Massage therapy students were not employees under the FLSA.

Nesbitt, a former massage therapy student at a for-profit vocational school, sued claiming that she and fellow students were employees under the Fair Labor Standards Act (FLSA), and thus entitled to be paid minimum wage. The trial court granted summary judgment for the school; the 10th Circuit affirmed. Nesbitt v. FCNH (10th Cir 11/09/2018) [PDF]

Students typically performed five massages per day on members of the public, who paid discounted rates for the massages. Nesbitt claimed that the school profited by using the students as free labor. The court applied the six-part test adopted in Reich v. Parker Fire Protection District, 992 F.2d 1023 (10th Cir. 1993).

Nesbitt focused on two factors:

(1) She claimed that the observation and supervision of students was inadequate, but the court pointed out that the "close supervision" factor is meant to distinguish between regular employees and trainees. At no time did the students function as regular employees; they were students learning a trade on vocational school premises.

(2) She also claimed that the school – rather than the students – was the primary beneficiary of the arrangement. The court's answer was that Nesbitt needed to graduate from an accredited massage therapy school in order to acquire a state license, and the school's 100-hour minimum clinical requirement clearly provided her a material benefit. The court also said, "This is true regardless of the profit, if any, that [the school] may have made from the students' unpaid work."

ADEA applies to local political subdivisions regardless of their size

In a unanimous decision, the US Supreme Court holds that the Age Discrimination in Employment Act (ADEA) applies to local political subdivisions regardless of their size. This is rejection of the argument that the ADEA applies only when a political subdivisions has 20 or more employees. Mount Lemmon Fire Dist v. Guido (US Supreme Ct 11/06/2018) [PDF]

Following Congressional amendments in 1974, the ADEA has two key sentences in its definitions: (a) "The term ‘employer' means a person engaged in an industry affecting commerce who has twenty or more employees … ." (b) "The term also means (1) any agent of such a person, and (2) a State or political subdivision of a State … ."

The Court said, "We hold … that §630(b)'s two-sentence delineation, and the expression 'also means' at the start of the second sentence, combine to establish separate categories: persons engaged in an industry affecting commerce with 20 or more employees; and States or political subdivisions with no attendant numerosity limitation."

The Court stressed the use of the phrase "also means," which appears dozens of times in the US Code, and typically carries an additive – rather than clarifying – meaning. Also, the second sentence in §630(b) pairs political subdivisions with agents, a discrete category that carries no numerical limitation. Although Title VII applies to local governments only if they meet a numerosity specification, that is a consequence of the different language Congress chose to employ.

The Supreme Court decision affirmed the 9th Circuit, and rejected contrary interpretations by the 6th, 7th, 8th, and 10th Circuits.

Law firm partner's arbitration agreement is unconscionable and void under Armendariz analysis.

We normally think that a partner in a law firm is not an "employee," and therefore statutory protections for employees (e.g., Title VII) do not apply. Likewise, there's an assumption that a law firm partner is a sophisticated player and thus not given special common-law protections that courts provide for employees.

Well, take a look at Ramos v. Superior Court (California Ct App 11/02/2018) [PDF]. Here, in deciding not to enforce an arbitration agreement, the California Court of Appeal treated a law firm partner as if she were an employee. But of course not coming right out and saying she was an employee.

Ramos, a former "income partner" at a law firm, sued asserting various causes of action under state law for discrimination, retaliation, wrongful termination, and anti-fair-pay practices. The trial court granted the firm's motion to compel arbitration, after severing provisions of the arbitration agreement related to venue and cost-sharing. The California Court of Appeal held that the arbitration agreement was unconscionable and void under the framework in Armendariz v. Foundation Health Psychcare Services, 24 Cal.4th 83 (2000), and ordered the trial court to deny the motion to compel arbitration.

(1) The court held that Ramos's claims fell within the scope of the arbitration agreement.

(2) The court held that Armendariz is still good law, even after the US Supreme Court's decision in AT&T Mobility LLC v. Concepcion 563 U.S. 333 (2011).

(3) The parties disagreed as to whether Ramos was a partner or an employee, but the court applied the Armendariz analysis because Ramos's claims encompass the statutory rights Armendariz held are unwaivable, and the firm "was in a superior bargaining position vis-à-vis Ramos akin to that of an employer-employee relationship, and there is no evidence in this record that Ramos had an opportunity to negotiate the arbitration provision."

(4) One provision in the agreement prevents Ramos from obtaining remedies available under her statutory claims, so that provision is unenforceable. Another provision requires Ramos to pay arbitration fees and costs that she would not have to pay if she litigated her statutory claims in court, which is inconsistent with Armendariz.

(5) The court found that the provision requiring all aspects of the arbitration be maintained in strict confidence is substantively unconscionable. This is because she would be in violation if she attempted to informally contact or interview any witnesses outside the formal discovery process, would unnecessarily increase her costs, and "unreasonably favors the employer to the detriment of employees seeking to vindicate unwaivable statutory rights and may discourage potential plaintiffs from filing discrimination cases."

(6) The court refused to sever the unlawful provisions from the contract. "Because we are unable to cure the unconscionability simply by striking these clauses, and would instead have to reform the parties' agreement in order to enforce it, we must find the agreement void as a matter of law."

Employment Law Case of the Week Oct 31, 2018

Class-action arbitration – Dead or Alive at the US Supreme Court?

This is a 93 second video discussing Lamps Plus v. Varela, argued at the US Supreme Court on October 29.

Issue: " Whether the Federal Arbitration Act forecloses a state-law interpretation of an arbitration agreement that would authorize class arbitration based solely on general language commonly used in arbitration agreements."