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Legal Updates from KLO

Pending U.S. Supreme Court Cases that Matter for Employers

Posted on October 13, 2021

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By: Lily Crespo Esq.

The U.S. Supreme Court’s new term began on Oct. 4. Although only a few employment-related cases have been accepted so far, employment law attorneys are following some key issues that could impact the workplace. The current docket is very light on employment cases, but there are potentially significant petitions that we are monitoring closely.

Members of the public will be able to listen to live audio of oral arguments again this term—a practice that began in 2020 when the court closed to the public due to the COVID-19 pandemic. Although arguments will be heard in the courtroom this term, access will be strictly limited for now.

Here are the cases and potential issues employers and HR professionals should be watching.

Cases on the Docket

Arbitration. In the upcoming term, the Supreme Court will hear Badgerow v. Walters, which involves a whistleblower claim and whether a federal court has the authority to confirm or vacate an arbitration award in the case when the only basis for federal jurisdiction is that the underlying dispute involved a federal question.

Quick Takeaway: The fact that the Supreme Court took an arbitration case is important. Essentially, it involves an employee who signed an arbitration agreement and is seeking to bring a whistleblower claim outside of the arbitration forum. The enforcement of arbitral awards is a significant issue for the federal courts.  And, while the state courts are to play a role under the FAA, uniformity of enforcement is an overriding concern today.  The Supreme Court’s resolution of Badgerow could depend on whether the use of the language “save for the agreement” in Section 4 dramatically restricts the application of the “look through” approach or whether application of the approach to all arbitration related proceedings is consistent with the overall policy of the FAA.

Oral argument is scheduled for Nov. 2.

Employee benefits. The court will also hear an employee benefits case, Hughes v. Northwestern University, regarding a claim that participants in a defined contribution retirement plan were charged excessive fees and plan fiduciaries breached their duty of prudence under the Employee Retirement Income Security Act.

The participants claim that the university recommended a fund that had high fees and poor results. The lower courts rejected the claim, noting that the participants could have chosen to invest in other funds.

Quick Takeaway: It is still unclear – where a plan offers a variety of investment options, including “high priced” and “low priced” options – for which of those funds a fiduciary has a prudence obligation. Obviously, a rule something like the one articulated by the Seventh Circuit – that a variety of fund/pricing options can be offered as long as there are low-cost options available – would be appreciated by most sponsors and sponsor fiduciaries. But any clarity on this issue would be an advance over the current situation.

Oral argument is scheduled for Dec. 6.

ACA disability discrimination. CVS Pharmacy Inc. v. Doe involves a disability discrimination claim under Section 504 of the Rehabilitation Act of 1973, and by extension, Section 1557 of the Patient Protection and Affordable Care Act (ACA). The high court was asked to decide whether the plaintiffs can bring a “disparate impact” claim for disability discrimination. “Disparate impact” means that a seemingly neutral policy is discriminatory in practice based on a protected category, such as disability.

The plaintiffs in this case are living with HIV/AIDS and obtain their medication through employer-sponsored health plans. Their prescription plans authorize “in-network” prices for specialized medication only if it is received by mail or picked up at a CVS pharmacy. The plaintiffs claim the policy forces them to “forego essential counseling and consultation from specialty pharmacists.” CVS argued that Section 504 “betrays no intent to create a private remedy for disparate impact discrimination” and “companies would face unacceptable uncertainty” if the court sides with the plaintiffs.

Quick Takeaway: The Supreme Court has chosen to wrestle with the availability of disparate-impact claims under Section 504 of the Rehabilitation Act, and potentially to further specify liability under the ACA. Based on the arguments and claims asserted by the defendants and plaintiffs above, health insurer and benefits manager stakeholders, individuals with disabilities, and their legal counsel, should all be especially eager to follow the Supreme Court’s upcoming decision. Worth watching closely is whether the decision from the Supreme Court rules on the availability of disparate-impact claims of disability discrimination under both the ACA and the Rehabilitation Act more broadly.

Oral argument is set for Dec. 7.

Emotional distress awards. In Cummings v. Premier Rehab Keller, P.L.L.C., the high court was asked to weigh in on whether emotional distress damages are available in discrimination claims under Section 504 of the Rehabilitation Act and the Americans with Disabilities Act.

Quick Takeaway: The availability of damages in private lawsuits is a critical part of the enforcement mechanisms of the Civil Rights Act, the Rehabilitation Act, and Section 1557 of the ACA. If the Supreme Court finds that damages for emotional distress are not available, these key anti-discrimination laws will be harder to enforce. It would place a strict limitation on the monetary relief that is recoverable by victims of discrimination, including older adults, who are more likely to have a disability or impairment. For example, a victim of discrimination who experienced severe distress or emotional trauma but did not experience a provable financial loss would not be able to bring a successful lawsuit to enforce their rights.

Oral argument is set for Nov. 30.

Petitions to Watch

Several pending petitions could have a significant impact on employers, but it’s unclear whether the court will hear those cases– Potential issues include:

  • Arbitration agreements with gig-economy workers and whether the Federal Arbitration Act (FAA) pre-empts the California Private Attorneys General Act.
  • Affirmative action programs.
  • Religion and First Amendment rights.
  • Wage and hour laws.
  • Discrimination claims.
  • Labor union dues.

We are also following developments in Gonzalez-Bermudez v. Abbott Laboratories, which asks whether an employee who brought an age discrimination claim could submit evidence of a “similarly situated” employee who did not share the same position, job duties and supervisor.

Although there are no cases on the docket regarding the following issues, these hot topics are on the horizon:

  • Marijuana legalization and how drug-testing policies interact with laws that restrict employers from monitoring workers’ off-duty conduct.
  • Religious discrimination and reasonable accommodations.
  • COVID-19-related litigation regarding vaccine mandates, disability-related and religious accommodations, remote-work rules, wage and hour laws, and more.

As you consider these and other issues, we recommend you speak with your school lawyer or contact Bea, Kevin, Megan, Beth, and Lily by email or at 406-542-1300 to discuss these issues.

Kaleva Law

At Kaleva Law Office you receive the experienced, practical advice of a large firm with the responsive, efficient, top-notch support of a small firm. We take care of the legal questions so you can focus on education.

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