The United States Supreme Court has granted certiorari in several employment cases in the past year, and the Court’s upcoming decisions may have a significant impact on employers’ exposure to liability under the federal anti-discrimination statutes and the Fair Labor Standards Act. This update summarizes four key employment cases currently pending in the Supreme Court, the outcomes of which will likely have a very wide effect on employers.

  1. Vance v. Ball State University – Definition of “supervisor” under Title VII

The Court will resolve a circuit split over the definition of the term “supervisor” for purposes of Title VII of the Civil Rights Act of 1964 (Title VII) in Vance v. Ball State University, No. 11-556, cert. granted, June 25, 2012. The Court’s decision may broaden the category of individuals whose conduct can be imputed to an employer as a basis for Title VII hostile work environment claims, thereby increasing employers’ exposure to liability for such claims.

The Vance case is on appeal from the Seventh Circuit, where the court determined that to be a “supervisor” with respect to a Title VII harassment claim, an individual must have the power to hire, fire, demote, promote, transfer, or discipline an alleged victim. The Seventh Circuit’s narrow definition is in contrast with the standard applied in the Second Circuit and supported by the Equal Employment Opportunity Commission (EEOC), under which a “supervisor” is any individual who has authority to direct an alleged victim’s daily work activities. Vance and the University urged the Supreme Court during oral argument to adopt the broader Second Circuit standard. Ball State asserted that even under the broader standard, it would not be liable for harassment on the facts of Vance’s case.

The Court’s resolution of this issue will affect an employer’s potential exposure in a Title VII harassment case. Under the Supreme Court’s landmark decisions in Faragher v. City of Boca Raton, 524 U.S. 775 (1998) and Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1998), if an employee is deemed a “supervisor” under Title VII, then that individual’s conduct will be imputed to the employer for purposes of liability. If a supervisor has created a hostile work environment for another employee, the employer can avoid liability if it had an effective anti-harassment policy in place, and the victim unreasonably failed to take advantage of that policy. In contrast, if the alleged harasser is not a “supervisor,” then the employer will be liable only if the plaintiff can prove that the employer failed to take reasonable measures to stop the harassment. A Supreme Court decision adopting the broader standard would increase the number of individuals who could be deemed a “supervisor” and accordingly increase an employer’s exposure to liability for hostile work environment claims.

  1. University of Texas Southwest Medical Center v. Nassar – “Mixed motive” claims under federal statutes

Oral argument is scheduled on April 24, 2013 in University of Texas Southwestern Medical Center v. Nassar, No. 12-484, cert. granted Jan. 18, 2013, which presents the question whether Title VII retaliation claims and bias claims under other similarly worded federal statutes require an employee to prove that an adverse employment action would not have occurred “but for” the employer’s improper motive, or whether the law only requires proof that an improper motive was one of several reasons for the adverse action (so-called “mixed motives”). Because “mixed motives” is a lower hurdle for plaintiffs to clear, the Court’s decision could have a far-reaching impact on employers’ exposure in retaliation suits and bias suits brought under other federal laws, including the Americans with Disabilities Act (ADA), the Family Medical Leave Act (FMLA), and the whistleblower provisions of other statutes.

Under existing law, employees are permitted to advance mixed-motive theories in establishing discrimination under Title VII. This rule is based on a 1991 amendment to Title VII’s discrimination – but not retaliation – provisions, which provides that a protected characteristic (such as race, gender, etc.) need only be a “motivating factor” to create actionable conduct. (The amendment followed the Supreme Court’s decision in Price Waterhouse v. Hopkins, 490 U.S. 228 (1989), which first allowed a mixed-motive framework in a Title VII discrimination case.) In contrast, the Age Discrimination in Employment Act (ADEA) prohibits discrimination “because of” an individual’s age. Relying in large part on this statutory language, in 2009 the Supreme Court held that ADEA plaintiffs could not establish unlawful age discrimination without proof of “but-for” causation. Gross v. FBL Financial Services, Inc., 557 U.S. 168 (2009).  

