Employment Law

Actual Knowledge by Employer Not Necessary for Title VII Religious Discrimination Claim, U.S. Supreme Court Rules

Why it matters

In a closely watched case, the U.S. Supreme Court sided with a teenage applicant to Abercrombie & Fitch who sued the company for religious discrimination under Title VII. Instead of accommodating her religious beliefs, Samantha Elauf contended that she was not hired by the national retailer because she wore a hijab to a job interview. A federal district court granted summary judgment for Elauf, but the Tenth Circuit Court of Appeals reversed, holding that the burden rests on an applicant or an employee to initially inform an employer of the religious nature of his or her conflicting practice and the need for accommodation. Elauf appealed to the Supreme Court, which granted certiorari given the split among the federal circuits (while the Tenth Circuit joined the Third, Fourth, Seventh, and Eighth, a line of contrary authority could be found in the Ninth and Eleventh Circuits). In an 8-1 opinion authored by Justice Antonin Scalia, the Supreme Court reversed. “Abercrombie’s primary argument is that an applicant cannot show disparate treatment without first showing that an employer has ‘actual knowledge’ of the applicant’s need for an accommodation,” the Court wrote. “We disagree. Instead, an applicant need only show that his need for an accommodation was a motivating factor in the employer’s decision.” The employee-friendly holding leaves employers with what the majority characterized as a “straightforward” rule: “An employer may not make an applicant’s religious practice, confirmed or otherwise, a factor in employment decisions.”

Detailed discussion

Samantha Elauf applied for a job at Abercrombie Kids in Tulsa, Oklahoma. During her two interviews, Elauf wore a hijab, or headscarf. At no point did she inform the employer that she was a practicing Muslim or ask if the headwear would be an issue.

Abercrombie declined to hire Elauf because of the hijab, which conflicted with the company’s “Look Policy,” the retailer’s dress code for employees intended to promote and showcase the Abercrombie brand. On behalf of Elauf, the Equal Employment Opportunity Commission (EEOC) brought suit against the retailer, alleging religious discrimination in violation of Title VII.

A federal district court granted summary judgment in favor of Elauf and the EEOC. In a damages-only jury trial, the plaintiff won $20,000. But in a 95-page decision, the Tenth Circuit Court of Appeals reversed, ruling that Elauf failed to set forth a prima facie case of discrimination because she had not requested a religious accommodation.

The holding broadened the split in the federal appellate courts, and when Elauf filed a writ of certiorari, the U.S. Supreme Court agreed to hear the case.

Reversing the Tenth Circuit, the majority found that Title VII’s prohibition on religious discrimination does not apply only when an applicant has informed the employer of his or her need for such an accommodation.

Abercrombie told the justices that applicants cannot demonstrate disparate treatment under the statute without first showing that an employer had “actual knowledge” of the need for an accommodation. “We disagree,” Justice Scalia wrote. “Instead, an applicant need only show that his need for an accommodation was a motivating factor in the employer’s decision.”

Importantly, Title VII does not impose a knowledge requirement as other anti-discrimination statutes do, the justices said. The Americans with Disabilities Act, for example, defines discrimination to include an employer’s failure to “make reasonable accommodations to the known physical or mental limitations” of an applicant.

“Instead, the intentional discrimination provision prohibits certain motives, regardless of the state of the actor’s knowledge,” the Court explained. “Motive and knowledge are separate concepts. An employer who has actual knowledge of the need for an accommodation does not violate Title VII by refusing to hire an applicant if avoiding that accommodation is not his motive. Conversely, an employer who acts with the motive of avoiding accommodation may violate Title VII even if he has no more than an unsubstantiated suspicion that accommodation would be needed.”

Justice Scalia said this reading of the statute generated a straightforward rule for employers: “An employer may not make an applicant’s religious practice, confirmed or otherwise, a factor in employment decisions.”

“For example, suppose that an employer thinks (though he does not know for certain) that a job applicant may be an orthodox Jew who will observe the Sabbath, and thus be unable to work on Saturdays,” the Court wrote. “If the applicant actually requires an accommodation of that religious practice, and the employer’s desire to avoid the prospective accommodation is a motivating factor in his decision, the employer violates Title VII.”

