During the last week of its most recent term, the United States Supreme Court (the “Court”) issued four important decisions that may affect California employers. We summarize those rulings, and an employment discrimination case the Court agreed to hear, below.

Arbitration

In Coinbase, Inc. v. Bielski, two consumers filed class actions against Coinbase. The trial court denied Coinbase’s motion to compel arbitration of the disputes, and Coinbase appealed. The trial court denied Coinbase’s request to pause the litigation until the appellate court reached a decision.

The Court held that when a trial court denies a party’s request to compel arbitration, the court must pause pre-trial and trial proceedings while the decision is appealed. The decision is a rare win for employers with arbitration programs. 

Religious Accommodations

Title VII of the Civil Rights Act of 1964 requires employers to reasonably accommodate employees’ religious practices whenever doing so would not create an undue hardship for the business. Although Title VII does not define “undue hardship,” in the 1977 case Trans World Airlines, Inc. v. Hardison, the Court suggested that requiring an employer to bear more than a “de minimis cost” to grant an accommodation would be an undue hardship.

In the case this term, Groff v. Dejoy, the Court clarified the undue hardship standard for religious accommodations. There, the employee requested not to work on Sundays to observe the Sabbath. 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 disciplined him. The employee sued his employer for failing to accommodate his religious practice.

The employer argued that the requested accommodation created an undue hardship because it burdened the employee’s co-workers, which disrupted workflow and lowered morale. The Court rejected this argument, and explained that “hardship” suggests something more severe than a mere burden, and “undue” means the burden must rise to an excessive or unjustifiable level. The Court held that an employer may only deny a religious accommodation request if it can show that the burden of granting an accommodation would result in “substantial increased costs” in relation to the conduct of its particular business. Impacts on co-workers are relevant only to the extent those impacts affect the conduct of the business.

Employers should expect to see an increase in religious accommodation requests, which continue to require a fact-specific analysis.  This decision creates a more rigorous standard for employers to justify denying a requested accommodation based on undue hardship.

Free Speech

The First Amendment prohibits the government from making laws that restrict the free exercise of speech, including laws that compel speech with which the speaker disagrees. Many states, including California and Colorado, have enacted laws prohibiting businesses engaged in the sale of goods and services to the public from refusing to serve individuals based on certain protected characteristics, including sexual orientation.

In 303 Creative LLC v. Elenis, a website designer asked the Court to determine whether Colorado’s anti-discrimination law required her to create custom, expressive websites for same-sex couples, even though doing so violated her religious beliefs. The petitioner, Lorie Smith, argued that she was not “discriminating” against anyone because she did not object to serving certain individuals based on their protected status; rather, she objected to being compelled to engage in expressive activity by designing websites with content that contradicted her religious beliefs. Relying on the parties’ stipulation that the websites Smith produced were “pure speech,” the Court held that Colorado’s anti-discrimination law could not interfere with Smith’s freedom of speech by compelling her to promote a state-approved message she did not support. Without providing further guidance, the Court acknowledged that determining what qualifies as “expressive activity” protected by the First Amendment can raise “difficult questions.”

Although the decision is not an employment case, it certainly will have implications in the workplace. The First Amendment does not apply to private employers, and employers remain legally obligated to comply with federal and state laws prohibiting discrimination and harassment. However, employers should use caution when responding to employees who raise objections regarding the expression of viewpoints in the workplace, and consult with legal counsel as needed.

Racial Discrimination

In Students for Fair Admissions, Inc. v. President & Fellows of Harvard College (“Harvard”) and Students for Fair Admissions, Inc. v. University of North Carolina (“UNC”), the Court held that it is unlawful for higher education institutions to consider race as a factor in the admissions process. The Court decided that Harvard and UNC’s admissions programs were unlawful because they lacked “sufficiently focused and measureable objectives warranting the use of race,” perpetuated racial stereotypes, and lacked “meaningful end points.”

This decision, although not directly workplace related, may profoundly affect the legality of diversity, equity, and inclusion programs and employee affinity groups. Employers that offer these important employee resources should contact their employment law counsel immediately. 

Workplace Transfers (Pending Decision)

In Muldrow v. City of St. Louis, the Court will address whether Title VII of the Civil Rights Act of 1964 prohibits discrimination in transfer decisions absent a determination that the transfer decision resulted in a significant disadvantage. In Muldrow, a police sergeant was involuntarily transferred from her position in the intelligence division to a less prestigious patrol position. The Eighth Circuit held that the transfer did not cause a significant disadvantage because there was no diminution to the sergeant’s title, pay, or benefits. This decision will provide important guidance to employers regarding the meaning of “adverse employment action.”