Aug 08, 2013 General Employment Issues

Three Significant U.S. Supreme Court Decisions for Employers

The U.S. Supreme Court recently issued three decisions with significant implications for employers.  The Court:  (1) struck down a key section of the Defense of Marriage Act (“DOMA”); (2) defined the employees who are supervisors for purposes of imposing vicarious liability for harassment under Title VII of the Civil Rights Act of 1964 (“Title VII”), and (3) required plaintiffs to establish “but-for” causation to prevail on retaliation claims under Title VII. 

The following provides a brief overview of these decisions.  Please do not hesitate to contact any of our attorneys if you would like additional information regarding these decisions or further guidance regarding their impact on your company.

1.   United States v. Windsor
      Section 3 of DOMA is Unconstitutional.

In United States v. Windsor, the Supreme Court struck down Section 3 of DOMA, which defined, for purposes of federal law:  (a) “marriage” as a legal union between a man and a woman; and (b) “spouse” as a person of the opposite sex who is a husband or a wife.  These Section 3 definitions were applied to over 1,000 federal laws concerning marital and spousal status and led to the denial of benefits to lawfully married same-sex couples under these laws.  The Court, therefore, ruled that Section 3 of DOMA was unconstitutional because it discriminated against individuals in same-sex marriages recognized under state law, in violation of the Fifth Amendment’s guarantees of due process and equal protection.  The constitutionality of Section 2 of DOMA, which allows states to refuse to recognize same-sex marriages legally performed in other states, was not an issue before the Windsor Court.

In light of the Windsor decision, lawfully married same-sex couples are now eligible for federal benefits offered to opposite-sex married couples.  In the employment context, this means, among other things, that: (a) an employee is now eligible for leave under the federal Family and Medical Leave Act to care for a same-sex spouse; (b) employees with same-sex spouses may now benefit from federal laws that allow for payment of health insurance coverage for spouses with pre-tax income and receipt of health insurance for spouses without federal tax liability; (c) same-sex spouses of employees are eligible for COBRA continuation coverage, consistent with the terms of the employer’s health plan; (d) expenses of same-sex spouses may now be eligible for reimbursement under an employee’s flexible spending account or health reimbursement arrangement, consistent with the terms of the employer’s plan; and (e) same-sex spouses are eligible for other pension and fringe benefits under ERISA and the Internal Revenue Code, which were previously only available to opposite-sex spouses. 

Notably, many open questions remain regarding: (a) the effect and application of this decision in states that do not recognize same-sex marriage; (b) how employers should implement the Windsor decision; and (c) the extent of the retroactive relief that may be available for same-sex spouses who were previously denied equal benefits under Section 3 of DOMA.  President Obama has directed all federal agencies to ensure the Windsor decision and its implications for federal benefits and obligations for same-sex legally married couples are implemented swiftly and smoothly.  It is therefore expected that guidance regarding the implementation and application of Windsor, including guidance from the Internal Revenue Service, will be issued soon and address many of these open questions.

2.   Vance v. Ball State University:
      An Employee Is a Supervisor For Purposes of Imposing 
      Vicarious Liability For Harassment Under Title VII 
      Only If He or She Is Empowered By the Employer To Take 
      Tangible Employment Action Against the Victim.

In Vance v. Ball State University, the Supreme Court defined the employees who are considered supervisors for purposes of imposing vicarious liability (i.e., imputing the employee’s actions to the employer) for harassment under Title VII.  

The Supreme Court previously held that different rules apply for establishing an employer’s liability for discriminatory harassment under Title VII based on whether the harasser is a “co-worker” or “supervisor” of the victim.  If the alleged harasser is a supervisor:  (a) the employer will be vicariously liable if the supervisor’s harassment culminates in a tangible employment action; or (b) if no tangible employment action is taken, the employer may avoid liability by establishing, as an affirmative defense, that (i) it exercised reasonable care to prevent and correct any harassing behavior and (ii) the victim unreasonably failed to take advantage of the preventive or corrective opportunities that the employer provided.  By contrast, if the alleged harasser is the victim’s co-worker, the employer is liable for the harassment only if it was negligent in controlling the working conditions.  The classification of the alleged harasser as a co-worker or a supervisor is therefore a threshold determination in most harassment cases.

In Vance, the Court held that a “supervisor” in these Title VII harassment cases is an individual who is empowered by the employer to take tangible employment actions against the victim – i.e., someone empowered to effect a significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits.  The Court specifically rejected as “nebulous” an alternative definition that tied supervisory status to the ability to exercise significant direction over another’s daily work, which had been advocated in guidance from the EEOC and substantially adopted by several Courts of Appeals, including the Second Circuit Court of Appeals. 

The Vance Court’s definition of a supervisor is helpful for employers because it provides clarity and limits the group of individuals whose alleged harassment may be imputed to the employer on the grounds of supervisory liability under Title VII.  Employers, however, must still be conscious of any state or local laws that may define supervisory liability more broadly than the Vance definition of a supervisor. 

In light of the Vance decision, employers should review their policies and job descriptions and clarify, if necessary, whether specific individuals are responsible for tangible employment actions.  Employers should also ensure that all supervisors and lower-level employees are properly trained regarding the prevention of harassment and discrimination in the workplace and the procedures for making a complaint regarding workplace harassment and discrimination. 

3.   University of Texas Southwestern Medical Center v. Nassar:  
      A Plaintiff Must Establish a “But-For” Causation to Prevail 
      On a Title VII Retaliation Claim.

In University of Texas Southwestern Medical Center v. Nassar, the Supreme Court defined the standard of causation for retaliation claims under Title VII (i.e., the standard a plaintiff must prove to show the employer took adverse action against him or her for complaining about, opposing, or seeking remedies for, unlawful discrimination).  The Court held that a Title VII retaliation claim must be proved according to traditional principles of “but-for” causation – the plaintiff must prove that the unlawful retaliation would not have occurred in the absence of the alleged wrongful action or actions of the employer.  In reaching this decision, the Court rejected arguments that retaliation should be proved under the more lenient causation standard applied to Title VII discrimination claims, where a plaintiff must only show that his or her protected characteristic was a motivating factor in the employer’s adverse employment decision. 

The Nassar decision is helpful for employers because it requires plaintiffs to meet a more stringent standard to prevail on retaliation claims under Title VII.  Employers, however, must also: (a) be mindful of more lenient standards of causation that may be imposed under state or local laws, under which plaintiffs may also seek to recover for retaliation; and (b) continue to be diligent in documenting the legitimate non-discriminatory reasons for their employment actions.