Despite the current U.S. government shutdown, many aspects of the federal government continue to operate, including the federal court system. This Alert highlights some of the legal, legislative and administrative developments that may impact employers in 2019.
U.S. Supreme Court Developments
Enforcement of Arbitration Agreements
In 2019, the Supreme Court will again address the enforcement of arbitration agreements in various contexts.
The Court has already published a significant arbitration-related decision. In New Prime Inc. v. Oliveira (Jan. 15, 2019), the Court held that the Federal Arbitration Act’s (FAA) exclusion of certain “contracts of employment” from the Act’s coverage applies to transportation worker independent contractors. The Court also held that a court and not an arbitrator should determine whether a Section 1 exclusion to the FAA applies before ordering arbitration. For a more detailed discussion of the decision, please see our January 15, 2019 Alert, Supreme Court Rules Independent Contractor Truck Driver Not Required to Arbitrate Wage Claim.
Additionally, in Schein Inc. v. Archer and White Sales, Inc. (January 8, 2019) (nonemployment case), the Court held that the FAA permits the parties to an arbitration agreement to contractually agree that an arbitrator, rather than a court, will decide the threshold issue of arbitrability as well as underlying disputes regarding the merits of the case. The Court also held that lower courts are not permitted to circumvent the parties’ agreement and decide issues of arbitrability if the argument that the arbitration agreement applies to the dispute is “wholly groundless.” The Supreme Court held that there is no “wholly groundless” exception in the FAA, and it is not at liberty to rewrite the statute.
The Court has granted certiorari in Lamps Plus Inc. v. Varela, Docket No. 17-988, although it has not yet published a decision in this case. In Lamps Plus, the Court will address whether class-wide arbitration can be authorized based solely on general language commonly used in arbitration agreements. The employer argued that the FAA forecloses the application of state-law principles that would permit such an interpretation. This is not the first time the Court has addressed the issue of class-wide arbitration. In Stolt-Nielsen, S.A. v. AnimalFeeds International Corp. (2010), a non-employment case, the Court held that parties cannot be required to submit to class-wide arbitration where the agreement between them is silent on the issue. In Lamps Plus, the Court will address the level of specification and detail required to authorize class-wide arbitration. The Court heard oral argument on October 29, 2018. The Ninth Circuit’s decision is Varela v. Lamps Plus, Inc., 701 F. App’x 670 (9th Cir. 2017).
Title VII Litigation
The Supreme Court has granted certiorari in Fort Bend County v. Davis to consider whether federal courts have the authority to waive a Title VII plaintiff’s failure to exhaust administrative remedies before the EEOC, or state equivalent, before filing a complaint in federal court. There is currently a split of authority among the federal appeals courts on this issue, with some courts treating the failure to exhaust administrative remedies as a waivable affirmative defense while others treat it as a nonwaivable jurisdictional perquisite. For more information, please see our January 16, 2019 Alert, Supreme Court Agrees to Consider Conflict Over Title VII Administrative Exhaustion Requirement.
Scope of Title VII’s Prohibition on Sex Discrimination
Additionally, parties in cases involving discrimination based on sexual orientation and gender identity have sought Supreme Court review, but the Court has not yet determined whether it will grant certiorari. In Altitude Express Inc. v. Zarda and Bostock v. Clayton County, the petitioners have asked the Court to determine whether Title VII’s prohibition on sex discrimination encompasses discrimination based on sexual orientation. In R.G. & G.R. Harris Funeral Homes Inc. v. Equal Employment Opportunity Commission, the petitioner asks the Court to determine whether Title VII’s prohibition on sex discrimination includes discrimination based on gender identity and transgender status, and whether Price Waterhouse v. Hopkins prohibits employers from applying sex-specific policies according to their employees’ sex rather than their gender identity. Following its January 11, 2019 conference, the Court did not announce whether it will accept review of these cases; however, it could make an announcement following its January 18, 2019 conference.