The justices rejected the Tenth Circuit formulation that placed the burden on applicants, an approach which “asks us to add words to the law to produce what is thought to be a desirable result. That is Congress’s province. We construe Title VII’s silence as exactly that: silence.”

While a request for accommodation or an employer’s certainty that the practice exists may make it easier to infer motive in a Title VII case, “it is not a necessary condition of liability,” the Court added.

Abercrombie’s alternative argument that an employer’s neutral policy cannot constitute intentional discrimination similarly failed to sway the justices.

“Title VII does not demand mere neutrality with regard to religious practices—that they be treated no worse than other practices,” the Court said. “Rather, it gives them favored treatment, affirmatively obligating employers not to fail or refuse to hire or discharge any individual … because of such individual’s religious observance and practice. An employer is surely entitled to have, for example, a no-headwear policy as an ordinary matter. But when an applicant requires an accommodation as an ‘aspec[t] of religious … practice,’ it is no response that the subsequent ‘fail[ure] … to hire’ was due to an otherwise-neutral policy. Title VII requires otherwise-neutral policies to give way to the need for an accommodation.”

Justice Samuel Alito authored a concurring opinion, writing separately that he found “ample evidence” in the record to support a finding that Abercrombie knew that Elauf was a Muslim and she wore her headscarf for a religious reason, necessitating the reversal of the Tenth Circuit’s summary judgment ruling in the company’s favor.

In a dissenting opinion, Justice Clarence Thomas staunchly defended the position that “[m]ere application of a neutral policy cannot constitute ‘intentional discrimination,’ ” arguing that the case was actually one of disparate impact.

“To be sure, the effects of Abercrombie’s neutral Look Policy, absent an accommodation, fall more harshly on those who wear headscarves as an aspect of their faith,” he wrote. “But that is a classic case of an alleged disparate impact. It is not what we have previously understood to be a case of disparate treatment because Elauf received the same treatment from Abercrombie as any other applicant who appeared unable to comply with the company’s Look Policy.”

To read the opinion in EEOC v. Abercrombie & Fitch, click here.

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Can California Healthcare Workers Waive a Second Lunch Period?

Why it matters

Can healthcare workers in California waive a second lunch period? The state’s highest court has agreed to decide what happens when Section 11(D) of Wage Order 5 collides with Sections 512(a) and 516 of the Labor Code. In February, an appellate panel ruled that in a conflict between the state meal period statute and the healthcare industry-specific wage order, the statute trumped, with workers unable to waive their statutory right to a second meal period when they work more than 12 hours per day. While state labor law requires that employees who work more than 10 hours in a workday receive two 30-minute meal periods, Section 11(D) permits employees to waive the second break if the workday is not longer than 12 hours and the first period was not waived. In the case before the California Supreme Court, three former hospital employees filed a putative class action claiming that the two provisions were in conflict and that the Labor Code won the day, mandating pay for their missed meal breaks. A trial court sided with the hospital but the appellate panel reversed, holding that the more permissive Wage Order was partially invalid and that retroactive application on the issue was appropriate. Healthcare employers should pay close attention to the case. If the California Supreme Court affirms the appellate panel’s ruling—including the finding that the ruling should be applied retroactively—employers in the industry could be facing significant liability.

Detailed discussion

Three healthcare employees filed suit against Orange Coast Memorial Medical Center, seeking to represent a class of workers that waived their rights to a second meal period on days they worked shifts of more than 12 hours.

California Labor Code Section 512(a) provides: “An employer may not employ an employee for a work period of more than 10 hours per day without providing the employee with a second meal period of not less than 30 minutes, except that if the total hours worked is no more than 12 hours, the second meal period may be waived by mutual consent of the employer and the employee only if the first meal period was not waived.”

Section 516 adds: “Except as provided in Section 512, the [Industrial Welfare Commission] may adopt or amend working conditions with respect to break periods, meal periods, and days of rest for any workers in California consistent with the health and welfare of those workers.”

According to the plaintiffs, these provisions ran counter to Section 11(D) of the Industrial Welfare Commission’s (IWC) Wage Order 5, which states: “Notwithstanding any other provision of this order, employees in the health care industry who work shifts in excess of eight (8) total hours in a workday may voluntarily waive their right to one of their two meal periods.”

