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Supreme Court issues number of important employment rulings

by Sean D. Lee

The U.S. Supreme Court’s October 2015 term ended in late June 2016. Employers and federal contractors should take note of several recent decisions that affect businesses nationwide across a broad range of areas, including employment discrimination, affirmative action, and overtime exemptions.  

Green v. Brennan
In Green v. Brennan (May 23, 2016), the Court held that the 45-day time limit for a plaintiff to file a “constructive discharge” claim begins to run on the date the employee gives notice of his resignation—not at the time of the employer’s last allegedly discriminatory act.

Under Title VII of the Civil Rights Act of 1964, a claim of constructive discharge arises when an employee’s working conditions become so intolerable that he is forced to quit. In this case, Marvin Green alleged that he was forced to leave his job with the U.S. Postal Service because of severe discriminatory treatment. The case turned on a dispute over whether Green had taken the necessary steps to file his claim within the applicable time limit.

The Court’s decision is widely seen as pro-plaintiff because it extends the time that an employee has to file a constructive discharge claim. Whether this will actually lead to an increase in such claims remains to be seen. Nevertheless, both employers and employees will benefit from the Court’s clear-cut rule, which eliminates potentially lengthy and costly disputes over when the clock begins to run in a constructive discharge case.

CRST Van Expedited, Inc. v. EEOC
In a victory for employers, the Court held in CRST Van Expedited, Inc. v. EEOC (May 19, 2016) that a defendant does not need to win on the merits of an employment discrimination case to be the “prevailing party” entitled to attorneys’ fees.

The Equal Employment Opportunity Commissions (EEOC) filed a lawsuit against trucking company CRST on behalf of more than 250 women alleging sexual harassment. All but 67 dropped out over the course of litigation, and the district court dismissed the case because the EEOC failed to investigate, provide a cause determination, or attempt to conciliate the claims of the remaining women. The court held that CRST was the prevailing party and therefore eligible to receive attorneys’ fees—which ended up being over $4 million. On appeal, the U.S. 8th Circuit Court of Appeals disagreed, holding that a defendant can be considered the prevailing party only after a “ruling on the merits,” not after a mere dismissal.

In a unanimous decision, the Supreme Court reversed the 8th Circuit, holding that a defendant may be the prevailing party even if it wins on procedural grounds. The Court did not issue a definitive ruling on whether CRST was entitled to recover the fees, but it sent the case back to the lower court for a final determination.

This ruling is helpful for employers because it clarifies that attorneys’ fees may be available based on the dismissal of a case, even without a decision on the Title VII claim. Perhaps more significant, however, the Court’s decision is a potent reminder to the EEOC that the agency must diligently fulfill its presuit obligations or risk paying fees.

Spokeo, Inc. v. Robins
Spokeo, Inc., a consumer reporting agency, searches databases to gather and provide personal information about individuals to a variety of users, including employers wanting to evaluate prospective employees. After Thomas Robins discovered that his Spokeo-generated profile contained inaccurate information, he filed a federal class action complaint against the company alleging that it willfully failed to comply with the requirements of the Fair Credit Reporting Act (FCRA).

In a 6-2 decision issued on May 16, 2016, the Court ruled that it was not enough for Robins to allege a “bare procedural violation” of the FCRA. Instead, he must allege an injury that was both “concrete and particularized.” There was no question that Robins had alleged a particularized injury, meaning the injury he alleged was based on the violation of his own statutory rights and was due to the inaccurate information about him. But the Court held that a concrete injury must actually exist; it may not be merely abstract. The Court sent the case back to the 9th Circuit to determine whether Robins had met this requirement.

Although the case involved a consumer reporting company, the Court’s ruling should provide some comfort to employers that are sued by current or former employees who allege that reports obtained by the employer contained inaccurate information. The mere allegation of an FCRA violation, without an allegation of a concrete and particularized injury, will not be sufficient in light of this decision.

Fisher v. University of Texas at Austin
Three years ago, the Supreme Court was faced with a challenge to the University of Texas’ practice of considering race as one of several factors in its undergraduate admissions process. The Court did not decide the merits of that challenge, however. Instead, it ruled that the 5th Circuit had applied the wrong legal standard in upholding the university’s policy. The Court sent the case back to the 5th Circuit with instructions to apply a “strict scrutiny” test and determine whether the university had met its burden of showing that the reasons for any racial classification were clearly identified and unquestionably legitimate.

