Rulings, changes likely to affect employment law

The U.S. Supreme Court has made a series of fractured rulings that deal with workplace issues during the 2008-2009 term, says Gerald L. Maatman Jr., a partner with Chicago law firm Seyfarth Shaw L.L.P. While no clear trend emerged from the latest cases in terms of favoring employers or employees, the Supreme Court rulings, coupled with potential changes in employment law, will affect employers for years to come, he says.

No clear trend emerged from Supreme Court decisions dealing with workplace issues in the 2008-2009 term, with six employment rulings neither favoring employers nor workers.

In the most controversial ruling—Frank Ricci et al. vs. John DeStefano et al.—the Supreme Court ruled 5-4 that the City of New Haven, Conn., discriminated against a group of white firefighters by scrapping the results of a promotional exam that had a disproportionately adverse impact on minorities. The Supreme Court held that fear of future litigation based on charges of racial discrimination is an insufficient basis for ditching the test results. Ricci likely will have a significant effect on the manner in which employers test and evaluate employees, although the most pronounced result may be on public employers that have affirmative action plans and more widespread selection and promotional exam processes.

In another 5-4 ruling in 14 Penn Plaza L.L.C. et al. vs. Steven Pyett et al., the Supreme Court endorsed labor contracts that send age discrimination claims to arbitration rather than to federal courts. As such, employers may use the arbitration process with union employees to force litigation out of the court system. Under Pyett, employers and unions have to decide if they want to include individual employment claims in a collective bargaining agreement, and to expressly authorize individual employees—over the objection of the union as a whole—to compel arbitration of claims of violations of the collective bargaining agreement.

The last of the fractured rulings—in AT&T Corp. vs. Noreen Hulteen et al.—the Supreme Court ruled 7-2 that women who took maternity leaves that were only partially credited toward retirement benefits cannot sue over leaves taken before the Pregnancy Discrimination Act of 1978 made it illegal to discriminate on the basis of pregnancy. The majority opinion emphasized that AT&T's maternity-leave calculations were lawful before the law came into being and stressed that pension systems should allow for predictable financial consequences for the employer who pays the benefit and the employee who gets the benefit. The ruling had the effect of shutting down a gender discrimination class action against AT&T, but it is unlikely to have much future significance because of the factual background of the case in terms of the 1978 law affecting pension-setting decisions more than three decades old.

The two unanimous rulings—Vicky S. Crawford vs. Metropolitan Government of Nashville and Davidson County, Tenn., and Lisa Fitzgerald vs. Barnstable School Committee—both favored workers, and construed the applicable statutes at issue expansively to open the doors of federal courthouses to workers' claims. In Crawford, the Supreme Court held that federal law protects workers from on-the-job retaliation after they cooperate with an employer's investigation of allegations of discrimination or harassment (and not just if they initiate their own complaint). In Fitzgerald, the Supreme Court ruled that a lawsuit filed under Title IX of the Education Amendments Act of 1972 for violation of the equal protection clause of the 14th Amendment does not preclude the use of 42 U.S.C. §1983, better known as the Civil Rights Act of 1866, to further constitutional claims. The Supreme Court reasoned that Title IX was not meant to be the exclusive tool to address gender discrimination in schools, or a substitute for actions filed under §1983 to enforce constitutional rights.

The lone clear pro-employer ruling from the past term—Jack Gross vs. FBL Financial Services Inc.—also was a 5-4 ruling. The Supreme Court held that the Age Discrimination in Employment Act does not allow a worker to establish discrimination by showing that age was one motivating factor for the employer’s action. The majority determined that employees must show age was the decisive factor behind the employer’s adverse job action. By rejecting the burden-shifting framework from cases under Title VII of the Civil Rights Act of 1964, Gross heightens the standard for plaintiffs to prove age discrimination claims.

The Supreme Court’s rulings will affect employers for years to come. Coupled with changes in employment laws heralded by the Obama administration, heightened workplace obligations and litigation exposures are inevitable.

Gerald L. Maatman Jr. is a partner in the law firm of Seyfarth Shaw L.L.P. in Chicago.

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