In Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66 (2013), the Supreme Court held that a putative Fair Labor Standards Act collective action brought by one employee on behalf of others was no longer justiciable when, as conceded by the employee, her individual claim became moot before others joined the case.
Symzcyk worked for Genesis Healthcare as a registered nurse. In 2009, Symczyk brought a putative collective action under the FLSA on behalf of herself and “other employees similarly situated.” 29 U.S.C. § 216(b). She alleged Genesis violated the FLSA by automatically deducting 30 minutes of time worked per shift for meal breaks for certain employees, even when the employees performed compensable work during those breaks. Symcyzk, who remained the sole plaintiff throughout the case, sought statutory damages for the alleged violations.
After Symczyk filed suit, but before any other employees joined the suit, the employer sent Symczyk an offer of judgment under Federal Rule of Civil Procedure 68, which Symczyk ignored. The offer had proposed to pay all of her statutory damages, plus costs and reasonable attorney’s fees. The District Court, finding that no one else had joined the case, and that the Rule 68 offer fully satisfied Symczyk’s claim, concluded that Symczyk’s suit was moot. The court therefore dismissed the case for lack of subject-matter jurisdiction.
The Third Circuit reversed, holding that while Symczyk’s individual claim was moot, the collective action on behalf of other similar employees was not. The Third Circuit reasoned that allowing employers to use calculated Rule 68 offers to “pick off” named plaintiff-employees before certification would frustrate the goals of collective actions. The court therefore remanded the case to the trial court, with instructions to allow Symczyk to seek conditional certification of the collective action and move forward with the case on behalf of other employees who might join. See 569 U.S. at 69-71.
The Supreme Court reversed. The Court held that because Symczyk had no “personal interest” in representing other putative, unnamed employees, nor any other kind of continuing interest that would render her suit not moot, the trial court properly determined it lacked subject-matter jurisdiction over the case.
At the outset, the Court declined to decide whether an unaccepted Rule 68 offer that fully satisfies a plaintiff’s individual claim is sufficient to render that claim moot. Symczyk, however, had conceded this point with respect to her claim and did not argue it on appeal. The Court therefore assumed, without deciding, that the employer’s offer to Symczyk mooted her individual claim. 569 U.S. at 72-73.
The Court then determined that “well-settled mootness principles” controlled the outcome of the case. Once Symczyk’s individual claim became moot, the Court determined that the suit became moot because she had no personal interest in representing others in the action. The Court rejected Symczyk’s contrary arguments because they relied on cases that arose in the context of Rule 23 class actions. The Court found those case inapposite, both because Rule 23 actions are “fundamentally different” from FLSA collective actions and because the cases were “inapplicable” to the facts in Symczyk’s case. 569 U.S. at 73-79.
The cases Symczyk rallied behind were Sosna v. Iowa, 419 U.S. 393 (1975) and United States Parole Comm’n v. Geraghty, 445 U.S. 388 (1980). Symczyk argued these cases meant she could seek certification of an FLSA collective action after her individual claim became moot. The Court determined Sosna and Geraghty did not support her position. In short, Sosna held that a class action is not rendered moot when the named plaintiff’s individual claim becomes moot after the class has been duly certified. Geraghty extended those principles to denials of class certification motions, and further provided that, where a putative class action would have acquired independent legal status but for the district court’s erroneous denial of class certification, a corrected ruling on appeal “relates back” to the time of the erroneous denial. See 445 U.S. at 404 and n. 11.
At first glance, these cases seemed like they supported Symczyk’s position. The Court observed, however, that Geraghty’s holding was explicitly limited to cases in which the named plaintiff’s claim remains live at the time the district court denies class certification. See 445 U.S. at 407 and n. 11. Symczyk, by contrast, had not yet moved for “conditional certification” when her claim became moot. Nor had the District Court anticipatorily ruled on any such request. Symczyk therefore had no certification decision to which her claim could have related back. More importantly, the Court emphasized that essential to Sosna and Geraghty was the fact that a putative class acquires an “independent legal status” once it is certified under Rule 23. By contrast, under the FLSA, “conditional certification” does not produce a class with an independent legal status, or join additional parties to the action. 569 U.S. at 73-75.
Second, the Court addressed a line of cases, like County of Riverside v. McLaughlin, 500 U.S. 44, 52 (1991), holding that an “inherently transitory” class-action claim is not necessarily moot upon the termination of the named plaintiff’s claim. The Court found these cases inapplicable. Symczyk argued that an employer’s use of Rule 68 offers to “pick off” a named plaintiff before the collective-action process is complete renders the action “inherently transitory.” But the Court observed the “inherently transitory” rationale was developed to address circumstances in which the defendant’s challenged conduct was effectively unreviewable because no plaintiff possessed a personal stake in the suit long enough for litigation to run its course. For this reason, the Court observed, the McLaughlin line of cases focused on the fleeting nature of the challenged conduct giving rise to the claim, not on the defendant’s litigation strategy. Unlike a claim for injunctive relief, a damages claim (like the FLSA claims at issue in Smyczk’s case) cannot evade review — the damage has been done, and can be measured and compensated. The Court further pointed out that an offer of full settlement cannot insulate such a claim from review. While dismissing Symzcyk’s case before certification would foreclose the putative other plaintiff-employees of Genesis from vindicating their rights in Symzcyk’s suit, those employees would remain free to do so in their own lawsuits. 569 U.S. at 75-77.
Finally, the Court addressed its decision in Deposit Guaranty Nat. Bank v. Roper, 445 U.S. 326 (1980), which Symczyk cited for her argument that the purposes served by the FLSA’s collective-action provisions would be frustrated by defendants’ use of Rule 68 to “pick off” named plaintiffs before the collective-action process has run its course. The Court found Roper did not support this argument. In Roper, the named plaintiffs’ individual claims became moot after the District Court denied their Rule 23 class certification motion and entered judgment in their favor based on defendant’s Rule 68 offer. The Roper Court held that the named plaintiffs could appeal the denial of certification because they possessed an ongoing, personal economic stake in the substantive controversy — namely, to shift a portion of attorney’s fees and expenses to successful class litigants. Symczyk, by contrast, conceded that her employer’s offer provided complete relief, and she asserted no continuing economic interest in shifting attorney’s fees and costs. Moreover, the Roper holding was tied to the unique significance of Rule 23 class certification decisions, distinguishing it from the FLSA collective action context. 569 U.S. at 77-79.
In summary, Genesis held that a putative FLSA collective action brought by single employee was no longer justiciable when, as conceded by the employee, her individual claim became moot by an offer of judgment providing complete relief and no other employees had joined the case. The Court, however, declined to decide whether an unaccepted offer of judgment could render a plaintiff’s claim moot.
This blog was also published to TimCoffieldAttorney.com.
In Falk v. Brennan, 414 U.S. 190 (1973), the Supreme Court held that an entity is an “employer” under the Fair Labor Standards Act when it exercises substantial control over the terms and conditions of the work of the employees at issue.
The Fair Labor Standards Act generally requires a covered “employer” to pay its covered nonexempt employees minimum wages for each hour worked and overtime wages for all hours worked in excess of 40 hours per workweek. 29 U.S.C. §§ 206(a) & 207(a). The FLSA defines “employer” as “includ[ing] any person acting directly or indirectly in the interest of an employer in relation to an employee[.]” 29 U.S.C. § 203(d). With some exceptions, the FLSA generally defines “employee” as “any individual employed by an employer.” 29 U.S.C. § 203(e)(1). The FLSA defines “employ” as including “to suffer or permit to work.” 29 U.S.C. § 203(g).
The FLSA also provides that for an employer to be covered under the Act’s dollar-volume “enterprise” coverage provision, the employer must receive “annual gross volume of sales made or business done  not less than $500,000[.]” 29 U.S.C. § 203(s)(1)(A)(ii).
