Pending Supreme Court case on arbitration

[Watch the video]

After Coinbase was sued (in two cases), they moved to compel arbitration and to stay the court proceedings. The trial courts denied the motions to compel arbitration – one on the ground of unconscionability, the other on the ground that the arbitration agreement did not apply to the issue at hand.

The trial courts also denied the motions for a stay. Coinbase filed interlocutory appeals at the 9th Circuit, but the trial courts allowed the court litigation to proceed. The 9th Circuit refused to grant a stay.

Now the cases are consolidated in the US Supreme Court – Coinbase v. Bielski [Briefs], and oral arguments are scheduled for March 21.

NOTE: This is not an employment law case, yet it will be important for employment lawyers.

Federal Arbitration Act Section 16 provides for an interlocutory appeal from the denial of a motion to compel arbitration, but it says nothing about a stay. FAA Section 3 requires a stay when a court does compel arbitration.

So which will it be? Automatic stay? Or within the trial court's discretion?

FLSA collective action chaos

Welcome to FLSA forum shopping. The US Supreme Court has ducked a chance to clarify whether a federal court – in an FLSA collective action – has jurisdiction over claims arising in another state. Circuit courts are split. About 50 district courts are split about 50-50.

After Christa Fischer filed an FLSA collective action against Fed Ex in federal district court in Pennsylvania, other employees from other states opted in. However, the 3rd Circuit held that the district court had no jurisdiction over the claims arising outside of Pennsylvania. Fischer v. Federal Express, 42 F.4th 366 (3rd Cir 2022).

Fischer petitioned the Supreme Court for certiorari, pointing out that Circuit courts were split 3-1 and district courts split 26-24. But the Court denied certiorari on March 6, 2023.

We can now expect plaintiffs to shop around for the most favorable circuit, which, for now, is the 1st Circuit.

SCOTUS: Highly paid executive – paid on a daily basis – entitled to FLSA overtime

The US Supreme Court has ruled that a highly paid executive (over $200,000/year) gets overtime under the FLSA. Under the regulations, an employee falls within the “bona fide executive” exemption only if (among other things) he is paid on a “salary basis.”

The question raised was whether a high-earning employee is compensated on a “salary basis” when his paycheck is based solely on a daily rate—so that he receives a certain amount if he works one day in a week, twice as much for two days, three times as much for three, and so on. The Court held that such an employee is not paid on a "salary basis," and thus is entitled to overtime pay. Helix Energy v. Hewitt (02/22/2023) (6-2 on the merits, with one Justice saying the Court should not have decided the case at all) [PDF].

Michael Hewitt worked for Helix on an offshore oil rig, typically working 84 hours a week while on the vessel. Helix paid Hewitt on a daily-rate basis, with no overtime compensation. The daily rate ranged, over the course of his employment, from $963 to $1,341 per day. His paycheck, issued every two weeks, amounted to his daily rate times the number of days he had worked in the pay period. So if Hewitt had worked only one day, his paycheck would total (at the range’s low end) $963; but if he had worked all 14 days, his paycheck would come to $13,482.

The Court said: "Helix did not pay Hewitt on a salary basis as defined in §602(a). That section applies solely to employees paid by the week (or longer); it is not met when an employer pays an employee by the day, as Helix paid Hewitt. Daily-rate workers, of whatever income level, are paid on a salary basis only through the test set out in §604(b) (which, again, Helix’s payment scheme did not satisfy)."

FAA preempts California's AB 51

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9th Circuit: The Federal Arbitration Act preempts California’s Assembly Bill 51, so employers are free to require employees and applicants to agree to arbitrate employment law disputes. 2:15 minute video – also on YouTube: https://youtu.be/4LkzTXD4rOk

Overrule TWA v. Hardison?

On April 18 the US Supreme Court will hear oral arguments in Groff v. DeJoy [Briefs] – which asks the Court to overrule the key holding in Trans World Airlines, Inc. v. Hardison, 432 U.S. 63 (1977).

Title VII generally prohibits an employer from discriminating against an individual “because of such individual’s * * * religion.” The statute defines “religion” to include “all aspects of religious observance and practice, as well as belief, unless an employer demonstrates that he is unable to reasonably accommodate to an employee’s or prospective employee’s religious observance or practice without undue hardship on the conduct of the employer’s business.”

In the Hardison case, the Supreme Court stated that an employer suffers an “undue hardship” in accommodating an employee’s religious exercise whenever doing so would require the employer “to bear more than a de minimis cost.”

The Hardison case was wrong, and should be overruled.

The "no more than a de minimis cost" rule was pulled out of thin air, and has no connection at all to Title VII's text.

The current Court has shown an eagerness to ensure that religious interests are treated no less favorably than secular interests.

I say Hardison R.I.P.

Webinar replay

Free replay of the webinar - 4 Pending Supreme Court employment law cases:  https://www.dropbox.com/s/1wcr7hdhnqt91xu/video1129740458.mp4

4 Pending Supreme Court employment law cases

Register now for my webinar on 4 Pending Supreme Court employment law cases.
Advance registration is required at this link:
https://us02web.zoom.us/webinar/register/WN_iKQo2dPBSU-0VCPvUT0MzQ

When: Tuesday, January 17 at 10:00 AM Pacific Time
This webinar will be about 45 minutes long.

