Littler Lightbulb – October Employment Appellate Roundup

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

  • Three cases pending before the Supreme Court with significant workplace implications.

In Muldrow v. City of St. Louis, discussed in the July Appellate Roundup, the Court will decide

The issue in Murray v. UBS Securities, LLC, is whether a whistleblower must prove an employer acted with “retaliatory intent” in a claim for adverse employment action under the Sarbanes Oxley Act (SOX). The plaintiff in the case sued UBS Securities, alleging the company terminated his employment in violation of SOX because he reported alleged fraud. A jury awarded the plaintiff damages and the Second Circuit reversed, concluding that a whistleblower must prove the employer acted with retaliatory intent to prevail in a SOX action.  The decision created a split with the Fourth, Fifth, Ninth, and Tenth Circuits on a whistleblower’s burden of proof under SOX. The Supreme Court heard oral argument in the case on October 10, 2023, and its decision will be significant because it may impact the burden of proof under whistleblower statutes in other industries as well as under SOX.

Another Second Circuit decision the Supreme Court will review is Bissonnette v. LePage Bakeries Park St., LLC, discussed in the February Appellate Roundup, in which the Second Circuit rejected claims by delivery drivers that they are exempt from arbitration under the Federal Arbitration Act (FAA). The issue the Supreme Court will address is whether the FAA’s exemption for employment contracts of workers engaged in foreign or interstate commerce applies to any worker who is “actively engaged” in the interstate transportation of goods, or only to those in the transportation industry.  The decision in the case will be important for employers seeking to arbitrate disputes with delivery drivers.

In the Federal Appellate Courts

  • Second Circuit Pleading Standard for FLSA Overtime Claims. The plaintiffs in Herrera v. Commes Des Garcons et al., No. 22-1962-cv (2d Cir. Oct. 16, 2023), who were employed as “Assistant Floor Manager,” “Floor Manager,” or “Sales Manager” at a New York City retailer, claimed their employer misclassified them as exempt managerial employees and failed to pay them overtime required under the Fair Labor Standards Act (FLSA). The federal district court dismissed the Plaintiffs’ FLSA claims for failure to allege the specific number of overtime hours they worked.

The Second Circuit reversed. First, the court noted, although their job titles contained the term “Manager,” the plaintiffs’ actual duties were non-managerial. Next, the court reviewed prior Second Circuit decisions requiring that “plaintiffs provide some degree of ‘specificity’ in order to sufficiently plead an FLSA overtime claim.” This pleading standard is satisfied, the court held, “if plaintiffs allege that their regularly scheduled workweek for a given period of time included more than forty hours of work, so that they were eligible for overtime during every week in which they worked their regular schedule.” In the case currently before it, the court concluded, the plaintiffs alleged their regularly scheduled work hours consisted of five shifts each week and that each shift lasted between eight and three-quarter hours and nine hours, amounting to between 43.75 hours and 45 hours of work per regular week, which the court found was sufficient to satisfy the overtime pleading requirements of the FLSA. Rejecting the assertion that plaintiffs were required to list specific workweeks during which they worked more than 40 hours, the court stated that doing so “would generate voluminous, tedious complaints and compel plaintiffs to record their work schedules with a level of precision and care at odds with our admonition that plaintiffs in FLSA cases are not obligated ‘to keep careful records and plead their hours with mathematical precision.’”

  • Eleventh Circuit Analyzes Applicability of ADA to Claims of Discrimination in Post-Employment Benefits. In Stanley v. City of Sanford, No. 22-10002 (11th Cir. Oct. 11, 2023), the Eleventh Circuit relied on the language of the statute to hold that the anti-discrimination in employment provisions of the Americans with Disabilities Act (ADA) apply only to employees or job applicants.  When the plaintiff in the case, who suffered from Parkinson’s disease, retired in 2018, her former employer’s benefit plan provided health insurance subsidies to disability retirees for only 24 months after retirement.  The plan had previously provided for free health insurance for disabled retirees until age 65 but was amended in 2003 to limit coverage. The plaintiff sued, alleging the plan change discriminated against her in violation of the ADA, among other things. The district court granted the employer’s motion to dismiss, the plaintiff appealed, and the Eleventh Circuit affirmed the dismissal.