Use of Salary History in Hiring
The Supreme Court has also been asked to consider whether prior salary is a “factor other than sex” under the Equal Pay Act (EPA), which would permit employers to pay men and women different wages for the same work. In Yovino v. Rizo, the petitioner is seeking review of the Ninth Circuit’s ruling that past salary cannot be used for setting initial salary under the EPA. Following its January 11, 2019 conference, the Court did not announce whether it will accept review of this case; however, it may make an announcement following its January 18, 2019 conference.
Federal legislation prohibiting employers from inquiring into prospective employees’ salary history was introduced in the House of Representatives in May 2017. The bill was referred to the House Committee on Education and the Workforce on May 11, 2017, but no further action has been taken. Although federal legislation on this issue appears stalled, several states and jurisdictions have passed laws prohibiting employers from inquiring into salary history. For more information, please see our January 3, 2019 Alert, Connecticut Employers are Banned from Asking Applicants' Salary History Effective January 1, 2019.
Wage and Hour Developments
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White Collar Exemptions: The Department of Labor (DOL) announced in its Fall Regulatory Agenda that it intends to issue a Notice of Proposed Rulemaking (NPRM) in March 2019 that will propose an updated salary level for the white collar exemptions under the federal Fair Labor Standards Act (FLSA). The NPRM will also seek the public’s view on the salary level and related issues. The DOL had published amendments to the white collar exemptions in 2016; however, these never took effect.
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Minimum Wage: Although legislation has been introduced in Congress that would increase the federal minimum wage to $15 per hour, similar previous legislation stalled in Congress, and it appears unlikely that this new legislation will be enacted. See Democrats introduce bill to hike federal minimum wage to $15 per hour, https://www.cnbc.com/2019/01/16/house-democrats-introduce-bill-to-hike-minimum-wage-to-15-per-hour.html, Jan. 16, 2019. With an increase in the federal minimum wage unlikely, many states have enacted laws increasing their minimum wage rates above the federal rate. For more information, please see our December 20, 2018 Alert, 18 States Set to Ring in the New Year with Minimum Wage Increases.
Labor Board Developments
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Election Rule: In December 2017, the National Labor Relations Board (NLRB) published a notice seeking information from the public regarding its 2015 election rule. The NLRB extended the deadline for submission of comments multiple times in 2018. It is possible the Board will announce some changes to the election rule in 2019.
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Joint Employer Test: Additionally, the Board likely will issue a new regulation to establish the standard for determining when two businesses are joint employers of a group of employees. The Board issued a proposed regulation in September 2018 and has extended the deadline for submission of comments on the rule. For more information regarding the proposed rule, please see our September 17, 2018 Alert, NLRB Proposes Regulation to Resolve Joint Employer Issue.
- Employee Use of Employer Email for Section 7 Activities: The NLRB has also invited the filing of briefs on whether it should adhere to, modify, or overrule its decision in Purple Communications, Inc., 361 NLRB 1050 (2014). In Purple Communications, the Board held that, absent “special circumstances,” employees who have access to their employer’s email system for work-related purposes have a presumptive right to use their employer’s email system, on nonworking time, to engage in Section 7 activities. The Board’s decision in Purple Communications overruled its previous standard set out in Register Guard. In Register Guard, the Board held that employees have no statutory right to use their employers’ email system for Section 7 purposes. For a more detailed discussion of the Board's decision in Purple Communications, please see our December 16, 2014 Alert, NLRB Opens Company Email Systems to Employees for Communications Protected by the National Labor Relations Act .The Board has invited the filing of briefs in a case currently pending before it, in which an administrative law judge, relying on Purple Communications, held that an employer’s email policy violated § 8(a)(1). The Board’s General Counsel has submitted a brief advising the Board to abandon Purple Communications and return to the Register Guard standard.
We will continue to monitor these developments and provide updates as more information becomes available. If you have any questions regarding this Alert, please feel free to contact the authors[1], Max Smith, counsel in our Nashville office at msmith@fordharrison.com, or Garrett Buttrey, an associate in our Nashville office at gbuttrey@fordharrison.com. You may also contact the FordHarrison attorney with whom you usually work.