Texas Employment Law Update : Texas Employment Lawyer & Attorney : Russell D. Cawyer : Kelly Hart & Hallman Law Firm : Dallas TX Labor Updates

Pre-game preparations are underway for the first Monday in October when the U.S. Supreme Court will commence its 2011-12 Term.  Here are the employment-related cases that are expected to be decided this Term.

Hosanna-Tabor Church v. EEOC (10-553)  To decide whether the ministerial exception, which prohibits most employment-related lawsuits against religious organizations by employees performing religious functions, applies to a teacher at a religious elementary school who teaches the full secular curriculum, but also teaches daily religion classes, is a commissioned minister, and regularly leads students in prayer and worship.— (to be argued Oct. 5, 2011)

Coleman v. Maryland Court of Appeals (No.10-1016) To decide whether Congress constitutionally abrogated states’ Eleventh Amendment immunity when it passed the self-care leave provision of the Family and Medical Leave Act. 

Knox v. SEIU (No. 10-1121) To decide whether (1) a State, consistent with the First and Fourteenth Amendments, condition employment on the payment of a special union assessment intended solely for political and ideological expenditures without first providing a notice that includes information about that assessment and provides an opportunity to object to its exaction and (2) a State, consistent with the First and Fourteenth Amendments, condition continued public employment on the payment of union agency fees for purposes of financing political expenditures for ballot measures?

Follow me on Twitter @RussellCawyer. 

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The Fair Labor Standards Act is the federal law that requires most employers to pay a minimum wage and overtime.  The FLSA also includes an anti-retaliation provision that prohibits an employer from discharging any employee who has "filed a complaint" under the FLSA because of that complaint.  The issue at the high court in Kasten v. Saint-Gobain Performance Plastics Corp., was whether an oral complaint constitutes the "filing of a complaint" under the anti-retaliation provisions of the FLSA.

Kasten filed his suit after his employment ended claiming that he was retaliated against for making oral complaints about the Company's placement of time clocks that Kasten believed had the effect of preventing workers from receiving credit for time spent for donning and doffing work-related protective gear.  In other words, Kasten alleged that he made complaints to his employer that employees were not being paid for all working time as required by the FLSA.  Kasten apparently never put his complaints in writing.  The trial court dismissed Kasten's claim holding that Kasten failed to engage in legally protected activity under the FLSA because the Act did not cover oral complaints. 

The U.S. Supreme Court reversed the judgment against Kasten and held that the FLSA's statutory language prohibiting retaliation for filing a complaint includes oral as well as written complaints. The Court arrived at its decision by interpreting the statutory phrase itself and by taking into account the remedial purpose of the anti-retaliation provisions.  Consequently, when an employee makes an oral complaint about an FLSA violation, he or she has filed a complaint for purposes of the FLSA's anti-retaliation provisions and can bring a suit alleging that he or she was discharged in violation of the Act.

A full copy of the Court's opinion in Kasten v. Saint-Gobain Performance Plastics Corp. can be accessed here.

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The U.S. Supreme Court recently considered the circumstances when an employer may be liable for employment discrimination based on the unlawful, discriminatory animus of an employee who influenced, but did not make, an ultimate employment decision.   This theory is commonly referred to as the Cat's Paw theory derived from fable about the monkey who convinces the cat to reach into the fire to pull out the roasting chestnuts.  The cat gets burned while the monkey makes off with the chestnuts.  In discrimination cases, the Cat's Paw theory refers to a situation where a supervisor with a discriminatory animus who influences, but does not make, the adverse employment decision.

