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SUPREME COURT ADDRESSES HOW AGENCIES INTERPRET THEIR OWN REGULATIONS

Many businesses have complained about federal agencies having too much power to interpret the laws they enforce.  For example, rather than amending the law or following the process to issue a new or revised regulation, agencies often issue fact sheets, operations handbooks, court briefs, and other statements and they ask the courts to follow the agencies' interpretations.  In a case called Auer v. Robbins in 1997, the Supreme Court had ruled that lower courts must defer to federal agencies' interpretations of their own rules.  The 1997 ruling was written by Justice Scalia, a staunch conservative, who later came to consider his opinion a mistake.  Since then, many thought that the Auer precedent would be overturned, but surprisingly it has survived, although in a weakened state, in a decision made by the U.S. Supreme Court in June 2019 in Kisor v. Wilkie

The majority 5-4 opinion indicates that an Auer deference should apply only when a regulation is "genuinely ambiguous," when an agency's interpretation is reasonable and when its approach stems from its "substantive expertise" and "fair and considerate judgment."  The Court says that deference is "rarely" warranted when an agency has changed its interpretation. 

The ruling will affect federal labor and employment agencies including the Labor Department, OSHA and the EEOC.  Their regulations are commonly involved in cases where their interpretations of regulations are major issues.  The bottom line is that the courts will be less willing in the future to defer to an agency's interpretations of its own regulations, and instead more inclined to interpret the regulation itself. 

It should be noted that there is another type of deference, cited in the famous case of Chevron v. Natural Resources Defense Council in 1984, in which courts are supposed to defer to an agency's interpretation of a statute which is ambiguous.  Chief Justice Roberts, who concurred with the more liberal members in Kisor, remarked that he does not see the Kisor decision as relating to the Chevron deference given to a statute, as opposed to an agency's interpretation of a regulation.

WILL OBAMACARE LAST?

There is an important case pending before the Fifth Circuit U.S. Court of Appeals, dealing with whether ObamaCare will survive or instead be declared unconstitutional.  Last December, a Texas federal judge invalidated the entire law, after Congress in 2017 passed a law that reduced the penalty provisions to employees for being uninsured to $0.  It is argued that this leaves the ACA as a stand-alone command to buy an insurance product that the federal government deems suitable, but it does not raise any revenue, and thus cannot be considered the "tax" aspect that was necessary to sustain its constitutionality under an earlier Supreme Court ruling.  Two of the three judges on the appeals court indicated that they were dubious that without the mandatory provisions the law would be constitutional.  Even if portions of the law should be invalidated, however, other unrelated portions may remain, and in any event the issue is likely to eventually go back to the U.S. Supreme Court.

In a related development, the Administration announced on 6/13/19 a plan to let employees use special pre-tax health arrangements known as HRAs, which are funded by employers with pre-tax dollars, to buy individual insurance, including policies that do not comply with the ACA provisions.  The starting date for the plan is January 2020.  While the plan may expand coverage to another one million people previously uninsured, critics say the approach may encourage consumers to pull out of the ACA insurance pool.

HAIR STYLE AND DRESS CODES NORMALLY NOT SUBJECT TO DISCRIMINATION RULES, WITH SOME EXCEPTION

Traditionally, the discrimination laws have not addressed dress codes and hair styles, because these characteristics are mutable.  That is, most people can readily change their hair styles and dress.  For example, the U.S. Court of Appeals for the Eleventh Circuit in Atlanta has stated in the last year that "every court to have considered the issue" has indicated that hair style discrimination is not a type of racial bias barred by federal law because it is a mutable, or alterable, characteristic.  EEOC v. Catastrophe Management Solutions, 129 FEP Cases 935 (C.A. 11, 2016).  However, workers who bring religious-based hair discrimination claims appear to have a better chance of prevailing.  In one case, for example, the Third Circuit in Philadelphia, found that an employer's policy failed to accommodate an employee with DREAD LOCKS, which were maintained as part of his Rastafarian faith.  The EEOC last year secured a $4.9 million discrimination settlement with UPS, on behalf of job applicants who wore beards and long hair for religious reasons. 

More recently, however, there have been several changes in local laws.  Two major cities, New York City and Chicago, passed local laws protecting hair styles closely associated with racial or ethnic identities.  Some research suggests, for example, that a majority of black women have to change their hair to get hired or otherwise accepted in the workplace.  California and New York are the first states to pass a law adding the phrase "inclusive of traits historically associated with race, including, but not limited to, hair texture and protective hair styles.""

Employers seem to have even more discretion in setting appropriate dress codes in the workplace.  The main type of discrimination issue that might arise is not one based on race but more likely to be one based on sex, in situations where females are held to tighter dress codes than males.  Requiring generally professional type dress equally applicable to males and females would not seem to violate these concepts.  A modern trend in industry is to allow for more informal types of dress, as a recruitment and retention tool.  In a recent development, even the stodgy New York financial firm, KKR, along with other Wall Street companies, relaxed their dress codes and no longer require suits, ties or heels, allowing employees flexibility.  At KKR, one of the world's largest private-equity firms, the memo does not specify exactly what types of clothes are appropriate, but instead use general terms like, "We trust you all to strike the right balance and exercise good judgment . . . .  At the same time, we recognize that many of our clients and other external relationships have a more formal expectation of "professionalism" . . . so please always have business attire available."

