- Through two unanimous decisions, the Supreme Court has made it easier for employees to avoid arbitration due to their status as "transportation workers" and to challenge job transfers as discriminatory under Title VII.
- The EEOC has published a final rule on the Pregnant Workers Fairness Act that expands the pregnancy-related medical conditions that employers must accommodate, including fertility treatments, lactation, and abortion.
- The EEOC has issued guidance on workplace harassment that reiterates that sex-based discrimination and harassment includes conduct based on sexual orientation, gender identity, and pregnancy-related medical conditions, and extends to harassing conduct outside the workplace.
- The Department of Labor increased the minimum salary requirements for employees that are exempt from overtime pay under the Fair Labor Standards Act.
The last several weeks have seen a flurry of significant developments in federal employment law. The Supreme Court decided a significant case interpreting Title VII and another analyzing the Federal Arbitration Act, the Equal Employment Opportunity Commission published a final rule on the Pregnant Workers Fairness Act and guidance on workplace harassment, and the Department of Labor published a rule increasing the salary threshold for overtime exemptions under the Fair Labor Standards Act. This OnPoint summarizes these developments and provides guidance for employers in implementing required changes and attempting to avoid potential employee actions.
Supreme Court Issues Decisions on the Federal Arbitration Act and Title VII
Two recent U.S. Supreme Court decisions signal the potential for increased litigation in the labor and employment arena.
Bissonnette v. LePage Bakeries Park St., LLC
On April 12, 2024, the Supreme Court issued its decision in Bissonnette v. LePage Bakeries Park St., LLC,[1] interpreting the Federal Arbitration Act (FAA) and, specifically, its coverage exemption for any “class of workers engaged in foreign or interstate commerce.” The Court has generally held that this exemption, which is contained in Section 1 of the FAA, applies to “transportation workers,”[2] and employees have frequently attempted to evade the FAA’s broad presumption in favor of arbitration by arguing that they are “transportation workers.” However, some courts, including the Second Circuit from which Bissonnette emanated, held that this exemption applies only to employees in the “transportation industry.” In a unanimous decision penned by Chief Justice Roberts, the Court rejected this interpretation and held that a transportation worker does not need to be employed by a company in the transportation industry to be exempt under Section 1 of the FAA.
In Bissonnette, Petitioners were distributors of Wonder Bread and Flowers Foods, Inc. (“Flowers”), the producer of Nature’s Own. Petitioners argued that they were exempt from the FAA as transportation workers because they drove delivery trucks, whereas Flowers argued they were not exempt because they worked in the bakery industry, not the transportation industry. In ruling for Petitioners, the Court emphasized that it recently rejected an “industry-wide” approach to the Section 1 exemption in Southwest Airlines Co. v. Saxon.[3]
While Bissonnette may seem like a significant expansion of the FAA, the Court emphasized that Section 1 will still be limited to its “narrow” scope, because employees must still prove that they qualify as transportation workers and are engaged in interstate or foreign commerce. Nevertheless, employers outside the transportation industry who utilize arbitration agreements should prepare for an increase in attempts by delivery workers and other employees to evade arbitration agreements on the grounds that the workers are covered by this exemption to the FAA.
Muldrow v. City of St. Louis
On April 17, 2024, the Supreme Court decided Muldrow v. City of St. Louis,[4] addressing the level of harm that an employee must demonstrate when challenging a job transfer as discriminatory under Title VII. The case involved a sergeant with the St. Louis Police Department who was involuntarily transferred from her position as a plainclothes officer in the Intelligence Division to a uniformed position in another division and was replaced by a male officer. Although she argued that she was transferred into a less prestigious position, the lower courts found she did not demonstrate that her transfer was a “significant change,” because her title, salary, and benefits were not diminished. Reasoning that the text of Title VII contains no language specifying the requirement for a heightened degree of harm, the Court held that to state a Title VII discrimination claim based on transfer, the transferee “must show some harm respecting an identifiable term or condition of employment,” but does not have to show such harm was “significant,” “substantial” or “any similar adjective suggesting that the disadvantage to the employee must exceed a heightened bar.” However, the Court indicated that the degree of harm will still be relevant as courts may consider whether a less harmful act is “less suggestive of intentional discrimination.”
Although the Court dismissed the City’s policy argument regarding increased litigation, employees may be emboldened to raise discrimination claims regarding transfers. Employers should be sure to meticulously document their legitimate business reasons for implementing transfers to minimize discrimination risks.
