During its most recent term, the United States Supreme Court issued two decisions that may affect California employers. We summarize those rulings, and two upcoming cases, below.
Employee Exemptions from Overtime Compensation
The Fair Labor Standards Act (“FLSA”) requires employers to pay overtime to employees who work more than 40 hours in a workweek. Employees covered under the “white collar” exemptions are not entitled to overtime.
There are two requirements to meet the white collar exemptions: a duties test and a salary test. The duties test is satisfied if the employee performs certain tasks with independence and discretion. To meet the salary test, the employee must be paid a minimum fixed salary (which is far less than the salary required for the related California exemption) that is not subject to variation based on the quantity or the quality of the work. (29 C.F.R. § 541.100)
In Helix Energy Solutions Group, Inc. v. Hewitt, the Court considered whether a highly-paid employee can satisfy the “salary basis” test if they are paid a fixed daily rate that far exceeds the minimum salary required under the FLSA. The employee in question regularly worked more than 40 hours each per week and made more than $200,000 per year, but was paid per day rather than on a fixed salary. The employer argued that the employee was not entitled to overtime payments because he was a “highly compensated employee.” The employee, on the other hand, took the position that because his compensation depended on the number of days he worked (i.e., if he worked five days, he would receive five times more pay than if he worked one day), his compensation was not fixed, and he was not paid a “salary.” The Court agreed with the employee, finding under these facts that the employee could not meet the salary basis test, despite his substantial annual earnings.
Because California law borrows from the FLSA in this area, the Helix decision puts to rest any argument that highly compensated employees may be exempt under California law even if they are not paid a fixed salary equal to at least two times the state’s minimum wage for full-time work.
Union Strikes and Intentional Property Damage
Among other things, the federal National Labor Relations Act (“NLRA”) protects the right of union employees to strike. In Glacier Northwest, Inc. v. International Bhd. of Teamsters Loc. Union No. 174, the Court ruled that an employer may maintain a tort action against a labor union for intentional destruction of the employer’s property resulting from a strike.
The employer, Glacier Northwest, Inc., sells ready-mix concrete and employs truck drivers to deliver the product to customers. The truck drivers went on an organized strike during negotiations between the union and company. At the time, the company was prepared to deliver significant loads of concrete to its customers. Because of the strike, mix-ready concrete was left in the company’s rotating truck drum. As a result, the concrete hardened and damaged the truck. The NLRA requires unions to take “reasonable precautions” to protect employer property from foreseeable and imminent danger resulting from a work stoppage. Because the union failed to do so, the strike was not protected under the NLRA, and the employer could proceed with its state tort claim for property damage.
The Glacier Northwest decision is rare a win for California employers covered by the NLRA (government employers, employers who employ exclusively agricultural workers, and employers subject to the Railway Labor Act generally are excluded).
Pending Decisions
In Geoff v. Dejoy, the Court will address two issues: (1) whether to uphold the “more-than-de-minimis cost” standard as articulated in Trans World Airlines, Inc. v. Hardison as a basis for an employer to refuse a religious accommodation; and (2) whether an employer may use evidence that a religious accommodation burdens other employees, rather than the business itself, to prove an “undue hardship” affirmative defense. In Dejoy, the employee sued his employer for failing to accommodate his religion when he requested not to work on Sundays. Although the employer attempted to find co-workers who could change shifts with the employee, the employer’s efforts were unsuccessful. The employee then failed to show up for his scheduled Sunday shift and the employer terminated him. The Court heard this case on April 18, 2023. This decision will provide important guidance to employers in responding to religious accommodation requests.
In Students for Admissions, Inc. v. President & Fellows of Harvard College (“Harvard College”) and Students for Fair Admissions, Inc. v. University of North Carolina (“University of North Carolina”), the Court will determine, among other affirmative action issues, whether higher education institutions lawfully may consider race as a factor in the admissions process. In Harvard College, rejected applicants claim that Harvard College’s admissions process treats Asian American applicants unfairly. In University of North Carolina, the petitioner took the argument and step further, alleging a violation of the Fourteenth Amendment. The Court heard both cases on October 31, 2022. The Court’s decisions in these matters likely will affect the implementation of workplace DEI programs.