Littler Lightbulb – April 2026 Employment Appellate Roundup

Fifth Circuit Vacates NLRB Order Regarding Company Subpoenas During Union Organizing Campaign

In Starbucks v. NLRB, __ F.4th __ (5th Cir. Apr. 17, 2026), the Fifth Circuit vacated the National Labor Relations Board’s (NLRB) order regarding subpoenas issued by the company in defense of an NLRB charge alleging unlawful conduct during a union organizing campaign. The Fifth Circuit rejected the NLRB’s claim that the subpoenas, which requested a broad range of documents, including communications by employees, violated Section 8(a)(1) of the NLRA by interfering with employees’ Section 7 organizing rights by requesting “information and communications concerning their protected and concerted activities, and/or union activities.”

The Fifth Circuit held the NLRB applied the wrong standard for assessing a Section 8(a)(1) violation, finding that the discovery rule for determining whether unions or employees could withhold otherwise relevant information based on confidentiality interests did not apply. “The test for Section 8(a)(1) liability is whether an employer’s conduct would ‘tend to be coercive’ when considered ‘within the totality of circumstances surrounding the occurrence at issue,” the Fifth Circuit stated. Instead of applying the appropriate standard, the NLRB applied the discovery-focused, balancing test which weighed employees’ rights to “keep their protected activities confidential” against the “employer’s need for the information to present its defense.” This test, however, was designed to determine whether production in response to a subpoena was required, but “does not resolve the distinct question whether the employer’s conduct is coercive” and, therefore, a violation of the National Labor Relations Act. 

Importantly, “that coercion determination turns on the employer’s conduct considered in its full context.” But, in using its test, the NLRB failed to consider important factors regarding whether the subpoenas were coercive, including the subpoena instructions, which explained how recipients could petition to revoke or modify the subpoena. 

Tenth Circuit Affirms Summary Judgment for the Employer in Title VII Retaliation Claim

A few weeks after complaining to the company Human Relations Vice President that his supervisor gave preferential treatment to female employees, the plaintiff in Dominguez v. Weiser Security Services, 172 F.4th 1138 (10th Cir. Apr. 7, 2026), was terminated from employment. He filed suit under Title VII claiming he was terminated in retaliation for complaining about gender discrimination.  The district court granted summary judgment for the employer, finding that neither the plant manager, who made the termination decision, nor the plaintiff’s supervisor knew about his complaint.

Affirming summary judgment for the employer, the Tenth Circuit emphasized that the plaintiff in a Title VII retaliation claim must show either that the decisionmaker who took the adverse employment action knew of the protected activity or that the person who engaged in the alleged discriminatory action knew of the complaint and influenced the decisionmaker to take the adverse employment action under the “cat’s paw” theory. The Tenth Circuit found that the plaintiff in the case failed to provide the required evidence under either theory. Specifically, the Tenth Circuit concluded the evidence he introduced, including an angry phone call in which his supervisor yelled at him for failing to conduct required training and the supervisor’s erroneous assertion that he failed to attend a training, did not establish that the supervisor knew about the complaint against him. Rather, the Tenth Circuit agreed with the district court that the evidence likely proved “‘something more benign’ than retaliation for protected activity, ‘like mere dislike.’”

Seventh Circuit Affirms Summary Judgment for the Employer in Rehabilitation Act Discrimination and Retaliation Case

After she was terminated from employment for performance issues, the plaintiff in Lewis v. Indiana Department of Transportation, __ F.4th __ (7th Cir. Apr. 22, 2026) filed suit asserting claims for disability discrimination and retaliation under Section 504 of the Rehabilitation Act, which requires employers receiving federal funds to reasonably accommodate their employees with disabilities, and race discrimination and retaliation under Title VII. The district court granted summary judgment for the employer on all claims and the Seventh Circuit affirmed. 

