October 1999, Vol. 122, No. 10
The law at work
Update on recent Supreme Court decisions
Compensatory time and overtime
Collective bargaining hearings
Charles J. Muhl
Office of Publications and Special Studies, Bureau of Labor Statistics
Update on recent Supreme Court decisions
At the end of June 1999, the Supreme Court wrapped up its session and issued a number of decisions in labor and employment law cases.
In Alden v. Maine,1 the Court held that individuals cannot sue State employers in State courts unless a State specifically waives its sovereign immunity and consents to the suit. Maine State parole and probation officers sought overtime pay under the Fair Labor Standards Act (FLSA). Under the terms of that statute, overtime pay can be pursued in State court actions. The Maine Supreme Judicial Court affirmed the dismissal of the suit, citing the U.S. Supreme Court’s decision in Seminole Tribe of Fla. v. Florida.2 In that case, the Court held that Congress does not have authority under Article I of the Constitution to waive the State’s sovereign immunity in State courts.
In affirming the Maine Supreme Judicial Court’s decision to throw out the suit, the Court noted that States’ immunity from suits is a fundamental component of sovereignty that was granted in the original drafting of the U.S. Constitution. According to the Court, the structure and history of the Constitution support such immunity. The Court noted that a State’s constitutional privilege to assert its sovereign immunity in its own courts does not enable it to disregard the Constitution or valid Federal law. Congress can waive a State’s immunity, but only if it does so using some valid form of constitutional authority. Maine law requires a specific legislative enactment to waive the State’s immunity, and its legislature had not enacted such a waiver with respect to the FLSA. The Court found the fact that Maine did not waive immunity under the Act to be a valid exercise of State sovereignty. Furthermore, Congress does not have authority under Article I to waive States’ immunity and apply the FSLA provisions to States.
In Cleveland v. Policy Management Systems Corp.,3 the Court ruled that people who apply for Social Security disability benefits can sue their former employers under the Americans with Disabilities Act (ADA), even though in some instances the application for disability benefits is inherently inconsistent with an ADA claim. After suffering a stroke and losing her job, Carolyn Cleveland applied for benefits, claiming that she was unable to work due to her disability. Shortly thereafter, she filed a suit under the ADA contending that Policy Management Systems, her former employer, discriminated against her due to her disability and that she could have performed the essential functions of her job had the company made reasonable accommodations for her disability. The fifth circuit held that her application for, or receipt of, disability benefits created a rebuttable presumption that a recipient of such benefits is estopped from pursuing an ADA claim. The circuit court then threw out Cleveland’s suit because she did not rebut that presumption.
The Supreme Court vacated the fifth circuit’s opinion and remanded the case for further proceedings, holding that the pursuit and receipt of disability benefits does not automatically estop a recipient from pursuing a claim under the ADA. To survive a summary judgment motion, the Court said, an ADA plaintiff must show that the two claims are consistent, meaning that the individual is too disabled to work and so is eligible for disability benefits, but can still perform the essential functions of the job with reasonable accommodations, so that the claim legitimately falls within the scope of the ADA. The Court also found that applying for disability benefits should not create a strong presumption against the recipient’s chances of success in an ADA suit, indicating that many situations exist in which the two can comfortably coexist. Among the examples cited by the Court was a situation wherein a condition changes over time, so that a statement about a disability made at the time of an application for benefits does not reflect an individual’s capacities at the time of the relevant employment decision. The standard the Court set for accepting the justification was as follows: to defeat summary judgment, the explanation must be sufficient to warrant a reasonable juror’s concluding that, assuming the truth of, or the plaintiff’s good-faith belief in, the earlier statement about being too disabled to work, the plaintiff could nonetheless perform the essential functions of his or her job with or without reasonable accommodation. On remand, Cleveland will have the opportunity to present her explanations for the discrepancy between her statements regarding her eligibility for disability benefits and her ADA claim, and Policy Management Systems Corp. will be able to contest those explanations.
In Kolstad v. American Dental Association,4 the Court ruled that punitive damages can be awarded for employment discrimination in violation of Title VII of the 1964 Civil Rights Act, even if an employer’s conduct is not "egregious."
Carole Kolstad sued the American Dental Association under Title VII, claiming that the association’s decision to promote another employer over her was gender discrimination. The trial court refused to give the jury an instruction regarding the awarding of punitive damages under the Act, and the Circuit Court for the District of Columbia affirmed the trial court’s ruling, holding that, prior to instructing the jury on punitive damages, the court must see evidence demonstrating that the defendant engaged in some "egregious" misconduct.
The High Court held that evidence of egregious behavior by the employer is one method that an employee may use to show the "malice" or "reckless indifference" that is needed for the employee to qualify for a punitive damage award, but that showing egregious behavior is not essential for qualification. After demonstrating "malice" or "reckless indifference" by an "agent" of the employer, the employee must show that the agent’s acts should apply to the principal—that is, that the employer should be held liable for the agent’s acts. The question of who qualifies as an agent is an open one, but generally, those with managerial or supervisory authority who act within the scope of their employment may be held responsible. The Court noted that common-law limitations on a principal’s vicarious liability for its agents’ acts apply in the context of Title VII. In this particular case, the Court vacated the decision of the Circuit Court for the District of Columbia and remanded the case so that the parties could address the issue of whether the employer should be held liable for acts of its agent.
