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

At the Supreme Court

• Oral Argument on Title VII Religious Accommodation Standard. On April 18, 2023, the U.S. Supreme Court heard oral argument in Groff v. DeJoy, assessing the standard for determining whether accommodating a religious employee’s request for time off creates an “undue hardship.” A decision in the case is expected before the end of the Court’s current term in June.

In the Federal Appellate Courts

• FLSA Administrative Exemption. In Walsh v. Unitil Serv. Corp., 64 F.4th 1 (1st Cir. Mar. 22, 2023), the First Circuit vacated summary judgment granted to a public utility company, finding the district court did not apply the appropriate analysis in determining that the company’s electric distribution dispatchers and gas controllers were exempt administrative employees under the federal Fair Labor Standards Act. The issue in the case was whether the employees’ “primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers” in accordance with the DOL regulations applicable to the administrative exemption.  In making its determination, the First Circuit applied what it termed a “relational” analysis explaining that if the employees’ primary duties relate to the business purpose of the employer or its customers “in that they produce the product or provide the service that the company is in business to provide,” the administrative exemption test is not satisfied.

The district court erred in this case, the First Circuit held, by failing to apply the relational analysis. Instead, it looked to examples of functional areas listed in the DOL regulations regarding the administrative exemption, finding the dispatchers’ and controllers’ primary duties were analogous to “regulatory compliance,” “quality control,” and “health and safety.” Looking at the evidence, however, the First Circuit concluded that the dispatchers’ and controllers’ duties were involved in health, safety, and quality control tasks in only “a limited or superficial way” and were not their “primary duty.” Accordingly, the court remanded the case to the district court to apply the “relational” analysis described in its opinion.

• Failure to Report Sexual Harassment. The Seventh Circuit affirmed summary judgment for the employer as to a manager’s claim that she was demoted in retaliation for reporting sexual harassment, in violation of Title VII of the Civil Rights Act of 1964, finding that the record demonstrated that the manager was demoted for failing to report allegations of sexual harassment, as required by company policy.

The plaintiff in Alley v. Penguin Random House, 62 F.4th 358 (7th Cir. 2023) was a group leader at a publishing company where she served as a liaison between supervisors and line employees. The company’s Anti-Harassment and Reporting Procedure provided that all managers and supervisors, including group leaders, were required to promptly report to human resources any employee complaint of sexual harassment and that they would be subject to discipline if they failed to do so. When one of the line employees complained to the group leader that another employee was sexually harassing her, the group leader decided to conduct her own independent investigation of the allegations instead of reporting the complaint to human resources. In the meantime, two other employees reported the harassment complaint to human resources, which immediately launched an investigation. When the HR Director met with the group leader as part of the investigation, the group leader admitted she knew of the harassment complaint but had failed to report it because she was awaiting additional information as part of her own investigation.

Following completion of the human resources investigation, the company terminated the employee accused of sexual harassment and demoted the group leader to forklift operator for failure to report the sexual harassment complaint. In support of her claim that the company’s reason for demoting her was pretextual, the plaintiff asserted that her manager had failed to report a sexual harassment complaint she made in 2017 and was never disciplined. The Seventh Circuit rejected this argument, noting that the company did not learn of the other manager’s failure to report a sexual harassment complaint until more than two years after the fact. “The law does not require employers to discipline employees equally for behavior that happened multiple years apart,” the court stated. The company’s “decision to treat the two employees differently in this situation is not evidence of a retaliatory motive,” it concluded.

• Summary Judgment for Employer Upheld in Harassment and Retaliation Suit under Title VII, FMLA and ADA. The Seventh Circuit upheld summary judgment for the employer in another suit involving failure to report harassment and retaliation. The plaintiff in Trahanas v. Northwestern Univ., 2023 U.S. App. LEXIS 8329 (7^th Cir. 2023), alleged her supervisor and co-workers made verbally abusive and demeaning comments about her mental health and sexual orientation, which she admitted she never reported. When her mental health conditions worsened, plaintiff took 12 weeks of approved FMLA leave. At the end of the 12 weeks, she did not extend the leave or return to work, and her employment was terminated.  Over the next several months, the plaintiff applied for other positions with the employer, and though she received one interview she was not hired.  Filing suit under Title VII, the FMLA and ADA, plaintiff claimed she suffered harassment and retaliation due to her medical conditions and FMLA leave.