The 5th Circuit again held that the university’s racial preferences were constitutionally justified. On June 23, 2016, the Supreme Court held 4-3 that the race-conscious admissions program was valid under the Equal Protection Clause of the Fourteenth Amendment to the U.S. Constitution. The Court held that the goals of enrolling a diverse student body to promote “cross-racial understanding and enable students to better understand persons of different races” were sufficient to survive the constitutional challenge. Justice Anthony Kennedy wrote the opinion for the majority. Chief Justice John Roberts and Justices Clarence Thomas and Samuel Alito dissented. Justice Elena Kagan did not participate in the decision.

While the case did not arise in an employment context, the Court’s ruling will guide future cases involving affirmative action programs instituted by public employers.

Encino Motorcars, LLC v. Navarro
The Supreme Court held in Encino Motorcars, LLC v. Navarro (June 20, 2016) that “service advisers” at car dealerships—employees who interact with customers and sell them repair and maintenance services—may not be eligible to earn overtime pay.

The Fair Labor Standards Act (FLSA) requires employers to pay overtime to employees who work over 40 hours a week. But under a long-standing and vaguely worded exemption, the overtime requirement does not apply to any “salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles.” For decades, the U.S. Department of Labor (DOL) interpreted this exemption to mean that service advisers were not eligible to earn overtime. In 2011, the DOL did an about-face and issued a rule, with minimal explanation, that interpreted the exemption to mean that service advisers can earn overtime. The issue in Encino was whether courts were required to defer to the DOL’s interpretation.

The Court concluded that the DOL’s rule was not entitled to deference because the DOL failed to adequately explain why it abandoned its former position. This “lack of reasoned explication . . . result[ed] in a rule that cannot carry the force of law.” The case was therefore sent back to the 9th Circuit to reconsider the exempt status of service advisers, without giving “controlling weight” to the DOL’s rule.

This ruling may apply to a narrow group of employees, but it contains a larger message: Federal agencies that change their stances on statutory interpretation must be careful to provide clear reasons for doing so.

Tyson Foods, Inc. v. Bouaphakeo
Tyson Foods operates a pork-processing plant in Storm Lake, Iowa. A group of hourly workers sued the company for failing to pay them overtime for time spent “donning and doffing” required protective gear. Because Tyson did not keep records of this time—despite being statutorily required to do so—the plaintiffs relied on expert statistical analysis to calculate average changing time and establish damages. The district court allowed the case to proceed as a class action, and the jury awarded the plaintiffs $2.9 million. The 8th Circuit affirmed the award.

This case involved two key issues. First, the company argued that individual differences in how long it took employees to put on and take off protective gear meant that the plaintiffs’ statistical evidence was improper and they should not have been able to proceed as a class. The Court rejected that argument, observing that “in many cases, a representative sample is ‘the only practicable means to collect and present relevant data’ establishing a defendant’s liability.” Importantly, the Court noted that the plaintiffs relied on statistical evidence because Tyson had not maintained appropriate records. Ultimately, the Court refused to ban the use of statistical sampling or other “representative evidence” in class action cases, although it stressed that “whether or when statistical evidence . . . can be used to establish class-wide liability will depend on the purpose for which the evidence is being introduced and on ‘the elements of the underlying cause of action.'”

The Court determined that it was premature to decide Tyson’s second claim—that the award should be set aside because there was no procedure in place to ensure that only injured class members would be compensated. The Court sent the case back to the district court to consider how to properly divvy up the money.

While this decision permits the use of statistical evidence in class action cases, it cautions that the use of such evidence is not unlimited. And the case serves as a powerful reminder that employers should take care to maintain complete and accurate employee records.

More to come
On June 16, 2016, a unanimous U.S. Supreme Court allowed a lawsuit under the federal False Claims Act (FCA) to proceed against Universal Health Services. The plaintiffs in the lawsuit alleged that too few of Universal’s employees who provided counseling services were properly licensed or supervised, and the company had not disclosed violations of “staff qualifications and licensing requirements.” Although the company made no express promise that its staffing was adequate to the tasks, its submission of bills to its government clients was an implied representation that it was “legally entitled to payment” and therefore met the “material legal requirements.” Because of that implied representation, Universal’s failure to disclose its staffing and supervision inadequacies could violate the FCA under the common-law definition of “misrepresentation.”

While the Court did not decide a common-law misrepresentation claim, its logic could extend to such claims. If your employees’ duties require special qualifications, supervision, or licensing, make sure you’re in compliance with those requirements because your bill for services might imply that all of them have been met. More litigation on this issue is sure to come.

Sean D. Lee is an associate with Fortney & Scott, LLC. He can be reached at

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