Decisions Focus On Wage And Hour Issues, Fiduciary Duties And Union Dues

The U.S. Supreme Court recently concluded its 2006-2007 term. In the surge of decisions issued in the last few weeks of the term, the justices issued three decisions of interest for employers.

In the first case, Long Island Care at Home, Ltd. v. Coke (No. 06-593, June 11, 2007), the high court held that in-home health care providers are exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA) - even if the workers are employed by third parties. In reaching this holding, the justices refused to overturn a Labor Department regulation that set forth an exemption for "companionship" workers "employed by an . . . agency other than the family or household using their services."

In a unanimous opinion, Justice Stephen Breyer wrote "[w]here an agency rule sets forth important individual rights and duties, where the agency focuses fully and directly upon the issue, where the agency uses full notice-and-comment procedures to promulgate a rule, where the resulting rule falls within the statutory grant of authority, and where the rule itself is reasonable, then a court ordinarily assumes that Congress intended it to defer to the agency's determination."

The second case - Beck v. PACE International Union (No. 05-1448, June 11, 2007) - focused on the Employee Retirement Income Security Act (ERISA). In that case, the Supreme Court held that a bankrupt employer did not breach its fiduciary duties when it chose to purchase an annuity to terminate its pension plans rather than merge the plans into the union's multi-employer pension fund. The Court overturned an earlier decision issued by the Ninth Circuit after finding that the merger of single-employer plans into multi-employer plans is not a permissible method of plan termination.

The third and final labor and employment-related case decided by the high court was Davenport v. Washington Education Association (No. 05-1589, June 14, 2007). In two consolidated cases, the justices reviewed the constitutionality of a Washington state law that requires a union to obtain the "affirmative authorization" of non-members before spending any part of their agency fees for political purposes.

The Washington Supreme Court previously held that the law violated the union's First Amendment rights. The U.S. Supreme Court reached a different conclusion, however, finding that the law is simply a restriction on the union's exercise of its "extraordinary power" provided by the state to charge fees to public employees it represents who do not wish to join the union.