SCOTUS: Boss’s PERCEPTION controls in 1st amendment case

Jeffrey Heffernan’s supervisor thought Heffernan was involved in his opponent’s political campaign, but actually Heffernan was politically neutral. The boss demoted Heffernan. When Heffernan sued, the lower courts turned him away because there had been no actual denial of his free speech rights – only a perceived denial. The US Supreme Court (6-8) reversed, saying:

We conclude that * * * the government’s reason for demoting Heffernan is what counts here. When an employer demotes an employee out of a desire to prevent the employee from engaging in political activity that the First Amendment protects, the employee is entitled to challenge that unlawful action under the First Amendment and 42 U. S. C. §1983—even if, as here, the employer makes a factual mistake about the employee’s behavior.

Heffernan v. City of Patterson (US Supreme Court 04/26/2016)

But wait. The City might still win this one. The Court ends its opinion with this life ring:

There is some evidence in the record, however, suggesting that Heffernan’s employers may have dismissed him pursuant to a different and neutral policy prohibiting police officers from overt involvement in any political campaign. See Brief for United States as Amicus Curiae 27–28. Whether that policy existed, whether Heffernan’s supervisors were indeed following it, and whether it complies with constitutional standards, see Civil Service Comm’n, 413 U. S., at 564, are all matters for the lower courts to decide in the first instance.

[For recent decisions and pending employment law cases, see US Supreme Court Watch.]

Tom Brady Deflategate suspension upheld

It’s no surprise that the Second Circuit has upheld an arbitration decision suspending New England Patriots quarterback Tom Brady for his role in the infamous Deflategate scandal. The court decision was a classic explanation of the principle that courts owe extraordinary deference to the decisions of arbitrators. The basic idea is that an employer and the union bargain for a method for resolving disputes – and that bargain must be upheld even though a court might have reached a very different decision. National Football League Management Council v. National Football League Players Association (2nd Circuit 04/25/2016).

Unions and employers bargain to have their disputes resolved by arbitrators because they don’t want courts making these decisions. (Who would?) If they don’t like what they’re getting, then they need to bargain for different arbitrators or for a different system. Sounds harsh, but that’s where it’s at.

Here is how the court explained it:

Our role is not to determine for ourselves whether Brady participated in a scheme to deflate footballs or whether the suspension imposed by the Commissioner should have been for three games or five games or none at all. Nor is it our role to second‐guess the arbitrator’s procedural rulings. Our obligation is limited to determining whether the arbitration proceedings and award met the minimum legal standards established by the Labor Management Relations Act, 8 29 U.S.C. § 141 et seq. (the “LMRA”). We must simply ensure that the arbitrator was “even arguably construing or applying the contract and acting within the scope of his authority” and did not “ignore the plain language of the contract.” [Citation.] These standards do not require perfection in arbitration awards. Rather, they dictate that even if an arbitrator makes mistakes of fact or law, we may not disturb an award so long as he acted within the bounds of his bargained‐for authority.

We hold that the Commissioner properly exercised his broad discretion under the collective bargaining agreement and that his procedural rulings were properly grounded in that agreement and did not deprive Brady of fundamental fairness. Accordingly, we REVERSE the judgment of the district court and REMAND with 24 instructions to confirm the award.

The only real surprise in this court decision is that there was a dissent. Here’s the essence:

Judicial review of an arbitration award can be boiled down to a two‐step process. Both inquiries follow from the fundamental premise that “arbitration is 28 a matter of contract.” In the first step, the reviewing court asks whether the arbitrator acted within the scope of his authority under the relevant collective bargaining agreement. This ensures that a party is not forced “to submit to arbitration any dispute which he has not agreed so to submit.” If the arbitrator 6 acted within the scope of his authority, then his decision is entitled to substantial deference. The award will be upheld so long as the reviewing court finds, at the second step, that the arbitral award “draws its essence from the agreement” and does not reflect “merely an example of the arbitrator’s own brand of justice.” This guarantees that the parties get what they bargained for, namely, the arbitrator’s construction of the CBA. In my opinion, the Commissioner’s decision fails as to both steps. [Citations omitted.]

SCOTUS argument on overtime exemption

Yesterday the US Supreme Court heard arguments on the Department of Labor’s shifting-sands position on whether an auto dealer’s service advisors are exempt from overtime. After 30 years of saying they’re exempt, DOL in 2011 pronounced them non-exempt. The case is Encino Motorcars v. Nevarro.

