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Justices will review Title VII exhaustion, application of California wage-hour laws to off-shore drilling rigs

By Pamela Wolf, J.D.

On January 11, the Supreme Court agreed to resolve the question of whether Title VII’s administrative exhaustion requirement is a jurisdictional prerequisite to suit, or is instead a waivable claim-processing rule. In a second case, the Court will determine whether California’s overtime and wage laws apply to drilling rigs under the Outer Continental Shelf Lands Act (OCSLA).

Exhaustion requirement. Below, in Fort Bend County v. Davis (18-525), the employee alleged that a supervisor retaliated against her for lodging a sexual harassment and assault claim, first by refusing her request to take a Sunday off to attend a special church service, and then firing her when she attended the service anyway and didn’t report to work. She filed claims of religious discrimination and retaliation, which the district court dismissed on summary judgment.

The Fifth Circuit held that Title VII’s administrative exhaustion requirement is not a jurisdictional bar to suit, noting the circuit’s discordant case law on the question and citing the rule of orderliness to choose the line of precedent which finds exhaustion is merely a prudential prerequisite. Consequently, a county employer facing a Title VII action forfeited its exhaustion defense by not timely raising it, so a district court erred in disposing of the employee’s claim on exhaustion grounds. Reviving her suit for a second time, the appeals court reversed summary judgment and remanded.

Three circuits, the Fourth, the Ninth, and the Eleventh, have held that Title VII’s exhaustion requirement is jurisdictional, and courts thus lack subject matter jurisdiction over claims that were never presented to the EEOC. Eight other circuits, however, disagree, characterizing the exhaustion requirement as a claim-processing rule that is subject to waiver, forfeiture, and other equitable defenses.

California overtime and wage laws. In Parker Drilling Management Services v. Newton (18-389), a roustabout and painter worked on drilling platforms that were located more than three miles offshore and were fixed to the seabed of the Outer Continental Shelf (OCS). He worked 14-day shifts comprised of 12 hours on duty followed by 12 hours on “controlled standby.” He was paid for 12 hours work per day and could not leave the platform during his shifts. He alleged that his employer did not provide 30-minute meal periods for each five hours worked, as required by California law.

In his putative class action filed in state court, he also claimed his employer did not pay him for the 12 hours he was on controlled standby each day. In all, he brought seven claims under California law.

Not inconsistent? The Ninth Circuit, addressing the novel question whether claims under California wage and hour laws may be brought by workers employed on drilling platforms fixed on the OCS, held that the absence of federal law is not a prerequisite to adopting state law as surrogate federal law under the OCSLA. Vacating the district court’s dismissal on the pleadings of the roustabout’s California wage and hour claims, the appeals court held that state wage and hour laws are adopted as surrogate federal law as long as they are “applicable and not inconsistent” with existing federal law, and California’s minimum wage and overtime laws are not inconsistent with the FLSA.

Or filling a significant void or gap? The Fifth Circuit, however, has held that state law is “applicable” as federal law under the OCSLA only when it is needed “to fill a significant void or gap” in federal law, the petition for certiorari noted. “The Ninth Circuit expressly ‘reject[ed]’ the Fifth Circuit’s rule that state law is ‘applicable’ under OCSLA only if needed ‘to fill a significant void or gap’ in federal law,” and instead concluded that “state law is ‘applicable’ on the OCS whenever it ‘pertain[s] to the subject matter at hand,”’ the petition states.

California’s wage-and-hour laws are “applicable” to the OCS because they pertain to the roustabout’s wage-and-hour claims, and are “not inconsistent” with federal law because the FLSA contains a savings clause that would preserve state wage-and-hour laws under preemption principles, the Ninth Circuit held.