D&F operated a property management company in Virginia. It rendered management services for the owners of several apartment complexes. Under its contracts with the apartment owners, D&F agreed to perform, on behalf of each owner and under his “nominal” supervision, “virtually all management functions that are ordinarily required for the proper functioning of an apartment complex.” 414 U.S. at 192. Those functions included advertising the apartments; signing, renewing, and canceling leases; collecting rents; instituting and settling all legal proceedings for eviction, possession of the premises, and unpaid rent; making necessary repairs and alterations; negotiating contracts for essential utilities and other services; purchasing supplies; paying bills; preparing operating budgets for the property owners’ review and approval; submitting periodic reports to the owners; and “hiring and supervising all employees required for the operation and maintenance of the buildings and grounds.” Id. at n4.
As compensation, D&F received a fixed percentage of the gross rents collected from each project. D&F deposited the rents it collected in local bank accounts. From these accounts it paid all expenses incurred in operating and maintaining the buildings. After deducting its compensation, as well as other expenses, D&F periodically transmitted payments to the various apartment owners. If disbursements for any apartment complex exceeded the gross rental receipts, the owner was required to reimburse D&F. 414 U.S. at 192-93. D&F collected about $8 million dollars per year in rents for all the buildings it managed. Id. at n6. However, its gross commissions received on those rentals were less than $500,000 per year. Id. at n10.
The Secretary of Labor filed suit against D&F on behalf of the maintenance workers, alleging that D&F violated the minimum wage, overtime, and recordkeeping requirements of the FLSA with respect to those workers. Id. Significantly, these employees worked under the supervision of D&F and were paid from the rents received at the apartment complexes where they worked. Under the contracts between the apartment owners and D&F, the maintenance workers were considered to be “employees of the project owners.” Id.
A central question for the Court was whether the maintenance workers were also employees of D&F, such that D&F was responsible for complying with the FLSA’s minimum wage, overtime, and recordkeeping requirements with respect to those workers.
A secondary question was which figure should be considered in determining whether D&F met the $500,000 threshold for enterprise coverage: D&F’s gross rentals collected ($8M annually), or D&F’s gross commissions on those rentals (less than $500,000).
The Court held that in addition to the apartment owners, D&F was also an FLSA “employer” of the maintenance workers — even though the owners and D&F had agreed that the workers were employees only of the owners. The Court reached this decision by interpreting the operative provisions of the FLSA as speaking to the extent of control a potential “employer” exercises over a worker.
First, the Court observed that Section 203(d) of the FLSA defines “employer” as ‘any person acting directly or indirectly in the interest of an employer in relation to an employee.’ 29 U.S.C. § 203(d). It further noted that Section 3(e) defines ‘employee’ to include ‘any individual employed by an employer.’ 29 U.S.C. s 203(e). Significantly, the Court interpreted these two provisions as providing an “expansive” definition of “employer” — meaning that whether an entity was an FLSA employer, with the attendant minimum wage, overtime, and recordkeeping responsibilities, could not be controlled by an agreement between entities that only one of them would be the “employer.”
The Court further indicated that the relevant inquiry, in answering the “employer” question, was whether the potential employer had “substantial control of the terms and conditions of the work” the employees performed. Id. at 195. D&F, for example, appears to have had supervisory powers with respect to the maintenance workers at the buildings it managed. See id. at 193 (“These employees work under the supervision of D&F”). The Court therefore determined that “in view of the expansiveness of [the FLSA’s] definition of ‘employer’ and the extent of D&F’s managerial responsibilities at each of the buildings, which gave it substantial control of the terms and conditions of the work of these employees,” D&F was pursuant to the FLSA an ‘employer’ of the maintenance workers Id.
With respect to the dollar-volume limitation question, the Court observed that D&F “sells” only professional management services, and therefore the gross rentals it collected as part of rendering those services to building owners did not represent sales attributable to D&F. Id. at 197-201. Based on this reasoning, the Court concluded D&F’s commissions were the relevant measure of its gross sales made or business done for purposes of the dollar-volume limitation in Section 203(s)(1). Thus, even though D&F was an “employer” under the the terms of the FLSA, and an “enterprise” under Section 203(r), the FLSA did not apply to D&F because its gross sales were below the Section 203(s)(1) dollar-volume threshold. Id. at 201.
In sum, Falk v. Brennan held that an entity is an “employer” under the FLSA when it exercises substantial control over the terms and conditions of the work of employees at issue. This decision later became relevant to the Department of Labor’s development of regulations guiding the analysis of FLSA “joint employment” situations. In those situations, where more than one entity benefits from the work of employees, the extent to which each entity exercises control over the terms and conditions of the workers’ employment is an important consideration in determining the entities’ respective or joint responsibilities under the FLSA. For the DOL’s analysis of its most recent changes to the rule (29 C.F.R. § 791) regarding joint employment, effective March 2020, go here.
This blog was also published to TimCoffieldAttorney.com.
In Christensen v. Harris County, 529 U.S. 576 (2000), the Supreme Court held that the Fair Labor Standards Act does not prohibit public employers from compelling employees to use compensatory time.
The Fair Labor Standards Act allows public employers (including states and their political subdivisions) to compensate employees for overtime work by granting them compensatory time instead of paying them a cash overtime wage. 29 U.S.C. § 207(o). Compensatory time is paid time off. To comply with this part of the FLSA, the public employer must provide the compensatory time at a rate not less than one and one-half hours for each hour of overtime worked. Id. Compensatory time can accumulate, like vacation time. Importantly, if employees do not use their accumulated compensatory time, under certain circumstances the FLSA requires the public employer to pay the employees cash compensation. 29 U.S.C. §§ 207(o)(3)-(4).
Employees in Harris County accumulated a great volume of unused compensatory time. This caused Harris County to worry that a budget crisis would result if it had to pay its employees for their accrued unused compensatory time. In an effort to avoid that situation, the county adopted a policy requiring its employees to schedule time off. The county’s reasoning was that requiring time off would reduce the amount of accrued compensatory time among its workers, thereby reducing the likelihood of a budget crisis from having to pay for unused compensatory time.
Ed Christensen was a Harris County deputy sheriff. He and a group of fellow deputy sheriffs sued the county, claiming the policy of requiring employees to use their compensatory time violated the FLSA. Christensen argued that the FLSA does not permit an employer to compel an employee to use compensatory time in the absence of an agreement allowing the employer to do so. The District Court ruled for Christensen and entered a declaratory judgment that the county’s policy violated the FLSA. The Fifth Circuit reversed. It held that the FLSA did not address the issue of compelling the use of compensatory time and therefore did not prohibit the county from implementing its policy.
The Court’s Decision
The Supreme Court affirmed, holding that neither the text of the FLSA nor its implementing regulations prohibits a public employer from compelling its employees to use their compensatory time.
First, the Court rejected Christensen’s argument that § 207(o)(5) of the FLSA implicitly prohibits compelled use of compensatory time in the absence of an agreement. That section provides that an employer must grant an employee’s request to use her compensatory time unless doing so would unduly disrupt the employer’s operations. 29 U.S.C. § 207(o)(5). Citing Raleigh & Gaston R. Co. v. Reid, 13 Wall. 269, 270 (1872) for the proposition that when a statute limits a thing to be done in a particular mode, it implicitly disallows any other mode, Christensen argued that because § 207(o)(5) allowed only an employee to require the use of compensatory time, that section implicitly prohibited an employer from requiring the use of compensatory time. Id. at 583-84. The Court disagreed with that conclusion. Instead, it found that the only “negative inference” to be drawn from § 207(o)(5) was that an employer may not deny a request for any reason other than that provided in § 207(o)(5). Id. Thus, the section did not prohibit employers from compelling the use of compensatory time.