The facts of Staub are straight forward.  In Staub, the employee complained that several of his direct supervisor were hostile to his reserve military service that periodically required him to miss work.  The employee complained that this hostile supervisors wrote him up on several occasions that were motivated by his military service.  Specially, Staub's direct supevisor issued him a corrective action for violating a company rule requiring him to stay in his work area when he was not working with a patient.  Several months later, a co-worker complained that Staub's frequent availablility.  On another occasion, the hostile supervisor reported that Staub had left his workstation without permission in violation of the earlier corrective action.  A hospital executive, whom had no discriminatory animus, reviewed Staub's file and made the decision to terminate his employment; at least in part on information contained in the file that was initiated by Staub's direct supervisors (and whom allegedly had discriminatory intent).  Staub appealed his termination through the hospital's grievance procedure but the decision stood.  Staub won at trial, but on appeal, the Seventh Circuit Court of Appeal reversed holding that since there was no evidence that the ultimate decisionmaker had a discriminatory animus, Staub could not hold the hospital liable for the discriminatory animus of a supervisor who was not the ulimate decisionmaker. 

The Supreme Court reversed the court of appeals.  As the Court stated, "If the employer's investigation results in an adverse action for reasons unrelated to the supervisor's original biased action . . . then the employer will not be liable."  However, "the employer is at fault [when] one of its agents committed an action based on discriminatory animus that was intended to cause, and did in fact cause, an adverse employment decision."  The core holding of the opinion is that "if a supervisor performs an act motivated by [discriminatory] animus that is intended by the supervisor to cause an adverse employment action, and if that act is a proximate cause of the ultimate employment action, then the employer is liable under [the law]."

Staub substantially expands the scope of situations where employers can be held liable for discrimination based on the acts of nondecisionmaker supervisors. You can access a full copy of Staub v. Proctor Hospital here.

What others are saying about Staub.

Mrs. Palsgraf and the Cat's Paw Doctrine

With a Friend Like Justice Scalia . . . Cat's Paw Decision Not Very Employer Friendly

The Supreme Court Upholds Cat's Paw Theory of Liability in Anti-Military Discrimination Case

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The U.S. Supreme Court announced that employees, who never engaged in protected activity, can bring third-party retaliation claims against their employers when they suffer an adverse employment action due to their connection with a person who has engaged in protected activity.

The facts of Thompson v. North American Stainless are straightforward.  In February 2003 North American Stainless was advised by the EEOC that Miriam Regalado filed a sex discrimination charge of discrimination against it.  Three weeks later, Regalado's fiancee, Eric Thomas, was terminated.  Thomas filed a charge of discrimination of his own alleging that he was fired in retaliation because his fiancee filed a charge of discrimination.  The EEOC found that Thomas had been retaliated against and issued a right to sue letter when conciliation was unsuccessful.

When the case reached the trial court, the judge dismissed the suit finding that Title VII did not recognize third-party retaliation claims.  Because the case was decided on a motion to dismiss (prior to any discovery), the reviewing courts were required to take Thomas' allegation as true (i.e., that he was in-fact, terminated for his fiance's charge of discrimination).  The Sixth Circuit Court of Appeals affirmed the dismissal for a different reason.  The Sixth Circuit concluded that Thomas never engaged in protected activity because he didn't filed a charge on his or his fiance's behalf prior to his termination and therefore he couldn't bring a retaliation claim.

The U.S. Supreme Court reversed.  Justice Scalia wrote, in a unanimous opinion (Kagan not participating) that the Court has little trouble concluding that if Thomas was fired because his fiancee filed a charge of discrimination, then he has a claim under the anti-retaliation provisions of Title VII.  The Court refused, however, to provide a bright line test as to which third-parties might have a claim stating:

We expect that firing a close family member will almost always meet the Burlington standard, and inflicting a milder reprisal on a mere acquaintance will almost never do so, but beyond that we are reluctant to generalize. . .   The significance of any given act of retaliation will often depend upon the particular circumstances.

 In holding that Thompson had a claim, the Court next concluded that Thompson had standing to sue.  The Court held that a plaintiff within the zone of interest sought to be protected by Title VII (i.e., protecting employees from unlawful actions of employer), has standing to bring a claim against his employer even though the employee had not engaged in protected activity himself.  The Thompson opinion clearly expand the scope of potential plaintiffs that can bring claims against their employers regardless of whether or not they engage in protected activity.

