Video preview: Mount Lemmon Fire District v. Guido
3 minute video

Does the Age Discrimination in Employment Act (ADEA) 20 employee threshold apply to a political subdivision of a state? US Supreme Court argument will be on October 1, 2018.

Ross Runkel discusses a pending US Supreme Court case - whether the Age Discrimination in Employment Act (ADEA) applies to a political subdivision with less than 20 employees.

Supreme Court cases set for argument

Four employment law cases are set for argument at the US Supreme Court this fall, starting on opening day - October 1, 2018.

ADEA: Mount Lemmon Fire District v. Guido [Briefs] raises the issue of whether a local government is covered by the Age Discrimination in Employment Act even if it has less than 20 employees. To be argued Oct. 1, 2018. My comments: Does ADEA 20-employee minimum apply to local governments? US Supreme Court will decide

Arbitration: New Prime Inc. v. Oliveira [Briefs] raises two issues: (1) whether an independent contractor's arbitration agreement is covered by the Federal Arbitration Act, and (2) whether the trial court (rather than an arbitrator) should resolve that threshold question. To be argued Oct. 3, 2018. My comments: Who decides arbitrability question? US Supreme Court will decideCan an independent contractor have a "contract of employment"?


Class-action arbitration: Lamps Plus Inc. v. Varela [Briefs] raises this 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." To be argued Oct. 29, 2018. My comments: Class action arbitration case hits US Supreme Court.

Payroll tax: BNSF Railway v. Loos [Briefs] – Whether a railroad’s payment to an employee for time lost from work is subject to employment taxes under the Railroad Retirement Tax Act. To be argued November 6, 2018. My comments: Another railroad payroll tax case hits the US Supreme Court

SCOTUS: Public sector union agency fees violate the 1st amendment (5-4)

Janus v. AFSCME (US Supreme Ct 06/27/2018)

The US Supreme Court has ruled (5-4) that it is a violation of the 1st amendment for a state to require nonconsenting public sector employees to pay agency fees to a union, overruling Abood v. Detroit Bd. of Ed., 431 U. S. 209 (1977). "We conclude that this arrangement violates the free speech rights of nonmembers by compelling them to subsidize private speech on matters of substantial public concern." The Court characterized agency fees as compelled subsidy of the speech of other private speakers, and emphasized the inherently political nature of public-sector bargaining. The Court applied "exacting scrutiny" (less than strict; more than rational basis) to the issue and concluded that agency fees do not "serve a compelling state interest that cannot be achieved through means significantly less restrictive of associational freedoms."

Thus, neither an agency fee nor any other form of payment to a public-sector union may be deducted from an employee, nor may any other attempt be made to collect such a payment, unless the employee affirmatively consents to pay.

The Court found that agency fees cannot be upheld on the ground that they promote an interest in labor peace because labor peace can readily be achieved through less restrictive means. As for the argument that agency fees are needed to eliminate free riders, the Court said that in non-agency-fee jurisdictions, unions are quite willing to represent nonmembers in the absence of agency fees, and any event States can avoid free riders through less restrictive means.

The Court said that Abood is not supported by the 1st amendment's original meaning. Also, Abood was never based on Pickering v. Board of Ed., 391 U. S. 563 (1968), and even under some form of Pickering, agency-fee arrangements would not survive. 

Stare decisis was not enough to save Abood. The Court said Abood was poorly reasoned, applied a deferential analytical standard, did not take into account the difference between the effects of agency fees in public- and private-sector collective bargaining, did not anticipate administrative problems with classifying union expenses as chargeable or nonchargeable, did not foresee practical problems faced by nonmembers wishing to challenge those decisions, and did not understand the inherently political nature of public-sector bargaining. 

DISSENT: The dissent views Abood as striking "a stable balance between public employees' First Amendment rights and government entities' interests in running their workforces as they thought proper," and says "the majority subverts all known principles of stare decisis."

Another railroad payroll tax case hits the US Supreme Court

Here's a case that's unimportant unless you are a railroad company or railroad employee. And then it is very important.

A railroad worker got a jury verdict against the railroad on his Federal Employers Liability Act claim that the railroad was liable for negligently causing a knee injury. The verdict included an amount of $30,000 for lost wages. The railroad moved the court to offset the lost wages award by the amount of the employee’s share of taxes ($3,765 ) owed under the Railroad Retirement Tax Act (RRTA). The trail court refused. The 8th Circuit affirmed. Loos v. BNSF Railway (8th Cir 08/03/2017) [PDF].  

The US Supreme Court granted certiorari on May 14 to review the 8th Circuit's judgment. BNSF Railway v. Loos (US Supreme Ct cert granted 05/14/2018) [Briefs]

The Railroad Retirement Tax Act together with the Railroad Retirement Act establishes a retirement and disability system that is separate from Social Security. The lower courts held that the damages that plaintiff received for time lost from work do not constitute taxable "compensation" under the RRTA. Altogether, various courts – both state and federal – seem to be hopelessly divided as to whether taxable “compensation” under the RRTA includes pay for time lost. This obviously makes life complicated for an interstate railway company and its employees, and makes them subject to differing tax treatment depending on where lawsuits are filed. In other words, there's a forum-shopping nightmare.

There is an IRS regulation that interprets taxable “compensation” under the RRTA as including pay for time lost. Courts differ as to whether to follow that regulation.

Expect an oral argument to be scheduled for the Fall of 2018.

Class action arbitration case hits US Supreme Court

Once again the US Supreme Court will wade into the contentious arena of class action arbitrations. In Stolt-Nielsen S.A. v. AnimalFeeds, 559 U.S. 662 (2010) [Decision] the Court held (5-3) that "a party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so." [Emphasis in original.] The Court overturned an arbitration award that had allowed arbitration to proceed on a class basis. But Stolt-Nielsen was a pretty easy case because the parties stipulated that there was no agreement on the question of class arbitration.

On April 30 the US Supreme Court granted certiorari in Lamps Plus Inc. v. Varela (US S Ct cert granted 04/30/2018) [Briefs]. The official issue is: "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."

Varela was an employee who brought a class action suit claiming his employer Lamps Plus released his personal information in response to a phishing scam. Lamps Plus moved to compel bilateral arbitration pursuant to an arbitration agreement the parties had signed. The district court found that the agreement was a contract of adhesion and ambiguous as to class arbitration, construed the ambiguity against the drafter Lamps Plus, and compelled class-wide arbitration. The 9th Circuit affirmed (2-1) in an unpublished opinion. Varela v. Lamps Plus (08/03/2017) [PDF].

The 9th Circuit distinguished Stolt-Nielsen by saying that the lack of any express reference to class arbitration is "not the 'silence' contemplated in Stolt-Nielsen." The court then applied state law to interpret the agreement, found an ambiguity, and resolved the ambiguity against Lamps Plus. The court actually used a lot of the language in the arbitration agreement (which Lamps Plus characterizes as "general language commonly used in arbitration agreements"). For example, the 9th Circuit pointed out that "The Agreement then specifies that arbitrable claims are those that 'would have been available to the parties by law,' which obviously include claims as part of a class proceeding."

Judge Fernandez dissented in two sentences: "I respectfully dissent because, as I see it, the Agreement was not ambiguous. We should not allow Varela to enlist us in this palpable evasion of Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 684–85, 130 S. Ct. 1758, 1775, 176 L. Ed. 2d 605 (2010)."

Expect this case to be set for oral argument in the Fall of 2018.