In rejecting her claims of harassment by both her supervisor and co-workers, the Seventh Circuit held that, because of her failure to report the alleged harassment, her employer could not be held to have known about the problem or be responsible for failing to take action to rectify it. As to her claims of retaliation under the ADA and FMLA, the plaintiff was unable to show that her medical conditions or decision to take FMLA leave were motivating factors in her employer’s decision to terminate her employment or failure to hire her for the positions for which she applied. The court found that her termination was due to her failure to return to work at the end of her leave, and there was no evidence that anyone making hiring decisions for the jobs she applied for knew she had a medical condition or that she had taken FMLA leave.Accordingly, the Seventh Circuit concluded, summary judgment for the employer was appropriate.

• Employee “Not a Good Fit” Legitimate Basis for Employment Decision. In Lashley v. Spartanburg Methodist College, 2023 U.S. App. LEXIS 9180 (4th Cir. 2023), the Fourth Circuit affirmed summary judgment on an employee’s claim that her contract was not renewed and she was terminated from employment in violation of the ADA, among other things, after she complained that mold or mildew in her office building exacerbated her asthma and other medical problems. Despite requesting an accommodation, the plaintiff never filled out or returned the accommodation form she was given. Shortly after her complaint, the plaintiff, a college professor on a one-year contract, was told her contract would not be renewed because “she and [the college] ‘were not a good fit for each other.’” After receiving this notice, the plaintiff began making threatening remarks about the college to students and colleagues, and the college terminated her employment.

The Fourth Circuit rejected plaintiff’s claim that the statement that she was not a “good fit” for the college “is itself compelling evidence of retaliatory animus.” Finding “[t]his is too broad an assertion,” the court noted that “[t]hough there may be circumstances where evidence reveals that ‘good fit’ is a subterfuge for discrimination or retaliation, it is also a perfectly innocuous comment that an organization’s collaborative goals would not be furthered, and in fact might be retarded, by a particular employee.” In this case, the court found, the college decided not to renew plaintiff’s contract based on evidence of her conflicts with multiple faculty members, excessive fraternization with students and favoritism toward some students, and inadequate preparation for classes, not because of her medical conditions or in retaliation for seeking an accommodation. As to her termination, the court found that the college took action due to legitimate concerns that the plaintiff was potentially violent and a threat to campus safety.

• Employment Decision Based on Poor Interview Scores Not Evidence of Discrimination. Applying the burden-shifting framework set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802–03 (1973) to an age discrimination case under the Missouri Human Rights Act, the Eighth Circuit found the company’s decision to promote younger candidates who scored better in interviews than did plaintiff was not evidence of age discrimination. In Bonomo v. Boeing Co., 63 F.4th 736 (8^th Circuit 2023), the plaintiff, who was 62, applied for promotions to two similar, more senior-level positions. In both cases, employees who were in their 30s and received the highest scores in structured interviews were selected for the positions. In both cases the hiring managers indicated that the structured interviews were the only factors considered in making the selection decisions.

The plaintiff filed suit alleging age discrimination and claimed, among other things, that the exclusive reliance on the structured interviews to make the hiring decisions was evidence of discrimination. The Eighth Circuit disagreed. Stating that “the presence of subjectivity in employee evaluations is itself not grounds for challenging those evaluations as discriminatory,” the court cited specific deficiencies the interviewers found in the plaintiff’s interview responses compared with the positive responses of the candidates selected, noting that both times plaintiff’s interview scores were the lowest of all applicants. Ultimately, because the plaintiff failed to provide material factual evidence that would lead a jury to find age discrimination, the court affirmed summary judgment in the employer’s favor.