The Court went on to explain that the purpose of § 207(o)(5) was to ensure that an employee receive “some timely benefit for overtime work.” Id. at 584. The FLSA’s nearby provisions reflect a similar concern. For example, § 207(o)(3)(A) provides that workers may not accrue more than 240 or 480 hours of compensatory time, depending upon the nature of the job. This provision “helps guarantee that employees only accrue amounts of compensatory time that they can reasonably use.” Christensen at 584. Similarly, the Court observed that § 207(o)(2)(B) conditions an employer’s ability to provide compensatory time (in lieu of paying cash overtime wages) upon the employee not accruing compensatory time in excess of the § 207(o)(3)(A) limits. Thus, these provisions, like § 207(o)(5), reflect a legislative concern that employees receive “some timely benefit in exchange for overtime work.” Christensen at 584.
The Court therefore concluded that the best reading of the FLSA is that it ensures liquidation of compensatory time. The law places restrictions on an employer’s ability to prohibit employees from using their compensatory time. But it says nothing about restricting an employer’s efforts to require employees to use the time. Id. at 585. Because the FLSA text is silent on this issue and because the county’s policy was compatible with § 207(o)(5), the Court held that Christensen could not, as § 216(b) of the FLSA requires, prove that the county violated the FLSA’s overtime provisions.
The Court further noted that two other features of the FLSA supported its reading that the FLSA did not prohibit employers from compelling the use of compensatory time. First, the FLSA allows employers to decrease the number of hours that employees work. Id. at 585 (citing Barrentine v. Arkansas—Best Freight System, Inc., 450 U.S. 728, 739 (1981) (“[T]he FLSA was designed … to ensure that each employee covered by the Act … would be protected from the evil of overwork …”). And second, the FLSA expressly allows employers to cash out accumulated compensatory time by paying the employee her regular hourly wage for each hour accrued. Id. at 585 (citing 29 U.S.C. § 207(o)(3)(B) & 29 CFR § 553.27(a)(1999). Thus, the FLSA allows an employer to require an employee to take time off work, and to use the money it would have paid in wages to cash out accrued compensatory time. Id. at 585. The Court concluded that Harris County’s policy of compelling the use of compensatory time “merely involves doing both of these steps at once.” Id. at 586.
Christensen also argued, unsuccessfully, that employers were prohibited from compelling the use of compensatory time pursuant a Department of Labor opinion letter. In that letter, the DOL concluded that an employer may compel the use of compensatory time only if the employee has agreed in advance to such a practice. Id. at 586-87. The Court observed that the opinion letter was not entitled to deference under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), because interpretations contained in opinion letters — similar to policy statements, agency manuals, and enforcement guidelines, all of which lack the force of law — do not warrant Chevron deference. While “persuasive” interpretations in opinion letters are “entitled to respect” under Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944) the Court concluded DOL’s interpretation was not persuasive. Id. at 587.
While Chevron deference does apply to an agency interpretation contained in a regulation, the regulation at issue, 29 CFR § 553.23(a)(2), provided only that “[t]he agreement or understanding [between the employer and employee] may include other provisions governing the preservation, use, or cashing out of compensatory time so long as these provisions are consistent with [§ 207(o)].” Id.; Christensen at 587-88. The Court concluded that nothing in 29 CFR § 553.23(a)(2) “even arguably” requires that an employer’s compelled use policy must be included in an agreement. Id. 588. Thus, Chevron deference did not apply. Lastly, deference to an agency’s interpretation of its regulation is warranted under Auer v. Robbins, 519 U.S. 452, 461 (1997), only when the regulation’s language is ambiguous. The Court held that the DOL’s regulation was not ambiguous, and therefore the DOL’s interpretation of that regulation was not entitled to Auer deference. Id. at 588.
In sum, Christensen held that the FLSA does not prohibit public employers from compelling their employees to use their accrued compensatory time. While this issue is not specifically addressed in the text of the FLSA, the law does not explicitly prohibit this practice, and the conclusion that public employers may compel the use of compensatory time is consistent with other aspects of the FLSA that allow an employer to require employees to take time off from work and to use the money it would have paid in wages to cash out accrued compensatory time.
This blog was also published to TimCoffieldAttorney.com.
In Kasten v. Saint-Gobain Performance Plastics Corp., 563 U.S. 1 (2011), the Supreme Court held that the anti-retaliation provision of the Fair Labor Standards Act protects employees who make oral (as well as written) complaints that their employer violated the FLSA.
Kasten worked for Saint-Gobain Performance Plastics. He complained orally to his superiors that the company located its timeclocks between the area where Kasten and his co-workers put on (and removed) their work-related protective gear and the area where they carried out their job duties. This location, Kasten complained, prevented workers from receiving credit for the time they spent putting on and taking off their work clothes — contrary to the requirements of the FLSA. Kasten complained only orally and did not make a written complaint. Saint-Gobain fired him. Id. at 5-6.
Kasten then sued his former employer, alleging that Saint-Gobain violated the FLSA’s anti-retaliation provision by terminating him for complaining orally about the legality of the location of the timeclocks. The trial court granted summary judgment for the employer, holding that the FLSA’s anti-retaliation provision covered only written complaints and did not cover oral complaints. The Seventh Circuit affirmed and Kasten appeals.
The Court’s Decision
The FLSA’s anti-retaliation provision makes it unlawful for employers “to discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to [the FLSA], or has testified or is about to testify in such proceeding, or has served or is about to serve on an industry committee.” 29 U.S.C. § 215(a)(3) (emphasis added).
The Court held that the scope of the statutory term “filed any complaint” includes oral, as well as written, complaints — and therefore the FLSA prohibits retaliation against employees who complain orally about violations of the wage and hour law.
As an initial matter, the Court cited its decision in Dolan v. Postal Service, 546 U.S. 481, 486 (2013) for the principle that proper interpretation “depends upon reading the whole statutory text, considering the [statute’s] purpose and context …, and consulting any precedents or authorities that inform the analysis.” The Court further explained that the text at issue — “filed any complaint” — taken alone, could not provide a conclusive answer as to whether it included oral complaints. Some dictionary definitions of “filed” contemplated a writing; others permitted using “file” in conjunction with oral material.
The Court noted that in addition to dictionary definitions, state statutes and federal regulations sometimes contemplate oral filings, and an analysis of contemporaneous judicial usage shows that when the FLSA was passed in 1938 oral filings were a known phenomenon. And even if “filed,” taken in isolation, might suggest a narrow interpretation limited to writings, the remainder of the phrase — “any complaint” — suggested a broad interpretation that would include an oral complaint. Thus, the Court concluded that the phrase “filed any complaint,” taken by itself, was not clear. Id. at 5-11.
Nor could the FLSA’s other references to “filed” resolve the question of whether oral complaints were included. Some parts of the FLSA involve filed material that is almost always written; others specifically require a writing, and others leave the oral/written question unresolved. Because the text at issue, taken alone, might, or might not, encompass oral complaints, the Court had to look to other methods of interpretation. Id. at 5-11.
The Court observed that several “functional considerations” indicated that Congress intended the anti-retaliation provision to cover both oral and written complaints. Id. at 11. First, looking to the FLSA’s purposes, the Court noted that a narrow interpretation excluding oral complaints would undermine the law’s basic objective: to prohibit “labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers,” 29 U.S.C. § 202(a). The Court had previously observed that the FLSA relies for enforcement of its substantive standards on “information and complaints received from employees,” Mitchell v. Robert DeMario Jewelry, Inc., 361 U.S. 288, 292 (1960), and its anti-retaliation provision makes the enforcement scheme effective by preventing “fear of economic retaliation” from inducing workers “quietly to accept substandard conditions[.]” Ibid. With that purpose in mind, the Court noted that limiting the provision’s scope to written complaints could have the undesirable result of preventing Government agencies from using hotlines, interviews, and other oral methods to receive complaints. 563 U.S. at 11-14.
