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Supreme Court Upholds Class Action Waivers

On May 21, the United States Supreme Court held that mandatory arbitration agreements containing class action waivers are to be enforced as written.  In Epic Systems Corp. v. Lewis, a trio of consolidated appeals, the Court rejected arguments by employees that section 7 of the National Labor Relations Act (“NLRA”) – which permits employees to engage in “concerted activity” for the purposes of “collective bargaining or other mutual aid or protection” – grants employees a statutory right to assert legal claims (such as claims under federal and state wage and hour laws) on a class or collective basis.

This decision is significant for employers nationwide. Since 2012, the National Labor Relations Board (“NLRB”) has asserted that such waivers violate the NLRA, forcing employers to choose whether to (a) risk violation of the NLRA, (b) implement an opt-out procedure that some courts had concluded might comply with the NLRA, or (c) abandon their class-action waivers and face the threat of class and collective wage and hour suits.

In response to the NLRB’s position, some courts (including the Ninth Circuit Court of Appeals) had refused to enforce mandatory arbitration agreements with class action waivers on the grounds that they were unlawful under the NLRA and, therefore, fell within the savings clause under the Federal Arbitration Act (“FAA”).  That clause permits courts to refuse to enforce arbitration agreements “upon such grounds as exist at law or in equity for the revocation of any contract.”  In reversing the Ninth Circuit and rejecting the NLRB’s

Supreme Court Rejects “Narrow” Reading of Overtime Exemption and Concludes that Auto Dealership Service Advisors are Exempt From Overtime

On its second trip to the U.S. Supreme Court, a six-year-long dispute between five auto dealership employees and their employer came to an end when the Supreme Court found that the employees were properly classified as exempt employees under the Fair Labor Standards Act (“FLSA”).  In the case, plaintiffs Hector Navarro and four other employees worked as service advisors—employees who meet and greet customers bringing their cars to dealerships for service or maintenance and suggest and sell such services to customers.

The service advisors in this case filed suit in 2012, claiming back pay under the FLSA for hours worked in excess of 40 in a week on the basis that they were misclassified as exempt.  Specifically, the employees argued that they neither sold nor repaired vehicles and, therefore, were improperly denied overtime in violation of the FLSA.  The employees also alleged violation of California state wage and hour laws.   However, in 2013, the district court agreed with the dealership’s argument that an exemption applied, dismissing the FLSA claims and declining to exercise jurisdiction over the California state law claims.

The Ninth Circuit reversed the District Court relying on regulations issued by the Department of Labor (“DOL”) in 2011.  In 2016, the Supreme Court reversed the Ninth Circuit because it had deferred to the DOL’s rule that service advisors were not overtime exempt, which the Court concluded was procedurally defective.  On remand, in 2017, the Ninth Circuit again found in favor of the service advisors.

On April 2, 2018, the

Supreme Court Rejects Disabled Employee’s Bid to Revive His $2.6 Million ADA Jury Verdict: Why You Should Still Regularly Update Job Descriptions and Supporting Documents

January 3, 2018

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On October 16, 2017, the Supreme Court rejected an employee’s petition for review of a decision in Stevens v Rite Aid Corporation.[1]  Stevens sued under the Americans with Disabilities Act (“ADA”) for alleged discriminatory discharge claiming trypanophobia or “fear of needles” as a disability.  Rite Aid discharged Stevens, a pharmacist of 32 years (with Rite Aid and its predecessors), after he refused to comply with Rite Aid’s requirement that pharmacists administer immunization injections to its customers.  The Second Circuit held that administering injections was an essential function of the pharmacist position at the time of his termination, and therefore, concluded that Stevens was not a “qualified individual” with a disability.

At trial, Rite Aid personnel testified that the company made a business decision to start requiring pharmacists to perform immunizations.  While courts are required to consider a variety of factors under Equal Employment Opportunity Commission’s (EEOC) regulations, many courts give substantial or “considerable” deference to an employer’s business judgment and written job descriptions.  Following this deferential standard, the Second Circuit reversed entry of judgment in Stevens’ favor and ordered the district court to vacate the jury’s $2.6 million award and enter judgment for Rite Aid as a matter of law on his claim of disability discrimination.

The Second Circuit is in line with other circuits, including the Fifth, Eighth, and Tenth Circuits, which have concluded that considerable or substantial deference to an employer’s business judgment about essential functions and its written job descriptions is required.   However, some circuit

California Bans the Box: Employers Must Review and Update Background Screening Processes

Recently, on October 14, 2017, Governor Jerry Brown signed Assembly Bill 1008 (“AB 1008”), which adds Government Code Section 12952 into state law.  Among other things, this new provision makes it an unlawful employment practice under the Fair Employment and Housing Act (“FEHA”) for a private employer with five (5) or more employees to inquire about or consider a job applicant’s conviction history prior to a conditional offer of employment.  This “ban-the-box” legislation is the latest in a series of initiatives nationwide to ban private employers from inquiring about convictions on an application for employment.   California joins five other states, including Connecticut, Illinois, New Jersey, Oregon, and Vermont, in banning private employers’ inquiries regarding convictions prior to a conditional offer of employment.  AB 1008 becomes effective January 1, 2018.

Only Post-Offer Consideration of a Conviction or Specified Arrests is Permissible.  Most dramatically, employers may not ask an applicant about any conviction on an application for employment, or during any other phase of screening prior to an offer.  Further, while an employer can still perform a criminal background check after an offer of employment is made, employers are required to conduct an “individualized assessment” of whether the applicant’s conviction has a “direct and adverse relationship with the specific duties of the job that justify denying the applicant the position.”  The employer must consider the factors that the U.S. Equal Employment Opportunity Commission laid out in its own guidance in 2012 regarding the use of convictions, specifically:

(1) the nature and gravity

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