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Game-Changing Supreme Court Employment Law Decisions in 2009

The Supreme Court’s New Haven reverse discrimination case may have gathered the most publicity, but other decisions in the just-concluded 2009 session have gotten lawyers scrambling and legislators busy writing bills to reverse the court’s work.

Reverse Discrimination Reversed

The New Haven case, Ricci v. DeStefano, involved a group of white and Hispanic firefighters who sued the Connecticut city after it threw out the results of a promotional exam because black firefighters hadn’t achieved passing scores. The city said it feared a disparate-impact lawsuit if it awarded promotions to the mostly white qualifiers.

In a 5-4 decision, the Supreme Court held that the city erred in voiding the results because there was no “strong basis in evidence” to believe that it would lose a disparate-impact lawsuit since the exam was consistent with business necessity and no equally valid, less discriminatory alternative was available.

The old sayings about being “caught between the devil and a hard place” and “damned if you do, damned if you don’t” seemed to sum up reaction to the decision: If you promote on the basis of a test that ends up excluding a protected class, you’ll be subject to a disparate-impact lawsuit. If you go ahead and certify the test results, you’ll be subject to a disparate-treatment lawsuit, as in Ricci.

However, the court did allow for some clarity with its “strong basis in evidence” standard. In New Haven’s case, the test had been professionally designed by an outside company to avoid any built-in biases, and further, no real alternative for promotions existed other than testing. Thus there was no “strong basis in evidence” to fear losing a disparate-impact action.

Age Discrimination Singled Out

Before the Supreme Court’s Gross v. FBL Financial Services decision, employees filing suit under the Age Discrimination in Employment Act (ADEA) could argue that age was one of the factors that led to a discriminatory job action or termination, and the burden would then fall on the employer to prove that age was not included in the “mixed motives” behind its decision.

However, the high court held in Gross that age must be the “but-for” factor, and thus the burden falls on the plaintiff to prove that age was the single factor in the adverse employment action. Failing to prove that, the trial cannot proceed. The decision noted: “Unlike Title VII [of the Civil Rights Act], the ADEA’s text does not provide that a plaintiff may establish discrimination by showing that age was simply a motivating factor.”

The decision probably left many employers breathing more easily because mixed-motive cases are harder to defend and easier to lose, as indeed had happened in Gross when a jury awarded the plaintiff $46,945 for a job reassignment that he claimed was really a demotion based on age discrimination.

The 8th Circuit Court of Appeals, however, overturned the jury award and said that the burden fell on the plaintiff to prove through “direct evidence” that age discrimination was behind the job reassignment. The court held that the plaintiff had failed this burden of proof. In essence, then, the Supreme Court upon review merely reaffirmed the Circuit Court’s ruling.

As with a 2007 decision the Supreme Court had rendered on an equal pay dispute that resulted in Congress’s overturning the ruling with its own piece of legislation (the Lilly Ledbetter Fair Pay Act of 2009), the Gross decision seems sure to draw legislative retaliation in a Democratic-controlled Congress. Thus employers must remain ever vigilant (as they should anyway) on how they base their employment decisions and be careful to document voluminously their every action regarding personnel.

Workplace Retaliation Targeted

It took Vicky Crawford six years to get her case before the Supreme Court, and when she finally did, the court was able to clarify Title VII of the Civil Rights Act and its protections for those who report discrimination and harassment in the workplace.

Ms. Crawford worked for a Tennessee school district when she became involved in an investigation into a manager’s alleged sexual harassment of female employees. She testified about instances of “inappropriate behavior” by the manager in her presence, including the grabbing of his genitals in front of her and his pulling her head toward his crotch.

Eventually, three women all testified against the manager, and all three were subsequently terminated for various reasons. Ms. Crawford, a 30-year employee, was accused of embezzlement and drug use and let go. The manager was retained until later when it was discovered that he had falsified his resume and he was forced to resign.

