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U.S. Supreme Court Round-Up

by Jennifer Brown Shaw and Brooke Kozak | The Daily Recorder | August 8, 2022

During its most recent term, the United States Supreme Court issued eight decisions that may affect California employers. We summarize these rulings below.

Vaccine Mandates and Agency Deference

On November 5, 2021, the Secretary of Health and Human Services (“HHS”) issued an interim final rule requiring Medicare and Medicaid-funded facilities to ensure their staff are vaccinated against COVID-19. On the same day, the federal Occupational Safety and Health Administration (“OSHA”) published an emergency temporary standard requiring employers with at least 100 employees to verify that employees are vaccinated against COVID-19 or undergoing weekly COVID-19 testing.

In Biden v. Missouri, the Court allowed HHS’s rule to stand. However, in National Federation of Independent Businesses v. Department of Labor, the Court struck down OSHA’s vaccine mandate on the ground that the mandate exceeded OSHA’s statutory authority. The ruling did not affect state and local vaccine mandates.

When reviewing the legality of actions taken by administrative agencies (such as OSHA), the Court has historically deferred to the agency’s interpretation when relevant statutes enacted by Congress are silent or ambiguous on the issue (often referred to as “Chevron deference”). However, in the NFIB vaccine mandate case, the Court explained that if Congress intended to assign decisions of “vast economic and political significance” to an administrative agency, it would clearly express such authorization in the relevant statute.

The Court relied on the “major questions” doctrine to strike down agency regulations in West Virginia v. Environmental Protection Agency. Although not strictly an employment case, the Court’s recent reliance on the major questions doctrine will have significance for employers. Lawmakers often intentionally word statutes broadly, relying on administrative agencies to carry out the statute’s objectives. Agencies that regulate the workplace are now on notice that the Court may more closely scrutinize their actions to determine whether Congress granted such authority. In light of this decision, employers should consult with their employment counsel before implementing changes when administrative agencies “finalize” new rules or regulations.

Arbitration

The Court decided three cases that may affect an employer’s ability to compel current and former employees to arbitrate claims, rather than pursue their claims in court.

In Morgan v. Sundance, Inc., the Court held that an employer waived its right to enforce an arbitration agreement with the plaintiff-employee by first litigating the case for eight months. Employers should search for any applicable arbitration agreements as soon as a claim is filed, and move quickly to compel arbitration.

Under the Federal Arbitration Act (“FAA”), arbitration agreements with certain transportation workers who are “engaged in foreign or interstate commerce” are not enforceable. In Southwest Airlines Co. v. Saxon, the Court held that the FAA exempts cargo ramp supervisors working for an airline because their duties involve loading and unloading cargo that would be transported across state lines. The Court clarified that the FAA does not exempt all employees of transportation providers. Rather, the analysis depends on the “actual work” that the employees typically carry out.

The Court’s decision in Viking River Cruises, Inc. v. Moriana was welcome news for California employers. The California Private Attorneys General Act (“PAGA”) allows individual employees to sue an employer on behalf of the State to recover penalties for Labor Code violations that they personally experienced (“individual claims”) and violations that other employees experienced (“representative claims”). In Viking, the Court held that a provision in an arbitration agreement requiring employees to arbitrate individual PAGA claims is enforceable, but waivers of representative claims are not enforceable. Employers with arbitration programs should work with their employment counsel to revise and redistribute arbitration agreements.

It remains unclear what happens to representative claims when the employee bringing the lawsuit must arbitrate their individual claims. The Court hinted that the employee will likely lack standing to pursue any representative PAGA claims. However, the door remains open for the state legislature to modify the law. Employers should watch for developments in this area.

Other Issues

In Kennedy v. Bremerton School District, the Court analyzed an apparent conflict between the clauses in the U.S. Constitution requiring separation of church and state, and prohibiting government interference with speech and the exercise of religion. The Court held that a public employer may not prohibit an employee from making religious statements when the statements are made as a private citizen, and not as a public employee. In this case, a public school football coach’s post-game prayers with students were permissible, as long as participation was not coerced, because he was not “acting within the scope of his duties as a coach” when he led the prayers.

Although the First Amendment is not applicable to private employers, state and federal laws require employers to reasonably accommodate employees’ sincerely held religious beliefs, practices, or observances.

In Dobbs v. Jackson Women’s Health Organization, the Court held that the U.S. Constitution “does not confer a right to abortion,” and returned the right to regulate abortion to the states. Although Dobbs is not an employment case, the ruling does raise questions for employers. Employers, particularly those with employees in multiple states, are now wrestling with whether and how to provide benefits for abortion-related travel without invading employees’ privacy. Additionally, employers should consider whether employees seeking leave to have the procedure are eligible for benefits under state or federal laws, such as the federal Family and Medical Leave Act (“FMLA”).

Future Cases

In Helix Energy Solutions Group, Inc. v. Hewitt, the Court will determine whether an employer who paid a highly-compensated employee a set amount each day (“day rate”) satisfied the “salary basis” component required for the employee to qualify as exempt from the federal Fair Labor Standards Act’s overtime pay requirements. The Court will hear arguments in the case on October 12, 2022.

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