Cases to be covered:

Glacier Northwest v. Teamsters: NLRA preemption of alleged tortious destruction of employer's property.

Fischer v. FedEx: FLSA collective actions and federal court jurisdiction.

Helix Energy v. Hewitt: FLSA overtime for highly paid supervisor.

Ohio Adj Gen v. FLRA: FLRA authority to regulate state militia labor practices.

A $15 fee helps cover my costs. Thank you.

After registering, you will receive a confirmation email containing information about joining the webinar.

Thank you!!

Ross Runkel
Arbitrator & Mediator
(503) 551-1360
www.RossRunkel.com

Specialty Healthcare returns: “Overwhelming community of interest” once again

The NLRB has returned to its prior “overwhelming community of interest” test, as set forth in Specialty Healthcare & Rehabilitation Center of Mobile, 357 NLRB 934 (2011), overruling PCC Structurals, 365 NLRB No. 160 (2017), and The Boeing Co., 368 NLRB No. 67 (2019). American Steel Construction, Inc., 372 NLRB No. 23 (12/14/2022) [PDF].

Where a party argues that a proposed bargaining unit must be expanded to include additional employees, the Board will place the burden on that party to show that the excluded employees share an “overwhelming community of interest” to mandate their inclusion in the bargaining unit.

The Board's majority opinion says this policy "better reflects traditional Board precedent, better achieves consistency with Supreme Court precedent, and better promotes the policies of the Act."

Two dissenting Members say "our colleagues advance no valid justification for taking this step."

NLRB expands make-whole remedies

In a major policy shift, the NLRB will now ensure that workers who are victims of labor law violations are compensated for all “direct or foreseeable pecuniary harm” suffered as a result of those unfair labor practices. Thryv, Inc., 372 NLRB No. 22 (12/13/2022) [PDF].

The standard make-whole remedy for labor law violations will now include the loss of earnings and benefits, out-of-pocket medical expenses, credit card debt, or other costs that are a direct or foreseeable result of the unfair labor practices.

The General Counsel will be required to present evidence in the compliance proceeding proving the amount of the financial harm, that it was direct or foreseeable, and that it was due to the unfair labor practice. The respondent employer or union would then have the opportunity to rebut that evidence.

This change will apply in every case in which the Board’s standard remedy would include make-whole relief for employees. The Board will apply this remedy retroactively to all cases currently pending.

Minimum wage for non-convicted incarcerated individuals?

The 9th Circuit has certified the following question to the California Supreme Court:

Do non-convicted incarcerated individuals performing services in county jails for a for-profit company to supply meals within the county jails and related custody facilities have a claim for minimum wages and overtime under Section 1194 of the California Labor Code in the absence of any local ordinance prescribing or prohibiting the payment of wages for these individuals?

Ruelas v. County of Alameda (9th Cir 11/01/2022) [PDF].

Plaintiffs are or were pretrial detainees, detainees facing deportation, or federal detainees confined in Alameda County’s Santa Rita Jail. Plaintiffs are or were performing industrial food preparation services and cleaning for defendant Aramark Correctional Services, LLC (“Aramark”), pursuant to a contract between Aramark and Alameda County. Aramark is a private, for-profit company. This contract was enabled by California Proposition 139, which legalized public-private partnerships of this kind.

Plaintiffs allege that Aramark employs detainees in the Santa Rita Jail without compensating them. Alameda County has not enacted a local ordinance providing for compensation to county detainees for services performed.

Arbitration: Manifest disregard of the law

Will a court vacate an arbitration award because it is in manifest disregard of the law? Some courts will, but not in Oregon.

After terminating him, Patrick Johnson's former employer sought a preliminary injunction enjoining him from competing with the employer, soliciting its customers, or disclosing confidential information.

However, the matter went to arbitration. The arbitration panel found that the employer failed to prove Johnson breached the employment agreement, and that the employer willfully withheld wages and made wrongful deductions from Johnson's final paycheck.

The employer sought to vacate the arbitration award, arguing that the panel exceeded its authority in that the award was in manifest disregard for the law. The trial court refused to vacate the award, and the Oregon Court of Appeals affirmed. Floor Solutions v. Johnson (Oregon Ct App 10/19/2022) [PDF].

The court rejected the employer's argument that a manifest disregard of the law standard is incorporated into ORS 36.705(1)(d).

The court said, "because the Oregon legislature adopted the [Revised Uniform Arbitration Act (RUAA)] and did not codify the manifest disregard standard as a basis to vacate an arbitration award, we conclude that the legislature's intent was consistent with the RUAA drafters' intent."

Therefore, ORS 36.705(1)(d) does not incorporate a “manifest disregard of the law” standard as a basis to find that an arbitrator or arbitration panel exceeded its authority.