Ms. Crawford sued, saying that she had been terminated in retaliation for testifying against the manager. However, the court threw out her case, saying she had failed to file a complaint with the Equal Employment Opportunity Commission (EEOC), which handles sexual harassment claims. The court explained that, under Title VII of the 1964 Civil Rights Act, just participating in an investigation does not earn the plaintiff a right to sue; only a formal EEOC complaint can empower that right.

The Supreme Court ruled unanimously in Ms. Crawford’s favor. Writing for the court, Justice David Souter observed: “Nothing in the statute requires a freakish rule protecting an employee who reports discrimination on her own initiative but not one who reports the same discrimination in the same words when her boss asks a question.”

The lesson for employers here is pretty clear: Instances of discrimination and harassment must be handled professionally, thoroughly and even-handedly, and the resulting actions should address the real issues without further discrimination, or worse, retaliation. The school district failed on all fronts and now must suffer the legal consequences.

Pregnancy Discrimination Not Retroactive

Four former employees of AT&T sued the company, claiming that their retirement income had been shortchanged by the way pregnancy leave had been calculated. Prior to the enactment of the Pregnancy Discrimination Act (PDA) in 1979, it was AT&T’s policy to include time spent on disability leave in calculations of time served on the job, but all other leave, including for pregnancy, was limited to 30 days’ credit. This in turn affected retirement benefits, which at AT&T are based on length of service. When the PDA passed, AT&T changed its policy to count pregnancy leave in the same manner as disability leave, but it did not backtrack and recount pregnancy leave prior to that date.

When the suit, AT&T v. Hulteen, et al., reached court, both the district court and the 9th Circuit Court of Appeals agreed that AT&T’s decision not to recalculate pre-PDA pregnancy leave was a violation of the 1979 act. In a 7-2 decision, however, the Supreme Court said that the PDA could not be applied retroactively, and thus there was no discrimination by AT&T in not adjusting pre-PDA pregnancy leave service credit. The court further held that 2009’s Lilly Ledbetter Fair Pay Act equally did not apply because, prior to 1979, AT&T’s pregnancy leave policy was not discriminatory. Thus the plaintiffs had not been "affected by application of a discriminatory compensation decision or other practice," the standard delineated in the Fair Pay Act.

Union Dues and Blues

The Supreme Court in its 2008-2009 session reached three decisions involving unions.

In Locke v. Karass, the court held that a union may charge a non-member an appropriate share of litigation expenses paid to a national affiliate so long as the expenses involve collective bargaining and the benefits of the litigation “inure to the benefit of the members of the local union by virtue of their membership in the parent organization." The decision was unanimous.

In Ysursa v. Pocatello Education Association, the Supreme Court upheld Idaho’s ban on payroll deductions for political purposes. The state law allows deductions for union dues but not for union political action committees or other political activities. The union argued that this restricted its First Amendment free speech rights, but the court ruled that its free speech rights remained intact even if state policy declined to allow payroll deductions for political causes.

Finally, in 14 Penn Plaza LLC v. Pyett, a narrow 5-4 decision found that a provision in a collective bargaining agreement (CBA) that mandated arbitration for ADEA claims is enforceable as a matter of federal law. The court held that the CBA’s arbitration clause could be voided only if the ADEA itself included a proscription on arbitration, which it does not.

Looking Ahead

The Supreme Court doesn’t reconvene until the first Monday in October (though officially still in session, the court vacations from late June until that October Monday). So far, 47 cases are to be heard by the court beginning in the fall, and among them no doubt are many that will affect business in America. With Sonia Sotomayor replacing David Souter as one of the nine justices, there may be subtle switches in some decisions, but it appears clear that the court’s 5-4 split between the predominant conservative faction and the minority liberal-moderate faction will remain intact. The court’s pro-business tenor, which has been evident for the past 25 or more years, should thus continue into the next session barring the unforeseen.

About the author:
Gary McCarty is a researcher and Web Content Manager for Personnel Concepts.

Note: The details in this white paper are provided for informational purposes solely. All answers are general in nature, not legal advice and not warranted or guaranteed. Readers are cautioned not to rely on this information. Because laws change over time and in different jurisdictions, it is imperative that you consult an attorney in your area regarding legal matters and an accountant regarding tax matters.

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