violations of another business, such as a subcontractor or franchisee. In Browning Ferris, the NLRB held in 2015 that simply having the right to control another business’s workers, even if that right is never exercised, was sufficient to confer joint employer liability. The pending legislation would limit joint employer liability under both the NLRA and the Fair Labor Standards Act (FLSA) to businesses that actually control another business’s workers.
Evolving Policy for Transgender Employees. U.S. Attorney General Jeff Sessions has announced that Title VII’s prohibition on sex discrimination “does not encompass discrimination based on gender identity per se, including transgender status.” This announcement reverses the past administration’s policy that deemed employment discrimination against transgender individuals to be discrimination on the basis of sex in violation of Title VII. Under President Obama’s administration, the Equal Employment Opportunity Commission (EEOC) pursued several cases against employers for Title VII discrimination against transgender individuals. Attorney General Sessions’ pronouncement signals a departure from those enforcement efforts.
Employers still should be cautious in taking any adverse action against transgender or gay individuals, however, because several courts have held that Title VII does prohibit discrimination on the basis of gender identity and sexual preference. Even in jurisdictions where courts share Attorney General Sessions’ view, plaintiffs’ attorneys routinely file such cases, claiming that the employer discriminated against an individual because he or she failed to conform to gender stereotypes. The law is well-settled that discrimination based on gender stereotypes violates Title VII. Also, under current law, federal government contractors are prohibited from discriminating against applicants and employees based on sexual preference and gender identity (which includes transgender individuals).