In contrast to the ADA, which requires plaintiffs to show they were discriminated against “on the basis of” their disability, the Seventh Circuit held that the Rehabilitation Act imposes a higher standard, requiring plaintiffs to establish they were discriminated against “solely by reason of” their disability, which the plaintiff was unable to do in light of her history of poor job performance. In response to the plaintiff’s claim that the reasons for her termination were pretextual, the Seventh Circuit found the record established a clear history of insubordination and ineffective job performance, including contesting assignments and a direct order from the department director, poor attendance at meetings, and negative comments about the director to other employees, which the court found were justifications for termination. Based on these facts, the Seventh Circuit also found there was no basis for the plaintiff’s Rehabilitation Act retaliation claim.

As to her discrimination complaint, the plaintiff, who was a Black, claimed that she was discriminated against because a White colleague received a higher raise than she did. The Seventh Circuit agreed with the district court that the plaintiff failed to provide information to establish that the other employee was an appropriate comparator based on job title, job duties, or other factors. Moreover, the court found, the White employee received a higher raise because his salary was lower than hers before and after the raise. The plaintiff’s retaliation claim failed for the same reasons.

Seventh Circuit applies MCA Overtime Exemption and Affirms Summary Judgment for Employers in FLSA Class Action 

Stingley v. Laci Transport, 172 F.4th 525 (7th Cir. Apr. 2, 2026), and Johnson v. Bosman Trucking, 172 F.4th 525 (7th Cir. Apr. 2, 2026), a consolidated class action, involved claims for unpaid overtime under the FLSA by shuttle truck drivers who transported out-of-state manufactured automobile parts from storage lots to a nearby assembly plant and returned to the storage lots after the parts were unloaded. The issue in the case was whether the Motor Carrier Act (MCA) overtime exemption for interstate drivers applied to the plaintiffs. The district court granted summary judgment for the employers and the plaintiffs appealed.

Assessing the issue, the Seventh Circuit noted, “[e]ven those who drive intrastate routes … such as the plaintiffs here,” can be covered under the MCA exemption if the “intrastate run” is part of a continuous interstate journey. Among the factors to be considered in determining whether the routes by the drivers were part of an interstate shipment were whether processing or substantial product modification occurred at the intermediate stop, and whether the shipper had a fixed and consistent intended destination. Citing a prior Seventh Circuit decision, the court stated that when a shipper transports product across state lines for sale to customers in the destination state and “the product undergoes no alteration during its journey to the shipper’s customers, and interruptions in the journey that occur in the destination state are no more than the normal stops or stages that are common in interstate sales, such as temporary warehousing, the entire journey should be regarded as having taken place in interstate commerce ...” In this case, the Seventh Circuit concluded the temporary stops at the storage lots were routine stops to the final destination, the assembly plant, and the transport of the empty containers from the assembly plant to the storage lots was also properly designated as interstate transportation as the intended destination was clearly the out-of-state manufacturing plant. Accordingly, the Seventh Circuit affirmed summary judgment for the employers.

Fourth Circuit Affirms Bonus Plan Exemption Under ERISA

The issue in Milligan v. Merrill Lynch Pierce Fenner & Smith, Inc., 173 F.4th 128 (4th Cir. Apr. 17, 2026), as amended (Apr. 20, 2026), was whether the employer’s incentive compensation program, which provided a lump-sum cash award to high-performing employees after eight years of employment, qualified as an employee pension benefit plan under ERISA. The plaintiff, who was part of the program, voluntarily resigned before becoming eligible for the award, and filed a class action alleging that the program violated ERISA’s vesting and anti-forfeiture requirements. The district court granted summary judgment for the employer, holding that the program was an ERISA-exempt bonus plan, and the plaintiff appealed.

The Fourth Circuit applied 29 C.F.R. § 2510.3-2(c), which provides that “the terms ‘employee pension benefit plan’ and ‘pension plan’ shall not include payments made by an employer to some or all of its employees as bonuses for work performed ...” Surveying the case law, the Fourth Circuit stated that among the factors courts consider in determining whether a plan is a bonus plan is whether the plan provides universal employee participation or imposes heightened eligibility requirements, and whether employees can unilaterally postpone payments until termination or beyond. Applying these factors to the program at issue, the court found that the program did not apply to all employees but rather had heightened eligibility requirements and was only available to high-performing employees who remained employed for eight years. Employees also could not choose to have program payments disbursed at termination or during retirement. Satisfying the eight-year vesting requirement triggered automatic, mandatory payment of the award. Based on these and other factors, the Fourth Circuit affirmed summary judgment for the employer, finding the program was clearly an ERISA-exempt bonus plan.