Second, the Court determined that in light of the delegation of enforcement powers to federal agencies, the agencies’ views about the meaning of the phrase “filed any complaint” should be given weight. The Secretary of Labor, charged with enforcing the FLSA, has long interpreted “filed any complaint” as covering both oral and written complaints. Similarly, the Equal Employment Opportunity Commission, charged with enforcing other employment laws, has a similar view that oral complaints are protected complaints. The Court held that these views were reasonable and consistent with the FLSA. And the length of time the Secretary of Labor held its position suggested it was the result of careful consideration, not “post hoc rationalizatio[n].” Id. at 14-16 (quoting Motor Vehicle Mfrs. Assn. of United States, Inc. v. State Farm Mut. Automobile Ins. Co., 463 U.S. 29, 50 (1983)).
Finally, Saint-Gobain made an alternative argument that the anti-retaliation provision only covered official complaints to government agencies or in court, and therefore did not protect internal complaints (written or oral) to employers. The Court declined to address this argument, however, because it was not properly raised in the certiorari briefs and did not need to be addressed to resolve the oral/written complaint issue. Id. at 17.
Scalia dissented on that point, arguing that the language of anti-retaliation provision, in light of the FLSA’s other references to “filing,” only protected official grievances filed with a court or an agency, not oral complaints — or even formal, written complaints — from an employee to an employer. Id. at 18-26.
Kasten clarified that an oral complaint about an employer’s FLSA violation is protected activity under the FLSA. The law therefore prohibits employers from retaliating against employees who complaint about violations of the federal wage and hour law, regardless of whether the employee complains orally or in writing.
This blog was also posted to TimCoffieldAttorney.com.
In Integrity Staffing Sols., Inc. v. Busk, 574 U.S. 27 (2014), the Supreme Court held that under the Fair Labor Standards Act, time warehouse workers spent waiting for and undergoing security screenings was not compensable time. More broadly, the decision clarified the proper analysis of “principal activities” verses preliminary and postliminary activities. Principal activities are compensable under the FLSA. Purely preliminary or postliminary activities (like a commute) are not, but some activities before or after a shift might still be compensable principal activities. The term “principal activities” includes all activities which are an “integral and indispensable part of the principal activities.” An activity is “integral and indispensable to the principal activities” if it is an “intrinsic element of those activities and one with which the employee cannot dispense if he is to perform his principal activities.” 574 U.S at 33.
Busk worked for Integrity Staffing Solutions as an hourly warehouse worker. Integrity Staffing provided warehouse staffing to Amazon. Integrity Staffing’s warehouse workers retrieved and packaged products for delivery to Amazon.com customers. Integrity Staffing required these employees to undergo a security screening before leaving the warehouse each day, but did not pay them for the time (roughly 25 minutes each day) they spent waiting for and undergoing the screening. Busk and his co-workers filed suit under the Fair Labor Standards Act. They asserted, inter alia, they were entitled to compensation for the time they spent waiting to undergo and undergoing the screenings. They also argued the screenings were compensable because the company could have reduced the time involved to a negligible de minimis amount by adding screeners or staggering shifts, and because the screenings were conducted to prevent employee theft and, thus, for the sole benefit of the employers and their customers.
The District Court dismissed this claim. It held the screenings were not integral and indispensable to the employees’ principal activities but were instead postliminary and noncompensable under the Portal–to–Portal Act. The Ninth Circuit reversed that decision in part, holding that the postshift screening would be compensable as integral and indispensable to the employees’ principal activities if the screenings were necessary to the principal work and performed for the employer’s benefit. Integrity Staffing appealed.
The Court’s Decision
The Supreme Court reversed. It held the time the warehouse workers spent waiting to undergo and undergoing security screenings was not compensable under the FLSA.
First, the Court explained Congress passed the Portal–to–Portal Act in response to the “unexpected liabilities” created by a broad judicial interpretation of the FLSA’s undefined terms “work” and “workweek.” See 29 U.S.C. § 251(a). The Portal–to–Portal Act therefore exempted employers from FLSA liability for claims based on “activities which are preliminary to or postliminary to” the principal activities that an employee is employed to perform. 29 U.S.C. § 254(a)(2).
The Court had long held that the term “principal activities” includes all activities which are an “integral and indispensable part of the principal activities.” Steiner v. Mitchell, 350 U.S. 247, 252–253 (1956). In Integrity Staffing, the Court further explained that an activity is “integral and indispensable to the principal activities” if it is an “intrinsic element of those activities and one with which the employee cannot dispense if he is to perform his principal activities.” 574 U.S at 33.
For example, in Steiner, the Court held the time battery-plant employees spent showering and changing clothes was compensable because the chemicals in the plant were “toxic to human beings” and the employer conceded that “the clothes-changing and showering activities of the employees [were] indispensable to the performance of their productive work and integrally related thereto.” Id. at 34 (quoting Steiner at 249, 251). Similarly, in Mitchell v. King Packing Co., 350 U.S. 260, 262 (1956), the Court held compensable the time meatpacker employees spent sharpening their knives because dull knives would “slow down production” on the assembly line, “affect the appearance of the meat as well as the quality of the hides,” “cause waste,” and lead to “accidents.” 574 U.S. at 34 (quoting Mitchell at 262). By contrast, in IBP, Inc. v. Alvarez, 546 U.S. 21 (2005), the Court held noncompensable the time poultry-plant employees spent waiting to don protective gear because such waiting was “two steps removed from the productive activity on the assembly line.” 574 U.S. at 34 (quoting IBP at 42). The Court further noted Department of Labor regulations were consistent with this approach. See 29 CFR § 790.8(b) (“The term ‘principal activities’ includes all activities which are an integral part of a principal activity.”); 29 CFR § 790.8(c) (“Among the activities included as an integral part of a principal activity are those closely related activities which are indispensable to its performance.”); 29 CFR 790.7(g) (examples of preliminary and postliminary activities). 574 U.S. at 30-35.
The Court then held the security screenings at issue in Integrity Staffing were noncompensable postliminary activities. First, the Court determined the screenings were not the principal activities the employees were employed to perform. The workers were not employed to undergo security screenings. They were employed to retrieve goods from the warehouse and package them for shipment. Nor were the security screenings “integral and indispensable” to those activities. In support of this conclusion, the Court cited a 1951 Department of Labor opinion letter, which found noncompensable under the Portal–to–Portal Act both a preshift screening conducted for employee safety and a postshift search conducted to prevent employee theft.
The employees in Integrity Staffing, like the Ninth Circuit, essentially took the position that if an activity was required by an employer it was compensable under the FLSA. The Court disagreed with this approach, noting that it would sweep into “principal activities” the very activities that the Portal–to–Portal Act was designed to exclude from compensation (like the time waiting to don protective gear held noncompensable in IBP). Finally, the Court rejected the employees’ argument that the screenings were compensable because Integrity Staffing could have reduced the time to a de minimis amount. Whether an employer could conceivably reduce the time employees spent on a preliminary or postliminary activity did not change the nature of the activity or its relationship to the principal activities that an employee is employed to perform. Therefore, that concern was properly addressed through bargaining, rather than in a suit under the FLSA. 574 U.S. at 35-37.
In sum, Integrity Staffing clarified the analysis of “principal activities” verses preliminary and postliminary activities. Principal activities are compensable. The term “principal activities” includes all activities which are an “integral and indispensable part of the principal activities.” An activity is “integral and indispensable to the principal activities” if it is an “intrinsic element of those activities and one with which the employee cannot dispense if he is to perform his principal activities.” 574 U.S at 33. More specifically, Integrity Staffing stands for the proposition that time spent waiting for and undergoing security screenings was not a principal activity and therefore not compensable under the Fair Labor Standards Act.
