In a much anticipated decision in Glatt v. Fox Searchlight Pictures, Inc., the United States Court of Appeals for the Second Circuit recently adopted the “primary beneficiary” test for determining whether individuals performing services for no compensation have been properly classified as “unpaid interns” or are, in fact, “employees” who have been improperly denied wages mandated by the Fair Labor Standards Act (FLSA). The district court, in an opinion that received a great deal of attention, had ruled that the plaintiffs were employees for FLSA purposes, applying the factors enumerated in the test proposed by the U.S. Department of Labor (DOL). The Second Circuit rejected the DOL’s test and, accordingly, reversed the district court’s order granting the plaintiffs’ motion for partial summary judgment and their motion to certify a collective action.
Author: Richard S. Zackin
Supreme Court Rules an Employer’s Failure to Accommodate a Job Applicant’s Religious Practice Violates Title VII Without Proof the Applicant Requested An Accommodation
In its much anticipated decision in Equal Employment Opportunity Commission v. Abercrombie & Fitch Stores, Inc., the U.S. Supreme Court has held that a prospective employee who was turned down for a job because she wore a headscarf, which the employer suspected was worn for religious reasons, can proceed with her claim of religious discrimination under Title VII of the Civil Rights Act of 1964, although when she applied for the job the applicant never requested permission to wear the headscarf as an accommodation to her religious practices. Employers should be aware that the Court’s decision (1) imposes on an employer an affirmative obligation to reasonably accommodate the religious practices of its employees and prospective employees and (2) exposes an employer to potential liability for intentional discrimination, and thus for compensatory and punitive damages, for failing to make such accommodations.
Supreme Court Rules ERISA Statute of Limitations Does Not Bar Breach of Fiduciary Duty Claim Challenging 401(k) Plan Investments Made More Than 6 Years Before Filing of the Claim
The statute of limitations governing breach of fiduciary duty claims brought under the Employee Retirement Income Security Act (“ERISA”) provides that such claims are untimely if not brought within 6 years after “the date of the last action which constituted the breach or violation” or “in the case of an omission, the latest date on which the fiduciary could have cured the breach or violation” (29 U.S.C. § 1113). In Tibble v. Edison International, the U.S. Supreme Court ruled that ERISA’s statute of limitations did not bar plaintiffs from pursuing their breach of fiduciary duty claim arising out of investments made by their employer’s 401(k) plan, although the investments were made more than 6 years before plaintiffs filed their claim. The Court held that ERISA plan fiduciaries have an ongoing duty to monitor plan investments and to remove imprudent investments. As long as the alleged breach of this continuing duty occurred within 6 years of suit, a claim challenging a fiduciary’s failure to act will be timely. The Court rejected the argument that only “a significant change in circumstances” triggers the duty to remove imprudent investments.
We previously reported on a decision by a panel of the United States Court of Appeals for the Sixth Circuit in Equal Opportunity Employment Commission v. Ford Motor Co., in which the panel held that the EEOC was entitled to a jury trial on its claim that Ford discharged an employee in violation of the Americans with Disabilities Act (“ADA”) after it denied her request to work from home 4 days per week as an accommodation for her irritable bowel syndrome (“IBS”). In an en banc decision the Sixth Circuit has now reversed the original panel’s decision, concluding that the district court properly granted Ford’s motion for summary judgment on the ADA claim. In so ruling, the Court credited Ford’s business judgment that the employee’s presence in the work place was an essential function of her job, and thus her request to telecommute four days per week was not a request for a reasonable accommodation to which Ford had to accede. The EEOC had heralded the original panel’s decision as a major victory. The Sixth Circuit’s en banc reversal of that decision should be cause for equal celebration by employers.
In Mach Mining LLC v. Equal Employment Opportunity Commission, the United States Supreme Court was presented with the issue of whether the EEOC must attempt to conciliate an employer’s alleged violation of Title VII of the Civil Rights Act of 1964 before initiating a lawsuit against the employer and, if so, to what extent a court may review those conciliation efforts. The Court concluded that the EEOC must attempt to engage in conciliation, but that the scope of a court’s review of the EEOC’s efforts is narrow. Post-Mach Mining, an employer that attempts to challenge a lawsuit brought by the EEOC on the grounds that the agency’s conciliation efforts were insufficient will be fighting an uphill battle.
