By: Sara Eber
Following a term with many employment-related decisions—and with outcomes emphatically pro-employer—the United States Supreme Court will hear the first oral arguments of its 2013-2014 term, which are currently scheduled to begin on October 7, 2013.
The docket will again feature several cases with significant implications for employers, including issues affecting the Employee Retirement Income Security Act, the Fair Labor Standards Act, the President’s power to make recess appointments to the National Labor Relations Board, and whistleblower protections under the Sarbanes-Oxley Act.
Below, we briefly preview the key cases to be reviewed by the top court in the land and the potential impact to the workforce and their employers. Stay tuned for more analysis and updates!
Heimeshoff v. Hartford Life & Accident Insurance Co. (Oral Argument: October 15, 2013)
- Issue: When should a statute of limitations period begin to run for judicial review of an Employee Retirement Income Security Act (ERISA) disability benefit decision?
- This Case: The plaintiff filed a claim for long-term disability benefits and was denied. Nearly two years later, she received a final denial. The plaintiff’s plan required her to sue within three years from the time that proof of loss was due, but she did not file suit within that period. She argued that the time for filing her claim should not begin to run until the claim was finally denied by the plan. The Second Circuit held the plan’s language was unambiguous and enforced the three-year limitations period.
- Potential Impact: This case touches on the primary ERISA principle that the plan terms control. It will address whether the statute of limitations can run upon a clear repudiation of rights, which may occur before a final claim decision.
Sandifer v. U.S. Steel Corporation (Oral Argument: November 4, 2013)
- Issue: What constitutes “changing clothes” within the meaning of Section 203(o) of the Fair Labor Standards Act (FLSA)?
- Legal Background: Section 203(o) states that time spent changing clothes is not compensable time if it is considered non-work time by a collective bargaining agreement. But the Department of Labor (DOL) opined that protective gear is not “clothes” and employees should be paid for such changing time.
- This Case: The plaintiffs claimed they should be paid for time spent changing into work clothes. The company argued the contrary, pointing to the collective bargaining agreement which clearly stated such time would not be compensable. The Seventh Circuit rebuffed the DOL’s interpretation and found that the protective gear or equipment were “clothes” under the FLSA and the employer was not required to pay employees for time spent changing in or out of them. (For more details and insight on this topic, see Seyfarth’s discussion of this case, here.)
- Potential Impact: This decision could be significant for two reasons. First, it will have a large effect on employers’ obligations to pay employees in unionized industries that use protective gear. Second, the Court will likely address the level of deference due to DOL administrative interpretations. Since the DOL has issued new interpretations on a variety of FLSA regulations, the decision could reign-in the DOL’s efforts to alter the FLSA without formal (i.e., legislative) changes.
Lawson v. FMR LLC (Oral Argument: November 12, 2013)
- Issue: Whether employees of privately-held contractors or subcontractors of public companies can bring retaliation claims under Section 806 of the Sarbanes-Oxley Act (SOX).
- Legal Background: SOX protects employees of publically-held companies from discrimination or retaliation for engaging in protected activity. Nonetheless, the DOL’s Administrative Review Board (ARB) interprets SOX’s protections as applying to private contractors of public companies as well.
- This Case: The plaintiffs, employees of a privately-held subsidiary of a public company, claimed they experienced retaliation after reporting misconduct involving a mutual fund they managed. The First Circuit held that SOX only applied to public companies and dismissed their case.
- Potential Impact: To date, most federal courts deciding this issue have held, like the First Circuit, that SOX does not cover private employers. But if the Court sides with the DOL, any employer doing business with a public company could be covered under SOX’s whistleblower statute. The case also presents another opportunity for the Court to rule on the level of deference courts should accord DOL or ARB decisions. With similar DOL-deference issues underlying the Sandifer case (see above), the Court’s opinions in Lawson and Sandifer could either provide some clarity – or create even more ambiguity – as to the weight of these agency rulings.
Unite Here Local 355 v. Mulhall (Oral Argument: November 13, 2013)
- Issue: Whether neutrality agreements violate the Labor-Management Relations Act’s (LMRA) anti-bribery provision because they provide a union with “something of value.”
- Legal Background: Section 302 of the LMRA prohibits an employer from delivering, or a union from receiving, any “thing of value.”
- This Case: The employer and union entered into a neutrality agreement, whereby the employer gave the union access to non-public work areas and employee contact information, and the union agreed to support a local ballot initiative favorable to the employer and not to strike. The Eleventh Circuit held this arrangement violated Section 302 because it provided a “thing of value” to the union. (For more details and analysis on this topic, see Seyfarth’s discussion of this case, here.)
- Potential Impact: The Supreme Court’s decision should resolve a split among the circuits—the Eleventh Circuit’s holding conflicted with cases from the Third and Fourth Circuit courts. More fundamentally, if the Court affirms the Eleventh Circuit, it will deflate a key union organizing method, likely resulting in a further decline in unionization rates.
NLRB v. Noel Canning (Oral Argument: TBD)
- Issue: Assessing the scope of the President’s recess-appointment power.
- Legal Background: The top echelon of the NLRB is supposed to have five members serving five-year terms. When there is a vacancy on the Board, the President appoints a nominee, subject to Senate approval. Three years ago, the Supreme Court held that the NLRB cannot function when it has less than three members.
- This Case: In January 2012, the Board’s membership dropped to two members. President Obama chose three new temporary members as recess appointments. In reviewing a company’s challenge to the NLRB’s decision, the D.C. Circuit held that the President’s appointments were invalid because the Senate was not really in “recess,” and consequently, with no quorum, any decisions issued by the Board were void.
- Potential Impact: Right now, the D.C. Circuit’s decision is only binding within its jurisdiction and the NLRB has continued to issue rulings involving and incorporating the three recess appointees. However, if the Supreme Court affirms the D.C. Circuit’s decision (that the appointments were invalid), it leaves vulnerable over 200 cases decided by the NLRB since the recess appointments were made, and potentially invalidating all of those 200+ cases.
Once these decisions come down, Seyfarth’s Employment Law Lookout and other blogs will provide you with more detailed analysis. In the meantime, please contact the author, Sara Eber, or your Seyfarth attorney with any questions.