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The Fair Labor Standards Act requires employers to pay minimum wages and overtime wages based on time worked by covered employees. Oftentimes, an employee has to spend time waiting to put equipment, walking to a worksite, or doing other preshift tasks necessary to perform her job. Is the employee entitled to compensation under the FLSA for that time? Trial courts routinely address various iterations of this question. In IBP, Inc. v. Alvarez, 546 U.S. 21 (2005), the Supreme Court answered one of them. It held that the FLSA requires employers to pay employees for time spent walking to and from stations that distributed employer-mandated safety equipment.
Alvarez involved two separate but similar cases. Employees of IBP filed suit under the FLSA seeking compensation for time they spent putting on and taking off (“donning and doffing”) required protective gear and walking between the locker rooms and the production floor of IBP’s meat processing facility. The trial court decided these activities were compensable. The Ninth Circuit affirmed. IBP appealed.
In the companion case, employees of Barber Foods sought compensation under the FLSA for time they spent donning and doffing required protective gear at Barber’s poultry processing plant, as well as time they spent walking and waiting associated with picking up and returning the gear. The trial court found in favor of Barber on the walking and waiting claims, finding those activities were not compensable. The First Circuit affirmed, finding that the walking and waiting times were preliminary and postliminary activities excluded from FLSA coverage by §§4(a)(1) and (2) of the Portal-to-Portal Act of 1947. The employees appealed.
The U.S. Supreme Court consolidated the cases to address the question of whether the FLSA requires employers to pay employees for time spent walking to and from stations that distributed required safety equipment.
In Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 691–692 (1946), the Supreme Court held that a “workweek” under the FLSA included the time employees spent walking from time clocks near a factory entrance to their workstations. In response to that decision, Congress passed the Portal-to-Portal Act. The Portal-to-Portal Act excepted from FLSA coverage walking on the employer’s premises to and from the location of the employee’s “principal activity or activities,” §4(a)(1), and activities that are “preliminary or postliminary” to “said principal activity or activities,” §4(a)(2).
The Department of Labor subsequently issued regulations which interpreted the Portal-to-Portal Act as not affecting the computation of hours within a “workday,” 29 CFR §790.6(a), which includes “the period between the commencement and completion” of the “principal activity or activities,” §790.6(b).
In a subsequent Supreme Court decision, Steiner v. Mitchell, 350 U.S. 247, 256 (1956), the Court explained that the “term ‘principal activity or activities’ … embraces all activities which are ‘an integral and indispensable part of the principal activities,’ ” including the donning and doffing of specialized protective gear “before or after the regular work shift, on or off the production line.”
The Court’s Decision
In the 2005 Alvarez decision, the Court held that an employee putting on employer-required safety equipment qualified as a “principal activity” under the FLSA. The continuous “workday” for purposes of calculating compensable time began when employees started that activity. Therefore, compensable time included the subsequent time employees spent walking to and from the worksite after donning their protective gear, and time spent waiting to doff the gear. The Court further held that the previous time spent waiting to put on the safety equipment, however, was not included in the workday, and not compensable time, because it was a “preliminary” activity under the Portal-to-Portal Act. 546 U.S. at 28-38.
Time spent walking to and from the worksite after donning and before doffing protective gear is compensable time
First, the Alvarez held that the time the IBP employees spent walking after changing into protective gear from the locker room to the production floor was compensable under the FLSA. 546 U.S. at 33-37.
The Court explained that Section 4(a)(1) of the Portal-to-Portal Act text does not exclude this time from the FLSA. IBP had argued that, because donning is not the “principal activity” that starts the workday, walking occurring immediately after donning and immediately before doffing is not compensable. That argument, the Court pointed out, was foreclosed by its decision in Steiner, which clarified that §4 does not remove activities that are “integral and indispensable” to “principal activities” from FLSA coverage because those activities are themselves “principal activities.” 350 U. S. at 253. The Court went on to explain that that these identical terms cannot mean different things within the same law (§4(a)(2) and in §4(a)(1)). According to the normal rules of statutory interpretation, identical words used in different parts of the same statute are generally presumed to have the same meaning. Further, with respect to §4(a)(2)’s reference to “said principal activity or activities,” “said” is an explicit reference to the use of the identical term in §4(a)(1). Alvarez, 546 U.S. at 33-35.
The Court also rejected IBP’s argument that Congress’s repudiation of the Anderson decision (by passing the Portal-to-Portal Act) reflected a legislative purpose to exclude the walking time at issue from the FLSA. The Court found this argument unpersuasive because it observed the time at issue in Alvarez, which occurred after the workday begins (by donning) and before it ends (by doffing), was more comparable to time spent walking between two different positions on an assembly line than to the walking in Anderson, which occurred before the workday began. Id. at 34-35.
The Court also pointed out the DOL regulations supported the compensable nature of the IBP employees’ walking time. For example, 29 CFR §790.6 did not strictly define the workday’s limits as the period from “whistle to whistle.” And 29 CFR §790.7(g), n. 49, which provides that postdonning walking time is not “necessarily” excluded from §4(a)(1) of the Portal-to-Portal Act, does not mean that such time is always excluded. Therefore, the Court determined those regulations could not overcome clear statements elsewhere in the regulations that supported the compensable nature of postdonning walking time. 546 U.S. at 35-37.
Time spent waiting to doff is compensable time
With respect to the Barber Foods employees, the Court similarly held that because donning and doffing gear that is “integral and indispensable” to employees’ work is a “principal activity” under the FLSA, the continuous workday rule required that the time the Barber Foods employees spent walking to and from the production floor after donning and before doffing, as well as the time spent waiting to doff at the end of the day, are not affected by the Portal-to-Portal Act. Therefore, this time was compensable under the FLSA. 546 U.S. at 37-39.
Time spent waiting to don is not compensable time
Finally, however, the Court held that time spent waiting to don protective gear before work is not compensable time. The Court’s reasoned that §4(a)(2) of the Portal-to-Portal Act excluded from the FLSA the time employees spend waiting to don the first piece of gear that marks the beginning of the continuous workday. The Court determined that this qualifies as a “preliminary” activity because it was “two steps removed” from the productive activity on the assembly line. While certain preshift activities were necessary for employees to engage in their principal activities, the Court found that this does not mean that those preshift activities are “integral and indispensable” to a “principal activity” under Steiner. The Court expressed a concern that it could not conclude that Barber employees predonning waiting time was a compensable “principle activity” without also reaching the necessary (but untenable) conclusion that the walking time in Anderson would also be a “principal activity” unaffected by the Portal-to-Portal Act. The Court observed that 29 CFR §790.7(h) (differentiating between being “engaged to wait,” which is compensable, and “wait[ing] to be engaged, which is not compensable) did not support a finding that time spent waiting to don protective gear was compensable. 546 U.S. at 39-42.
In short, Alvarez held that an employee putting on employer-required safety equipment qualified as a “principal activity” under the FLSA. The continuous “workday” for purposes of calculating compensable time began when employees started that activity.
This determination, that the workday begins with donning, has two important implications. First, FLSA compensable time included the subsequent time employees spent walking to and from the worksite after donning their protective gear, and time waiting to doff their gear. Second, however, the previous time employees spent waiting to don the protective equipment was not included in the workday, and not compensable time, because it was a “preliminary” activity under the Portal-to-Portal Act.