My take-away is that nobody on the Court seriously thinks DOL has misread the statute, so under Chevron USA v. Natural Res. Def. Council the Court probably will defer to the DOL’s most recent interpretation and uphold the 9th Circuit’s decision that service advisors are non-exempt. That’s a victory for the plaintiff-employee, and a huge victory for the DOL and other administrative agencies that want to change their formal positions on the meaning of statutes they administer.

Some choice extracts from the one hour argument:

JUSTICE KAGAN: “Wow. I really did not expect you to say that.” [Responding to the government’s statement that the new regulation omits any explanation of why DOL changed its position was because there was “an inadvertent mistake in drafting.”]

JUSTICE BREYER: “But these people don’t work irregular hours and they’re not paid on commission. So why wouldn’t they be treated like a secretary?”

JUSTICE GINSBURG: “They clearly considered exactly this question. They made a judgment on it. They have effected that judgment within a notice-and-comments setting. I mean, if that’s not Chevron, what is?”

CHIEF JUSTICE ROBERTS: “I don’t mean to be too particular, but if there’s a squealing sound and it might be the fan belt, you’re saying he’s not going to open the hood and look at the fan belt?

NLRB complaint: Misclassification is an unfair labor practice.

The National Labor Relations Board’s General Counsel is taking the position that when an employer misclassifies a worker as an independent contractor rather than an employee, that constitutes an unfair labor practice and a violation of the National Labor Relations Act.

Proper classification as between “employee” and “independent contractor” has lots of implications for purposes of taxes, worker compensation, insurance, and other matters. Now it’s coming into the NLRB’s cross-hairs.

General Counsel Richard F. Griffin, Jr. put out a formal memorandum on March 22 entitled “Mandatory Submissions to the Division of Advice.” The memo tells NLRB Regional Directors that the GC has a list of “General Counsel’s initiatives or policy concerns.” When these matters pop up at the local level, the Regional Directors are instructed to get advice from headquarters. One of these is:

“Cases involving the question of whether the misclassification of employees as independent contractors violates Section 8(a)(1).”

NLRB’s Regional Director in Los Angeles has filed a formal complaint alleging that Intermodal Bridge Transport violated the National Labor Relations Act because it

“misclassified its employee drivers as independent contractors, thereby inhibiting them from engaging in Section 7 activity and depriving them of the protections of the Act.”

A hearing before an NLRB administrative law judge is scheduled for June 13.

The NLRB’s legal theory is pretty simple: If an employer tells its employees that they are independent contractors, then the employer is really telling them that they are not allowed to organize. And that – to paraphrase the statute – interferes with, restrains, or coerces employees in the exercise of the rights guaranteed in Section 7.

Teacher tenure is not unconstitutional. Well, Duh.

Just because a statute is imperfect, as plaintiffs alleged, does not make it unconstitutional. Vergara v. State of California (California Ct App 04/14/2016) upheld the constitutionality of California’s teacher tenure statute, its dismissal statutes, and its reduction-in-force statute.

Plaintiffs contended that California’s:

  1. tenure statute forced school districts to decide whether new, probationary teachers should be granted tenure before the teachers’ effectiveness could be determined;
  2. dismissal statutes made it nearly impossible to dismiss poorly performing teachers; and
  3. reduction-in-force statute required school districts, in the event of layoffs, to terminate teachers based on seniority alone, regardless of their teaching effectiveness.

The California Court of Appeal summarized its decision this way:

Plaintiffs failed to establish that the challenged statutes violate equal protection, primarily because they did not show that the statutes inevitably cause a certain group of students to receive an education inferior to the education received by other students. Although the statutes may lead to the hiring and retention of more ineffective teachers than a hypothetical alternative system would, the statutes do not address the assignment of teachers; instead, administrators — not the statutes — ultimately determine where teachers within a district are assigned to teach. Critically, plaintiffs failed to show that the statutes themselves make any certain group of students more likely to be taught by ineffective teachers than any other group of students.

With no proper showing of a constitutional violation, the court is without power to strike down the challenged statutes. The court’s job is merely to determine whether the statutes are constitutional, not if they are “a good idea.”