The First, Sixth, and Seventh Circuits have construed Gross to mean that unless Congress specifies otherwise, federal employment statutes with provisions that mirror the “because of” language of the ADEA require “but-for” causation. However, the Fifth and Eleventh Circuits have limited Gross to the ADEA and held that federal statutes with similar language require the employee to show only that an improper motive was a motivating factor behind the employer’s action – the “mixed motive” standard.

The Court now has an opportunity to clarify which standard applies to Title VII’s retaliation provision and federal employment statutes such as the ADA and FMLA. If the Court limits the “but-for” test of Gross to the ADEA and allows the lower “mixed motive” standard to govern such claims, it will increase employer exposure to liability for Title VII retaliation and other federal employment law violations.  

  1. Genesis HealthCare Corporation v. Symczyk – Offers of judgment in FLSA collective action cases

An employer’s ability to moot a putative collective action under the Fair Labor Standards Act (FLSA) is at issue in Genesis HealthCare Corporation v. Symczyk, No. 11-1059, cert. granted June 25, 2012. In this case, the employer made an offer of judgment to the named plaintiff under Federal Rule of Civil Procedure 68 on an amount admitted to equal or exceed all her claimed damages – before she sought class certification and before any other plaintiffs had opted into the action. The Supreme Court will decide whether this unaccepted offer of judgment renders the case moot under such circumstances, where the sole plaintiff was offered full relief.  

Under the FLSA, a plaintiff who wishes to proceed on a class basis must move the court for certification of the suit as a “collective action.” Unlike class actions brought under Federal Rule of Civil Procedure 23, where individuals who are members of the proposed class are bound by a class-based determination unless they opt out of it, the FLSA requires individual members of the proposed class to “opt in” to the collective action in order to participate and be bound. In this case, Symczyk brought a putative FLSA collective action against Genesis relating to its automatic meal break deduction policy. But she had not yet moved for her claims to be certified as a collective action, nor had any other plaintiffs opted in to the suit, when Genesis made her an offer for US$7,500 that would have covered all of her claims. The Third Circuit held that this offer did not moot Symczyk’s suit.

During oral argument in the Supreme Court, Genesis asserted that cases should not remain on the docket when there is no plaintiff with an interest. In contrast, the plaintiff argued that the offer was insufficient because (1) she did not accept it and had received no money from Genesis, and (2) courts should be required to consider whether there are similarly situated plaintiffs before dismissing FLSA collective action suits.  

A Court decision accepting the employer’s reasoning that such offers of judgment can moot putative collective actions under the FLSA would improve the outlook for employers targeted with these high-cost and high-risk lawsuits. In that case, an employer willing to pay a relatively small amount to one or a small number of named plaintiffs could make an offer of judgment to avoid protracted and expensive litigation as well as potential class-wide liability, unless other employees step forward to be substituted as plaintiffs.

  1. Sandifer v. U.S. Steel Corporation – “Changing clothes” for purposes of FLSA Section 203(o)  

In another FLSA case, Sandifer v. United States Steel Corporation, No. 12-417, cert. granted Feb. 19, 2013, the Supreme Court will address the definition of “changing clothes” under Section 203(o) of the FLSA, which allows employers to stipulate in a collective bargaining agreement that time spent “changing clothes” will not be compensable work time. The Court’s definition will resolve the uncertainty in the meaning of this term caused by the Department of Labor’s and many courts’ shifting interpretations of the language over the past several years.

The plaintiffs in Sandifer are workers required to wear personal protective equipment to perform their jobs, including flame-retardant garments worn outside of their clothing, goggles, ear plugs, and hard hats. They claimed that these types of equipment are not “clothes” for purposes of the 203(o) exemption, and therefore that time spent donning and doffing the equipment should be compensable. The Seventh Circuit rejected this interpretation and made other rulings regarding whether donning the gear was a “principal activity” that started the workday. But the Supreme Court granted certiorari on the narrow question of how “changing clothes” is defined for purposes of Section 203(o).  

The Supreme Court’s decision will provide clarity to employers with unionized workforces that bargain over compensation for donning and doffing clothes and personal protective equipment. And if the Court determines that such protective equipment constitutes “clothes” under Section 203(o), employers can minimize costs by including in their collective bargaining agreements a stipulation about changing clothes that will cover time spent donning and doffing such protective equipment as well.