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Law of Joint Employment
A worker’s joint employers are jointly and severally liable for any violations of the Fair Labor Standards Act. Salinas v. Commercial Interiors, Inc., 848 F.3d 125, 134 (4th Cir. 2017). This means that for purposes of the FLSA’s requirements that an employer pay minimum wages and overtime wages to non-exempt employees, a worker may have more “employers” than just the company who issues her paychecks. In short, if more than one entity has the ability to help determine the conditions of a workers’ employment, more than one entity may be liable if the worker is not paid the minimum wages or overtime compensation required by federal law.
DOL Joint Employment Regulations
The Department of Labor regulation implementing the FLSA distinguishes “separate and distinct employment” from “joint employment.” 29 C.F.R. § 791.2(a). “Separate employment” exists when “all the relevant facts establish that two or more employers are acting entirely independently of each other and are completely disassociated with respect to the” individual’s employment. Id. By contrast, “joint employment” exists when “employment by one employer is not completely disassociated from employment by the other employer(s).” Id. When two or more entities are found to jointly employ a particular worker, “all of the employee’s work for all of the joint employers during the workweek is considered as one employment for purposes of the [FLSA].” Id. (emphasis added). Thus, for example, all hours worked by the employee on behalf of each joint employer are counted together to determine whether the employee is entitled to overtime pay under the FLSA. Id; Hall v. DIRECTV, LLC, 846 F.3d 757, 766 (4th Cir. 2017).
Fourth Circuit Factors
In Salinas, the Fourth Circuit observed that the joint employment regulations speak to “one fundamental question: whether two or more persons or entities are ‘not completely disassociated’ with respect to a worker such that the persons or entities share, agree to allocate responsibility for, or otherwise codetermine — formally or informally, directly or indirectly — the essential terms and conditions of the worker’s employment.” 848 F.3d at 141 (quoting 29 C.F.R. § 791.2(a) and citing In re Enter. Rent-A-Car Wage & Hour Employment Practices Litig., 683 F.3d 462, 468 (3d Cir. 2012) (“[W]here two or more employers … share or co-determine those matters governing essential terms and conditions of employment — they constitute ‘joint employers’ under the FLSA.” (internal quotation marks omitted)).
With these principles in mind, courts in the Fourth Circuit consider six factors in determining whether entities constitute joint employers:
(1) whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate the power to direct, control, or supervise the worker, whether by direct or indirect means;
(2) whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate the power to, directly or indirectly, hire or fire the worker or modify the terms or conditions of the worker’s employment;
(3) the degree of permanency and duration of the relationship between the putative joint employers;
(4) whether, through shared management or a direct or indirect ownership interest, one putative joint employer controls, is controlled by, or is under common control with the other putative joint employer;
(5) whether the work is performed on a premises owned or controlled by one or more of the putative joint employers, independently or in connection with one another; and
(6) whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate responsibility over functions ordinarily carried out by an employer, such as handling payroll, providing workers’ compensation insurance, paying payroll taxes, or providing the facilities, equipment, tools, or materials necessary to complete the work. Id. at 141.
Salinas at 141.
The Fourth Circuit in Salinas observed that these six factors may not constitute an exhaustive list of all potentially relevant considerations. Id. at 142. “To the extent that facts not captured by these factors speak to the fundamental threshold question that must be resolved in every joint employment case — whether a purported joint employer shares or codetermines the essential terms and conditions of a worker’s employment — courts must consider those facts as well.” Id.
As these factors illustrate, the Fourth Circuit’s joint employer test turns on whether the entities in question codetermine the essential conditions of a worker’s employment. Salinas at 143. Thus, the existence of a general contractor-subcontractor relationship “has no bearing on whether entities … constitute joint employers for purposes of the FLSA.” Id. 143–44.
Application of Salinas Factors
For example, in Salinas, the Fourth Circuit held that a drywall installation subcontractor and general contractor were joint employers under the FLSA because, inter alia, the subcontractor provided staffing for the contractor based on the contractor’s needs; the employees performed the work for the contractor’s benefit; the contractor supervised the employees’ progress daily and provided feedback; and the employees wore uniforms bearing the contractor’s logo. 848 F.3d at 146.
For another Fourth Circuit case on the joint employer issue, see Hall v. DIRECTV, LLC, 846 F.3d 757, 762 (4th Cir. 2017). In that case, the plaintiff technicians sufficiently alleged DIRECTV as a joint employer, even though the technicians were nominally employed by a subcontractor. The court held that DIRECTV could be liable as a joint employer along with the subcontractor because, inter alia, the technicians were required to “obtain their work schedules and job assignments through DIRECTV’s centralized system,” to check in with DIRECTV after completing assigned jobs, and to “wear DIRECTV uniforms…when performing work for the company.” Similarly, in Young v. Act Fast Delivery of W. Virginia, Inc., 2018 WL 279996, *8 (S.D. W.Va. Jan. 3, 2018), the court held that under Salinas, a pharmaceutical delivery company was a joint employer of the plaintiff couriers, even though the couriers were nominally employed by a third party subcontractor.
As the Fourth Circuit emphasized in Salinas, “Separate employment exists when … ‘two or more employers are acting entirely independently of each other and are completely disassociated with respect to’ the individual’s employment.” 848 F.3d at 133-34 (emphasis in original) (quoting 29 C.F.R. § 791.2(a)). “By contrast, joint employment exists when ‘the facts establish … that employment by one employer is not completely disassociated from employment by the other employer.’” Salinas at 134 (emphasis in original).
Therefore, under the Fourth Circuit’s framework, the “fundamental question” guiding the joint employment analysis is “whether two or more persons or entities are ‘not completely disassociated’ with respect to a worker such that the persons or entities share, agree to allocate responsibility for, or otherwise codetermine — formally or informally, directly or indirectly — the essential terms and conditions of the worker’s employment.” Id. at 140. If the facts show that two related companies were not “completely disassociated” or “acting entirely independently” with respect to a worker’s employment, they may be joint employers. If the entities shared control over the conditions of employment, they may both be potentially jointly and severally liable for FLSA violations as joint employers.
McKennon v. Nashville Banner: Law of After-Acquired Evidence
What happens when an employer, having wrongfully terminated an employee (in violation of federal employment law), discovers in litigation that the employee did something that would have legitimately and lawfully lead to termination, had the employer known about it before wrongfully firing the employee? Does the employer still have to pay lost wages for the wrongful termination, or does this “after-acquired evidence” excuse the violation?
The Supreme Court addressed these questions in McKennon v. Nashville Banner Pub. Co., 513 U.S. 352 (1995). The Court rejected the argument that a legitimate reason for termination, discovered after an unlawful discharge, excuses the unlawful action or bars the employee from recovery. However, the Court also indicated that such after-acquired evidence may limit the employee’s ability to obtain reinstatement or recover all lost wages associated with the termination.
McKennon worked thirty years for Nashville Banner Publishing Company until she was terminated at age sixty-two. McKennon filed suit, alleging that her discharge violated the Age Discrimination in Employment Act of 1967 (ADEA). McKennon’s suit sought a variety of legal and equitable remedies available under the ADEA, including backpay. In her deposition, McKennon admitted that during her final year of employment she had copied and taken home several of the Banner’s confidential financial documents. 513 U.S. 354-56.
For the purposes of summary judgment, the Banner conceded that it had discriminated against McKennon because of her age. Id. The District Court, however, granted summary judgment for the company, holding that McKennon’s misconduct in taking the confidential documents was grounds for termination and that neither back pay nor any other remedy was available to her under the ADEA. The Court of Appeals affirmed on the same reasoning. McKennon appealed. Id. at 355-56.
The Court’s Decision
The Court reversed. It held that an employee who is fired in violation of federal employment law is not barred from all relief when, after her discharge, her employer discovers evidence of wrongdoing that would have led to her termination on lawful and legitimate grounds had the employer known of it. 513 U.S. 356-360.
