Jul 03, 2013
Capping off a term of big decisions with employer-friendly results, the U.S. Supreme Court weighed in on two major employment issues in a pair of Title VII cases that determined retaliation claims require plaintiffs to prove their case according to traditional “but for” causation and that for purposes of vicarious liability in a discrimination suit, a supervisor must have the power to take “tangible employment actions” against the victim.
In University of Texas Southwestern Medical Center v. Nassar, Justice Anthony M. Kennedy wrote for the majority that employees alleging retaliation by an employer face a higher burden – “but for” causation – as opposed to merely showing that the retaliation was one motivating factor in an adverse employment action.
The 5-4 decision vacated a $3.4 million verdict for Dr. Naiel Nassar, who claimed his supervisor discriminated against him on the basis of his Arab ethnicity and Muslim religion with comments like “Middle Easterners are lazy.” After he resigned and sent a letter laying out his complaints about the supervisor, a job offer at the school’s clinic was rescinded. He filed suit for constructive discharge and retaliation under Title VII.
A jury sided with Nassar on both claims and the 5th U.S. Circuit Court of Appeals affirmed, ruling that under Title VII retaliation claims only required a showing that retaliation was a motivating factor, not that the adverse action would have happened but for the retaliation.
But the justices reversed, ruling that the proper standard of causation for Title VII retaliation requires a higher showing than status-based discrimination claims. The anti-retaliation provision of Title VII is set apart from the statute’s ban on status-based discrimination, which is subject to a lower standard of proof, the Court said.
“As actually written…the text of the motivating-factor provision, while it begins by referring to ‘unlawful employment practices,’ then proceeds to address only five of the seven prohibited discriminatory actions – actions based on the employee’s status, i.e. race, color, religion, sex and national origin,” Justice Kennedy wrote. “This indicates Congress’s intent to confine [the motivating-factor] provision’s coverage to only those types of employment practices. The text…says nothing about retaliation claims.”
Hinting at the ever-popular floodgates argument, the majority expressed concern that lessening the causation standard “could also contribute to the filing of frivolous claims.”
Congress created a “precise” statutory scheme, the justices concluded, and the “text, structure, and history of Title VII demonstrate that a plaintiff making a retaliation claim…must establish that his or her protected activity was a but-for cause of the alleged adverse action by the employer.”
In her dissent, Justice Ruth Bader Ginsburg argued that the majority “drives a wedge” between discrimination and retaliation claims, which are in fact tightly bonded. “This Court has long acknowledged the symbiotic relationship between the proscriptions on discrimination and proscriptions on retaliation,” she wrote. Separating the two “undermin[es] the legislature’s effort to fortify the protections of Title VII.”
On the same day, the justices released Vance v. Ball State University, a second Title VII decision with a 5-4 split in which the justices narrowed the scope of vicarious liability for employers.
“We hold that an employer may be vicariously liable for an employee’s unlawful harassment only when the employer has empowered that employee to take tangible employment actions against the victim, i.e., to effect a ‘significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits,’” Justice Samuel A. Alito Jr. wrote for the majority.
The case began when Maetta Vance, an African-American catering assistant at Ball State University in Indiana, sued the school alleging it maintained a racially hostile work environment. Vance claimed she was subjected to racial harassment by a white catering specialist. Unable to establish negligence on the part of the university in how it handled her complaints, Vance focused her case on whether the alleged harasser qualified as her “supervisor,” making Ball State vicariously liable under Title VII.
But the majority said the co-worker’s direction of Vance’s daily activities did not make her a “supervisor.”
“The ability to direct another employee’s tasks is simply not sufficient,” the Court determined. “Employees with such powers are certainly capable of creating intolerable work environments, but so are many other co-workers. Negligence provides the better framework for evaluating an employer’s liability when a harassing employee lacks the power to take tangible employment actions.”
The court rejected “the nebulous definition” of “supervisor” adopted by several federal appellate courts, colloquial uses of the term, and advocated for by the Equal Employment Opportunity Commission.