You can read the full opinion here. 

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The U.S. Supreme Court reversed and remanded a win the City of Chicago obtained against an African-American class of firefighter applicants seeking positions with the City.  In Lewis v. City of Chicago, a group of firefighter applicants filed a lawsuit against the City challenging the City's 1996 decision that it would only consider those applicants who scored "well-qualified" on the entrance examination.  Applicants who passed the test, but only scored "qualified" were not further considered for employment opportunities.

The plaintiffs challenged their exclusion from the screening process when the City exhausted its pool of well-qualified applicants but failed to begin considering those who scored "qualified" on the test.  The thrust of the plaintiffs' claim was that the arbitrary decision to only consider those "well-qualified" applicants had a disparate impact on racial minorities.  The plaintiffs won at  trial, but their victory was reversed when the court of appeals held that because none of the applicants filed a timely charge of discrimination from the date the decision was made to only hire applicants from the "well-qualified" list, their claims were untimely and barred.

The U.S. Supreme Court reversed the court of appeals holding that a plaintiff who does not file a timely charge of discrimination challenging the adoption of an allegedly unlawful practice may still assert a disparate impact claim in a later charge challenging the employer's use of that practice as long as the plaintiff alleges each of the elements of a disparate impact claim.  A complete copy of the Court's opinion can be accessed here. 

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In a non-employment case of significant importance to employers and employment lawyers, the U.S. Supreme Court held today that imposing class arbitration on parties who have not agreed to class arbitration is inconsistent with the Federal Arbitration Act and is therefore not permitted.  This case arose out of an MDL antitrust case alleging that certain competitors were engaged in a price-fixing scheme.  The parties to the underlying transaction were signatories to an arbitration agreement that was silent on whether the arbitrator had the authority to conduct class action arbitrations. For a more detailed review of the factual and procedural background of the case, see the SCOTUS Wiki on the case here. 

The significance of this case to employers is that many employment agreements containing arbitration provisions are also silent on the issue of class arbitration (and some specifically exclude class action arbitration).  Without doubt this opinion will be used to argue that an arbitrator lacks the authority under the FAA to arbitrate class action employment disputes where the parties' agreement, or other probative evidence, fails to establish that the parties agreed to arbitrate those claims collectively. 

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The U.S. Supreme Court completed its 2008-09 term. On the docket were five cases of interest dealing with employment law.  Here is a summary of the holdings in those cases.

• Crawford v. Metropolitan Gov’t of Nashville and Davidson County, Tenn., (2009) An employee’s participation in an employer’s internal harassment investigation by responding to the employer's questions may constitute protected oppositional activity under Title VII that would support a retaliation claim. 
• 14 Penn Plaza LLC v. Pyett, (2009) Provisions in collective bargaining agreements that clearly and unmistakably require union members to submit statutory discrimination claims to the grievance and dispute resolution provisions of the agreement are binding and enforceable on the bargaining unit members.  More detail here.
• AT&T Corp. v. Hulteen, (2009) An employer does not necessarily violate the Pregnancy Discrimination Act when it calculates and pays pension benefits based on an accrual rule that applied only pre-PDA, and gives less retirement credit for pregnancy leave than for other medical leave.
• Gross v. FBL Financial Services, Inc., (2009)  A plaintiff asserting an age discrimination claim under a disparate (i.e., intentional) treatment theory must prove that age was the “but for” cause of the challenged employment action and the burden of proof never shifts to the employer to show that it would have taken the same action regardless of the age of the plaintiff.  More detail here.
• Ricci v. DeStefano, (2009)  An employer can avoid Title VII disparate-impact liability related to a promotional exam having a disparate impact on minorities if the employer can show a strong basis in evidence that, had it not certified the results, if would have been subject to disparate-treatment liability.  More detail here.