Independent contractors vs. anti-trust laws

A fascinating petition for a writ of certiorari has been filed in the US Supreme Court. The case is Confederación Hípica de Puerto Rico, Inc. v. Confederación de Jinetes Puertorriqueños, Inc. [Petition and Briefs] Of course, there's no telling whether the Court will grant certiorari and decide this case.

In Puerto Rico, jockeys are independent contractors, and horse owners hire jockeys on a race-by-race basis. When a group of 37 jockeys demanded higher pay, they refused to race for three days, and the racetrack had to cancel races. The racetrack sued the jockeys, alleging that the they engaged in a group boycott in violation of federal antitrust law. However, the 1st Circuit [Opinion] ruled that the jockeys' actions were not subject to the ant-trust laws due to the "labor exemption."

The statutory labor exemption states: “No court of the United States * * * shall have jurisdiction to issue any restraining order or temporary or permanent injunction in a case involving or growing out of a labor dispute.”

The Norris-LaGuardia Act defines a "labor dispute" as “any controversy concerning terms or conditions of employment, or concerning the association or representation of persons in negotiating, fixing, maintaining, changing, or seeking to arrange terms or conditions of employment, regardless of whether or not the disputants stand in the proximate relation of employer and employee.”

The racetrack's position is that the labor exemption applies only to employees, and not to independent contractors.

The 1st Circuit, however, ruled that the “critical distinction in applying the labor-dispute exemption” is that “disputes about wages for labor fall within the exemption,” regardless of whether the work is that of independent contractors.

Prediction: I think the jockeys will win if the Court actually decides this case. Remember New Prime v. Oliveira (US Supreme Court 2019) [PDF]. That was a Federal Arbitration Act case in which the Court held that certain independent contractors (not merely employees) were exempt from the Act because the Act’s term “contract of employment” refers to any agreement to perform work – as understood in 1925. Norris LaGuardia was enacted in 1932 and I think "terms or conditions of employment" will also apply to independent contractors.

NLRB: Dues checkoff continues after CBA expires

The NLRB now holds that employers may not unilaterally stop union dues checkoff after a collective-bargaining agreement expires. Valley Hospital Medical Center, Inc. (10/03/2022) [PDF].

This issue has had a long and tortured history.

Bethlehem Steel (1962) held that an employer was free to end dues checkoff upon contract expiration.

Lincoln Lutheran (2015) held dues checkoff to be subject to the general statutory rule requiring employers to maintain most terms and conditions of employment after contract expiration to facilitate bargaining for a new agreement.

Valley Hospital I (2019) permitted employers to stop checkoff when a contract expires.

Valley Hospital Medical Center, Inc. (10/03/2022) (on remand from the 9th Circuit) reverses Valley Hospital I and returns to the rule that an employer, following contract expiration, must continue to honor a dues-checkoff arrangement established in that contract until either the parties have reached a successor collective-bargaining agreement or a valid overall bargaining impasse permits unilateral action by the employer.

NLRB will again change the rules on finding joint employment relationships

Here we go again.

The NLRB – as expected – proposes to again change its joint-employer rule so that two companies may be held to be joint employers when one's control over the other's workers is indirect rather than direct, or is simply reserved and not exercised.

[Text of proposed rule]

The rule just bounces back and forth depending on which political party has been able to appoint NLRB Members.

Under the Republicans, in order to find a joint employer relationship one company had to be directly and immediately exercising control over the wages, hours, and working conditions of another company’s employees.

Now the Democrats have their turn, and plan to expand the rule so it includes situations where the control is indirect rather than direct, and even when the right to control is reserved but not actually exercised.

Comments on this proposed rule must be received by the NLRB on or before November 7, 2022. Comments replying to comments submitted during the initial comment period must be received by the Board on or before November 21, 2022.

"Local delivery drivers" are not engaged in interstate commerce, so they're not exempt from arbitration.

Douglas Lopez was a local delivery driver for Cintas Corporation. That means he picked up items from a Houston warehouse (items shipped from out of state) and delivered them to local customers. When Lopez sued claiming a violation of the Americans with Disabilities Act, the employer moved to compel arbitration.

Lopez argued he was exempt from arbitration because he belongs to a "class of workers engaged in foreign or interstate commerce" under § 1 of the Federal Arbitration Act.

The 5th Circuit held in favor of the employer, so Lopez's claim will go to arbitration. Lopez v. Cintas Corp (5th Cir 08/30/2022) [PDF].

The court followed the analytical path set out in Southwest Airlines v. Saxon, 142 S. Ct. 1783 (2022).

First, the court defines the relevant “class of workers” that Lopez belongs to. Lopez belongs to a "class of workers" – "local delivery drivers" – that picks up items from a local warehouse and delivers those items to local customers, with an emphasis on sales and customer service.

Second, the court determines whether that class of workers is “engaged in foreign or interstate commerce.” The court pointed out that these drivers "take items from a local warehouse to local customers; these drivers enter the scene after the goods have already been delivered across state lines." "Once the goods arrived at the Houston warehouse and were unloaded, anyone interacting with those goods was no longer engaged in interstate commerce."