Earlier this year, we wrote about some of the major cases and legal developments for employers to watch in 2023. With the start of the U.S. Supreme Court's new term last month, we are back to provide insight into the next round of potential legal developments employers should watch for.
Before diving into the issues currently under review by the Supreme Court, we first provide some brief updates on the legal developments we previously highlighted.
Where Are They Now?
- According to a report by Bloomberg Law, the Federal Trade Commission's vote on the final version of its proposed rule that, if enacted, would amount to a nearly complete nationwide ban on employers' use of non-compete agreements, is delayed until April 2024 because of the volume of public comments received following an extension of the comments period from March 20, 2023 to April 19, 2023.
- However, the Court stated that an employee who is paid a daily rate may still satisfy the "salary basis" requirement for exemption, but only if (1) they are guaranteed at least $455 per week, and (2) the "guaranteed amount" bears a "reasonable relationship" to the "amount actually earned."
- On June 1, 2023, the Supreme Court decided Glacier Northwest, Inc., d/b/a Calportland v. International Brotherhood of Teamsters Local Union No. 174 and held that the National Labor Relations Act (NLRA) does not preempt an employer's state-law tort claim alleging that a union intentionally destroyed the company's property during a labor dispute. The Court held that employees' right to strike under the NLRA is limited when workers fail to take "reasonable precautions to protect their employer's property from foreseeable, aggravated, and imminent danger due to the sudden cessation of work."
- On June 29, 2023, the Supreme Court decided Students for Fair Admissions, Inc. v. President and Fellows of Harvard College, and Students for Fair Admissions, Inc. v. University of North Carolina et al., holding that the affirmative action admissions programs used by Harvard and the University of North Carolina violate the Fourteenth Amendment's Equal Protection Clause because they do not satisfy the strict scrutiny requirements to pass constitutional muster.
- On June 30, 2023, the Supreme Court ruled in 303 Creative LLC v. Elenis that Colorado could not enforce its nondiscrimination law against a website designer who declined to create wedding websites for same-sex couples. The Court held that to compel the website designer to offer her services to LGBTQ+ customers would impermissibly infringe on the designer's constitutional right to speak freely under the First Amendment's Free Speech Clause.
The Supreme Court has once again been asked to weigh in on several important issues that may have far-reaching implications for employers. Below we highlight some of these.
Potential Limits on Who Can Bring an ADA Accessibility Lawsuit
The Supreme Court in Acheson Hotels v. Laufer has been asked by a Maine hotel to determine whether a self-appointed "accessibility tester" who goes from business to business looking for alleged violations of the Americans with Disabilities Act (ADA) has standing to sue for such alleged violations despite having no intent of actually visiting the business. Typically, a party has standing to bring a lawsuit only when they have suffered a particularized injury and not merely a generalized grievance shared widely by many other people. The basis of the plaintiff's lawsuit in Acheson Hotels was the hotels' alleged failure to detail on their website the accessible features in the hotel and guest rooms to allow individuals with disabilities to determine whether the hotel or guest rooms meet their accessibility needs. The hotel argued that this alone was insufficient to constitute an injury giving the plaintiff standing to sue. In reversing the district court's ruling in favor of the hotel, the U.S. Court of Appeals for the First Circuit held that the plaintiff suffered an injury sufficient to confer standing by the mere lack of accessible information on the hotel's website, notwithstanding that plaintiff had no intent of staying at the hotel.
If the Court rules in favor of the hotel, "testers" may find themselves limited in the types of civil rights lawsuits they can bring. However, a ruling in favor of the plaintiff could have dangerous implications for long-standing principles of constitutional standing, potentially broadening the scope of who has a right to bring certain types of lawsuits.
Forced Lateral Transfers Based on Gender Bias
Title VII of the Civil Rights Act of 1964 prohibits an employer from "discriminat[ing] against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin." The Supreme Court in Muldrow v. St. Louis will decide whether an employee's forced lateral transfer to a different job rises to the level of an adverse employment action in violation of Title VII, regardless of whether the transfer negatively alters the employee's compensation, terms, conditions, or privileges of employment. The district court and the Eighth Circuit Court of Appeals ruled in favor of the St. Louis Police Department and held that Title VII bars only adverse employment actions that result in "a material employment disadvantage" for the employee. In dismissing the plaintiff's claims of discrimination based on gender bias, the lower courts concluded that the forced transfer was not actionable under Title VII because plaintiff's rank, pay, and responsibilities in her new position were similar to those of her old one. The district court and Eighth Circuit found it immaterial that the transfer resulted in minor changes in the conditions of the plaintiff's employment.
The Court's decision in Muldrow is expected to resolve a circuit court split concerning whether a forced transfer alone rises to the level of an adverse employment action under Title VII. Thus, the implications for employers resulting from this decision will vary. But regardless of how the Court rules, its decision should provide clarity on the types of actionable employment decisions that violate Title VII and the standard for bringing a Title VII action.
Chevron Deference to Agencies May Be at Risk
The Supreme Court in Loper Bright Enterprises v. Raimondo will consider whether to overrule, or at least clarify, the long-standing Chevron doctrine that courts should defer to agencies' reasonable interpretations of ambiguous laws. Under Chevron, the federal agency that administers and enforces a law typically has the power to interpret any ambiguities in that law, and courts should defer to reasonable interpretations by the agency. Such deference has received considerable criticism as affording administrative agencies inappropriate power. In Loper, a group of commercial fishing companies challenged a rule issued by the National Marine Fisheries Service (NMFS) that requires the fishing industry to pay for monitors. At issue was whether the federal law permitting NMFS to require monitors to collect fishery conservation and management data was ambiguous as to who is required to pay for the monitors where the law did not explicitly state the responsible party. Applying Chevron, the Court of Appeals for the D.C. Circuit held that the law was ambiguous and deferred to the agency on this issue, finding the agency's decision was reasonable.
If the Court overrules Chevron, it could have far-reaching implications for employers that deal with administrative agencies. For example, regulations and rules issued by administrative agencies could come under greater legal scrutiny, potentially invalidating clarity previously afforded to ambiguous laws. However, not all potential implications are negative. Because administrative agencies are given broad deference in interpreting laws, it is not uncommon for an agency's burdensome interpretation to go unchallenged. Removing, or limiting, the deference afforded to agencies could open more avenues for employers to challenge such interpretations.
Whistleblowers May Be Required to Prove Retaliatory Intent
Under the Sarbanes-Oxley Act, whistleblowers are protected from discrimination and retaliation when they report financial wrongdoing. In Murray v. UBS Securities, LLC, the Supreme Court is expected to decide the standard employees must meet to prove retaliation under Sarbanes-Oxley: specifically, whether a whistleblower must prove retaliatory intent. The applicable standard for these claims differs among the federal appeals courts, with some applying a higher "retaliatory intent" standard and others applying a lower standard requiring whistleblowers to show only that their activity was a contributing factor in the adverse employment action taken against them.
The Court's decision in Murray could resolve the differing standards applied by federal appeals courts. While this decision will be limited to whistleblower retaliation claims under the Sarbanes-Oxley Act, the Court's decision could eventually reach further into other areas of law that provide protections to whistleblowers.