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

Standard for Title VII Discrimination Claims

Under Title VII, employers cannot “refuse to hire or to discharge any individual, or otherwise discriminate against any individual” with respect to “compensation, terms, conditions or privileges of employment” on the basis of race, color, religion, sex, or national origin.

In Muldrow v. City of St. Louis, the Supreme Court considered whether a female police officer was discriminated against based on her sex when she was transferred to a different position with the same rank and pay as her previous position, but with different responsibilities, perks, and work schedule. The lower courts rejected her claim because she did not suffer “significant” harm.

The Supreme Court unanimously reversed the lower court’s decision. The Court, in pointing to Title VII’s specific language, concluded that the police officer needed to show only “some” harm from her transfer: “There is nothing in the provision to distinguish, as the courts below did, between transfers causing significant disadvantages and transfers causing not-so-significant ones. And there is nothing to otherwise establish an elevated threshold of harm.”

The Court’s decision lowers the standard of harm that transferred employees must show to prove discrimination under Title VII. For various reasons, most employees in California sue under the Fair Employment and Housing Act rather than Title VII. However, Title VII decisions are instructive and provide important guidance to all employers.

Court Deference to Federal Agencies

In 1984, the Supreme Court’s decision in Chevron v. Natural Resources Defense Council resulted in the long-standing doctrine known as the “Chevron doctrine” or “Chevron deference.” This doctrine essentially requires federal courts to uphold or defer to a federal government agency’s interpretation of a statute where the statute is ambiguous, and the agency’s interpretation is reasonable. This deference includes allowing agencies to issue guidance on the interpretation and application of the law.

In June of this year, the Supreme Court significantly restricted the scope of the Chevron doctrine in two decisions, Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce. The Court found that the Administrative Procedure Act, which establishes procedures for federal agencies to follow and instructions for courts to review agency actions, requires courts to “decide legal questions by applying their own judgment,” and not defer to agency interpretations. Chief Justice Roberts, writing the majority opinion, argued that the Chevron doctrine is “fundamentally misguided.”

Although this case is a matter of federal administrative law, it certainly will affect federal employment agencies, such as the Equal Employment Opportunity Commission, the Occupational Health and Safety Administration, and the U.S. Department of Labor, in terms of issuing interpretations of statutes and regulations.

Whistleblower Retaliation

The Sarbanes-Oxley Act of 2002 makes it unlawful for publicly traded companies to take adverse employment action against whistleblowers; that is, employees who report violations of SEC rules or regulations. In Murray v. UBS Securities, LLC, the plaintiff employee sued his employer, UBS Securities, alleging that he was fired in retaliation for reporting what he believed to be fraudulent activity. The lower court found in favor of the company, holding that the employee failed to prove that the company acted with “retaliatory intent.”

In February of this year, the Supreme Court unanimously reversed the lower court decision and held that an employee need not prove retaliatory intent when an adverse employment action is taken; the employee must only show that the whistleblowing activity was a “contributing factor” in the unfavorable employment decision. The Court explained that the text of the statute does not include a “retaliatory intent” requirement.

The Court further addressed the burden-shifting framework required under the statute. If the employee can show that the whistleblowing activity was a “contributing factor” in the personnel action, the burden then shifts to the employer to show that the employer would have taken the same unfavorable personnel action even if the employee had not engaged in the whistleblowing activity. 

Preliminary Injunctions Issued by the NLRB

The National Labor Relations Board (NLRB) may initiate administrative proceedings against an employer or labor union engaging in unfair labor practices. While these proceedings are pending, the NLRB can also request a preliminary injunction from a federal district court for temporary relief.

In Starbucks Corp. v. McKinney, several Starbucks employees invited the media to the store after hours to announce their plans to unionize. Starbucks subsequently fired several of the participating employees for violating company policy. The NLRB issued an administrative complaint against Starbucks for engaging in unfair labor practices. In addition, the NLRB sought a preliminary injunction that would require Starbucks to reinstate the employees.

The Supreme Court considered whether the NLRB must apply a two-part test or the stricter, more traditional four-part test when evaluating the appropriateness of a preliminary injunction. The two-part test asks whether “there is reasonable cause to believe that unfair labor practices have occurred,” and whether injunctive relief is “just and proper.” This test generally results in the preliminary injunction being granted. On the other hand, the four-part test consists of four criteria, identified in an earlier Supreme Court case, that “encompass the relevant equitable principles.”

The Court held that the NLRB must meet the criteria of the four-part test to receive a preliminary injunction. Stating that “a preliminary injunction is an ‘extraordinary’ equitable remedy’ that is ‘never awarded as of right,’” the Court did “not lightly assume that Congress has intended to depart from established principles” when interpreting a law giving federal courts the ability to issue preliminary injunctions. Moreover, the Court noted that it has consistently presumed that the four-part test applies when interpreting other statutes that authorize preliminary injunctions. Although the Court’s decision does not prohibit the NLRB from seeking preliminary injunctions, it does increase the bar.