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In one of the most anticipated employment discrimination cases in years, the U.S. Supreme Court held that the City of New Haven discriminated against non-minority firefighters when it chose to ignore the test results of a racially-neutral promotional exam because too few minorities scored high enough on the test to be considered for promotion.  I previously wrote about this case and outlined its facts.  (See here for post).

In Ricci v. DeStafano, a majority of the Supreme Court began with the premise that the City's decision to ignore the results of its promotional testing because too few minority fire fighters scored well on the test, constituted intentional discrimination against the firefighters that scored well on the test.  There was no dispute that the City disregarded the test results because of the race of the test takers and the fact that no minorities scored high enough to qualify for promotion.  Concluding that this conduct constituted intentional discrimination, the Court examined whether the City had a legitimate justification for ignoring the test results. 

The City's sole justification for the ignoring the test results was that if it recognized the results it would face litigation from the minority firefighters who took, and scored poorly, on the test.  The minority firefighters, the City predicted, would sue the City claiming that the racially-neutral test had a disparate impact on minority firefighters and therefore discriminated against them.  The City argued that it was faced with a Hobson's choice where no matter what it elected to do it would be faced with a discrimination lawsuit (i.e., either being sued by the white firefighters who scored well and were denied promotional opportunities because the test results were ignored or by the minority firefighters who claimed the test unintentionally discriminated against them by recognizing a test that had a disparate impact on minorities).

The Court explained that if the City had a "strong basis in evidence" that its recognition of the test results would subject it to disparate-impact liability in the absence of it taking the race-conscious, discriminatory action --not necessarily that it would lose an disparate impact case.  To make this showing, there would need to be a showing of a significant statistical disparity; and the tests were no job related and consistent with business necessity; or there existed an equally valid, less-discriminatory alternative that served the City's needs that it refused to adopt.  Applying this standard to the Ricci case, the Court concluded that City lacked a strong basis in evidence that it would be subjected to disparate-impact liability if it recognized the test results.  Therefore, it found that City discriminated against the non-minority firefighters when it threw out the test results.    

The lesson from Ricci is that when an employer is faced with qualification or promotional exam that may have a disparate impact on a protected class, the employer must build a strong record and attempt to ferret out the reasons for the disparity before deciding whether to ignore the results.  A strong case would begin with a test that was designed in such a way as to avoid a disparate impact as was the case in Ricci.  The Court's opinion makes clear that it is not intended to prohibit an employer from considering (before test administration) a way to design a test that provides a fair opportunity for all individuals, regardless of their race.  Instead, the legal analysis encourages employers (and gives them broad latitude) at the test-design phase to invite comments to ensure the test is fair.  This would tend to help to identify aspects of the prospective test that might not be job-related and consistent with business necessity or other equally effective, less discriminatory alternatives.  

With a strong record in this regard, an employer assert and prevail with the new defense announced by the Ricci court when it faced with the prospect of being sued for disparate treatment (i.e., intentional) or disparate impact (i.e., unintentional) discrimination.   

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In Gross v. FBL Financial Services, Inc., the U.S. Supreme Court was asked to decide whether a plaintiff must present direct evidence of discrimination in order to obtain a mixed-motive instruction in a non-Title VII discrimination case.

In the case, Plaintiff Gross was employed by FBL Financial Group since 1971. In 2001 he held the title of claims administration director. Gross was reassigned in 2003 to the position of claims project coordinator. He was 54 years old.  Many of the job duties Gross previously performed were transferred to a newly created position and that position was given to a female former subordinate of Gross who was in her early 40’s. While Gross and the co-worker received the same compensation, Gross considered his reassignment and reallocation of job responsibilities a demotion. Consequently he filed suit alleging age discrimination under the Age Discrimination in Employment Act. At trial, the jury was asked to decide whether age was “a motivating factor” in the decision to reassign and reallocate Gross’s job responsibilities. This permitted the jury to find in Gross’ favor if even one of many reasons for the job changes was Gross’ age. FBL requested a jury instruction that would have only permitted the jury to find for Gross if he showed that the challenged job actions would not have occurred “but for” Gross’ age. The jury found for Gross.

