This Littler Lightbulb highlights some of the more significant employment law developments at the U.S. Supreme Court and federal courts of appeal in the last month.

At the Supreme Court

• Employers Can Sue Union for Strike Damage. In a significant decision for employers, Glacier Northwest, Inc. v. International Brotherhood of Teamsters Local Union No. 174, 2023 U.S. LEXIS 2299 (June 1, 2023), the Supreme Court held that the NLRA does not protect a union from claims alleging destruction of property during a strike when the union failed to take reasonable precautions to protect against foreseeable and imminent harm. The case involved a company that prepared and sold ready-mix concrete, which begins to harden unless it is delivered promptly after being loaded onto the ready-mix trucks. The union ordered a strike when it knew the company was in the midst of mixing substantial amounts of concrete, loading batches into ready-mix trucks, and making deliveries.  Although the company instructed drivers to finish deliveries in progress, the union directed them to ignore the company’s instructions, and the concrete that had been mixed that day hardened and was destroyed. The Court emphasized that while the NLRA protects the right to strike, that right is not absolute: “the NLRA does not shield strikers who fail to take ‘reasonable precautions’ to protect their employer’s property from foreseeable, aggravated, and imminent danger due to the sudden cessation of work.” 

• Court Restricts Consideration of Race in College Admissions.  In its long-awaited decision on affirmative action, Students for Fair Admissions, Inc. v. President and Fellows of Harvard College and Students for Fair Admissions, Inc. v. University of North Carolina, the Supreme Court held that Harvard and the University of Carolina’s admissions programs violated the Equal Protection Clause of the Fourteenth Amendment because they “lack sufficiently focused and measurable objectives warranting the use of race, unavoidably employ race in a negative manner, involve racial stereotyping, and lack meaningful end points.”  Examining prior Supreme Court decisions on what it called “race-based government action,” the Court stated, “[o]ur acceptance of race-based state action has been rare for a reason. ‘Distinctions between citizens solely because of their ancestry are by their very nature odious to a free people whose institutions are founded upon the doctrine of equality.’… That principle cannot be overridden except in the most extraordinary case.” The universities’ affirmative action programs, the court concluded, did not rise to that level. An analysis of how this decision will affect private employers can be found here.

• Stricter Standard for Interpreting “Undue Hardship” in Assessing Employee Requests for Religious Accommodation.  In Groff v. Dejoy, the Supreme Court focused on the language of Title VII, which requires employers to accommodate the religious practice of their employees unless doing so would impose an “undue hardship on the conduct of the employer’s business,” stating that courts below, including the Third Circuit in this case, have mistakenly used the phrase “more than de minimis” in Trans World Airlines, Inc. v. Hardison, 432 U. S. 63, 84 (1977) as the standard for determining undue hardship.  In Groff, the Court held, “showing ‘more than a de minimis cost,’ as that phrase is used in common parlance, does not suffice to establish “undue hardship” under Title VII.”

Instead, the Court stated, it “understands Hardison to mean that ‘undue hardship’ is shown when a burden is substantial in the overall context of an employer’s business. This fact-specific inquiry comports with both Hardison and the meaning of ‘undue hardship’ in ordinary speech.” More specifically, the Court held, “an employer must show that the burden of granting an accommodation would result in substantial increased costs in relation to the conduct of its particular business … including the particular accommodations at issue and their practical impact in light of the nature, ‘size and operating cost of [an] employer.’” In addition, the Court emphasized, it is necessary for an employer to consider other options that would satisfy the employee’s request, such as shift-swapping.

• Free Speech Rights Under First Amendment Override State Anti-Discrimination Laws. 303 Creative v. Elenis involved a Colorado-based web designer who sought an injunction barring the state from enforcing its anti-discrimination statute to compel her to create websites that contradict her sincerely held belief that marriage should be reserved for unions between a man and a woman. The Colorado Anti-Discrimination Act (CADA) prohibits all “public accommodations,” which it defines broadly to include almost every public-facing business in the state, from denying its goods and services to any customer based on their race, creed, disability, sexual orientation, or other statutorily enumerated trait. The parties stipulated that the plaintiff is “willing to work with all people regardless of classifications such as race, creed, sexual orientation, and gender” and “will gladly create custom graphics and websites” for clients of any sexual orientation, but, she claimed, requiring her to create wedding websites for same-sex couples violated her First Amendment free speech rights.