EEOC Publishes Final Rule on Pregnant Workers Fairness Act
On April 15, 2024, the Equal Employment Opportunity Commission (EEOC) issued its 400+ page final rule on the Pregnant Workers Fairness Act (PWFA), slated to go into effect on June 18, 2024. The rule provides a very expansive interpretation of what medical conditions need to be accommodated, and the breadth of an employer’s obligations to accommodate those conditions. A summary of the significant terms and obligations imposed by the rule, as well as the already pending legal action to enjoin enforcement, is discussed below.
Defined Terms
The final rule defines a “qualified employee” as an employee who can perform the essential functions of their position with or without a reasonable accommodation. In a departure from the accommodation obligations under the Americans with Disabilities Act (ADA), the rule states that under the PWFA, an employee may be qualified even if that individual is unable to perform one or more essential functions of the position if: i) the inability to perform an essential function is for a temporary period, ii) the essential function could be performed in the near future, and iii) the inability to perform the essential function can be reasonably accommodated. While the PWFA does not define “temporary,” the final rule defines it as “lasting for a limited time, not permanent, and may extend beyond ‘in the near future.’” The term “in the near future” is further defined as “generally forty weeks from the start of the temporary suspension of an essential function.”
The rule defines “limitation” as a physical or mental condition related to, affected by, or arising out of pregnancy, childbirth, or related medical conditions. The EEOC provides details on what constitutes a “related medical condition,” and includes on its non-exhaustive list fertility and infertility treatments; termination of pregnancy, including stillbirth and miscarriage; endometriosis; postpartum depression, anxiety, or psychosis; menstruation; and lactation. Notably, in a divisive move that garnered in excess of 50,000 public comments, the final rule includes abortion within this definition.
On April 25, a coalition of seventeen Attorneys General from red states filed a suit in the U.S. District Court in the Eastern District of Arkansas against the EEOC, seeking to enjoin implementation of the rule and enforcement against this group of states. They did so principally because the EEOC included abortion as a pregnancy-related medical condition for which employers may have to provide workers reasonable accommodations. In their complaint, the attorneys general argue that the law was passed to promote safer conditions for pregnant workers, not to accommodate employees who undergo elective abortions. The attorneys general argue that the rule exceeds the EEOC’s authority and is not a reasonable interpretation of the PWFA, and will subject employers to federal lawsuits for failing to accommodate employees’ abortions even if those abortions are illegal under the law of the state in which the employer is located.
Reasonable Accommodations and Undue Hardship
The EEOC provides a lengthy list of examples of possible accommodations, including: frequent breaks, sitting, standing, schedule changes, part-time work, paid and unpaid leave, telework, parking, light duty, modifying the work environment, job restructuring, temporarily suspending essential functions, modifying equipment, and adjusting examinations or policies. Added to this list were hypotheticals illustrating additional potential accommodations, such as allowing an employee who experiences nausea and vomiting during the first trimester of pregnancy to work from home, and temporarily reassigning an employee who has postpartum sciatica who works in a fulfillment center line that requires her to move twenty-pound packages.
As is the case under the ADA, under the PWFA employers are not obligated to provide a reasonable accommodation that will impose an undue hardship on business operations. However, the final rule lists a number of “predictable assessments,” which are reasonable accommodations the EEOC advises will, in virtually all cases, not be found to impose an undue burden. These reasonable accommodations include: allowing an employee to carry water, allowing an employee to take additional restroom breaks, allowing an employee whose works requires standing to sit, allowing an employee whose work requires sitting to stand, and allowing an employee to take breaks to eat and drink.
Seeking Documentation
The rule states that employers may only seek supporting documentation when it is reasonable under the circumstances to determine whether the employee has a limitation and needs an adjustment or change due to the limitation. The EEOC provided a list of circumstances in which it is not reasonable to seek supporting documentation, including when the limitation and the adjustment or change at work needed are “obvious” and the employee provides self-confirmation, and when the employer already has sufficient information to determine whether the employee has a limitation and needs an adjustment or change at work.
Given the breadth of medical conditions contemplated by the rule, the number of accommodations that may be considered reasonable, the length of time in which accommodations must be provided, and the responsibility of employers to potentially provide such accommodations even without obtaining supporting documentation, it is critical that employers familiarize themselves with the EEOC’s guidance on the PWFA and engage with employees in compliance with the rule.
Department of Labor Issues Update on Overtime Exemptions
On April 23, 2024, the U.S. Department of Labor (DOL) released its highly anticipated final rule concerning the exemptions from eligibility for overtime compensation under the Fair Labor Standards Act (FLSA). As with recent rulemakings, the new rule increases the level of compensation that an employee must receive to be treated as exempt, but does not change any of the duties requirements to qualify for an exemption under the common executive, administrative, and professional (EAP) exemptions to the FLSA.
