Supreme Court Term Provides Significant Guidance for HR

News Updates

The U.S. Supreme Court term that ended in June 2011 was “pretty evenly split” between victories for employers and wins for employees, Camille Olson, an attorney with Seyfarth Shaw in Chicago, told SHRM Online. Out of nine employment cases, there were four decisions that could be called “pro-employee” and four that could be called “pro-employer,” with one opinion that is best described as “unclear” or “neutral,” she said. But, she continued, “You can’t just look at the term and count the cases. Overall, it was a very favorable term for employers and HR professionals in terms of the guidance that was given to HR executives regarding HR practices.”

The four cases that could be considered “employer friendly” are Dukes v. Wal-Mart, addressing the standards for certifying a class in a sex discrimination case under Title VII; AT&T Mobility v. Concepcion, upholding the enforceability of class-action waiver provisions in arbitration agreements; NASA v. Nelson, ruling that NASA did not violate a constitutional right to privacy by seeking information on an employee questionnaire about treatment or counseling for recent illegal drug use; and Borough of Duryea v. Guarnieri, holding that public workers who claim retaliation in violation of the petition clause of the First Amendment to the U.S. Constitution must show that the claim involves a policy matter of community concern.

The “employee friendly” cases are two retaliation cases, Kasten v. Saint-Gobain Performance Plastics and Thompson v. N. Am. Stainless LP; plus Chamber of Commerce v. Whiting, the case upholding the Arizona law that penalizes employers for knowingly or intentionally hiring undocumented workers; and Staub v. Proctor Hospital, the “cat’s paw” case.

The “neutral” decision is Cigna Corp v. Amara, ruling that a misleading or incomplete summary plan description for a cash balance pension plan could not support a claim for benefits under the Employee Retirement Income Security Act.

Lessons from Dukes v. Wal-Mart

The case that has probably gotten the most attention is Dukes v. Wal-Mart, ruling that a lower court erred in certifying a class of female employees who were claiming that subjective decision-making by local managers resulted in discriminatory pay and promotions decisions. The majority opinion, written by Justice Antonin Scalia, concluded that the types of claims asserted were not the types that lent themselves to determination in a class-action proceeding because of the lack of evidence of a corporate policy underlying the employment actions.

The only corporate policy that the plaintiffs’ evidence convincingly establishes, Scalia wrote, is Wal-Mart’s “policy” of giving local supervisors discretion over employment matters. While such a policy could be the basis of a Title VII disparate impact claim, recognizing that a claim “can” exist does not mean that every employee in a company with that policy has a common claim, he wrote.

“After Dukes, I hear clients asking, ‘Does it mean that we shouldn’t be engaged in subjective decision-making?’ ” Olson said, adding: “That isn’t the lesson of Dukes.” Instead, the opinion contrasts subjective decision-making without clearly expressed criteria and the type of decisions HR should be training first-line supervisors to make. “Discretionary decisions should be based on clear corporate guidance or standards to make sure that promotion and pay decisions are made in a nondiscriminatory way,” she said. “It is critical that HR executives are designing tools that link the procedures used to measure job performance.”

But employees’ performance cannot be measured just by numbers, she added. “You can’t measure everything quantitatively. But that doesn’t mean that you can’t measure it objectively. HR executives must make sure managers know what criteria they are applying, what information they are considering, what measurements are being used. It is a really good HR practice for those managers to get practice on how to be consistent.”

In terms of the proliferation of class actions, “it’s a little early to figure out the significance of Dukes,” said Gary Mathiason, an attorney with Littler Mendelson in San Francisco, “but there is no question that it will make class actions more difficult to bring; at least increase the standard that has to be met.”

Court Supports Retaliation Claims, Class-Action Waivers

The Supreme Court has read retaliation “into almost every employment law statute and [is] finding a way to order relief,” Mathiason told SHRM Online. “In terms of retaliation, we have a court that is making very sure that there are clear and substantial protections for people who might be subject to retaliation,” he said.

Kasten held that an oral complaint to a supervisor was protected by the anti-retaliation provisions of the Fair Labor Standards Act. “This creates a task for HR of being responsible within the organization for responding to oral complaint, Mathiason noted. This makes it important, he added, that there be good managerial training as to how to handle oral complaints and a process established in HR for handing such complaints.

In the Thompson case, the court ruled unanimously that a worker who claimed that he was fired because his fiancee had filed a sex discrimination claim against their mutual employer had a cause of action for retaliation under Title VII. “If the court chose to take a more literal reading of the statute, this case could have come out the other way,” said Michael W. Fox, an attorney with Ogletree Deakins in Austin, agreeing that the court is focused on retaliation and is “very supportive of employees bringing retaliation claims.”

AT&T Mobility, although not an employment case, is important for any employer considering alternative dispute resolution (ADR), Mathiason said, noting that the case holds that “a properly structured arbitration agreement containing a class-action waiver will likely be enforceable even if state law would have found the agreement unconscionable.” This resolved the uncertainty around class-action waivers, he said, advising that, if your employees enter into an arbitration agreement, make sure that the agreement has a clearly written class-action waiver.

“You shouldn’t rely on silence as a waiver,” he cautioned. Further, “if you don’t have an ADR system, this is a good time to evaluate the benefits and disadvantages of arbitration.”  

“My experience with employers who have mandatory arbitration agreements in place is that they are more effectively used when combined with pre-arbitration attempts to resolve the issues,” Olson said. HR is likely to be involved in these efforts, which can work like grievance procedures, she noted.

In Staub, the “cat’s paw” case, the court held that an employer may be held liable for employment discrimination based on the discriminatory motive of an employee who influenced, but did not make, the ultimate employment decision. This will lead to more factual issues, Fox said, to answer the question of whether “there is someone leaning in and whispering to the decision-maker in order to influence the decision.” The most obvious impact of this, he noted, is that it is likely to result in the denial of summary judgment to the employer in more cases, getting plaintiffs before a jury “where they hope they can win the fairness battle.”

Although not decided in the employer’s favor, the decision in Staub “gives HR meaningful guidance,” Olson said. Mere review by HR of an employment decision is not going to relieve the employer of liability if there was bias in making the decision. But conducting meaningful review of employment decisions “is a very vital role for HR to play and the best way to ensure that discrimination doesn’t enter into decision-making and that supervisors’ decisions are well-supported,” she said.

Focus on Manageability of Litigation

“It was a good term for employers because, on a couple of key cases, the court was focused on the manageability of litigation,” Fox said. The high court said it was important that cases coming before trial courts don’t get so big that they become impossible to handle.

“This won’t affect you day to day as an HR person. But it will impact the backdrop in which you work, particularly if you get involved in litigation,” he said, adding that the “reverse would have been a really bad thing for employers and HR,” adding significantly to the burdens imposed by the ever-increasing numbers of class-action employment lawsuits being filed.

Joanne Deschenaux, J.D., is SHRM’s senior legal editor.