On appeal, the U.S. Supreme Court found that it was improper to charge the jury under “a motivating factor” standard of causation. The U.S. Supreme Court held that a plaintiff asserting an age discrimination claim under a disparate (i.e., intentional) treatment theory must prove that age was the “but for” cause of the challenged employment action and the burden of proof never shifts to the employer to show that it would have taken the same action regardless of the age of the plaintiff. 

This is a significant, but perhaps short-lived, win for employers at the Supreme Court. Like other decisions of the Supreme Court that the Democratically-controlled Congress dislikes, expect quick legislation to be proposed to amend the ADEA to reinstate the “motivating factor” standard of causation.

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By now most of  you have read or heard that President Obama nominated Sonia Sotomayor for the U.S. Supreme Court to replace Justice David Souter.  Judge Sotomayor is currently an appellate judge on the U.S. Court of Appeals for the Second Circuit based in New York.  She also served on the federal district bench before joining the Court of Appeals.  The following links are useful to anyone who wants to get up-to-speed on Judge Sotomayor and her judicial philosophy.

• Michael Fox has done a good summary of Judge Sotomayor's appellate opinions in employment cases.  You can find that summary here.
• The Supreme Court of the United States Blog has done a comprehensive review of Judge Sotomayor's civil opinions.  You can find a four part review of those opinions at Part 1, Part 2, Part 3 and Part 4.  For extra credit, here is the blog's summary of Judge Sotomayor's civil opinions with dissents (here).
• The WSJ.com discusses what effect, if any, Judge Sotomayor's diabetes might have on the confirmation process.  The article can be found here.  The WSJ.com also has views of Judge Sotomayor's appointment from commentators on the Left and Right.

Given that Judge Sotomayor has twice obtained Senate confirmation, most commentators are expecting that her appointment will be confirmed.  

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Adam Liptak of the New York Times had an interesting preview about an important employment law case scheduled to be argued before the U.S. Supreme Court this month.  In Ricci v. Destafano, scheduled for oral argument on April 22, 2009, the Court is being asked to determine whether the City of New Haven's use, and then abandonment, of a firefighter promotional exam discriminated against white firefighters. 

As  Liptak wrote for the Times, Frank Ricci was an 11-year veteran of New Haven Fire Department who desired to advance to lieutenant.  To qualify for the promotion Ricci had to take a test that the City paid $100,000 to an independent testing company to develop.  The testing company , I/O Solutions, Inc., went to extraordinary lengths to ensure that the test was free of any racial bias.

Ricci wanted the promotion so badly that when the City offered the promotional exam, Ricci "gave up a second job and studied up to 13 hours a day.  Mr. Ricci, who is dyslexic, paid an acquaintance more than $1,000 to read textbooks onto audiotapes. He made flashcards, took practice tests, worked with a study group and participated in mock interviews."

Ricci finished 6th out of the 77 candidates that took the test.  However, because none of the 19 African American firefighters scored high enough to qualify for the promotion, the City threw out the test.  At this point it appears that the City was concerned about being sued by the African American firefighters who scored poorly on the test claiming that the test had a disparate or adverse impact on them.

Instead, Ricci (along with eighteen other firefighters) sued the City claiming that its abandonment of the test because none of the minority candidates qualified for promotion under the test constitutes unlawful discrimination. The trial court recounted that the City's motives for abandoning the test that included fear of public criticism, the possibility of more lawsuits from minority applicants and a desire to promote diversity and manager role models for firefighters.

The case is likely to outline the extent to which an employer can go to further its goal of increasing racial diversity in the workplace.  And while most "reverse discrimination" lawsuits do not tend to do well in Court, the facts in Ricci make for an intriguing case for the Justices to consider.  For more background information and  "pregame" commentary on this case, the National Journal Magazine, the New Haven Independent and the Connecticut Employment Law Blog have some interesting articles.  Adversity.net has the results of the test by score and race.