The salary thresholds for the EAP exemptions and the related highly compensated employee (HCE) exemption will be subject increases on July 1, 2024 and January 1, 2025. On July 1, 2024, the threshold for the EAP exemptions will increase from the current annual salary of $35,568 ($684 per week) to $43,888 ($844 per week), and the threshold for the HCE exemption will increase to $132,964 annually. Then, on January 1, 2025, the threshold will increase to $58,656 annually ($1,128 per week) for the EAP exemption and to $151,164 annually for the HCE exemption. The rule provides for these thresholds to be updated again as of July 1, 2027, and every three years thereafter. Although some states already require higher salary thresholds than those provided in this final rule, employers should be prepared to comply with these changes to salary thresholds by increasing the salaries of applicable exempt employees earning less than these thresholds or reclassifying such employees as overtime nonexempt, as needed.
EEOC Publishes New Guidance on Workplace Harassment
On April 29, 2024, the EEOC issued enforcement guidance on harassment in the workplace. This guidance follows a proposed update to guidance on workplace harassment which the EEOC had issued in September 2023. This new guidance, which took effect immediately upon issuance, provides guidelines from the EEOC on a number of areas related to workplace harassment, including protections for LGBTQ employees, an expanded understanding of what constitutes sex-based discrimination and harassment, and harassment in remote work environments.
Protections for LGBTQ Employees
In the new guidance, the EEOC reiterated that discrimination and harassment is only covered by federal equal employment opportunity (EEO) laws, such as Title VII, if it is based on one or more protected characteristics, such as race, national origin, or sex. The guidance states that sex-based discrimination includes discrimination on the basis of sexual orientation or gender identity. The guidance explains that harassing conduct based on sexual orientation or gender identity includes epithets, physical assault, outing individuals, harassing conduct because an individual does not present in a way that is stereotypically associated with that individual’s sex, misgendering (repeated and intentional use of a name or pronoun that is inconsistent with that individual’s known gender identity), or denying access to a bathroom or other sex-segregated facility, such as a locker room, consistent with that individual’s gender identity.
The EEOC explicitly states that this guidance does not exceed the scope of the Supreme Court’s decision in Bostock v. Clayton County, 590 U.S. 644 (2020), under which the Court held that termination of an employee due to that employee’s sexual orientation or gender identity is unlawful sex discrimination in violation of Section 703(a)(1) of Title VII. The EEOC acknowledged that the Court in Bostock did not address a number of other situations that could constitute unlaw sex discrimination based on sexual orientation or gender identity, such as employee use of sex-segregated bathrooms. However, the EEOC asserted that it may be obligated to take a position on whether conduct violates Title VII even if the Court has not published a precedential decision on the issue.
Protections for Pregnancy-Related Circumstances
The new guidance also addresses sex-based harassment in the context of pregnancy, and aligns with the above-discussed final rule on the PWFA. The guidance states that under Title VII, sex-based harassment includes harassment based on pregnancy, childbirth, or related medical conditions. The EEOC elaborated that such related medical conditions can include lactation, using contraception or not using contraception, or deciding to have an abortion or to not have an abortion. The guidance provides several examples of such harassment, including a hypothetical in which an employee announces her pregnancy to her coworkers and a supervisor subsequently begins berating the employee for working slowly, scrutinizing her bathroom use, and making derogatory comments towards her.
Harassment and Remote Work
The guidance reflects the increase in remote and virtual work due to the COVID-19 pandemic by addressing circumstances in which conduct that occurs outside the regular workplace may constitute workplace harassment and give rise to hostile work environment claims. The guidance states that a hostile work environment claim may involve conduct that occurs in a work-related context or environment that is outside of the regular workplace, such as at an offsite employer-hosted party or conduct that occurs over work-related communications systems, accounts, devices, or platforms, such as a work email, instant messaging, videoconferencing, or official social media accounts.
The guidance also states that employers may be held liable for conduct that occurs in a non-work-related context that has consequences in the workplace. The EEOC clarified that such conduct can include electronic communications using private phones, computers, or social media accounts, to the extent they impact the workplace. The guidance includes examples, such as two employees making racist and offensive jokes about a coworker on a social media service using non-work-related accounts.
Although the new guidance will likely face legal challenges, particularly regarding how the EEOC has interpreted discrimination and harassment on the basis of sexual orientation, gender identity, and medical conditions and decisions related to pregnancy, employers should familiarize themselves with these guidelines and be prepared to comply with the EEOC’s interpretation of harassment and discrimination in the workplace.
Conclusion
Employers must carefully consider how these agency and judicial developments will impact their operations and should stay updated on any additional changes or legal challenges that may arise.
- Case No. 23-51 (U.S. Apr. 12, 2024).
- Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001).
- 596 U.S. 450 (2022).
- Case No. 22-193 (U.S. Apr. 17, 2024).
