U.S. Supreme Court Update

Volume 16, Issue 19
November 13, 2017

The new term for the U.S. Supreme Court began in October. So far we know that the Court will revisit two labor and employment issues from 2016 and rule on a class/collective action issue that is important to employers.

First, the Court has already heard oral argument on three cases presenting essentially the same issue: whether class and collective action waivers in arbitration agreements violate the National Labor Relations Act (NLRA). This issue has been presented to the Supreme Court via the Ninth Circuit Court's decision in Ernst & Young, LLP v. Morris, the Fifth Circuit Court's decision in NLRB v. Murphy Oil USA, and the Seventh Circuit Court's decision in Epic Systems Corp. v. Lewis. The Supreme Court's decision in these consolidated cases will be very important to any employer who has adopted or wishes to adopt an arbitration agreement that requires employees to arbitrate claims individually rather than as a class or group.

Second, the Court will revisit the Ninth Circuit case of Encino Motorcars, LLC v. Navarro where the issue is whether "service advisors" at car dealerships are exempt from the overtime-pay requirements of the Fair Labor Standards Act (FLSA). In June 2016, the Supreme Court held that the Ninth Circuit Court was wrong to rely upon a 2011 Department of Labor regulation because it was procedurally defective. The Supreme Court sent the case back to the Ninth Circuit for a second analysis independent of that regulation. In January 2017, the Ninth Circuit Court of Appeals reaffirmed its position that service advisors are not exempt from overtime under the FLSA. The Ninth Circuit Court's position on this issue is in conflict with two other circuit courts, and it is expected that the Supreme Court will now settle the matter.

Third, the Court will again consider the issue of public sector agency shop arrangements whereby employees who choose not to join a union can be compelled to pay the equivalent of union dues in the form of "fair share service fees." Since the U.S. Supreme Court's 1977 decision in Abood v. Detroit Board of Education, public workers who choose not to join a union can be forced to contribute a service fee to the union out of their paychecks. You may remember that a group of California teachers objected to these compulsory fees arguing that the fees violate their rights under the First Amendment. The Supreme Court was poised to address the issue, but issued a one-line decision on March 29, 2016, following the death of Justice Scalia, ending that case because the Court was "evenly divided." The issue has been brought before the Court again via the case of Janus v. AFSCME. Given the appointment of Justice Gorsuch to fill Justice Scalia's seat, it is expected that the Court may now be ready to overturn Abood - a decision that will deal a significant blow to public sector unions and have far reaching implications for all employers.

As the Supreme Court's term progresses, we will keep you posted on these cases as well as any new labor or employment cases that the Supreme Court agrees to hear.

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.