Instead, Justice Alito emphasized that the Court’s “tangible employment actions” standard was “easily workable” and “can be applied without undue difficulty at both the summary judgment stage and at trial.”
Again authoring a spirited dissent, Justice Ginsburg said the majority “ignores the conditions under which members of the work force labor, and disserves the objective of Title VII to prevent discrimination from infecting the Nation’s workplaces.”
“Trumpeting the virtues of simplicity and administrability, the Court restricts supervisor status to those with power to take tangible employment actions,” she wrote. “In so restricting the definition of supervisor, the Court once again shuts from sight the ‘robust protection against workplace discrimination Congress intended Title VII to secure.’”
To read the decision in University of Texas Southwestern Medical Center v. Nassar, click here.
To read the decision in Vance v. Ball State University, click here.
Why it matters: Taken together, the decisions are a decisive victory for employers, heightening the evidence requirements for retaliation plaintiffs and narrowing the scope of supervisors potentially liable for harassment. Under Nassar, retaliation plaintiffs now face a higher burden in proving their claims against an employer while the Vance holding will focus litigation on whether an employer was negligent in failing to respond to harassment complaints, and not on the tangential issue of whether someone qualifies as a “supervisor.” In addition, pursuant to Vance, employers may consider reevaluating which employees are granted the power to effectuate “a significant change in employment status” to narrow the scope of possible supervisors.
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Following through on guidance issued last year, the Equal Employment Opportunity Commission filed two recent suits against employers the agency alleged engaged in the unlawful and discriminatory use of criminal backgrounds checks.
Complaints were filed against BMW Manufacturing Co. LLC and Dollar General. In the suit against BMW, the EEOC said the company’s use of criminal background checks resulted in disproportionately screening out African-American contractors at a South Carolina facility.
The claimants fell under the company’s policy of excluding individuals with “any convictions of a violent nature,” and convictions involving “theft, dishonesty, and moral turpitude,” as well as murder, assault and battery, rape, child abuse, domestic abuse, manufacturing of drugs, distribution of drugs, and weapons violations. In addition, BMW’s written policy stated that “there is no statute of limitations for any of the crimes.”
When BMW switched to a new logistics services provider, it required employees to re-apply for their positions and undergo a criminal background check. Of the 645 existing employees, 88 had criminal convictions; 69 were African-American, the EEOC said. “The gross disparity in the rates at which black and non-black employees” lost their employment due to the criminal background check “is statistically significant,” the agency alleged.
The disproportionate percentage of black employees affected by the criminal conviction policy constitutes an unlawful employment practice in violation of Title VII, according to the complaint. “BMW’s policy had, and continues to have, a significant disparate impact on black employees and applicants and is not job-related and consistent with business necessity. The effect of the practice has been to deprive the claimants of equal employment opportunities.”
Similar claims were made by the agency against Dollar General in a suit filed in Illinois federal court.
The retailer has “engaged in ongoing, nationwide race discrimination against [African-American applicants] in violation of Title VII” since January 2004, the agency alleged, and the use of criminal justice history information has had a disparate impact on minority applicants.
Dollar General’s policy provides that once an applicant is given a job offer, the store manager submits information to a third party vendor who conducts a criminal background check. The company established a matrix identifying specific felonies and misdemeanors to exclude applicants with specifications on how recent the convictions must be to rescind an offer. Convictions mandating disqualification include flagrant non-support, illegal dumping, and failure to file an income tax return.
The utilization of the criminal convictions policy “has not been demonstrated to be and is not job-related and consistent with business necessity,” the EEOC said. “Consideration is not given to the age of the offender, any actual nexus between the crime and the specific job duties, employee safety, or to the time or events that have transpired since the offence.” the agency added.
Both suits seek a permanent injunction from the allegedly discriminatory policies as well as back pay and other affirmative relief for the claimants.
To read the complaint in EEOC v. BMW Manufacturing, click here.
