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2015 U.S. SUPREME COURT ROUNDUP PART 2

by Jennifer Brown Shaw and Julia C. Melnicoe | The Daily Recorder | Jul 21, 2015

This article is Part II of a two-part series

The following round out the U.S. Supreme Court’s labor and employment law opinions for the 2014 Term.

King v. Burwell (June 25, 2015)

The Patient Protection and Affordable Care Act (ACA) creates an individual mandate that requires most individuals to have health coverage or pay a penalty to the IRS. The ACA directs states to create insurance marketplaces called “exchanges” for their residents to buy their coverage. When states opt out, the federal government provides the exchange. Insurers within the exchange are required to accept every individual who applies for coverage and may not charge higher premiums based on health criteria.

The federal government provides tax credits to low income households to purchase insurance the required. Without the subsidies, the cost of buying insurance would exceed 8% of income for many lower-income individuals, which would exempt them from the individual mandate. The subsidies are essential to the ACA’s structure. Without them, many younger, healthy individuals would be exempt from the mandate, thereby causing the cost of insurance for the pool to increase.

The ACA expressly states the subsidies apply to insurance that is purchased through an exchange “established by the State.” The language referring to the subsidies does not mention the federal exchange. This case involved a dispute over whether the ACA’s tax credits apply to those who purchased their coverage through the federal exchange.

The Supreme Court, based on the structure of the ACA and other statutory language, found that the state and federal exchanges are one in the same “Exchange.” The Court declined to draw a distinction between whether insurance was purchased through the state or federal exchange. The Court noted that Congress intended the federal exchange to function the same as the state exchange. As such, the Court held that the tax credits were available to low income participants who bought insurance in states that did not establish their own exchange.

Perez v. Mortgage Bankers Association (March 9, 2015)

The Administrative Procedure Act (APA) authorizes federal agencies to create regulations. “Legislative” regulations have force of law and must go through a public notice and comment period. “Interpretive” rules merely provide guidance and do not have a notice and comment period. A federal circuit court previously held that revisions to interpretive rules must be subject to public review.

The Department of Labor has traditionally published “opinion letters” regarding the interpretation of a particular law to specific situations. In 2010, the DOL issued an “Administrator Interpretation” in which the Administrator opined that mortgage loan officers were non-exempt. The DOL issued several other general Administrator Interpretations as well.

The Mortgage Bankers Association sued DOL on the ground that its Administrator Interpretation regarding the exemption required public review. The Supreme Court ruled that the APA does not support the argument that revisions to interpretive rules require a notice and comment period. The Court refused to address whether the Administrator Interpretation was really a “legislative rule in interpretive clothing,” as the MBA had failed to make that argument in the lower courts.

Department of Homeland Security v. MacLean (January 21, 2015)

MacLean was an air marshal for the Transportation Security Administration. He received notice air marshals would not be used on long flights. MacLean believed the new policy was a cost saving measure that was contrary to public safety. He complained internally. When he didn’t receive the response he had desired, he leaked the details to a reporter. TSA eventually discovered the source of the leak and terminated MacLean.

MacLean sued under the federal Whistleblower Protection Act. The TSA argued that MacLean’s disclosure was exempt from whistleblower protection because the WPA does not protect disclosures specifically prohibited by law. The TSA claimed MacLean and leaked aviation information in violation of both TSA regulations and the Aviation and Transportation Security Act .

The Supreme Court concluded that the whistleblower statute exempts only disclosures prohibited by statute, not TSA regulations. The Court also found that MacLean did not violate the ATSA, which merely gives the TSA power to make regulations. Consequently, the Court held that MacLean’s disclosure was protected activity under the WPA.

Young v. UPS (March 21, 2015)

Young worked as a delivery driver for UPS. An essential function of her job was lifting up to 70 pounds. Young’s doctor restricted her from lifting more than 20 pounds after she became pregnant. She requested temporary light duty, which UPS declined to do. UPS provided light duty equally to members of both sexes, but only under certain circumstances, not including pregnancy.

Young sued under the federal Pregnancy Discrimination Act for discrimination. She claimed UPS denied her light duty, while providing light duty to non-pregnant employees. The PDA describes pregnancy bias as a form of sex discrimination, and states that pregnant employees must be treated the same as other workers who can handle the same kind of job.

The Supreme Court rejected Young’s argument that an employer must treat pregnant employee as favorably as it treats any similarly abled employee, calling that a “most-favored-nation” approach. The Court also rejected UPS’ argument that pregnancy discrimination is identical to sex discrimination, and that a sex-neutral accommodation policy would therefore also be pregnancy-neutral.

The Court instead referred to the familiar McDonnell Douglas framework (used by California courts for establishing violations of the Fair Employment and Housing Act), holding that a pregnant employee must show: (1) she sought an accommodation; (2) the employer did not accommodate her; and (3) the employer accommodated others “similar in their ability or inability to work.” The employer then has the burden to proffer a legitimate, nondiscriminatory reason for denying the accommodation. The employee must provide evidence that the employer’s legitimate reason is a pretext for discrimination. The Court decided there was a genuine dispute as to whether UPS treated non-pregnant employees with similar abilities differently based on differences in UPS’ written accommodation polices. This decision will significantly affect how employers grant light duty, particularly to certain classes of workers.

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