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The Masterpiece Cakeshop Decision – Bakery Owner Wins, But on Narrow Grounds

On June 4, 2018, the Supreme Court of the United States issued its highly anticipated decision in Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Commission, Case No. 16-111. In its opinion, found here, the Court vacated an administrative order entered by the Colorado Civil Rights Commission (“CCRC” or the “Commission”) against the bakery, which had refused to sell custom wedding cakes to same-sex couples on the grounds that doing so would violate the owner’s sincerely held religious beliefs. The Court made it clear that judges and administrative officials violate a litigant’s constitutional rights if they engage in conduct that displays hostility toward a particular set of religious beliefs. But the majority opinion left many questions unanswered. It remains to be seen if a business owner may refuse to do business with a prospective customer because of the customer’s sexual orientation when the refusal is based on a sincerely held religious belief.

Employee Class Action Waivers Held Enforceable

On May 21st, the United States Supreme Court held that the National Labor Relations Act (“NLRA”) does not prohibit employers from requiring workers to agree, as a term and condition of their employment, that they waive the right to bring class or collective actions, and will individually arbitrate employment-related legal claims.  Epic Sys. Corp. v. Lewis, U.S., Case No. 16-285 (Slip Opinion, May 21, 2018). This decision resolves a high profile conflict, in which the National Labor Relations Board and some federal courts had found that the NLRA prohibits enforcement of arbitration agreements containing class action waivers. The Court’s decision makes clear that the NLRA does not prevent the enforcement of an arbitration agreement that is otherwise valid under the Federal Arbitration Act (“FAA”). 

NLRB Restored to Employer-Friendly Three Republican/ Two Democrat Composition

Relief for employers under the Trump Administration continues, following the U.S. Senate’s narrow confirmation of John Ring, former Morgan Lewis & Bockius LLP attorney, to the National Labor Relations Board on April 11, 2018.  The 50-48 Senate vote returned the five-member board to an employer-friendly composition of three Republicans and two Democrats and alleviates the log jam of the 2-2 split created when Board Member Phillip Miscimarra stepped down. On April 13, Ring became Chair of the Board, replacing Marvin Kaplan as Chair. Kaplan remains a member of the Board. 

New WHD Opinion Letters Provide Guidance to Employers

Last week, the U.S. Department of Labor’s Wage and Hour Division (WHD) issued three new opinion letters for the first time since 2010.  The Obama administration had ceased the practice of issuing opinion letters – which answer specific questions from employers or other parties – in favor of general administrative interpretations.  Last June, Secretary of Labor Alex Acosta announced that he was reinstating the practice of issuing opinion letters for the Trump administration.  This announcement was praised by businesses and employment lawyers because the opinion letters apply the law to a specific set of facts and represent official statements of agency policy.  In addition to the new letters, WHD republished 17 letters the Obama administration rescinded following their original publication late in the Bush administration.

Equal Pay Act: Ninth Circuit Says Prior Salary Not Job-Related

On April 9, the full Ninth Circuit held that employers may not rely on an employee’s prior salary as a “factor other than sex” in defending against a claim under the Equal Pay Act. Rizo v. Yovino, No. 16-15372 (9th Cir. April 9, 2018) (found here). In making this determination, the court phrased the question before it concisely, asking “can an employer justify a wage differential between male and female employees by relying on prior salary?” The answer: a resounding “no.” The court further stated that the “text, history and purpose of the Equal Pay Act” do not allow an employer to rely on an employee’s prior salary to justify a wage disparity. Id. 

DOL Announces “PAID” Program

On March 6, 2018, the Wage and Hour Division of the U.S. Department of Labor (DOL) announced that it will soon launch a nationwide pilot program for employers to self-report potential overtime and minimum wage violations. The pilot program is called the Payroll Audit Independent Determination (PAID) program. The primary objective of PAID, according to the agency, is to “improve employers’ compliance with overtime and minimum wage obligations, and to ensure that more employees receive the back wages they are owed—faster.” Many details are not yet available, but the DOL has announced the broad outlines of the program, which are available here:  https://www.dol.gov/whd/paid/#1

Large Arizona Jury Award Reversed Because of Timely Raised Procedural Defense

The Arizona Court of Appeals recently reversed a jury’s award of $375,000 in damages to a former police officer for the City of Surprise. In Peterson v. City of Surprise, No. 1 CA-CV 16-0415 (Feb. 6, 2018), the court held that the employee, who claimed she was constructively discharged in retaliation for reporting sexual harassment, was precluded from bringing the case in court because she had failed to file a charge of discrimination within 180 days after she left her employment. As the court stated, the employee specifically “crafted her claim against the City to allege not constructive discharge caused by ‘firsthand’ discrimination, but constructive discharge caused by illegal retaliation under the [Arizona Employment Protection Act].” A claim of illegal retaliation is one that contends that the employer’s actions were wrongful in response to a report of discrimination, not wrongful because of the discrimination itself. The court held that there was no difference between the claim of retaliation and the harassment claims for purposes of the filing deadline.

City of KCMO Adopts Ban The Box Ordinance for All “Employers”

On February 2, 2018, the City of Kansas City Missouri (“KCMO” or “the City”) adopted a “Ban The Box” ordinance that applies to private employers. The KCMO “Criminal Records in Employment” ordinance enacts a new section, Section 38-104. The ordinance becomes effective on June 9, 2018.  Before this ordinance, private employers located in KCMO were encouraged, but not required, to limit the extent to which they based employment-decisions on an applicant’s criminal history. The new Section 38-104 clearly and unambiguously places limitations on the extent to which all private employers located in KCMO can take an applicant or current employee’s criminal history into account when making employment decisions. (The City has applied a similar rule to its own employment procedures since 2013.). Employers with locations in KCMO should carefully review the ordinance and seek guidance from legal counsel in determining whether, how and when to make inquiries regarding criminal history.

The FLSA & Unpaid Internship Programs: DOL Adopts “Primary Beneficiary” Test

On January 5, 2018, the U.S. Department of Labor (“DOL”) clarified its position regarding paid and unpaid internships. They will now use the “primary beneficiary” test for determining “whether interns are employees” under the Fair Labor Standards Act (“FLSA”). The agency has issued a revised Fact Sheet called “Internship Programs under the Fair Labor Standards Act.”

NLRB Issues Two Landmark Decisions: Return to Original Joint-Employer Standard & New Handbook Policy Review Standard

On December 14, 2017, the National Labor Relations Board (the “Board”) issued two landmark decisions. Both are of note because they directly and substantively address two issues that have vexed employers for a number of years: (1) When can two separate and distinct corporate entities be treated as joint-employers for NLRA purposes? and (2) When is a work rule or handbook policy unlawfully overbroad under the NLRA?

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