During the 2021 term, The Supreme Court of the United States ("SCOTUS") delivered 66 decisions, some of which were highly controversial. In the constantly evolving field of employment law, it is evident that the justices’ decisions will continue to alter how employers manage their employees. Employers must continue to stay up-to-date on SCOTUS decisions and how they could impact their businesses. Here is a summary of five decisions from the 2021 term that impact employers:
1. Changes to Abortion Laws Could Effect Employee Policies – Dobbs v. Jackson Women’s Health Organization.
This case was probably the most talked about ruling from SCOTUS this season. Dobbs was one of three abortion cases ruled on during the 2021 term (the other two specific to Texas abortion laws). This case overrules Roe v. Wade and lifted the federal right to abortion access. This means that states are now free to pass stricter abortion laws. For businesses, this may affect employer policies related to time off work, medical leave, payment for certain medical benefits, etc. as employees might seek to travel out of state to take care of abortion procedures. As such, employers should review their policies to ensure that they remain compliant and address potential issues that could arise as a result of this ruling.
2. Employers Should Monitor ERISA Plans – Hughes v. Northwestern University.
In a unanimous decision (8-0), the Court held that an Employee Retirement Income Security Act (“ERISA”) fiduciary is not categorically protected against a claim that certain options are imprudent. Under ERISA, fiduciaries who manage defined-contribution retirement plans (like a 401(k) plan) have a continuing duty of prudence to monitor investment options and remove imprudent ones. Abigail Hughes, on behalf of herself and other employees, sued Northwestern University for violating this duty of prudence. Although the SCOTUS decision did not definitively change any existing fiduciary liability standards, employers administering employee retirement plans should be sure that they are acting prudent to avoid potential liability.
3. Medicaid Can Recover Reimbursement from Settlement Funds – Gallardo v. Marstiller.
The Court agreed that the “Medicaid Act permits a State to seek reimbursement from settlement payments for future medical care.” In matters in which employees have taken Medicaid funds for the same injuries alleged against an employer, employers need to be careful when negotiating any settlement. Employers should understand that Medicaid may seek reimbursement from any settlement, which could affect settlement negotiations.
4. Federal Courts Cannot Create Special Procedural Rules to Favor Arbitration – Morgan v. Sundance, Inc.
In a wage and hour matter filed by a Taco Bell employee, Sundance, Inc. (a franchisee of Taco Bell), first filed a motion to dismiss the matter. Then, Sundance sought to compel arbitration. The district court denied the motion, ruling that because Sundance participated in the litigation, it waived its right to arbitration. On appeal, the Eighth Circuit reversed the district court’s order and held a party waives its right to arbitration if it knew of the right, acted inconsistently with that right, and prejudiced the other party by its inconsistent actions. The Court’s found that the prejudice requirement is not a feature of federal waiver law and that the Eighth Circuit adopted the requirement because of the “federal policy favoring arbitration.” When employers are seeking to enforce arbitration agreements, be aware that the Court will hold a party to an arbitration contract like general contract interpretation and not favor arbitration over litigation.
5. A Win for California Employers under PAGA – Viking River Cruises, Inc. v. Moriana.
The most talked about case for employers this season is Viking River where the Court ruled that a carefully drafted arbitration agreement could be used to waive representative PAGA claims. This is a huge win for California employers as it allows employers to preemptively limit potential liability for civil penalties. Employers should consult with their trusted employment counsel and review their current arbitration agreements. Find more information on what this ruling means here.
6. Prayer in Public Schools is Protected Speech – Kennedy v. Bremerton School District.
Another highly controversial case this season was Kennedy, where SCOTUS found that a high school football coach praying on the field after games was protected speech under the First Amendment. Again, although this does not directly affect private employers, this case could pave the way for other cases related to religious expression in the workplace. Employers will have to continue to be careful with how they handle religious expression of their employees.
SCOTUS’ 2022 term is scheduled to begin on October 3. So far, SCOTUS has agreed to hear 27 cases. Among the cases, these are the ones that may have implications for employers:
1. Overtime Payment for High Earning Employees – Helix Energy Solutions Group, Inc. v. Hewitt.
In this matter, Michael Hewitt, a supervisor for Helix Energy Solutions Group, Inc., was earning more than $200,000 per year through a daily rate. Hewitt claims that he should be entitled to overtime payments. The district court ruled that Hewitt was exempt from overtime payment, but on appeal, the Fifth Circuit ruled he was not exempt. This case is scheduled for hearing on October 12, 2022.
2. Using Race in College Admission Decisions – Student for Fair Admissions, Inc. v. President & Fellows of Harvard.
This case concerns the legality of institutions of higher education using race as a factor in admissions decisions. Although this case does not directly impact most businesses, a ruling regarding school admissions could have impacts on voluntary affirmative action plans for businesses. This case is scheduled for oral argument on October 31, 2022.