Specifically, the Wage Order sanctions second meal period waivers for healthcare employees who work shifts of more than 12 hours, the workers said, but the Labor Code permits such waivers only if no more than 12 hours total were worked.

The hospital countered that it utilized valid meal period waivers signed by the relevant employees in compliance with state law. A trial court judge granted summary judgment for the employer.

But the appellate panel disagreed.

When the validity of an IWC Wage Order is conceded, courts will provide extraordinary deference. However, when the validity of a wage order is challenged, no such deference is due, the court said.

By creating an additional exception for healthcare workers to waive a second meal period even in shifts of more than 12 hours, the IWC exceeded its authority with Wage Order 5, the panel said, citing language from the California Supreme Court’s 2012 decision in Brinker Restaurant Corp. v. Superior Court that “as to the majority of its 2001 wage orders, the IWC did not intend to impose a different meal period requirement than that spelled out in section 512.”

“We see nothing in this legislative history to support the hospital’s argument the additional regulatory exception embodied in section 11(D) for shifts longer than 12 hours is consistent with the Legislature’s intent,” the panel wrote. “To the contrary, everything in this legislative history evidences the intent to prohibit the IWC from amending its wage orders in ways that conflict with meal period requirements in Section 512, including the proviso second meal periods may be waived only if the total hours worked is less than 12 hours.”

The court rejected the hospital’s contention that Section 512 and Wage Order 5 were not in conflict. Brinker itself did not confirm the validity of second meal period waivers, the court added, as that decision did not address the issue in the case at bar.

As the broad powers of the IWC do not extend to the creation of additional exemptions from the meal period requirement beyond those provided by the legislature, the IWC exceeded its authority and Wage Order 5 is partially invalid to the extent it authorizes healthcare workers to waive their second meal periods on shifts longer than 12 hours, the court declared.

Further, the panel said its conclusion should have retroactive effect. “[E]mployers in this state have been on clear notice, pursuant to sections 512(a) and 516, they were required to provide health care workers with a second meal period when they worked more than 12 hours in a day,” the court wrote.

Despite noting a reluctance to punish employers for conduct “apparently authorized by the IWC,” the panel said employers have received the benefit of employees working without the statutorily mandated second meal periods and “there is nothing unfair about requiring hospitals to compensate them for that time.”

Therefore, the plaintiffs were entitled to seek premium pay pursuant to Section 226.7 of the Labor Code for any failure by the hospital to provide mandatory second meal periods within the three-year statute of limitation period.

Orange Coast Memorial Medical Center appealed.

On May 20, the California Supreme Court granted the hospital’s petition for review. The state’s highest court said the case presented two issues: “(1) Is the health care industry meal period waiver provision in section 11(D) of the Industrial Wage Commission Order No. 5-2001 invalid under Labor Code section 512, subdivision (a)?” and “(2) Should the decision of the Court of Appeal partially invalidating the Wage Order be applied retroactively?”

To read the appellate court’s opinion in Gerard v. Orange Coast Memorial Medical Center, click here.

To read the California Supreme Court’s grant of review, click here.

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Employee’s Inability to Work With Particular Boss Not a Disability For FEHA Purposes

Why it matters

California’s Fair Employment and Housing Act (FEHA) does not recognize anxiety or stress due to a manager’s supervision as a disability, an appellate panel in the state recently concluded. A clinical assistant at a medical center alleged that she began visiting her physician because of stress at work due to interactions with her manager. After being diagnosed as having adjustment disorder with anxiety, the employee took a disability leave. Not long after she returned to work, the employee suffered a panic attack when her manager yelled at her—and never came back. She remained on disability leave for another four months before the employer fired her. The employee then sued for wrongful termination under FEHA, but the court affirmed a grant of summary judgment for the medical center, ruling that the employee’s stated disability—“an inability to work under a particular supervisor because of anxiety and stress related to the supervisor’s standard oversight of job performance”—was not a disability recognized by FEHA and therefore not an actionable claim.

Detailed discussion

Michaelin Higgins-Williams was hired by Sutter Medical Foundation in September 2007 as a clinical assistant. Her immediate supervisor was Debbie Prince, who in turn reported to the regional manager, Norma Perry.