COMPARING OLD TO NEW HIRING TECHNIQUES

American companies for many years filled almost 90% of annual vacancies from within the company, but that portion has now fallen to less than a third.  Skeptics suggest that this decline is in spite of the fact that some research suggests that outside hires take three years longer to perform as well as internal candidates, and also cost more.  Some worker selection techniques have gravitated towards a battery of tests, even remote criterias such as facial expressions and word usage.  Many question such remote tests and argue that, consistent with federal discrimination laws, applicants should be tested for the skills directly required for the job. 

Interviews remain the "go to" process, and the use has increased over the years, not decreased.  Many believe the best interview strategy is to ask applicants the same set of predetermined questions, so that the answers can be fairly compared.  It is believed that some managers may place too much emphasis on "culture," which tends to subject the applicant to the biases of the interviewers, with the results to recruit people like themselves.  Even complicated testing algorithms based on the characteristics of existing employees can lead to the same result. 

Everyone watches what Walmart does, as it is the country's largest private employer.  Walmart is currently using virtual reality headsets to test which employees have the aptitude for promotions into management.  The headsets place Walmart employees in real-life situations, to test their decision-making and leadership capacities as well as their skills.  Common on-the-job issues can be virtually replicated and standardized for all interested persons, resulting in job-related selection processes without bias.  Other companies using such programs include Johnson & Johnson and Farmers Insurance, which uses such VR programs for training.

OBESITY ALONE MAY NOT BE PROTECTED BY ADA

Obesity remains a controversial issue under the Americans with Disabilities Act (ADA).  Employers received some relief from the issue in a recent court ruling that obesity unaccompanied by an underlying physiological condition is not a disability protected by federal law.  Richardson v. CTA, No. 17-3508 (C.A. 4, 6/12/19); see also Aumara v. Monsanto, 2019 BL218595 (E.D. La., 6/13/19) (even if morbid obesity is an impairment, plaintiff cannot show his weight substantially limits major life activity).  In this case, plaintiff was a severely obese bus driver with the Chicago Transit Authority.  The Authority contended that the plaintiff's weight exceeded the limit of the driver's seats and made it difficult for him to operate the bus pedals properly.  The court found that the employer thus had non-discriminatory reasons for the termination.  More importantly, the court joined three other federal appeals courts in finding that obesity unaccompanied by an underlying physiological condition simply isn't protected.  The court saw weight as a physical characteristic just like eye and hair color, not a disability. 

Editor's Note:  While the Second, Sixth and Eighth Circuit Court of Appeals has reached results similar to that of the Seventh Circuit in the Richardson case, the Equal Employment Opportunity Commission and the First Circuit have issued rulings indicating that obesity alone could be protected from discrimination.

RECENT CASES SHOW DANGERS EVEN WHERE AN EMPLOYER SEEMS TO BE FOLLOWING FMLA

Most employers are familiar with their obligations under the Family and Medical Leave Act (FMLA) and allow 12 weeks of such leave per year.  Even where employers follow these rules, they can still run afoul of the retaliation aspects of the FMLA.  A couple of recent cases illustrate this danger.

In the first case, the plaintiff was disciplined within one month of asking for FMLA and roughly a week after returning from an FMLA leave of about 13 days.  The employer, Marriott, contended it disciplined the plaintiff for insubordination, not for taking FMLA leave.  The hotel said the plaintiff failed to comply with a manager's instructions to place vanilla cakes in a display case, and the plaintiff said she complied with that order despite believing the cakes should not have been put out because they were frozen.  A federal judge denied the defendant's motion for summary judgment, finding that it was not a reasonable job assignment if a jury credit's plaintiff's testimony over her manager's.  The judge indicated that the close timing between the request for leave, the taking of leave, and the discipline, would allow a jury to connect the plaintiff's protected activity with the defendant's discipline.  Tsige v. Marriott Hotel Services, Inc., 2019 BL249750 (D.Md. 7/5/19).

In another case involving the FMLA, the court ruled that an employer improperly fired the plaintiff after he went on vacation to Mexico during the final two weeks of a medical leave to recover from foot surgery.  The employer apparently confronted the plaintiff with photographic evidence of activities he participated in while out on medical leave, and the employer contended that such activities were inconsistent with someone who claimed to have limited mobility.  He was fired for misrepresenting the extent of his injury when he applied for the medical leave.

The case went to a jury trial, which awarded the plaintiff $1.3 million, which included some $715,000.00 in punitive damages.  It has been suggested that this case illustrates that an employee is not necessarily abusing medical leave even when they go on vacation during the protected time off work.  DaPrato v. Mass. Water Resources Authority, Mass. No. SJC-12651, 6/5/19.

Editor's Note: The above cases should send a warning to employers who are considering disciplining an employee around the time they are taking FMLA leave.  While the above dangers are always present, they represent very pro-plaintiff views that are in contrast to the more reasonable views of perhaps a majority of the courts.  For example, many cases recognize a defense when an employer has conducted a full and complete investigation, and formed an honest belief that the employee was abusing FMLA leave or committed some other disciplinary offense.


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