D.C. Circuit Holds Union Employee’s Termination for Disparaging Testimony Was Not an NLRA Violation

Plaintiff in Oncor Electric Delivery Co. LLC v. NLRB, __ F.4th __ (D.C. Cir. Apr. 28, 2026) was terminated from employment after giving disparaging testimony about the employer’s products at a legislative hearing. The National Labor Relations Board (NLRB) found that the employer committed an unfair labor practice in violation of Section 7 the National Labor Relations Act (NLRA), which protects employees’ right “to engage in … concerted activities for the purpose of collective bargaining or other mutual aid or protection,” including “a right to appeal to third parties outside the employment relationship in an effort to ‘improve terms and conditions of employment.’” 

The employer petitioned the D.C. Circuit for review, which determined that the NLRB failed to address the first prong of the “Jefferson Standard” test articulated by the Supreme Court in NLRB v. Loc. Union No. 1229, Int’l Bhd. of Elec. Workers, 346 U.S. 464, 471–73 (1953). Under that test, an employee may be discharged for making a disparaging comment about the company or its products to a third party if the communication (1) does not disclose that “it is related to an ongoing dispute between the employees and the employers” or (2) is “disloyal, reckless or maliciously untrue.” The D.C. Circuit therefore remanded the case to the NLRB “for further consideration” of that issue. The NLRB found the plaintiff’s testimony showed a connection to an ongoing labor dispute and his termination was therefore unlawful, and the employer again petitioned the D.C. Circuit for review.

Disagreeing with the NLRB’s conclusion, the D.C. Circuit found that nothing the plaintiff said connected his criticism of the company’s products to an ongoing labor dispute, and therefore he was not protected from dismissal under the NLRA. Among other things, the court rejected the NLRB’s finding that plaintiff’s testimony was a complaint about his working conditions. and that an employee’s discussion of working conditions necessarily indicates a connection to an ongoing labor dispute. “An employee’s negative statements about working conditions, without more,” the court stated, “do not show that those conditions are part of a labor dispute. The Board’s suggestion that any disparaging communication that references working conditions satisfies Jefferson Standard’s first prong would eviscerate the requirement that the protected communication express a connection to an ongoing employer-employee dispute.” Accordingly, the D.C. Circuit granted the employer’s petition for review and denied the NLRB’s cross-petition for enforcement.

Ninth Circuit Reverses District Court, Finding Company’s Arbitration Agreements Enforceable

O'Dell v. Aya Healthcare Servs., 171 F.4th 1173 (9th Cir. Apr. 1, 2026) involved a class action challenging the validity of arbitration agreements containing a clause requiring an arbitrator, rather than a court, to determine the validity of the agreement. Initially, the district court sent claims by four plaintiffs to separate arbitrations. Two of the arbitrators found that the agreements were valid, and the other two arbitrators found that the agreements were invalid. Later, after 255 additional plaintiffs opted in to the case, a different district court judge applied the doctrine of non-mutual offensive collateral estoppel, which applies when a party different from the party in the original action is seeking to avoid relitigating the same issue, to preclude the enforcement of the arbitration agreements.

The employer appealed to the Ninth Circuit which held that applying non-mutual offensive collateral estoppel to invalidate arbitration agreements would eviscerate the Federal Arbitration Act (FAA).  The FAA provides that arbitration agreements are “valid, irrevocable, and enforceable” and that the only grounds for revocation are fraud, duress, or unconscionability, none of which the court found in this case.  “[T]he application of non-mutual offensive collateral estoppel provides no exception to that mandate,” the Ninth Circuit stated. Moreover, the court noted, several Supreme Court decisions have also held that imposing a class action without the parties’ consent and where the parties had agreed to individually arbitrate is a violation of the FAA, which requires mutual consent. Based on all these factors, the Ninth Circuit reversed the district court, holding that as a matter of apparent first impression, the FAA does not permit the application of non-mutual offensive collateral estoppel that would result in the effective invalidation of arbitration agreements.