In reaching its decision the Eleventh Circuit rejected plaintiff’s argument that the Supreme Court’s decision in Robinson v. Shell Oil Co., 519 U.S. 337 (1997), which held that employees could sue for post-employment retaliation under Title VII, applied.Title VII’s anti-retaliation provision was ambiguous, the court stated, and could apply to either current or past employees. In contrast, the Eleventh Circuit held, “[t]here is a clear temporal qualifier in Title I: Only someone ‘who, with or without reasonable accommodation, can perform the essential functions of the employment position that such individual holds or desires’ is protected from disability discrimination.” (Emphasis in the original.) The court acknowledged that its decision was contrary to the decisions on the issue in the Second and Third Circuits, but consistent with decisions in the Sixth, Seventh, and Ninth Circuits.

  • Second Circuit Holds the Federal Equal Pay Act (EPA) Does Not Require Employers to Show Pay Differentials Are Job-related. Noting that “[t]he circuits are split in numerous directions on the meaning of ‘factor other than sex’ as a defense to claims of pay differentials in violation of the EPA, in Eisenhauer v. Culinary Institute of America, No. 21-2919-CV (2d Cir. Oct. 17, 2023) the Second Circuit joined the fray.  The case involved a claim that the plaintiff’s employer violated equal-pay laws by compensating her less than a male colleague, and that its sex-neutral compensation plan, which incorporated a collective bargaining agreement, did not qualify as a “factor other than sex” to justify the pay disparity because it was not based on job-related differences between her job and her colleague’s job.

The Second Circuit rejected this claim with respect to the EPA, holding that the unambiguous language of the statute did not include a requirement that a “factor other than sex” be job-related, and that such a requirement would conflict with the statute’s plain meaning. Although the plain meaning of the statute “trumps any resort to legislative history,” the court noted that its legislative history also “strongly supports our interpretation…. Nothing in the legislative history suggests that a ‘factor other than sex’ must be job related. Nor is there anything to suggest that the term must be limited in in any other way.”

In contrast, the court held, New York’s Equal Pay law, New York Labor Law §194(1), requires that “bona fide factor other than sex” as a defense to a pay disparity claim must be “job-related with respect to the position in question.”

  • Fourth Circuit Rejects Gender-Based Pay Discrimination and Retaliation Claims.  In a similar suit to Eisenhauer, in Noonan v. Consolidated Shoe Co., Inc., No. 21-2328 (4th Cir. October 19, 2023) a female plaintiff claimed she was paid less than a male co-worker in violation of Title VII and the EPA. In contrast to Eisenhauer, Noonan involved the issue of appropriate comparators in a pay discrimination case.  Before the federal district court, the plaintiff, a content creator and part-time photographer in the employer’s marketing department, sought to show wage discrimination by comparing her wages to those of a male co-worker who was a graphic designer. Finding the two were not in similar jobs and therefore not appropriate comparators in a wage discrimination case, the district court granted summary judgment to the employer.

On appeal, the plaintiff broadened her claim, asserting that in addition to being paid higher wages than she was paid, the male employee was also paid at the “local industry standard,” while she and the other two female employees in the marketing department were paid below that standard.  Finding that the other female employees also didn’t perform jobs similar to the male employee, the Fourth Circuit affirmed summary judgment for the employer under title VII.  In a footnote the court noted that because the plaintiff failed to meet Title VII’s similarity requirement for comparators, “she necessarily fails to meet the Equal Pay Act’s higher bar to show the comparable jobs were equal.”

In addition to her pay discrimination claim, plaintiff also alleged she was retaliated against for complaining about pay discrimination. Although her complaint of pay discrimination was protected activity, the Fourth Circuit held, to be actionable retaliation, the plaintiff must show “significant” harm that “could well dissuade a reasonable worker from making or supporting a charge of discrimination.”  In this case, the court found that plaintiff’s boss’s admonishment that “it was a fireable offense to know another employee’s salary” would not dissuade a reasonable worker from bringing a charge of discrimination. None of the plaintiff’s other complaints of retaliatory actions were “both material and undertaken because of her complaints about salary equity,” the court concluded, affirming summary judgment on her relation claims as well as on her discrimination claim.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.