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Top labor and employment developments in January 2018

February 8th, 2018  |  Kathy Kapusta

In case you missed Employment Law Daily’s in-depth coverage, here’s a recap of some of the key developments in the L&E community for January 2018.

Supreme Court:

“Tolled” means “stop the clock.” It was a slow month for the Supreme Court, which issued only one employment-related case in January, a procedural decision arising out of dismissed federal and state employment discrimination claims. In that case, the 5-4 Court held that 28 U.S.C. §1367(d), which says that the period of limitations for refiling state claims after they have been dismissed in a federal court action “shall be tolled while the claim is pending [in federal court],” stops the clock while the claim is in federal court, and it starts running again when the tolling period ends. Accordingly, an employee’s state-law claims that were dismissed from federal court after two and a half years and were refiled in state court 59 days later were timely, because the applicable statute of limitations for her D.C. law claims was suspended while her federal suit was pending. Employment lawyers see this decision benefitting plaintiffs. Notably, Chief Justice Roberts joined the liberal wing of the court in the majority opinion authored by Justice Ginsburg; Justice Gorsuch dissented (Artis v. District of Columbia, January 22, 2018, Ginsburg, R.).

Justices opt to stay out of joint-employer battle… The Court, however, was busy deciding what not to decide. On January 8, in an order issued without explanation, it denied the petition for certiorari filed in DirectTV, LLC v. Hall (16-1449), which sought review of a Fourth Circuit joint-employer ruling that the petitioners contend departed from every other circuit to have considered the issue.

… and will not scrutinize Mississippi’s controversial ‘religious freedom’ law. The Court also declined to take up challenges to Mississippi’s “Protecting Freedom of Conscience from Government Discrimination Act.” Signed into law in April 2016, H.B. 1523 was part of a trend of laws passed to insulate from liability religious organizations and persons not inclined to accept same-sex marriage as legitimate, even in the wake of the U.S. Supreme Court’s 2015 edict in Obergefell v. Hodges. The law goes a bit further than other state laws of its genre ostensibly to protect from “discriminatory action” by the government religious organizations and individuals who refuse to solemnize, celebrate, recognize, accommodate, or provide goods or services for a same-sex marriage or to same-sex-oriented individuals because of a sincerely held religious belief, or even a moral conviction, that marriage should be limited to the union of one man and one woman and sexual relations are properly reserved to such a marriage.

But will take up travel ban. The Court did, however, agree to review a Ninth Circuit ruling partially blocking the implementation of version three of the Trump Administration’s beleaguered “travel ban.” The Justices will resolve three questions presented in the administration’s petition for certiorari, as well as the question of whether the travel ban violates the Establishment Clause, a query posed in the State of Hawaii’s (and other respondents’) brief in opposition. This is the administration’s third try on a travel ban against foreign nationals from Muslim-majority countries.

Direct Supreme Court review of DACA injunction sought. Also in January, the Trump Administration asked the High Court to directly review a California district court’s preliminary injunction issued by a federal district court in California preventing the administration from ending the Deferred Action for Childhood Arrivals program. If granted, the Ninth Circuit would lose its chance to weigh in on interlocutory appeal before the Justices resolve questions at the heart of the case. The administration has already filed a notice of appeal asking the Ninth Circuit to review the January 9 ruling in Regents of the University of California v. U.S. Department of Homeland Security.

Federal Courts of Appeal:

First Circuit: $545K award stands for female firefighter’s sex-plus claim. Refusing to impose a more stringent standard for sex-plus claims (here sex plus sexual orientation) than required for traditional sex discrimination claims, the First Circuit affirmed a jury’s verdict and a judge’s front pay award in favor of a female firefighter who was subjected to “vile verbal assaults” and even had blood and brain matter flung at her by a coworker before she retired on disability due to post-traumatic stress disorder. Rejecting the employer’s contention that a more stringent evidentiary standard should have been applied (it allowed evidence regarding coworkers’ behavior at a union hall outside of work) and that the employee should have been required to identify a comparative class of homosexual male firefighters who had not been discriminated against, the court found this approach not only had “some rather obvious flaws,” but it has not been endorsed by the First Circuit and was in direct conflict with the text and jurisprudence of Title VII (Franchina v. City of Providence, January 25, 2018, Thompson, O.).

Fourth Circuit: EEOC’s EPA suit revived. Agreeing with the Third and Tenth Circuits, a divided Fourth Circuit found that the Equal Pay Act requires that an employer submit evidence from which a reasonable factfinder could conclude, not simply that its proffered reasons could explain the wage disparity, but that the proffered reasons do in fact explain the wage disparity. Further, observed the court, because the employer in an EPA action bears the burden of ultimate persuasion, once the plaintiff has established a prima facie case, the employer will not prevail at summary judgment unless it proves its affirmative defense “so convincingly that a rational jury could not have reached a contrary conclusion.” Turning to the case at hand, which was brought by the EEOC on behalf of three female employees alleging salary discrimination, the appeals court vacated summary judgment in favor of a Maryland state agency, finding that the EEOC established a prima facie violation of the EPA and that genuine fact issues existed regarding whether the pay disparity was due to factors other than gender (EEOC v. Maryland Insurance Administration, January 5, 2018, Keenan, B.).