After-Acquired Evidence Not a Complete Bar
First, the Court held that this kind of “after-acquired evidence” is not a complete bar to recovery. The Court reasoned that even if the employee engaged in misconduct that would have prompted a termination, the employer’s discrimination that actually prompted the discharge cannot be disregarded. The Court assessed the purposes of the ADEA’s remedial provisions, 29 U.S.C. § 626(b) and 29 U.S.C. § 216(b), which (like the remedial provisions of other employment laws) were designed both to compensate employees for injuries caused by unlawful discrimination and to deter employers from discriminating in the first place. The Court concluded that allowing after-acquired evidence to bar all relief would frustrate both of these important objectives. Therefore, the Court held that after-acquired evidence did not bar all relief for unlawful discrimination. Id. at 358-360.
Relevance to Crafting an Appropriate Remedy
Second, however, the Court observed that trial courts should take into account after-acquired evidence of an employee’s wrongdoing in determining the specific remedy for the employer’s discrimination. To hold otherwise, and bar any consideration of employee misbehavior in the relief analysis, would be to ignore the employer’s legitimate concerns about employee misconduct. The ADEA, like other employment laws, just prohibits discrimination. It does not limit employers from having legitimate rules and exercising appropriate lawful discretion in hiring, promoting, and firing employees. Therefore, the Court noted, employee wrongdoing is relevant in taking due account of such lawful prerogatives and the employer’s corresponding equities arising from the wrongdoing. Id. at 360-61.
General Rule: No Reinstatement or Front Pay
Third, the Court discussed how trial courts might balance these competing concerns — on one hand, the prohibition against unlawful discrimination, and on the other, the employer’s right to address legitimate employee misconduct in an appropriate manner. The Court decided that remedial relief in such cases should be addressed on a case-by-case basis. However, the Court stated that as a general rule, if the employer proves the employee engaged in misconduct that would have prompted a lawful termination had the employer known about it, neither reinstatement nor front pay is an appropriate remedy. Id. at 362. This is because “it would be both inequitable and pointless to order the reinstatement of someone the employer would have terminated, and will terminate, in any event and upon lawful grounds.” Id.
Possible Limitations on Back Pay
The Court indicated that the more difficult issue, in after-acquired evidence cases, is the proper measure of back pay. This is because even a guilty employer cannot be required to ignore information it learns about employee wrongdoing that would lead to a legitimate discharge, even if it is acquired during the course of a discrimination lawsuit and might have gone undiscovered in the absence of the discrimination that led to the lawsuit. Id. at 362. The Court stated that the “beginning point in formulating a remedy should therefore be calculation of backpay from the date of the unlawful discharge to the date the new information was discovered.” Id. In determining the appropriate relief, the court can consider extraordinary equitable circumstances that affect the legitimate interests of either party. But an “absolute rule barring any recovery of backpay, however, would undermine the [federal employment law’s] objective of forcing employers to consider and examine their motivations, and of penalizing them for employment decisions that spring from … discrimination.” Id. Thus, as a general rule, after-acquired evidence does not bar back pay, but it might limit the amount of back pay an employee can recover.
No Bar to General Compensatory, Punitive, or Liquidated Damages
It is also worth noting that McKennon did not state or suggest that compensatory damages for past or future emotional harm should be time-limited. The decision only addressed possible limitations on lost wages and reinstatement. Allowing full emotional distress damages even if the defendant prevails on an after-acquired evidence defense makes good sense in light of McKennon’s reasoning. This is because no legitimate business prerogative would be served by allowing a proven discriminator to avoid paying the full cost of the emotional damage caused by the discrimination. The same reasoning supports the conclusion that after-acquired evidence does not bar punitive damages or liquidated damages, in cases where the usual standards for awarding punitive or liquidated damages are met. Here is a link to EEOC’s guidance on this issue.
Employer’s Burden of Proof
Finally, the Court discussed the employer’s burden in attempting to prove an “after-acquired evidence” defense. When an employer seeks to use this defense, it must first establish that the wrongdoing was of “such severity that the employee in fact would have been terminated on those grounds alone had the employer known of it at the time of the discharge.” Id. at 362-63. The Court also expressed concern that, due to the possibility of uncovering after-acquired evidence, employers might routinely undertake extensive discovery into an employee’s background or job performance to resist employment discrimination claims. Id. at 363. However, the Court concluded the trial courts’ authority to award attorney’s fees under §§ 216(b) and 626(b) and to invoke the appropriate provisions of the Federal Rules of Civil Procedure would likely deter most abuses of the discovery rules. Id.
The Court in McKennon rejected the notion that a legitimate reason for termination, discovered after an unlawful discharge, excuses the unlawful action or bars the employee from recovery. However, such after-acquired evidence may limit the employee’s ability to obtain reinstatement or recover all lost wages associated with the termination. To use this defense, an employer must prove that the employee engaged in misconduct of such severity that the employee would have been terminated on those grounds alone had the employer learned of it during her employment. As a general rule, if the employer meets this burden, reinstatement is not an appropriate remedy and back pay may be limited.
In Meritor Savings Bank v. Vinson, 477 U.S. 57 (1986), the Supreme Court recognized for the first time that sexual harassment is a violation of Title VII of the Civil Rights Act of 1964..
Meritor Savings Bank addressed the question of whether Title VII prohibits employers from creating a sexually “hostile environment” or only prohibited tangible economic discrimination, like terminations and demotions.
The Court held, inter alia, that “hostile environment” sexual harassment is a form of sex discrimination that is actionable under Title VII. Id. at 63-69. This is because the language of Title VII is not limited to “economic” or “tangible” discrimination, like a termination resulting in wage loss. Therefore, sexual harassment leading to purely non-economic injury (like emotional distress) can violate Title VII.
In 1974, Meritor Savings Bank hired Vinson as a teller. Her supervisor was a man named Sidney Taylor. Vinson testified that Taylor subsequently invited her out to dinner and, during the course of the meal, suggested that they go to a motel to have sex. At first, she refused, but out of what she described as fear of losing her job she eventually agreed. According to Vinson, Taylor thereafter repeatedly demanded sexual favors from her, usually at the branch, both during and after business hours. She estimated that over the next several years she had intercourse with him some 40 or 50 times. In addition, Vinson testified that Taylor fondled her in front of other employees, followed her into the women’s restroom when she went there alone, exposed himself to her, and forcibly raped her on several occasions. Taylor denied all this. The District Court found that any sexual relationship between Vinson and Taylor was a voluntary one.
In her suit against Taylor and the bank, Vinsom claimed that during her four years at the bank she had constantly been subjected to “sexual harassment” by Taylor in violation of Title VII. She sought injunctive relief, compensatory and punitive damages against Taylor and the bank, and attorney’s fees.
The Court’s Decision
Meritor Savings Bank raised the question of whether Title VII’s prohibition on sex-based “discrimination” prohibits employers from creating a sexually “hostile environment” or was limited to a prohibition on tangible economic discrimination, like terminations and demotions.
The Court held that “hostile environment” sexual harassment is a form of sex discrimination that is actionable under Title VII. Id. at 63-69. This is because the language of Title VII is not limited to “economic” or “tangible” discrimination, like a termination resulting in wage loss. Therefore, consistent with EEOC’s interpretation of Title VII, sexual harassment leading to purely non-economic injury (like emotional distress) can violate Title VII.
In so holding, the Court emphasized the purpose of Title VII: “Title VII affords employees the right to work in an environment free from discriminatory intimidation, ridicule, and insult whether based on sex, race, religion, or national origin. 477 U.S. at 65. Citing the EEOC’s guidelines on sex discrimination, the Court held that an employee may establish a violation of Title VII “by proving that discrimination based on sex has created a hostile or abusive work environment.” Id.