The Court agreed with the Tenth Circuit that the planned wedding websites would qualify as “pure speech” protected by the First Amendment, but disagreed with its holding, which denied the injunction based on the state’s over-riding compelling state interest in insuring equal access to publicly available goods and services. While recognizing that governments have a “compelling interest” in eliminating discrimination in places of public accommodation, and that “Colorado and other States are generally free to apply their public accommodations laws, including their provisions protecting gay persons, to a vast array of businesses.” Justice Gorsuch, writing for the majority, added that “no public accommodations law is immune from the demands of the Constitution. In particular, this Court has held, public accommodations statutes can sweep too broadly when deployed to compel speech.”  Accordingly, the Court held, when a state public accommodations law collides with the First Amendment, the First Amendment takes precedence.

In the Federal Appellate Courts

• Ninth Circuit Finds Rap Music Creates Sexually Hostile Work Environment. In Sharp v. Activewear, L.L.C., 2023 U.S. App. LEXIS 14130 (9^th Cir. 2023), seven women and one man claimed their former employer created a sexually hostile work environment in violation of Title VII by continuously blasting “sexually graphic, violently misogynistic” rap music from commercial-strength speakers throughout its warehouse. The federal district court granted the employer’s motion to dismiss, finding the music’s offensiveness to both men and women and the fact that all employees were exposed to the music defeated the claim. The plaintiffs appealed, and the Ninth Circuit reversed.

Citing the Supreme Court, the Ninth Circuit examined the claim applying two basic principles: 1) Words that have sexual content or connotations do not always create a hostile work environment; and 2) An employer cannot avoid liability for a sexually hostile work environment by saying the words or conduct offend both men and women. Based on these concepts, the Ninth Circuit found the music at issue contained sexually demeaning and violent language that went beyond offhand foul comments and constituted harassment “because of sex” in violation of Title VII even if it offended men as well as women. The court noted its decision was consistent with decisions in similar cases that found music, radio programs, and other derogatory and sexually explicit sounds permeating the workplace create a hostile work environment in violation of Title VII. The court added, “[t]his same principle holds true in the context of race discrimination: We have held that a white coworker’s ‘use of racially charged words to goad both black and white employees makes [the] conduct more outrageous, not less so.’”

• Fourth Circuit Rejects Racially Hostile Work Environment Claims.  Robinson v. Priority Automotive Huntersville, Inc., 2023 U.S. App. LEXIS 14884 (4^th Cir. 2023) involved claims by two sales managers at an auto dealership who alleged, among other things, that they were subjected to a racially hostile work environment in violation of Title VII and 42 U.S.C. §1981.  The issues began when a new manager arrived at the dealership and made a number of changes, including moving sales managers’ offices from a side hallway to a central area where sales associates would bring them car sales deals to be finalized.  Unlike the other sale managers, the two Black sales managers decided not to move to the central area and kept their offices in the side hallway. When sales associates stopped bringing them deals to finalize, and their pay decreased as a result, they claimed it was because they are Black. In addition, plaintiffs claimed that several things the new manager said shortly after his arrival were racist, including a saying he wanted to “make Priority Honda great again,” paraphrasing former President Trump, and allegedly telling an employee to “stop hanging around with those thugs,” referencing a mixed-race group that included the two Black employees.  Lastly, the plaintiffs claimed they overheard one employee telling another to “come over to the white side,” although the employee claimed she said “right side,” not “white side.”