In June 2010, Higgins-Williams reported to her treating physician that she was stressed because of interactions at work with human resources and her manager. Diagnosed as having adjustment disorder with anxiety, she requested and was granted a disability leave from work under the Family and Medical Leave Act (FMLA) and California’s counterpart, the Moore-Brown-Roberti Family Rights Act (CFRA).

After exhausting her leave, Higgins-Williams returned to work in August. She received a negative performance evaluation from Prince, signed by Perry. She claimed that she was singled out for negative treatment by Perry, who was “curt and abrupt” with her while “open and friendly” with other employees. In September, the employee said Prince inaccurately accused her of being irresponsible with her identification badge and Perry “grabbed her arm and yelled at her.”

Higgins-Williams suffered a panic attack as a result and left work. She was granted a leave of absence and submitted a request to transfer to a different department for “forever.” Sutter continued to extend her leave of absence. In January 2011, the medical center requested documentation about whether Higgins-Williams was medically cleared to return to work by February 1, 2011. When the information was not provided, Higgins-Williams was terminated.

She filed suit under California’s Fair Employment and Housing Act (FEHA) and the CFRA. A trial court granted summary judgment for Sutter, finding the plaintiff failed to allege a recognized disability.

An appellate panel affirmed. Three elements are required to establish a prima facie case of mental disability discrimination under FEHA, the court explained: that the plaintiff suffers from a mental disability; she is otherwise qualified to do the job with or without reasonable accommodation; and she was subjected to an adverse employment action because of the disability.

Higgins-Williams could not advance past the first element, the court said.

“[T]he plaintiff employee’s alleged disability—an inability to work under a particular supervisor because of anxiety and stress related to the supervisor’s standard oversight of job performance—is not a disability recognized in California’s Fair Employment and Housing Act,” the appellate panel wrote, citing Hobson v. Raychem Corp., 73 Cal. App. 4th 614 (1999).

Plaintiff and her treating physician “acknowledged on several occasions, both directly and through requests for a transfer from [Sutter], that plaintiff was unable to work under her regional manager Perry or her supervisor Prince because of anxiety and stress related to their standard oversight of plaintiff’s job performance,” the court said. “This is precisely ‘the inability … to work under a particular supervisor’ that Hobson says does not rise to a FEHA-recognized disability.”

While Hobson has been disapproved on one point—that FEHA requires a “substantial limit” on a major life activity—and questioned on another by the Ninth Circuit Court of Appeals, the central tenet of the case has not been overruled, the panel explained.

“What no decision has disapproved or questioned, however, is the Hobson point directly on point here—i.e., that an employee’s inability to work under a particular supervisor because of anxiety and stress related to the supervisor’s standard oversight of the employee’s job performance does not constitute a mental disability under FEHA,” the court wrote.

Given this conclusion, the panel said the plaintiff’s other disability-based causes of action also failed.

“The undisputed facts and plaintiff’s deposition testimony … show that Sutter had a legitimate reason for terminating plaintiff on February 1, 2011; and plaintiff has not raised an issue of fact that this reason was pretextual,” the court added.

Even the temporal proximity between plaintiff’s accommodation requests and her termination failed to raise a genuine issue of material fact “when viewed against the undisputed facts showing that Sutter, before terminating her, granted plaintiff nearly five additional months of leave (accommodation-based) after she had exhausted her CFRA/FMLA leave, and further asked plaintiff for information whether additional leave would effectuate her return as a clinical assistant—information plaintiff did not provide,” the court said.

The appellate panel remanded the case to the trial court for a determination of attorney’s fees and costs, particularly in light of a new opinion from the California Supreme Court raising the standard for employers to recover costs to require that a discrimination suit was “objectively groundless.”

To read the opinion in Higgins-Williams v. Sutter Medical Foundation, click here.

