On September 28, 2017, the U.S. Supreme Court granted certiorari in two cases with labor and employment implications.
In the first case, Janus v. American Federation of State, County, and Municipal Employees, Council 31 (Case No. 16-1466), the court has agreed—again—to take on the question of whether public-sector employees can be forced to pay union dues as a condition of their employment. The plaintiff in Janus seeks to overturn the Supreme Court’s 1977 decision in Abood v. Detroit Board of Education, which held that that public school teachers can be required to pay their fair share of the costs the union is required by law to incur in negotiating and administering collective bargaining agreements on behalf of all teachers it represents, even though teachers cannot be required to join a union or contribute to its lobbying expenditures. The Court will consider whether this type of arrangement (known as an “agency shop”) violates the First Amendment rights of public-sector employees, who may not personally support the union but are forced to fund its efforts.
Interestingly, the same challenge to Abood was posed to the court just last year, in Friedrichs v. California Teachers Association.1 The court heard oral argument in that case in January of 2016. The Court’s more conservative justices, led by Justice Scalia, appeared ready and willing to overrule Abood. Justice Scalia died suddenly only a few weeks later, however, before the Court announced a decision. Stymied by a 4-4 tie among the remaining justices, the Court abandoned the issue, leaving the lower court’s ruling (which followed Abood) intact. Justice Gorsuch, who filled Justice Scalia’s seat, is likely to follow in his predecessor’s footsteps. As a result, the Court may be poised to overrule Abood. This would be a significant blow to labor unions.
The second case added to the docket, Encino Motorcars, LLC v. Navarro (Case No. 16-1362), raises a question under the Fair Labor Standards Act (FLSA) and is back before the Court for another round of scrutiny, after a remand last year. The case concerns an overtime exemption under the FLSA that applies to automobile dealership employees who work as salesmen, partsmen, or mechanics “primarily engaged in selling or servicing automobiles, trucks, or farm implements.”2 Plaintiffs include a handful of a dealership’s “service advisors,” who sell maintenance and repair services but not vehicles. In response to their claim for allegedly unpaid overtime compensation, their employer asserted the exemption in question. In a June 20, 2016, opinion, the Court addressed whether the parties could rely on certain interpretations of the exemption issued by the Department of Labor. In the 6-2 opinion, the Court took issue with the fact that the Department gave little explanation for its 2011 decision to abandon its decades-old practice of treating service advisors as exempt. After reaching “the unavoidable conclusion” that the 2011 regulation was issued “without the reasoned explanation that was required,” the Court sent the case back to the U.S. Court of Appeals for the Ninth Circuit to decide whether the exemption indeed applied.
On remand, the Ninth Circuit held that service advisors do not fall within the exemption applicable to salesmen, partsmen, or mechanics. In reaching this conclusion, the appellate court disagreed with prior holdings out of the Fourth and Fifth Circuits, as well as the Supreme Court of Montana, thus creating a circuit split.
No dates have been set for oral argument in Janus and Encino Motorcars. Meanwhile, the U.S. Supreme Court will be entertaining three other employment cases this term—Epic Systems Corp. v. Lewis, Ernst & Young LLP v. Morris, and NLRB v. Murphy Oil USA—all of which raise the same question. The court will hear argument in these matters on October 2, 2017, as to whether Section 7 of the National Labor Relations Act prohibits employers from requiring employees to agree to waive class and collective actions in arbitration.
We will continue to monitor and report developments in these key cases as the Court’s term plays out.