The U.S. Supreme Court recently published several long-awaited decisions that will have wide-spread significance for employers.
It Depends On What the Meaning of “Is” Is. Lawyers frequently quibble about precise definitions since cases can turn on how certain words are interpreted. For instance, a dining service employee recently sued her employer, claiming that another employee harassed and retaliated against her. Generally, a company is automatically liable for harassment by a supervisor, but only liable for the harassment by a co-worker if the company was negligent in handling the victim’s complaint. In other words, an employer’s liability for workplace harassment often depends on whether the harasser is properly considered a “supervisor.” The U.S. Supreme Court rejected the EEOC’s more expansive definition of the term “supervisor” and narrowly defined a supervisor as someone with the power to hire, fire, promote, reassign, or significantly change the alleged victim’s benefits. This narrow definition could make it harder for employees to win future workplace harassment claims.
High Court Imposes More Rigid Standard for Retaliation Claims. The Supreme Court also sided with employers on a case that examined the proper standard for retaliation claims. In this case, a doctor of Middle Eastern descent sued his employer after his supervisor allegedly retaliated against him for reporting ethnic harassment. The doctor claimed that his employer violated Title VII because the employer’s retaliatory conduct was a motivating factor in his discharge. The U.S. Supreme Court disagreed. The Court held that an employee can’t win a Title VII retaliation claim unless the employee proves that the retaliatory conduct was the factor in his or her discharge. This standard (also known as “but for” causation) is tougher than the less demanding “motivating factor” standard and could result in fewer successful Title VII retaliation claims.
Sign on the Dotted Line. We’ve all done it. We click “accept” before fully reading a lengthy terms and conditions agreement. But that’s dangerous. Just ask several plaintiffs who recently sued American Express. They entered into an agreement with American Express that contained an arbitration provision, requiring that all disputes be resolved by arbitration. Despite this provision, the plaintiffs filed a class action lawsuit against American Express. They claimed that the arbitration provision should be thrown out because the cost of individually arbitrating the case would be too costly. That didn’t persuade the Supreme Court. It held that the Federal Arbitration Act does not permit courts to invalidate a contractual waiver of class arbitration. While this lawsuit was not employment related, the Court’s deference to arbitration provisions should give hope to companies that use them and pause to people who don’t read them.
Court’s Ruling Provides More Questions than Answers. Congress passed the Defense of Marriage Act (DOMA) in 1996. It denied federal recognition of same-sex marriage by defining marriage as a union between one man and one woman. However, the Supreme Court recently ruled that DOMA is unconstitutional because it violates the Due Process Clause of the Fifth Amendment. The fall of DOMA affects over 1,000 other federal laws, including many rules governing employee benefit plans. The Court’s ruling will impact operational provisions such as spousal protections in retirement plans, along with the taxation of same-sex spouse benefits. It is too early to say what plan changes this ruling will require, but changes are certainly coming.