This article is Part 1 of a two-part series providing an overview of recent United States Supreme Court decisions in employment law.
The United States Supreme Court issued several decisions during the past year that may affect California employers. We summarize the most important of these decisions below.
Integrity Staffing Solutions, Inc. v. Busk (December 9, 2014)
Integrity Staffing Solutions provides warehouse staffing for online retailer Amazon.com. Plaintiffs Busk and Castro worked as hourly employees, packaging orders for Amazon shipments out of a facility in Nevada.
Integrity requires its employees to go through a metal detector and security screening at the end of each day to prevent theft. The process took around 20-25 minutes each day after employees clocked out.
Plaintiffs brought a class action under the Fair Labor Standards Act, asserting that the security screening should be compensated as time worked. The district court dismissed the case on the ground that the post-shift security procedures were not an integral part of the principal duties the plaintiffs were employed to perform. The federal Portal-to-Portal Act states that such non-integral activities (called “postliminary” activities) are not compensable.
Plaintiffs appealed, and the 9th Circuit reversed the district court’s ruling. The court concluded that postliminary activities may still be compensable if they are (1) necessary for the work performed, and (2) for the benefit of the employer. So, even though the security procedures were unrelated to the packaging duties plaintiffs were hired to perform, the 9th Circuit found that the screening process was compensable as a necessary security measure for Integrity’s benefit.
But the U.S. Supreme Court unanimously reversed the 9th Circuit. The Supreme Court held that an integral activity is one so intrinsic to the employee’s principal duties that the employee could not carry out his job without that activity. The Court found that the security screening was not compensable because it was not essential to the plaintiffs’ principal duties of packaging Amazon orders.
The Supreme Court’s ruling shows that not every activity required by an employer is compensable. However, California employers should not rely on this case without extreme caution. California courts use a broad definition of time worked which includes any time spent under the control of the employer. So, the result would likely be different under California law.
Equal Employment Opportunity Commission v. Abercrombie & Fitch Stores, Inc. (June 1, 2015)
Retailer Abercrombie & Fitch enforces a sales employee dress code that prohibits wearing caps of any kind. Teenager Samantha Elauf applied and was interviewed for a sales job at a retail store in Tulsa, Oklahoma, wearing a Muslim hijab (headscarf). The interviewer did not ask Elauf about the headscarf, but informed management that she believed it was for religious purposes and expressed concern it would conflict with the company’s dress code. Management declined to hire Elauf for that reason.
The EEOC sued Abercrombie, claiming the failure to hire Elauf was religious discrimination in violation of Title VII. Abercrombie countered that there could be no liability for failure to accommodate a religious practice where Elauf never gave actual notice that she needed an accommodation.
The Supreme Court ruled that whether Abercrombie had actual notice of Elauf’s religious practice was irrelevant. Title VII prohibits employers from discriminating against applicants where religion is a “motivating factor” in the decision. The Court found that Abercrombie’s belief that Elauf’s religion would interfere with the company’s dress code requirement motivated management to take adverse action, whether or not that belief was confirmed by Elauf.
The bottom line is that taking adverse action based on a “perceived” need for religious accommodation can still create liability. Abercrombie could have avoided this ambiguity by asking Elauf if she could abide by the dress code, if hired — which would have provided Elauf the opportunity to clarify whether an accommodation was needed.
California employers should note that state law requires employers to accommodate religious dress and grooming standards, such as headscarves.
Tibble v. Edison International (May 19, 2015)
Several individual beneficiaries of Edison’s 401(k) plan filed a lawsuit claiming that the trustees of the Plan violated fiduciary duties under ERISA by offering mutual funds that could have been obtained for lower administrative fees with due diligence. Edison argued that the lawsuit was untimely because ERISA requires fiduciary duty claims to be brought within six years, and Edison had offered the mutual funds more than six years prior.
Trustees of employer pension plans must manage the assets of those plans with “prudence.” The question before the Supreme Court in this case was whether that duty of prudence applies only at the time the trustee first makes an investment, or whether the standard imposes an obligation on the trustee to continuously monitor investments to ensure they don’t become imprudent over time.
The Court held that trustees have a continuing duty to monitor plans as circumstances change. Therefore, the plaintiffs could properly claim that the Edison trustees violated that duty of prudence on an ongoing basis, into the six-year statutory period.
Mach Mining v. Equal Employment Opportunity Commission (April 29, 2015)
Plaintiff claimed Mach Mining refused to hire her as a coal miner because of her sex. The EEOC investigated and found evidence to support her claims. So, the EEOC wrote a letter notifying the parties of the mandatory “conciliation” process (similar to mediation) and stated that it would follow up regarding informal dispute resolution.
Approximately a year later, the EEOC sent Mach a letter stating the conciliation efforts were unsuccessful and that any further efforts would be “futile.” EEOC then brought suit against Mach in federal court. Mach claimed the lawsuit was premature because the EEOC’s efforts at conciliation were perfunctory at best. The EEOC argued that the Court has no power to review the quality of EEOC’s conciliation efforts.
The Supreme Court agreed with Mach, finding that a court may review the EEOC’s conciliation efforts to determine whether the agency has met prerequisites to filing a lawsuit.
Part 2 of this article will be printed next time.