Supreme Court Preview: Workplace Issues Are on the Docket

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The U.S. Supreme Court started a new term Oct. 1 and immediately jumped into oral argument in an age-discrimination case. The high court will also hear arguments in an arbitration case later this week. Here are the key issues on the docket this term that may shape workplace policies and practices.

The ADEA's Reach

The justices heard arguments Oct. 1 in a case that asks if the Age Discrimination in Employment Act (ADEA) applies to public employers only if they have 20 or more employees—which is the threshold that is applied to private employers—or if the act protects all public-sector state and local workers regardless of employer size.

In Mount Lemmon Fire District v. Guido, U.S., No. 17-587, two laid-off firefighters brought an ADEA claim against the Mount Lemmon Fire District, which had 11 full-time employees. The employer argued that the ADEA didn't apply in this case because the fire district didn't meet the threshold number of employees for coverage. The 9th U.S. Circuit Court of Appeals disagreed and ruled that the ADEA applies to all state political subdivisions, regardless of size. This ruling is a departure from the 6th, 7th, 8th and 10th Circuits, which have all held that the 20-employee threshold for private employers also applies to political subdivisions.  

The 9th Circuit's interpretation "wreaks havoc" by "treating public employers worse than private ones" when the statute's purpose "was to bring parity to the two," said E. Joshua Rosenkranz, an attorney with Orrick in New York City, who represented the fire district during oral argument.

Justice Ruth Bader Ginsburg said that perhaps Congress should have used the language under Title VII of the Civil Rights Act of 1964, which makes it "absolutely clear" that the employee threshold applies to private and public employers. "But this statute, ADEA, picks up on the language of the Fair Labor Standards Act, which has no numerosity requirement," she said.

Arbitration Cases

Arbitration agreements are in the spotlight this term, particularly because of the #MeToo movement and the Supreme Court's recent decision in Epic Systems Corp. v. Lewis, U.S., No. 16–285 (May 21, 2018), said Katherine Sandberg, an attorney with Fisher Phillips in Sacramento, Calif.

The arbitration cases on the Supreme Court's docket show how important it is to draft an agreement clearly, noted Christopher Murray, an attorney with Ogletree Deakins in Indianapolis. Some of these cases involve bare-bones agreements, and the businesses probably could have avoided litigation if they were clearly drafted, he said.

In Lamps Plus Inc. v. Varela, U.S., No. 17-988, the high court will consider whether an arbitration agreement with general language stating that "arbitration shall be in lieu of any and all lawsuits or other civil legal proceedings" waived an employee's right to bring a class-action claim. The plaintiff brought a data-breach class action against the employer, but the employer argued that the worker signed an arbitration agreement requiring him to bring his claims in arbitration as an individual, not a class. The 9th Circuit said that the arbitration agreement was valid, but he could bring the claim as a class in arbitration. The plaintiff worked in California, and under California contract law ambiguities must be interpreted against the party who drafted the agreement, which is Lamps Plus in this case, the 9th Circuit said. Lamps Plus, however, argued that because the agreement didn't mention class arbitration, the agreement should be interpreted under the Federal Arbitration Act (FAA) and Supreme Court precedent to require individual arbitration.

[SHRM members-only HR Q&A: What are the California rules regarding mandatory arbitration agreements, and how do they differ from federal law?]

In New Prime Inc. v. Oliveira, U.S., No. 17-340, the high court justices will consider whether arbitration agreements are enforceable against long-haul truck drivers who were classified as independent contractors. There is an exception to the FAA for "contracts of employment" with workers who engage in interstate commerce, such as long-haul truck drivers. The question in this case is whether the exception applies to drivers who operate as independent contractors rather than employees. The trucking company argued that the drivers are not employees, and so it may enforce arbitration agreements against the independent contractors. However, the drivers argued that contracts of employment have historically applied to employees and independent contractors, and therefore the drivers in this case aren't required to arbitrate claims. This case should be of particular interest to any businesses that are in the trucking industry or use independent contractors as drivers, Murray said.

Some arbitration agreements include a clause stating that an arbitrator must decide the threshold question of whether an issue should be heard by an arbitrator or a court. But what if the answer is clear that a court needs to decide the case? Do judges have the power to decide to keep the case in court? If a judge thinks that there is no way that arbitration should be compelled in the case it may be a waste of resources to send the case to an arbitrator, Sandberg noted. In Henry Schein Inc. v. Archer and White Sales Inc., U.S. No. 17-1272, the justices will consider whether the FAA permits a court to decline to enforce an agreement delegating questions of arbitrability to an arbitrator if the claim that the case should be arbitrated is "wholly groundless."

Composition of the Court

Justice Anthony Kennedy, a Republican-appointed associate justice, announced his retirement in June, leaving the court with four conservative and four liberal justices to start the term. The last time the court had a vacancy—after Justice Antonin Scalia's death in 2016—the high court deadlocked on several high-profile issues. Since then, conservative Justice Neil Gorsuch has joined the Supreme Court.

The court will continue to have a conservative tilt, Sandberg said, though it is not clear when the vacancy will be filled. Judge Brett Kavanaugh has been nominated to Kennedy's seat, but his nomination has been highly controversial. The Senate has pressed pause on confirming the nomination, pending the outcome of a second FBI background investigation into claims of sexual assault and harassment.

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