The federal district court granted summary judgment for the employer on the Title VII and §1981 claims, and the plaintiffs appealed. In assessing the legal standard for racial harassment under federal law, the Fourth Circuit emphasized that the conduct alleged must be because of race, and the harassment must be so “severe or pervasive” that it alters the conditions of employment and creates an abusive atmosphere. Examining the facts alleged, the court concluded that a reasonable person could not find the conduct complained of occurred because plaintiffs are Black.First, the court found, there was no evidence the plaintiffs’ drop in sales was because the manager told sales associates not to bring them sales deals because of their race, but rather the evidence suggested they stopped receiving deals because they did not relocate to the new sales location. Next, the court stated that paraphrasing former President Trump’s campaign slogan was not objectively racist and that “[p]laintiffs’ subjective discomfort – whether based on possible political preferences or on perceived animus – is not grounds for a federal racial discrimination claim.” As to the use of the term “thugs,” the court noted the term is often used non-racially to express disapproval of group behavior, and in this case the comment was directed at a group that included non-Black employees. Accordingly, the court stated, the “one-time use of “thugs” fails to support an objective inference of racial harassment – never mind severe or pervasive racial harassment.” Lastly, the court found that a reasonable person might consider the alleged “white side” comment was race-based harassment but concluded “the statement, on its own, does not create a severe or pervasive hostile work environment. Even the ‘utterance of an ethnic or racial epithet which engenders offensive feelings in an employee’ is generally not severe or pervasive enough to create a hostile work environment.” Based on all the foregoing, the court affirmed summary judgment for the employer on the Title VII and §1981 claims of racial harassment.

• Fifth Circuit Finds Religious Freedom Restoration Act Exempts Private Employer from Discrimination Based on Sexual Orientation.  In Braidwood Mgmt. v. EEOC, 2023 U.S. App. LEXIS 15378 (5^th Cir. 2023), the Fifth Circuit examined the religious exemptions to Title VII left open in the Supreme Court’s decision in Bostock v. Clayton County, 140 S. Ct. 1731(2020), which held that discrimination against a person for being homosexual or transgender is discrimination based on sex in violation of Title VII.  The plaintiffs in the case were a church and a privately held management company that the court described as “a Christian-owned business.” After determining that the plaintiffs had standing to bring suit against the EEOC on the grounds that the EEOC might enforce Title VII in situations like plaintiffs’ and discussing ripeness of the case for adjudication, as well as issues regarding class certification, the Fifth Circuit addressed the merits of the case, which is most relevant for employers.  Most significantly, the Fifth Circuit found the management company, which refused to employ homosexual or transgender individuals, was exempt from Title VII because of the owner’s belief that doing so would “make him complicit in sin, violating his sincerely held religious beliefs.”

The Religious Freedom Restoration Act (RFRA) requires the exemption, the court held, because compliance with Title VII would substantially burden the company’s ability to operate by its religious beliefs. To comply with Title VII the company would have to change its policies and “tacitly endorse homosexual and transgender behavior…. Being forced to employ someone to represent the company who behaves in a manner directly violative of the company’s convictions is a substantial burden and inhibits the practice of [the company’s] beliefs,” the court stated.

In addition, the court found that the EEOC failed to show a compelling interest in refusing an exemption other than a generalized interest in prohibiting all forms of sex discrimination. Moreover, the court stated, forcing the company “to hire and endorse the views of employees with opposing religious and moral views is not the least restrictive means of promoting that interest.” Accordingly, the court affirmed summary judgment for the company.

Commentators predict the decision will be appealed to the Supreme Court, and we will continue to monitor any further developments.

• Employer Not Required to Arbitrate Disputes Over Staffing Plans with Union. National Nurses Organizing Committee v. Midwest Division MMC, LLC, d/b/a Menorah Medical Center, LLC, 2023 U.S. App. LEXIS 14657 (10^th Cir. 2023) involved a dispute between a nurses’ union and a hospital over the implementation of a new staffing plan that the union alleged displaced bargaining-unit nurses with supervisory nurses in performing bargaining unit work. The union sought arbitration of a grievance alleging the hospital violated Article 4 of the collective bargaining agreement (CBA) that states: “It is not the intent of the Hospital to displace bargaining unit employees with supervisory employees in the performance of bargaining unit work.”  In response, the hospital asserted the grievance was not arbitrable based on provisions in the CBA specifically excluding disagreements related to staffing plans from arbitration.

The district court granted summary judgment to the hospital, and the union appealed. The Tenth Circuit acknowledged the federal policy favoring arbitration of labor disputes but stated that the presumption of arbitrability applies only when the party opposing arbitration does not rebut the presumption with “‘forceful evidence’ that the parties intended to exclude the dispute from arbitration.”In this case the court found the language in Article 4 was “aspirational,” in contrast to the mandatory language in multiple sections of the CBA excluding staffing plans from arbitration. The exclusionary provisions therefore trumped the presumption of arbitrability, the court held, affirming summary judgment for the hospital.