The Court quoted the Eleventh Circuit’s decision in Henson v. City of Dundee, 682 F.2d 897, 902 (11th Cir. 1982), which compared sex-based harassment to racial harassment:
Sexual harassment which creates a hostile or offensive environment for members of one sex is every bit the arbitrary barrier to sexual equality at the workplace that racial harassment is to racial equality. Surely, a requirement that a man or woman run a gauntlet of sexual abuse in return for the privilege of being allowed to work and made a living can be as demeaning and disconcerting as the harshest of racial epithets.
477 U.S. at 67. The Court went on to hold that for harassment to violate Title VII, it must be “sufficiently severe or pervasive ‘to alter the conditions of [the victim’s] employment and create an abusive working environment.'” Id. (quoting Henson at 904).
The Court further held that “voluntariness” in the sense that an employee was not forced to participate in sexual conduct against her will, is no defense to a sexual harassment claim. The District Court had therefore erroneously focused on the “voluntariness” of Vinson’s participation in the claimed sexual episodes. In a sexual harassment case, the correct inquiry is whether the employee by her conduct indicated that the alleged sexual advances were unwelcome, not whether her participation in them was voluntary. 477 U.S. at 67-68. The Court further held that while evidence of an employee’s sexually provocative speech or dress may be relevant in determining whether she found particular advances unwelcome, such evidence should be admitted with caution in light of the potential for unfair prejudice. Id. at 69.
Meritor Savings Bank marked the first time the Supreme Court recognized a cause of action for sexual harassment. The decision also clarified that sexual harassment creating a hostile work environment constitutes unlawful sex discrimination under Title VI. The case is also notable for questioning whether sexual conduct between a supervisor and a subordinate could truly be voluntary due to the power dynamics and hierarchical relationship between supervisors and subordinates.
Here’s a link to a contemporaneous 1986 New York Times article about the case and its significance.
Oncale v. Sundowner Offshore Services is an important case in the development of employee protections from sexual harassment, same-sex discrimination, sexual orientation discrimination, and sexual identity discrimination. Specifically, Title VII of the Civil Rights Act of 1964 — the primary federal law barring sex-based discrimination in employment — prohibits workplace discrimination and harassment that is “because of … sex.” 42 U.S.C. § 2000e-2(a)(1). This language plainly bars an employer from treating male employees better than female employees, or vice versa, and plainly bars employers from making sexual activities a condition of employment. But the text of Title VII does not specifically explain whether this “because of … sex” language also bars sexualized harassment by a straight employee against another straight employee of the same sex, or whether it bars discrimination against an employee because of his/her/their sexual orientation or gender identity.
Oncale specifically concerns the meaning of the phrase “because of…sex” in the context of same-sex harassment among straight male employees. The central decision in Oncale was that Title VII’s rule against discrimination “because of… sex” applied to sexualized harassment in the workplace between members of the same sex, even when the conduct at issue is not motivated by sexual desire. This decision was a precursor to later cases applying that same “because of … sex” language in the context of discrimination based on sexual orientation and gender identity.
Facts and Procedural Background
Oncale worked for Sundowner on an oil rig in the Gulf of Mexico. He was part of a crew of eight men. On several occasions, certain crew members subjected Oncale to “sex-related, humiliating actions … in the presence of the rest of the crew … physically assaulted Oncale in a sexual manner, and … threatened him with rape.” 523 U.S. at 77. Oncale complained to his supervisors about the behavior, but they allowed it to continue. Oncale eventually quit, and requested that his personnel file reflect that he left “due to sexual harassment and verbal abuse.” Id. Apparently all the crew members were straight, so presumably their actions were not motivated by sexual desire. Id. at 79.
Oncale sued Sundowner, claimed that the harassing behaviors directed against him by his straight male co-workers constituted discrimination “because of … sex” under Title VII. The District Court granted summary judgment for Sundowner, dismissing the case on the grounds that Oncale, being male, had no cause of action under Title VII for harassment by male co-workers. The Fifth Circuit affirmed. 83 F.3d 118 (1996).
Supreme Court Decision: Same-Sex Discrimination is Action Under Title VII
In a 9-0 decision written by Scalia, the Supreme Court reversed, holding that sex discrimination consisting of same-sex sexual harassment is actionable under Title VII. The Court’s reasoning here was that (1) under Newport News Shipbuilding & Dry Dock Co. v. EEOC, 462 U. S. 669, 682 (1983), Title VII’s prohibition of discrimination “because of … sex” protects men as well as women, and (2) under Castaneda v. Partida, 430 U. S. 482, 499 (1977), in the related context of racial discrimination in the workplace, the Court had rejected any conclusive presumption that an employer will not discriminate against members of his own race. “Because of the many facets of human motivation, it would be unwise to presume as a matter of law that human beings of one definable group will not discriminate against other members of their group.” Castaneda, 430 U.S. at 499. It therefore follows that males might discriminate against other males.
The Court’s Rationale
The Court further explained there was no justification in Title VII’s language or the Court’s precedents for a categorical rule barring a claim of discrimination “because of … sex” just because the victim and the harasser are of the same sex. Scalia explained that while male-on-male sexual harassment “was assuredly not the principal evil Congress was concerned with when it enacted Title VII … Statutory prohibitions often go beyond the principal evil to cover reasonably comparable evils, and it is ultimately the provisions of our laws rather than the principal concerns of our legislators by which we are governed.” Oncale, 523 U.S. at 79.
The Court therefore held that same-sex harassment is actionable under Title VII, so long as the conduct meets the well-established elements of a sexual harassment claim: (1) that the conduct at issue was “not merely tinged with offensive sexual connotations, but actually constituted ‘discrimina[tion] … because of … sex’ and (2) that the conduct “severe or pervasive enough to create an objectively hostile or abusive work environment[.]” Id. at 81.
The objective severity of harassment should be judged from the perspective of a reasonable person in the plaintiff’s position, considering “all the circumstances.” Id. (citing Harris v. Forklift Systems, Inc., 510 U.S. 17, 23 (1993)); see also Meritor Savings Bank, FSB v. Vinson, 477 U.S. 57, 67 (1986). Scalia further pointed out that in all harassment cases, including same-sex cases, the “severe or pervasive” inquiry requires “careful consideration of the social context in which particular behavior occurs and is experienced by its target.” Oncale at 81. For example, “[a] professional football player’s working environment is not severely or pervasively abusive, for example, if the coach smacks him on the buttocks as he heads onto the field – even if the same behavior would reasonably be experienced as abusive by the coach’s secretary (male or female) back at the office.” Id. “The real social impact of workplace behavior often depends on a constellation of surrounding circumstances, expectations, and relationships which are not fully captured by a simple recitation of the words used or the physical acts performed.” Id. at 81-82.
The Court therefore rejected Sundowner’s argument that recognizing liability for same-sex harassment would transform Title VII into a “general civility code” for the American workplace. Scalia explained that Title VII is directed at discrimination “because of” sex, not merely “conduct tinged with offensive sexual connotations.” Id. at 81. The Court also pointed out that Title VII does not reach “genuine but innocuous differences” in the ways men and women routinely interact with members of the same, and the opposite, sex. Id.
Analysis and Significance
In short, Oncale is important because it held that Title VII’s protection against workplace discrimination “because of… sex” applies to sex-based conduct between members of the same sex, even in the absence of sexual desire. This was an important early decision in the development of the rights of employees to be free from workplace discrimination because of their sexual orientation or gender identity. For example, in 2015 the EEOC cited Oncale as part of its rationale for issuing an agency decision that Title VII bars sexual orientation-based employment discrimination. Oncale therefore laid the foundation for analyzing same-sex harassment and sex-based harassment without “sexual desire” by indicating that any discrimination based on sex is actionable if it places the victim in an objectively hostile or abusive work environment, regardless of the victim’s or harasser’s gender or sexual preference.