To read the complaint in EEOC v. Dollar General, click here.
Why it matters: Filed on the same day, the lawsuits are the first from the EEOC after guidance issued last year by the agency for employers on how to use criminal background check information. The lesson for employers: use such checks carefully. The agency’s guidance, “Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964,” emphasized that while the use of criminal justice history information does not violate Title VII per se, an employer may run afoul of the law if the checks result in systemic discrimination based on race, color, national origin, religion, or sex – as alleged by the EEOC in the BMW and Dollar General suits. Further, the guidance suggests employers should conduct an individualized assessment, considering factors like the nature of the crime and its relation to the potential job, as well as how much time has passed since the conviction and rehabilitation efforts.
A California federal court judge granted certification to a one-store class of Kmart cashiers suing the retail giant for failure to provide seated workstations while denying the plaintiff’s attempt to certify a statewide class.
The case has a long and convoluted history, beginning with a different putative class action plaintiff, Lisa Garvey. She alleged that Kmart violated California Wage Order 7-2001(14), which reads: “All working employees shall be provided with suitable seats when the nature of the work reasonably permits the use of seats.” Kmart failed to provide seats to checkout stand cashiers, according to Garvey’s complaint. U.S. District Court Judge William Alsup of the Northern District of California rejected a statewide class in the suit and certified a class limited to cashiers at a Kmart store in Tulare, California, where Garvey worked.
After a bench trial, Judge Alsup ruled for the defendant, holding that modifying stores to give cashiers seats would be “too unsafe, too inefficient, and too inconvenient to customers and cashiers.” However, he offered plaintiffs’ counsel a second shot at the suit, allowing the plaintiffs to add further representatives from other stores in the state to pursue their claims. Redlands store employee Collette Delbridge was then selected as the next putative class plaintiff. (Another proposed plaintiff was dismissed for lack of standing after she failed to include her claim against Kmart in her personal bankruptcy estate.)
Delbridge then attempted a second attempt at statewide class certification of cashiers. And for a second time, Judge Alsup denied the request.
Kmart stores throughout the state have different physical layouts, have varying numbers of registers, and make use of different checkout systems, the court noted, with some stores using a conveyor belt and others a bagging table. However, both sides presented evidence which “shows sufficient commonality of working conditions among cashiers to certify a Redlands class, and that plaintiff Delbridge’s own experience was sufficiently typical for class certification,” he wrote.
“Kmart devotes its class certification opposition to battling a potential statewide class,” Judge Alsup noted. “To the extent that its arguments can be translated to a class limited to a single store, they fall flat. Kmart does not demonstrate that differences in cashiers’ physical stature at the Redlands store, or other variances in the experiences of Redlands cashiers, overshadow the evidence of a common policy of not providing seats and the evidence which cashiers spend the majority of their time at their registers performing a limited set of checkout duties.”
Judge Alsup also emphasized that his decision reflected the second – and final – round of class certification. The plaintiffs were presented with an opportunity to produce additional evidence of commonality among cashier experiences across the state’s stores but “failed to meet their burden,” he concluded. The Tulare trial lasted nearly two weeks for a single store, the court noted and “[d]eveloping a factual record sufficient to cover all Kmart store permutations would require a long parade of experts and lay witnesses.”
In another twist to the suit, Delbridge objected to 400 “declarations” submitted by the defendant. She argued that the declarations were actually surveys conducted by the company asking cashiers to check boxes and fill in blanks to estimate the time spent engaging in various activities like twisting, reaching, and bending while working at their checkout stands. Although the surveys included a disclosure form that they were being collected by Kmart counsel for use in litigation and that the company’s interests were potentially adverse to the cashiers, the plaintiff argued that the collection and preparation of the documents violated California’s Rules of Professional Conduct.
While Judge Alsup disagreed, noting that precertification communications with potential class action members are “sometimes proper,” he said “the accuracy of the information is suspect.” Based on the existing record, the court said Kmart’s methods were not “fundamentally coercive or misleading,” but he issued an injunction prohibiting the company from engaging in any further communications with members of the certified class regarding the subject matter of the suit.
