As we wrote about last month, on May 21, 2018, the Supreme Court rendered its decision in Epic Systems Corp. v. Lewis, 138 S. Ct. 1632 (2018), rejecting perhaps the largest remaining obstacles to the enforcement of class action waivers in arbitration agreements in the employment context. The Court concluded that the class action waivers did not violate the National Labor Relations Act (“NLRA”). Although the Court’s opinion also seemed dispositive of whether such agreements could be avoided under the Fair Labor Standards Act (“FLSA”), at least one claimant tried to continue to litigate the issue, which was disposed of last week in Gaffers v. Kelly Servs., Inc., No. 16-2210 (6th Cir. 2018). And now the Sixth Circuit has addressed whether Epic Systems would apply to arbitration agreements with putative independent contractors who contended that they should have been treated as employees.
A single paragraph in an otherwise routine opinion could have reverberations in FLSA exemption cases for years to come.
Earlier this week, in a 5-4 decision, the Supreme Court held in Encino Motorcars LLC v. Navarro et al. that auto service advisors are exempt under the FLSA’s overtime pay requirement. While the case resolved a circuit split for a discrete exemption, the Court’s decision has broad implications for all employers.
Last week, the United States Supreme Court released its decision in Digital Realty Trust v. Somers, where the Court unanimously adopted a narrow reading of the Dodd-Frank Act’s anti-retaliation “whistleblower” provision. The Court held that the provision applies only to individuals who report securities violations directly to the Securities and Exchange Commission.
The case involved Paul Somers, a former employee of Digital Realty Trust, who alleged that the company terminated him after he internally reported suspected violations of securities law by the company. Somers, however, never reported any of the suspected securities violations to the SEC.
In the employment law arena, plaintiffs frequently bring in federal court both federal and state law claims arising from the same nucleus of fact. Plaintiffs can do so thanks to 28 U.S.C. § 1367, which permits federal courts to exercise supplemental jurisdiction over state claims arising from the “same case or controversy” as the federal claims. 28 U.S.C. § 1367(a). If the federal court dismisses the federal claims, often the court will decline to retain jurisdiction over just the state law claims and, consequently, dismisses those, too. See 28 U.S.C. § 1367(c)(3). If that happens, how long does the plaintiff have to re-file in state court the state law claims, which have not been adjudicated on the merits? The answer lies in 28 U.S.C. § 1367(d), which reads in relevant part:
On January 8, 2018, the United States Supreme Court denied a petition for certiorari seeking to overturn the Fourth Circuit’s new joint employer test under the Fair Labor Standards Act. As a result, employers will continue to be faced with differing joint employer standards in the various federal circuits.
The United States Supreme Court recently resolved a Circuit Court split on the appropriate standard of review of a District Court’s decision whether to enforce a subpoena issued by the Equal Employment Opportunity Commission (“EEOC”). In McLane Co., Inc. v. Equal Employment Opportunity Commission, No. 15-1248, 581 U.S. __ (April 3, 2017), the Court held that such a decision should be reviewed only to determine whether the District Court abused its discretion – a deferential standard of review. This conclusion was fairly uncontroversial. Indeed, the abuse of discretion standard has long been used for review of decisions whether to enforce administrative subpoenas (such as those issued by the National Labor Relations Board). Historically, however, the Ninth Circuit alone has used a de novo standard of review in these circumstances, while the seven other U.S. Courts of Appeal to have addressed this issue all applied the more deferential standard. The Ninth Circuit panel itself questioned why de novo review applied, in light of the substantial authority to the contrary, and the Supreme Court took the case to resolve this circuit split.
The United States Supreme Court has granted consolidated review of three cases to determine whether arbitration agreements that waive employees’ rights to participate in a class action lawsuit against their employer are unlawful. The Court’s decision to address the uncertainty surrounding class action waivers of employment claims follows a circuit split last year in which the Fifth and Eighth circuits upheld such waivers and the Seventh and Ninth circuits found that such waivers violate the National Labor Relations Act. Given the increasingly widespread use of class action waivers by employers to stem costly class and collective actions, the high court’s ruling is likely to have a significant nationwide impact.
On January 31, 2017, President Trump nominated Neil Gorsuch to fill the nearly year-long vacancy on the Supreme Court left by Justice Scalia. Judge Gorsuch, currently on the Tenth Circuit Court of Appeal, is likely a welcome choice for employers. His employment decisions generally—though not always—have favorable outcomes for employers. However, he does not appear to be a trailblazer on employment issues, but rather applies established precedent that generally favors employers. His employment decisions do not tend to draw dissent, bolstering the view that his opinions are not significant departures from Tenth Circuit and Supreme Court precedent. (Of course, not all agree. Senator Elizabeth Warren describes him as having “twisted himself into a pretzel to make sure the rules favor giant companies over workers and individual Americans. He has sided with employers who deny wages, improperly fire workers, or retaliate against whistleblowers for misconduct. He has ruled against workers in all manner of discrimination cases.”)
The United States Supreme Court has denied a restaurant manager’s petition seeking review of whether parties may stipulate to the dismissal with prejudice of a lawsuit alleging violations of the Fair Labor Standards Act (“FLSA”), or whether judicial or Department of Labor (“DOL”) approval is a prerequisite to such a dismissal, as the Second Circuit held in his case, Cheeks v. Freeport Pancake House, Inc. Having declined the petition for writ of certiorari, FLSA lawsuits will remain more difficult to resolve for employers in New York, Connecticut, and Vermont.