This case challenged the statutes “on their face” rather than as applied, which is always a difficult task.

In any event, the take-away here is that legislatures are allowed to enact statutes that may be imperfect, but that doesn’t mean they are unconstitutional.

SCOTUS will look at DOL’s flip-flop in FLSA exemption case

Encino Motorcars, LLC v. Navarro – up for US Supreme Court argument on April 20 – looks like a dispute about whether car dealership “service advisors” are exempt from FLSA’s overtime provisions, but it really is a test of the Department of Labor’s ability to put its own spin on the meaning of a statute – especially when DOL changes its spin.

Let’s look at the history:

  • 1970: DOL interpretive regulation says service advisors are non-exempt.
  • Post 1970: All courts considering the matter reject the DOL’s position.
  • 1978: DOL policy letter says service advisors are exempt as long as a majority of their sales were for non-warranty work.
  • 1987: DOL’s Field Operations Handbook instructs its employees to allow exemption for service advisors.
  • 2008: DOL’s notice of proposed rulemaking would have made service advisors exempt.
  • 2011: DOL – after notice-and-comment – issues a final rule saying service advisors are non-exempt.

The 9th Circuit (Navarro v. Encino Motors (9th Cir 03/24/2015)) deferred to DOL’s regulatory definitions because the statute was ambiguous, and under the Chevron standard, the regulation was reasonable.

I think this case will be a fascinating exercise in applying Chevron U.S.A. Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984). In Chevron the Supreme Court said:

Step One: “If the intent of Congress is clear, that is the end of the matter.”

Step Two: “[I]f the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.”

Navarro, wanting to be non-exempt, places great reliance on Chevron. At Chevron step one, the regulation reflects the statute’s clear meaning. If you have to get to step two, then the regulation is a permissible reading of the statute.

Encino Motorcars, wanting its service advisors to be exempt, says the statute unambiguously covers service advisors so there is no ambiguity in the statute and no need to defer to DOL’s interpretation. If deference is considered, the argument is that DOL’s interpretation is “patently unreasonable.” Besides, there was a “complete lack of justification for [DOL’s] about-face in the 2011 interpretive regulation.”

Interesting. The 9th Circuit found the statute to be ambiguous. Both Navarro and Encino Motors argue that the statute is clear and unambiguous. Of course, each party’s clear meaning is the opposite of the other. It would seem, then, that the statute really is ambiguous. That definitely pushes the analysis to Chevron step two, at which point the issue becomes whether DOL’s construction is “permissible.”

19 businesses pledge action for workers with criminal records

The White House on Monday gathered up an impressive list of 19 major companies who have taken a pledge to eliminate unnecessary hiring barriers for individuals with criminal records. [Fact Sheet]

Here’s the list:

American Airlines, Busboys and Poets, The Coca-Cola Company, Facebook, Georgia Pacific, Google, Greyston Bakery, The Hershey Company, The Johns Hopkins Hospital and Health System, Koch Industries, Libra Group, PepsiCo, Prudential, Starbucks, Uber, Under Amour/Plank Industries, Unilever and Xerox.

Here’s the pledge:

“We applaud the growing number of public and private sector organizations nationwide who are taking action to ensure that all Americans have the opportunity to succeed, including individuals who have had contact with the criminal justice system. When almost 70 million Americans — nearly one in three adults — have a criminal record, it is important to remove unnecessary barriers that may prevent these individuals from gaining access to employment, training, education and other basic tools required for success in life. We are committed to providing individuals with criminal records, including formerly incarcerated individuals, a fair chance to participate in the American economy.”

OK, the pledge is a bit wishy-washy. Here are some suggested ways to put meat on these bones:

Promote Fair Chance Hiring Practices:
The most important contribution businesses can make to this effort is to give a fair chance to all applicants, to ensure that information regarding an applicant’s criminal record is considered in proper context, and to engage in hiring practices that do not unnecessarily place jobs out of reach for those with criminal records. Specifically, you can commit to:

  • Banning the Box by delaying criminal history questions until later in the hiring process;
  • Training human resources staff on making fair decisions regarding applicants with criminal records;
  • Ensuring internships and job training are available to individuals with criminal records;
  • Using reliable background check providers to help ensure accuracy;
  • Hosting a Fair Chance and Opportunity Job Fair


Worth reading – thru 04/08/2016