B&B could not set in-kind value of employee’s housing at what guests pay. Reversing a grant of summary judgment against the FLSA claims of a bed and breakfast (B&B) employee who alleged she was not paid for all time worked or for all overtime owed, the Fourth Circuit explained that the lower court erred in finding that the parties’ agreement on hours worked exempted the employer from the FLSA’s other requirements for calculating the value of in-kind compensation. The case was remanded for the lower court to assess all “pertinent facts” and determine if the parties’ agreement was reasonable, and to make a finding on the reasonable cost of lodging and other in-kind benefits provided to the employee (Balbed v. Eden Park Guest House, LLC, January 25, 2018, Motz, D.).

Eighth Circuit: Panera can’t cap substantial bonus after performance had begun. Affirming a decision in favor of a group of Panera managers who sued their employer based on its attempt to cap the amount of the five-year bonuses they already had been promised, the Eighth Circuit found Panera could not modify its bonus offer in this way after performance had begun. As had the district court before it, the appeals court concluded that Panera’s promise to pay the bonus, which it put in writing when it asked managers to sign an employment agreement with a compensation plan that provided for the one-time bonus to be paid five years after execution, was an offer for a unilateral contract. Thus, imposition of the cap was an ineffective attempt to modify its unilateral contract offer (Boswell v. Panera Bread Company, January 5, 2018, Arnold, M.).

Tenth Circuit: Requiring use of vacation or swapping of days for Sabbath may violate Title VII. In a Title VII suit by two Seventh Day Adventists, who were fired for excessive absences after Kellogg’s new scheduling policy required they work every other Saturday, the Tenth Circuit refused the employees’ and amicus EEOC’s invitation to adopt a per se rule that a “reasonable” accommodation must completely eliminate the conflict between an employee’s religious practice and work requirements. Reversing the grant of summary judgment against their failure-to-accommodate claim, the court found a triable question on whether Kellogg reasonably accommodated them by requiring that, to avoid working on the Sabbath, they use vacation or other accrued time off or find a qualified coworker to swap schedules (Tabura v. Kellogg USA, January 17, 2018, Ebel, D.).

Other notable developments:

Sessions turns back clock on marijuana enforcement. In a January 4 memorandum, which he characterized as “a return to the rule of law,” Attorney General Jeff Sessions reversed course on federal marijuana enforcement policy, instead directing all U.S. Attorneys to enforce the laws enacted by Congress and to follow well-established principles when pursuing prosecutions related to marijuana activities, including the Controlled Substances Act. The memo wipes out earlier guidance, including a 2013 memorandum issued by then-Deputy Attorney General James M. Cole, which backed off of marijuana prosecutions—except in certain priority instances—in light of state ballot initiatives legalizing the substance for personal use in small amounts and providing for regulation of production, processing, and sale of marijuana. It also acknowledged, that outside those priority areas, the federal government has left it to state and local law enforcement to address marijuana activity via their own narcotics laws. Some 29 states and the District of Columbia have enacted laws governing the medical use of marijuana, and several states and the District of Columbia have enacted laws permitting personal consumption, several predating the Cole memorandum. Sessions’ new guidance casts doubt on the status of those laws in light of its reversal of federal enforcement policy and complicates matters for employers, who are already experiencing significant challenges managing employees who legally use marijuana for medical or recreational purposes under state laws.

NLRB GC wants to stay McDonald’s case. Following its upheaval on the joint-employer scene and a substantial tilt toward employers, the NLRB is asking an administrative law judge to stay proceedings in the high-profile McDonald’s USA, LLC, case in which the Obama-era Board had asserted that the fast-food giant is a joint employer of certain franchise employees. The new Republican General Counsel also cited his Board’s reversal of precedent on facially neutral workplace rules, policies, and employee handbook provisions.

DOL to use primary beneficiary test to decide when interns working at for-profit employers are subject to FLSA. In an announcement on January 5, citing the Ninth Circuit’s December 19, 2017, opinion in Benjamin v. B & H Education, Inc. expressly rejecting the DOL’s six-part test for determining whether interns and students are employees under the FLSA, the Labor Department clarified that going forward it would use the “primary beneficiary” test. The Ninth Circuit was the fourth federal appellate court to expressly reject the DOL’s six-part test. In its announcement, the DOL said that the agency will conform to these appellate court rulings by using the same “primary beneficiary” test that these appellate courts use to determine whether interns are employees under the FLSA. “The Wage and Hour Division will update its enforcement policies to align with recent case law, eliminate unnecessary confusion among the regulated community, and provide the Division’s investigators with increased flexibility to holistically analyze internships on a case-by-case basis.”