• Rights and Benefits of Employees on Military Leave.  In Myrick v. City of Hoover, 2023 U.S. App. LEXIS 14323 (11^th Cir. 2023), police officers for the City of Hoover, Alabama, who were military reservists, challenged the disparity between the pay and benefits the city provided for military leave compared to administrative leave. The city provided 168 hours of paid military leave annually during which employees on leave continued to accrue benefits and earn holiday pay. Once those hours were exhausted, employees on military leave no longer accrued benefits or earned holiday pay.  In contrast, the city did not cap pay or benefits accrual for employees on paid administrative leave for jury duty, voting, inclement weather, promotional exams, court hearings, formal city hearings, “or other appropriate reasons,” including while they are under internal investigation. The reservists filed suit claiming the distinction in treatment was unlawful under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).  The Federal District Court for the Northern District of Alabama granted summary judgment in the reservists favor and the city appealed.

Under USERRA, employees on military leave “must be given the most favorable treatment accorded to any comparable form of leave.”  In determining comparability, the court looked at three factors: 1) the purpose of the leave, 2) the ability of employees to choose when to take the leave, and 3) the duration of the leave.  Starting with purpose, the court found that military leave and administrative leave serve similar ends: compliance with the law and providing pay to protect employees from undue hardship. Next, the court examined the employees’ ability to choose when to take the leave, finding that in both situations employees did not control when to take the leave.

As to the final factor, duration of the leave, the district court grouped military leave and administrative leave into two categories based on length – short-term leave and long-term leave – finding that short-term military leave lasted three times longer than short-term administrative leave.  It concluded that long-term military leaves for deployment and investigative administrative leaves, which each lasted about the same amount of time, were outliers and therefore the military and administrative leaves were not comparable in duration.  Nevertheless, the district court ultimately held that the leaves were comparable. The Eleventh Circuit disagreed with the district court’s finding that the long-term administrative leave was an outlier, and instead stated it reflected the upper strata of paid leave the city was willing to provide to employees, concluding that the leaves were comparable in every respect.  Thus, the court held, the city violated USERRA by not providing the same benefits to employees on military leave that it afforded similar employees on paid administrative leave and affirmed summary judgment for the reservists.

• Reasonable Accommodation for Deaf Employee. Beasley v. O'Reilly Auto Parts, 69 F.4th 744 (11^th Cir. 2023) involved a deaf employee’s claim that his former employer discriminated against him in violation of the ADA by failing to provide him with reasonable accommodations.  Among other things, the employee had requested text messages summarizing mandatory nightly meetings where important safety information was provided, and a sign language interpreter in progressive disciplinary meetings so that he could explain his absences, which he claimed had been authorized, and resolve the discipline he received, which adversely affected his performance reviews and pay.

The district court granted summary judgment to the employer, finding the plaintiff failed to show his requested accommodations would have enabled him to perform essential job functions. The Eleventh Circuit reversed, finding the two requested accommodations at issue did involve essential job functions. When determining what job functions are essential, the Eleventh Circuit emphasized the language of the statute: “[C]onsideration shall be given to the employer’s judgment as to what functions of a job are essential.” 42 U.S.C. § 12111(8). Applying this standard to the plaintiff’s request for text messages summarizing the pre-shift meetings, the court noted that attendance at the meetings was mandatory. A company manager had also testified about the importance of the meetings, stating it would be a “failure” if a team member didn’t receive the meeting’s safety information. The court also found the plaintiff’s ability to participate meaningfully in the disciplinary meetings about his attendance was an essential aspect of his employment, citing testimony of a company HR representative and a manager about the importance of communication between supervisors and employees at disciplinary meetings. Thus, the court held, “even though disciplinary meetings were not part of [the employee’s] day-to-day functions as an inbound materials handler, they were an essential part of the job… [and] the result of his disciplinary proceedings directly affected the amount of the pay raise he received.”

Based on these factors, the Eleventh Circuit concluded summary judgment for the employer was inappropriate and remanded the case to the district court for further proceedings on the plaintiff’s claim that the company violated the ADA by failing to provide him with reasonable accommodations regarding the nightly pre-shift meetings and the disciplinary proceedings involving his attendance issues.