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Can an Offer of Complete Relief Moot a Case? U.S. Supreme Court to Decide

Why it matters

A hotly contested defense strategy is the subject of an upcoming U.S. Supreme Court case with major implications for employers. In the context of a Telephone Consumer Protection Act (TCPA) consumer class action, the justices will determine whether or not an offer of complete relief in a putative class action made before a class is certified moots the individual and/or the class claims. The question has occupied courts across the country not just in TCPA cases but employment law as well. At the very least, a decision from the U.S. Supreme Court will provide much-needed clarity to courts across the country that have struggled with the issue. A ruling that a complete offer can moot either individual and/or class claims would keep alive one strategy for employers facing class action litigation.

Detailed discussion

The case before the justices involves Campbell-Ewald, a marketing consultant hired by the U.S. Navy to develop and execute a recruiting campaign targeting young adults. Campbell-Ewald outsourced texting responsibility for the campaign to a third party and was named in a lawsuit filed by Jose Gomez, who alleged he received an unwanted text in May 2006.

Campbell-Ewald offered Gomez $1,053 per violation, plus reasonable costs, but the plaintiff allowed the offer to lapse. The company moved to dismiss the case as moot. A trial court judge said the unaccepted offer alone was insufficient to moot Gomez’s claim. The Ninth Circuit Court of Appeals affirmed that the case remained a live controversy, and Campbell-Ewald filed a writ of certiorari.

The U.S. Supreme Court granted cert in May.

In addition to splitting courts across the country in TCPA cases, the strategy has also been the subject of intensive litigation in the Fair Labor Standards Act (FLSA) context. In 2013, the Court assumed without deciding that an offer of full relief mooted an FLSA collective action in Genesis Healthcare Corp. v. Symczyk.

The 5-4 majority effectively shrugged about the impact of encouraging the strategy, writing that “a full settlement offer addresses plaintiff’s alleged harm by making the plaintiff whole.”

“In the absence of any claimant’s opting in, respondent’s suit became moot when her individual claim became moot, because she lacked any personal interest in representing others in this action,” the Court held. Distinguishing the nature of an FLSA collective action from a true class action suit, the justices said that “the mere presence of collective-action allegations in the complaint cannot save the suit from mootness once the individual claim is satisfied.”

Justice Elena Kagan—joined by Justices Ruth Bader Ginsburg, Stephen Breyer, and Sonia Sotomayor—authored a spirited dissent to stake out the position that an unaccepted offer cannot moot a case.

“When a plaintiff rejects such an offer—however good the terms—her interest in the lawsuit remains just what it was before,” she wrote. “And so too does the court’s ability to grant her relief. An unaccepted settlement offer—like any unaccepted contract offer—is a legal nullity, with no operative effect.”

The majority in the Genesis opinion distinguished FLSA collective actions from Rule 23 class actions, leaving parties and courts across the country uncertain as to the viability of the strategy in other cases.

While a reversal of the Ninth Circuit’s ruling in Campbell-Ewald would be a victory for employers, four members of the Court have seemingly staked out their position against the strategy.

To read the petition for certiorari in Campbell-Ewald v. Gomez, click here.

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California Supreme Court to Decide if On-Call Time Requires Compensation

Why it matters

In another case with significant ramifications for employers, the California Supreme Court has agreed to decide whether an employee on a break—and still “on call”—must be compensated for that time. The case involved a security company that admitted its guards were told to keep their radios and pagers on during rest breaks and “remain vigilant” should the need to respond arise. A trial court judge certified a class of security guards and entered judgment for roughly $103 million to compensate them for their time. An appellate panel reversed, holding that remaining on call does not itself constitute performing work. The applicable wage order only mandates that an employee not be required “to work” on a rest break—not that the employee be relieved of all duties, the court said. An affirmation of the appellate panel by the California Supreme Court would certainly ease the burden on employers. However, a January decision from the state’s highest court in Mendiola v. CPS Security Solutions addressing the same wage order and holding that workers must be paid for “all hours worked,” even sleeping security guards on call, could prove challenging to distinguish.

Detailed discussion

Three former security guards for ABM Security Services filed suit on behalf of themselves and other guards alleging that the employer failed to provide rest periods as mandated by California law because they were required to remain on call during breaks instead of being relieved of all of their duties.

Security guards employed by ABM are the “eyes and ears” of the building’s management, with duties to patrol buildings, hoist and lower flags, greet visitors, eject trespassers, and monitor and restrict access to buildings.