Supreme Court Upholds Department of Labor’s Authority to Issue Interpretive Rules Without Public Notice or Comment
Rules promulgated by agencies of the federal government can be divided into those which have the force and effect of law and those which are merely “interpretative” or provide general statements of policy concerning the agency’s view of the law. When an agency wishes to promulgate rules having the force and effect of law it must comply with the requirements of the Administrative Procedures Act (APA) by, among other things, publishing the proposed rules in advance, allowing sufficient time for public comment and responding to significant comments received. In Perez v. Mortgage Bankers Association, the United States Supreme Court addressed the issue of whether the Department of Labor (the “DOL”) was free to reverse itself about the proper interpretation of the laws over which it has enforcement responsibility without giving notice or allowing public comment of the proposed change. The Court unanimously held that the DOL was free to do so.
The Americans with Disabilities Act (“ADA”) makes it unlawful for an employer to either require its employees to undergo medical examinations or make disability-related inquiries that cannot be justified as “job related and consistent with business necessity.” The statute, however, expressly provides that testing an employee for illegal drug use is not a “medical examination” that must be justified under this standard. But what about an employer, who, because of safety concerns, requires employees to be tested for substances for which the employee has a valid prescription? Does such a test constitute a medical examination or a disability-related inquiry? In Bates v. Dura Automotive Systems, Inc., the United States Court of Appeals for the Sixth Circuit recently undertook to provide guidance on this issue. The Court concluded that whether testing for prescription drugs constitutes a medical examination or a disability-related inquiry for ADA purposes depends on the specific facts of the case at hand and, ultimately, may be an issue for a jury to resolve. It is clear that this is an area where employers must tread carefully. The difficulty of implementing a prescription drug testing program that will comply with the ADA suggests that such testing should be used only as a last resort when other safety measures have proved insufficient.
In a recent case decided by the United States Court of Appeals for the Third Circuit, Lupyan v. Corinthian Colleges Inc., an employee who did not return to work until after her 12 weeks of leave under the Family and Medical Leave Act (FMLA) had expired was able to avoid summary judgment against her because her employer was unable to come up with any hard evidence that she had actually received the FMLA notices mailed to her while on leave. The decision is a clear warning to employers that they run a real risk in FMLA litigation that notices sent by ordinary mail to an employee on leave may not carry the day.
President Obama recently signed two Executive Orders that impact government contractors in their capacity as employers. Executive Order 13672 (July 21, 2014) amends Executive Order 11246 (September 24, 1965) by adding “sexual orientation” and “gender identity” to the list of personal characteristics that cannot be used by government contractors to discriminate against any employee or applicant for employment. As originally issued, Executive Order 11246 proscribed discrimination on account of race, color, religion, sex, and national origin – characteristics protected by Title VII of the Civil rights Act of 1964 (Title VII). Sexual orientation and gender identity are not specifically identified in Title VII as protected characteristics. These Executive Orders also apply to subcontractors and vendors of government contractors. Executive Order 13672 leaves in tact an earlier amendment to Executive Order 11246 that granted an exemption for government contractors qualifying as religious organizations in terms of the ability of these organizations to hire individuals of a given religion. The Department of Labor is charged with issuing regulations within 90 days implementing the new Executive Order.
In June 2014, the New Jersey Supreme Court, in Hitesman v. Bridgeway, Inc., affirmed the decision of a lower appellate court dismissing a claim brought by a healthcare worker under the New Jersey whistleblower law, the Conscientious Employee Protection Act, N.J.S.A. § 34:19-1 et seq. (CEPA). The decision is significant because the Supreme Court clarified the role of a trial court on the issue of whether a plaintiff has sufficiently identified a rule of law or a public policy that provides the necessary foundation for a CEPA claim.