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Today, the U.S. Supreme Court held that provisions in collective bargaining agreements that clearly and unmistakably require union members to submit statutory discrimination claims to the grievance and dispute resolution provisions of the agreement are binding and enforceable. 

In 14 Penn Plaza LLC v. Pyett ,  a dispute arose over a commercial office building's reassignment of night watchmen employees (whose duties were outsourced) to less desirable positions such as light duty cleaners and porters.  The reassigned employees, members of the Service Employee International Union, Local 32BJ, filed a grievance with the union contending that the reassignments violated, among other things, the CBA's ban on age discrimination.  When the grievances were unsuccessful, the Union requested arbitration under the dispute resolution procedures of the CBA.  The union later withdrew the grievances to the extent they complained about age discrimination prohibited by the contract but continued to press for arbitration on the remaining claims.

The disgruntled reassigned employees then filed a charge of discrimination with the EEOC over their reassignment claiming the reassignments were discriminatory.   After the EEOC issued a right to sue letter and the employees sued in federal district court, the defendant filed a motion to compel arbitration relying on the language of the grievance and dispute resolution procedures of the CBA with the union that stated:

§ 30 NO DISCRIMINATION. There shall be no discrimination against any present or future employee by reason of race, creed, color, age, disability, national origin, sex, union membership, or any other characteristic protected by law, including, but not limited to, claims made pursuant to Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the New York State Human Rights Law, the New York City Human Rights Code, . . . or any other similar laws, rules, or regulations. All such claims shall be subject to the grievance and arbitration procedures (Articles V and VI) as the sole and exclusive remedy for violations. Arbitrators shall apply appropriate law in rendering decisions based upon claims of discrimination.

The trial court and Second Circuit Court of Appeal refused to compel arbitration holding that a CBA could not waive the bargaining unit members' right to a judicial forum over statutory civil rights claims created by Congress.

The Supreme Court reversed holding that where the intent to submit statutory discrimination claims to the grievance and dispute resolution procedures of the CBA is clear and unmistakable (an issue that was not in dispute before the court --i.e., the parties agreed that the language was sufficiently explicit) nothing precluded the union's ability to waive its members right to a judicial forum to resolve those discrimination claims.  A majority of the Court rejected the employee's argument that the union was waiving important, substantive rights to be free from age discrimination. 

The Court noted that the union had not waived (nor could it) the employee's right to be free from and to challenge employment actions that were based on unlawful motivations such as age discrimination.  Rather, the Court observed, the Union had merely negotiated for and agreed that such claims would be resolved in a forum other than a judicial one --i.e., arbitration.  Consequently, the Court held that to the extent the employees were to litigate their statutory age discrimination claims they would have to do so within the confines of the grievance and dispute resolution procedures of the CBA.

As a consequence of this ruling it is unlikely that unions will agree in future negotiations that their grievance and arbitration procedures include employment discrimination and civil rights claims.  Placing the unions in the position of using limited resources to arbitrate otherwise individual claims is unlikely to be something that benefits the majority of the bargaining unit members.  This potential conflict of interest is something most unions would prefer to avoid. 

Other commentators have suggested, and I agree, that the holding of this case is likely to be limited because Congress may seek to overturn it as it did with the Court's Ledbetter decision.  See Jottings by an Employer's Lawyer and The Delaware Employment Law Blog . 

Another potential consequence is that the existence of a mandatory arbitration provision in a CBA covering employment discrimination claims may be an important factor the EEOC considers in deciding whether to litigate over a particular charge of discrimination.  Under the current law the EEOC is not be bound by the grievance and arbitration provisions in CBA's (nor individual employment contracts between employees and employers) and it could vindicate an employee's rights in a federal judicial forum notwithstanding the CBA.

Until legislation is passed to overturn 14 Penn Plaza, employers and unions with CBAs that clearly and unmistakably include employment discrimination and civil rights claims in the grievance and dispute resolution provisions will now be forced to resolve those disputes in an arbitral forum.

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