To read the order in Delbridge v. Kmart Corporation, click here.
Why it matters: “This is the last class that will be certified in this action,” Judge Alsup wrote in his certification order of a one-store class of Kmart cashiers. While ostensibly a victory for the Redlands store cashiers who will now try their claims, the order is also a lost chance for the plaintiffs. The court noted that the plaintiffs failed to take advantage of the opportunity presented to them after their loss in the first trial. Offered the ability to amend their complaint and attempt to add new putative class representatives, plaintiffs’ counsel only came up with two possible class reps – one of whom was dismissed (and the second challenged by the defense for a past felony conviction). In addition, the plaintiffs then failed to meet their burden to show commonality across Kmart store locations statewide, losing their shot at statewide certification or even certification of additional stores.
In a blow to employers utilizing unpaid interns, a New York federal court judge determined that two men who ran errands, made copies, and delivered coffee for a production company working for Fox Entertainment Group on the movie Black Swan were in fact employees – and should have been compensated as such.
Four different interns who worked for various units of Fox filed a putative class action under California and New York Labor Law as well as the Fair Labor Standards Act. Both sides moved for summary judgment.
U.S. District Court Judge William H. Pauley III of the Southern District of New York quickly dismissed one of the plaintiffs, whose claims he found time-barred. He also certified a class of New York interns, finding that the claims of a second plaintiff “identified several common questions” regarding violations of state law. “Evidence that interns were recruited to help with busy periods, that they displaced paid employees, and that those who oversaw the internships did not believe they complied with applicable law is evidence capable of generating common answers to questions of liability,” he concluded.
Judge Pauley focused the bulk of his decision on the issue of whether the two remaining plaintiffs, Eric Glatt and Alexander Footman, were “employees” covered by the FLSA and state law and if Fox was their “employer.”
Noting that the FLSA requires a case-by-case totality of the circumstances of review, Judge Pauley emphasized the “striking breadth” of the FLSA’s definition of “employ.” Although Fox argued that the movies were produced by separate companies, the court said those entities were created for the sole purpose of producing the film and ruled Fox was a joint employer, on the hook for liability.
Control is key, he emphasized, analyzing the relationship between the parties under two different tests adopted by the 2nd U.S. Circuit Court of Appeals: the formal control test and the functional control test.
Under the formal control test, the court found that Fox’s power to fire the movie’s production set was “unbridled” and that the company “closely supervised” work on Black Swan, requesting daily call sheets and wrap reports. The production company needed Fox’s permission to have unpaid interns, which meant it “was involved in their method of pay,” the court said.
Fox’s control was similarly evident under the functional control test, Judge Pauley found, as the crew of Black Swan was tied to Fox, not the production company. Fox “in its ‘sole reasonable discretion,’ had the power to replace key production personnel without material changes to those underneath them. [Fox] could even have dismissed [the production company] and taken over the production,” the court said.
Once Judge Pauley concluded Fox was Glatt and Footman’s “employer,” he turned to whether they were “employees” covered by New York law and the FLSA, looking to a 2010 Department of Labor Intern Fact Sheet. Analyzing six relevant factors and considering the totality of the circumstances, the court concluded that the plaintiffs “were classified improperly as unpaid interns and are ‘employees’ covered by the FLSA and [New York] law.
“They worked as paid employees work, providing an immediate advantage to their employer and performing low-level tasks not requiring specialized training. The benefit they may have received – such as knowledge of how a production or accounting office functions or references for future jobs – are the results of simply having worked as any other employee works, not of internships designed to be uniquely educational to the interns and of little utility to the employer. They received nothing approximating the education they would receive in an academic setting or vocational school,” he wrote.
Therefore, Judge Pauley granted summary judgment to Glatt and Footman, concluding that Fox, as a joint employer with the production company, is liable to pay them as employees.
To read the decision in Glatt v. Fox Searchlight Pictures, click here.
