Thursday, January 19, 2017

Cases and Issues To Watch In 2017 – Part II

The following is Part II of a two-part series that identifies cases and issues that we anticipate will have a considerable impact on the labor and employment field in the coming year.

1.  Right-to-Work Litigation

Right-to-Work proponents were dealt a setback when the U.S. Supreme Court virtually punted in its 4-4 order in Friedrichs v. California Teachers Association that concerned the issue of whether public employees who do not join a union can be required to pay an “agency” or “fair share” fee to cover costs that the union incurs, for example, for collective bargaining. But efforts to pass Right-to-Work legislation are far from dead. In various public statements and tweets, the President-elect has indicated preference for Right-to-Work laws. And the Vice President-elect passed Right-to-Work legislation while governor of Indiana. Notwithstanding, there are two cases still pending in Illinois over a Right-to-Work issues that should have unions concerned.

The first is Janus v. AFSCME. The Governor initially filed the action which was filed following the issuance of his executive order that directed all fair-share fees to be placed in an escrow account, rather than turning them over to unions. But, the Governor’s case was dismissed on the grounds that he did not have standing because he was not subject to the fair share fees requirement. Thereafter, State employees filed a motion to intervene, creating standing and rejuvenating the issue.  In the same way the plaintiff’s in Friedrichs v. California Teachers Association sought an expedited path to have the case heard by the U.S. Supreme Court, the plaintiffs in Janus are pursing the same strategy, as the district court already dismissed the amended complaint and the issue is now before the Seventh Circuit.

The second case was recently decided on January 7, 2016 when a federal judge in Illinois found that a local right-to-work ordinance is preempted by the National Labor Relations Act, and that only states and territories have the authority to enact such laws. The dispute arose in late 2015 when an Illinois home rule municipality passed a “right-to-work” ordinance establishing worker freedom.  Under the “right-to-work” ordinance, individuals can work for a private company in union-protected positions without having to join the union or pay the full share of union dues. In a zone designated right-to-work, non-union employees also get benefits negotiated by a labor union with company management. The ordinance approved late last year only applied to private companies within the village and not to public-sector employees, such as police officers.

The plaintiffs challenging the ordinance alleged that it is invalid under the Supremacy Clause and preempted by the National Labor Relations Act. In finding for the plaintiffs, the court held that local governments are preempted from passing right-to-work legislation because they do not qualify as a “State” under the National Labor Relations Act. The court also found that because the ordinance “imposes more stringent requirements than federal law” it further conflicts with the National Labor Relations Act.

The case will certainly be appealed to the U.S. Court of Appeals for the Seventh Circuit, which previously upheld the legality of Indiana’s right-to-work but on different grounds and did not address the issue of whether local governments constitute a political subdivision of their state that have authority enact right-to-work laws. Notwithstanding, the issue here is similar to the Sixth Circuit’s decision in Hardin that found counties and cities are political subdivisions of the state that can enact right-to-work ordinances.  If the Seventh Circuit reaches the same conclusion the Sixth Circuit did, then Illinois cities will be able to pass right-to-work themselves. But, if the Seventh Circuit disagrees, this dispute is likely headed to the U.S. Supreme Court so that the circuit split concerning whether local governments have authority to enact right-to-work legislation can be fully resolved.

2.  Sexual Orientation Under Title VII - Hively vs. Ivy Tech Community College

After an en banc hearing in 2016, the U.S. Court of Appeals for the Seventh Circuit will issue its decision sometime in 2017 on the issue of whether Title VII of the Civil Rights Act bars employers from discriminating against an employee because of his or her sexual orientation. The decision likely will have a widespread impact on gay and lesbian worker rights nationwide.

In Hively vs. Ivy Tech Community College, Hively alleged that she was denied full-time employment and not renewed as an adjunct professor "based on sexual orientation." The district court dismissed on the grounds that the Seventh Circuit, as far back as 1984, held that Title VII sex discrimination covers only discrimination against "men" and "women," and does not extend to sexual orientation and gender identity. A three-judge panel of the Seventh Circuit initially concluded that Title VII did not protect an employee from discrimination based on her sexual orientation. However, the Seventh Circuit granted the employee’s petition for en banc review and the case was heard in November before all of the Seventh Circuit judges.

Should the Seventh Circuit find in favor of Hively, it will be the first federal appeals court to extend Title VII workplace protections to sexual orientation claims. What is more, it would constitute a departure from an existing body of precedent that declined to extend Title VII to sexual orientation claims while acknowledging that district court cases and a recent EEOC ruling that rejected such precedent had actually demonstrated superior legal reasoning.

3.  Transgender Rights - Gloucester County School Board v. G.G.

Although not a labor and employment case, the ultimate outcome of Gloucester County School Board v. G.G. will be far-reaching and could have an impact on deference given to federal agency orders, including the U.S. Equal Opportunity Commission and the U.S. Department of Labor.

In Gloucester County School Board v. G.G., the U.S. Supreme Court will consider the issue of transgender rights in which a county school board in Virginia challenged a federal appeals court ruling that gave a 17-year-old transgender boy a right to use the school restroom that conforms to his gender identity. By way of background, in January 2015, the Department of Education’s Office of Civil Rights issued an opinion letter stating that, if schools separate students in restrooms and locker rooms on the basis of their sex, a “school generally must treat transgender students consistent with their gender identity.” In view of the 2015 letter, the U.S. Court of Appeals for the 4th Circuit reversed and ruled for G.G., relying on the Supreme Court’s 1997 decision in Auer v. Robbins, which held that courts generally should defer to an agency’s interpretation of its own regulation.

Gloucester County School Board v. G.G. represents the highest-profile case of the Supreme Court’s docket. However, the Supreme Court will only consider the technical issues of the dispute. The Supreme Court will review two questions: (1) whether deference should be given to the Department of Education opinion letter that was issued as part of the specific dispute; and (2) whether the Department of Education’s interpretation of the federal civil rights laws and the 1975 regulation as requiring schools to treat transgender students consistent with their gender identity should be given effect. If the final decision settles the policy declaration by the Department of Education that Title IX banning sex bias in federally funded education programs also forbids discrimination based on gender identity, it would signify the Supreme Court’s first major ruling on the transgender rights.

There is uncertainty about the case because it will now be argued by the Trump Administration due to a modified briefing schedule. G.G. relied heavily on deference to the Obama Administration’s interpretation of Title IX, and it was the basis for the Fourth Circuit’s ruling. Although the Trump Administration will not file a brief supporting the school board, it could nonetheless reverse course before G.G. files his brief. Such a change could substantially alter the arguments that G.G. makes and the justices consider. Indeed, if the Trump Administration does rescind the existing Department of Education letter or issue its own guidance on the question, the justices could opt to send the case back to the lower court for reconsideration in light of that new guidance. It could also signal a change in the deference given to other agency opinions, particularly the Department of Labor.

4.  Obama Executive Orders

The President-elect has revealed plans to repeal a raft of President Barack Obama’s executive actions on his first day in office. While it is unclear which executive orders will be repealed, there are signs that the executive order respective to Project Labor Agreements (“PLA”) could be repealed. While the President-elect has not indicated his support or opposition to government-mandated PLAs, he generally refused to build with PLAs on his development projects. What is more, the President-elect chose Andrew F. Puzder to be secretary of labor. If the Senate confirms the appointment Mr. Pruzder, over time he may eventually undo many of the employee and labor protections achieved under the Obama administration including changes to minimum wage for federal contractors and the final overtime rule that effectively modified FLSA.

Check back regularly on this site for updates and analysis on these and other issues affecting your workplace.