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US Employment Litigation Round-Up for July 2017

A Review of Key Cases and New Laws Affecting Employers
9 August 2017
Mayer Brown Newsletter

Ninth Circuit Says Mortgage Underwriters Are Not Exempt from FLSA Overtime Requirements

Decision: On July 5, 2017 in McKeen-Chaplin v. Provident Savings Bank, the US Court of Appeals for the Ninth Circuit held that mortgage underwriters are not properly classified as exempt under the Fair Labor Standards Act (FLSA) and that they are thus entitled to overtime compensation for hours worked in excess of 40 per week. In doing so, the Ninth Circuit joined the Second Circuit, and parted with the Sixth Circuit, in finding that the mortgage underwriters’ primary job duty did not relate to their employer bank’s management or general business operations, making the administrative employee exemption inapplicable.

Impact: The Ninth Circuit’s decision deepens the split among the circuits regarding the proper classification of mortgage underwriters, an often litigated issue. Accordingly, employers of mortgage underwriters across the country should keep up with the current developments in this space.


California High Court Grants PAGA Plaintiffs Broad Discovery Rights at Outset of Litigation

Decision: The California Supreme Court has ruled that plaintiffs who file representative actions under California’s Private Attorneys General Act of 2004 (PAGA) can seek the names and contact information of other employees in discovery prior to demonstrating any good cause or proving up the underlying merits of their case. In Williams v. Superior Court (Super. Ct. No. BC503806, July 13, 2017), the Court explained that, while individual cases may present a basis to limit or postpone a representative plaintiff’s access to contact information, the default position is that such information may be sought immediately and that employee privacy rights do not prohibit disclosure of their names and contact information in discovery or require plaintiffs to demonstrate a compelling need for the information.

Impact: The Court’s decision will make it more difficult for employers to resist providing employee names and contact information to plaintiffs early on in PAGA and class action cases, which may increase the cost of litigation. Employers can still make a showing of an undue burden in providing the information or can attempt to employ the Belaire-West process to allow employees to opt out of having their information provided in a lawsuit. However, the Court’s pronouncement that plaintiffs are “presumptively entitled” to the information will make it more likely that plaintiffs will prevail in obtaining the information.


Massachusetts Supreme Judicial Court Allows Medical Marijuana Users to Pursue Disability Discrimination Claims

Decision: On July 17, 2017, the Massachusetts Supreme Judicial Court revived the claims of an advertising business’s employee and ruled that employees can sue for disability discrimination under state law if they are fired or otherwise disciplined for using medical marijuana. Barbuto v. Advantage Sales & Marketing LLC & Joanne Meredith Villaruz, Case No. SJC-12226. The Court held that because the use and possession of medical marijuana is permitted under Massachusetts law, employers must make an exception to their drug policies and permit an employee to use medical marijuana as a reasonable disability accommodation if alternative medications would be less effective. The Court explicitly rejected the employer’s argument that medical marijuana use is a per se unreasonable accommodation because it violates federal law, emphasizing that “[t]he only person at risk of federal criminal prosecution . . . is the employee.”

Impact: Although the Court overturned the dismissal of the employee’s disability discrimination claims, it emphasized that it was not ruling on the merits of those claims. Rather, the court explained that the employer would have the opportunity to show that allowing medical marijuana use as an accommodation would impose an undue hardship on its business. Despite this caveat, the Court’s ruling may have broad repercussions because it affirmatively recognizes disability protections relating to medical marijuana use even though such protections are not included in the state’s recently enacted medical marijuana laws. Given the Court’s ruling, employers in states where medical marijuana is legal should review their drug policies and their practices for disability accommodations to correctly account for the possibility that medical marijuana users may be entitled to accommodations that would permit them to continue use of medical marijuana while performing their job, if allowing such an accommodation would not impose an undue hardship.


Tenth Circuit Holds ADA Does Not Entitle Temporary Employee Diagnosed with Cancer to Leave of Absence

Decision: In Punt v. Kelly Services, et al., No. 16-1026 (July 6, 2017), the US Court of Appeals for the Tenth Circuit affirmed a summary judgment award in favor of two companies in an Americans with Disabilities Act suit brought by a temporary employee. The plaintiff’s assignment by a staffing agency to work as the receptionist for another business was terminated after she missed a significant amount of work while being tested for breast cancer and informed the staffing agency that, due to her cancer, she needed to take a full week plus an additional unknown amount of time off for more tests, appointments and radiation treatments. The panel determined that the employee’s request was not a “plausibly reasonable accommodation.” 

Impact: Noting that the determination of whether a requested accommodation is reasonable must be made on the facts of each case, taking into consideration the particular individual’s disability and employment position, the Tenth Circuit based its decision in this case on the temporary nature of the plaintiff’s work assignment, evidence that the plaintiff’s position as a receptionist made her physical presence at the workplace essential and the fact that the extent of the leave that would be necessary was uncertain. Employers should keep these factors in mind when making decisions about accommodations requested by employees, in addition to the court’s guidance that physical attendance in the workplace is itself an essential function of most jobs and that an employee’s request to work from home for an unknown duration is, as a matter of law, unreasonable if the employer has decided that physical presence at the workplace is an essential function of the position.


Fifth Circuit Holds That Regular Attendance Is an Essential Function of Most Jobs

Decision: In Credeur v. State of Louisiana, No. 16-30658 (June 23, 2017), the US Court of Appeals for the Fifth Circuit held that in most cases employers do not have an obligation to allow open-ended or unlimited requests to work from home as a reasonable accommodation under the Americans with Disabilities Act (ADA). The court reasoned that “regular work-site attendance is an essential function of most jobs.” The Fifth Circuit also emphasized that courts should “give greatest weight to the employer’s judgment” when determining the essential functions of a job.

Impact: Beyond establishing that for employers in the 5th Circuit, indefinite work from home arrangements generally are not reasonable accommodations under the ADA, this case also serves as a reminder that employers should regularly review their job descriptions to ensure that they set forth all essential functions for each position, including regular attendance at the workplace where appropriate.


Third Circuit Holds That Single Slur Can Sustain Federal Workplace Harassment or Retaliation Claim

Decision: On July 14, 2017, the US Court of Appeals for the Third Circuit held in Castleberry v. STI Group, No. 16-3131, that a plaintiff need only show that workplace harassment or retaliation was severe or pervasive—not both—to sustain a claim under federal law. Under that standard, the Third Circuit continued, even a single use of a racial epithet can suffice to state a claim. The Third Circuit reversed the district court’s dismissal of the plaintiffs’ complaint, thus reviving their claims that they were terminated after reporting an incident where a supervisor told them, when explaining a work assignment, that they would be fired if they “[N-word]-rigged” the job.

Impact: The Third Circuit’s decision provides a more lenient standard for employees alleging harassment or retaliation and emphasizes the need for employers to provide training for all employees to avoid even isolated incidents of harassment in the workplace.

Authors

  • Lori A. Zahalka
    T +1 312 701 7921
  • Corwin J. Carr
    T +1 312 701 8015
  • Grant T. Miller
    T +1 213 229 5130
  • Richard E. Nowak
    T +1 312 701 8809
  • Andrea Maldonado Weiss
    T +1 213 229 5123
  • Ruth Zadikany
    Associate
    T +1 213 621 3916

Related People

  • Marcia E. Goodman
    T +1 312 701 7953
  • John Zaimes
    T +1 213 229 9545
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