Why it matters: The Glatt decision is a blow for employers making use of unpaid interns. Companies that have intern programs in place should review their policies and procedures to ensure compliance with relevant state wage and hour law as well as the FLSA, paying particular attention to whether the intern receives any formal training or education – a factor Judge Pauley found important in his analysis of whether the plaintiffs constituted employees.
The 4th U.S. Circuit Court of Appeals became the second federal appellate court to strike down a new rule promulgated by the National Labor Relations Board mandating that companies post information for employees about their federal rights.
The “Notification of Employee Rights Under the National Labor Relations Act” rule required employers to “conspicuously display” the 11-by-17-inch poster, which would have included information about the right to form or join a union, as well as the right of employees to act together to improve wages and working conditions under the National Labor Relations Act. Failure to post the notice constituted an unfair labor practice.
Challenging the rule, the U.S. Chamber of Commerce and the South Carolina Chamber of Commerce argued that the Board exceeded its statutory authority pursuant to the Administrative Procedure Act. A federal district court agreed and in a decision similar to an opinion issued by the D.C. Circuit Court of Appeals in May, the 4th Circuit affirmed summary judgment for the plaintiffs.
“[T]he rulemaking function provided for in the NLRA, by its express terms, only empowers the Board to carry out its statutorily defined reactive roles in addressing unfair labor practice charges and conducting representation elections upon request,” the three-judge panel wrote. “Indeed, there is no function or responsibility of the Board not predicated upon the filing of an unfair labor practice charge or a representation petition.”
Beginning with the premise that the poster rule was invalid unless the court found that Congress intended to delegate the Board the power to issue such rules (as opposed to the Board’s argument that it should be considered to have such power unless Congress expressly withheld it), the 4th Circuit said the legislation simply did not grant such authority.
“[T]he substantive provisions of the [NLRA] make clear that the Board is a reactive entity, and thus do not imply that Congress intended to allow proactive rulemaking of the sort challenged here,” the court said.
The court reviewed the history, structure, and purpose of the NLRA, noting that the relevant provision on rulemaking – Section 6 – provides the Board with the power to make rules “as may be necessary to carry out the provisions” of the NLRA.
The Board had a laudable rationale behind the rule, the court acknowledged: to inform workers about their rights under the NLRA. But that purpose was not in furtherance of enumerated powers, despite the Board’s argument that it was fulfilling its requirements under Sections 1 (which details the purpose and aspirations of the Board) and 7 (which lists rights protected under the NLRA) by educating workers. There is “nothing in the text of the NLRA to suggest the burden of filling the ‘knowledge gap’ should fall on the employer’s shoulders,” the court concluded. “Put simply, we cannot accept the Board’s circular argument; the Board may not justify an expansion of its role to include proactive regulation of employers’ conduct by noting its reactive role under the [NLRA].”
The 4th Circuit also noted that Congress’s decision not to provide the Board with the ability to engage in proactive rulemaking stood in contrast to other labor agencies like the Equal Employment Opportunity Commission, the Occupational Health and Safety Administration, and the Department of Labor, to which lawmakers clearly granted such powers.
“Congress’s continued exclusion of a notice-posting requirement from the NLRA, concomitant with its granting of such authority to other agencies, can fairly be considered deliberate,” the panel concluded. “Had Congress intended to grant the NLRB the power to require the posting of employee rights notices, it could have amended the NLRA to do so.”
To read the decision in Chamber of Commerce v. NLRB, click here.
Why it matters: The NLRB’s poster rule faces an uphill battle to enforcement now that two federal appellate courts have overwhelmingly sided with employers in striking down the rule. As the 4th Circuit repeatedly emphasized, the “NLRB serves expressly reactive roles” to conduct representation elections and resolve charges of unfair labor practices. The Board’s “novel” attempt to step outside those boundaries could not stand, the court said.
Sandi KingPractice Chair
Esra A. HudsonPartner
Andrew L. SatenbergPartner
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