Wage Order 4 mandates that an employee who works more than three and one-half hours per day must be permitted to take a paid 10-minute rest period per every four hours of work or major fraction thereof. During that rest period, the employee shall not be required “to work.”

In the course of discovery, ABM admitted that it requires its security guards to keep their radios and pagers on during rest breaks, to remain vigilant, and to respond when needs arise, such as an emergency situation. The guards told the court that their rest periods were therefore indistinguishable from normal security work, rendering each rest break invalid under Wage Order 4.

A trial court judge certified a class of an estimated 10,000 security guards, and both parties moved for summary judgment. The class relied solely on ABM’s policy and offered no evidence indicating that anyone’s rest period had ever been interrupted. ABM responded with evidence—including the deposition testimony of the named plaintiffs—that guards regularly took uninterrupted rest breaks during which they performed no work but engaged in leisure activities such as smoking, reading, and surfing the Internet. The mere risk of interruption did not negate or invalidate a rest break, the employer told the court.

The trial court judge granted the motion in favor of the class and entered an award of $103 million in statutory damages, interest, penalties, and attorney fees.

ABM appealed. Considering the scope and duties that Wage Order 4, as well as California Labor Code Sections 226.7 and 512, imposes on a security company to afford rest periods to its employees, the appellate panel reversed.

Wage Order 4 sets out the necessary time periods for security guard rest periods, with Section 226.7 providing the only guidance as to the nature of a rest break: “An employer shall not require an employee to work during a meal or rest or recovery period.”

Does simply being on call constitute performing “work”? “We conclude that it does not,” the panel wrote.

The court bolstered its conclusion with a comparison between rest periods and meal periods. Subdivision 11(A) of Wage Order 4 requires that an employee be “relieved of all duty” during a meal period. However, Subdivision 12(A) contains no similar requirement.

“If the [Industrial Welfare Commission] had wanted to relieve an employee of all duty during a rest period, including the duty to remain on call, it knew how to do so,” the court wrote. “That it did not indicates no such requirement was intended. On the contrary, the IWC’s order that an on-duty meal period must be paid implies an on-duty rest period, which is also paid, is permissible: It would make no sense to permit a 30-minute paid, on duty meal break but not a 10-minute paid rest break.”

Whether or not the on-call rest period was “indistinguishable” from other parts of the guards’ workday was “without merit,” the panel said. “[S]ection 226.7 does not require that a rest period be distinguishable from the remainder of the workday, it requires only that an employee not be required ‘to work’ during breaks. Even if an employee did nothing but remain on call all day, being equally idle on a rest break does not constitute working.”

Many of the tasks required for a guard on duty—greeting visitors, raising and lowering the flag, monitoring traffic or parking—were required of the guards while on rest periods, the court added. “Admittedly, an on-call guard must return to duty if requested, but … remaining available to work is not the same as performing work.”

The court distinguished the California Supreme Court’s 2012 decision in Brinker Restaurant Corp. v. Superior Court because “it said nothing about an employer’s obligation to relieve an employee of all duty on a rest break,” and concerned meal periods only. Meal breaks and rest breaks are qualitatively different, and Brinker applies to the mandate of Subdivision 11(A), but not Subdivision 12(A), the court said.

As for Mendiola v. CPS Security Solutions, the panel cited the decision for the proposition that not all employees at work actually perform work. “[A]n employer, if he chooses, may hire a man to do nothing, or to do nothing but wait for something to happen … [I]dleness plays a part in all employments in a stand-by capacity.”

“Remaining on call is an example,” the panel wrote. “On-call status is a state of being, not an action. But section 226.7 prohibits only the action, not the status. In other words, it prohibits only working during a rest break, not remaining available to work.”

Reversing summary judgment in favor of the class as well as the damage awards, the court left intact the class certification order.

The class filed a petition for review with the California Supreme Court, which was granted on May 29. The state’s highest court said it will consider whether Section 226.7 and Wage Order 4 “require that employees be relieved of all duties during rest breaks,” as well as if “security guards who remain on call during rest breaks [are] performing work during that time under the analysis of Mendiola.”

To read the appellate court’s decision in Augustus v. ABM Security Services, click here.

To read the California Supreme Court’s grant of review, click here.

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