In National Aeronautics and Space Administration (NASA) v. Federal Labor Relations Authority,5 the Supreme Court affirmed the Eleventh Circuit Court of Appeal’s decision that an investigator from the NASA Office of the Inspector General (OIG) is a "representative" of NASA and that NASA employees are entitled to active union representation when they are being investigated by a party from the OIG. Under Section 7114(a)(2)(B) of the Federal Service Labor-Management Relations Statute (FSLMRS), union participation is permitted at an employee examination conducted by a "representative of the agency" if the employee believes that the examination will result in disciplinary action and requests such representation. In this case, a party from NASA–OIG began investigating an employee’s activities; a union representative was permitted to attend, but not actively participate in, the meetings. The union filed a charge with the Federal Labor Relations Authority alleging that the restriction on the union representative’s activity was an unfair labor practice. An administrative law judge concluded that the OIG investigator was a "representative" of NASA and that the investigator’s behavior violated the employee’s right to union representation. The Eleventh Circuit Court of Appeals affirmed the decision.
In agreeing with the eleventh circuit, the Supreme Court found that, applying ordinary tools of statutory construction to the FSLMRS, the term "representative" was sufficiently broad to include employees of NASA–OIG. The Court did not accept the notion that the term should be limited to a representative of the "entity" that collectively bargains with the employee’s union. The Court noted further that the Inspector General Act, which authorized the creation of offices of inspector general, favors treating OIG personnel as representatives of the agencies they are duty bound to audit and investigate. Because the Court found the oig investigator to be a representative of NASA, the investigator was required to follow the provisions of the FSLMRS. The investigator violated that act by not permitting the employee to have active union representation during the investigatory meetings.
Finally, in National Federation of Federal Employees, Local 1309 v. U.S. Department of the Interior,6 the Court rejected a Fourth Circuit Court of Appeals holding that the Federal Labor Relations Authority could not require Federal agencies to engage in midterm bargaining with their employees’ unions when they were covered by an existing collective bargaining agreement. The Federal Service Labor-Management Relations Statute (FSLMRS) requires Federal agencies and employees’ unions to "meet and negotiate in good faith for the purpose of arriving at a collective bargaining agreement."7 The fslmrs also created the Federal Labor Relations Authority, giving it broad power to adjudicate and make policy to implement the statute. After switching between positions, the Authority finally ruled that the good-faith-bargaining requirement extended to union-initiated proposals during the term of a basic collective bargaining agreement. The Department of the Interior rejected a request by its employees’ union to bargain over a union-initiated proposal midterm. The Authority then ordered the agency to bargain over the issue, but the fourth circuit threw out the order.
The Court ruled that the FSLMRS delegates to the Authority the legal power to determine whether parties must engage in midterm bargaining, even though the statute does not specifically address that question. The Court noted that the FSLMRS does give the Authority sufficiently broad discretion to make rules in implementing the statute and that this particular issue falls under that discretion.
Compensatory time and overtime
The Supreme Court has agreed to resolve a conflict among the Circuit Courts of Appeals regarding whether a public employer who is covered by the Fair Labor Standards Act (FLSA) has the authority to require employees to use accrued compensatory time off at the employer’s discretion. In Moreau v. Harris County,8 the U.S. Court of Appeals for the Fifth Circuit held that public employers can order employees to use compensatory time, while, in Heaton v. Moore,9 the eighth circuit ruled that compensatory time belongs to the employee and can be used at the discretion of the employee as long as its use does not unduly disrupt the employer’s operations.
By an act of Congress in 1985, the compensatory-time provisions10 of the FLSA were applied to State and local government employees. Those provisions permit such employees to receive compensatory time instead of overtime pay; for each hour of work that would qualify for overtime pay, employees receive 1½ hours of compensatory time. The FLSA limits the accumulation of compensatory time to 480 hours for public-safety, emergency-response, or seasonal workers and 240 hours for any other workers. Once an employee reaches these limits, overtime pay is required for any overtime hours worked. The FLSA also states that employees who want to use accumulated compensatory time shall be permitted by their employer to use the time within a reasonable period after making the request, as long as the use does not "unduly disrupt the operations of the public agency."11
Moreau v. Harris County arose from a dispute between the Harris County (Houston), Texas, Sheriff’s Department and its employees. The department implemented a policy that bureau commanders shall determine the upper limit on the number of compensatory-time hours that may be accrued by employees, reflecting the personnel requirements of each bureau. When employees neared the upper limit on such hours, the commanders asked the employees to reduce their accumulated time either by using some of the hours or by being paid overtime for some of the hours. If employees did not voluntarily reduce their accrued time, supervisors had the ability to require them to do so during periods that were best suited for the bureau, based on its personnel needs. In April 1994, a number of employees sued, claiming that Harris County violated the FLSA by taking away the employees’ discretion as to when they could use their compensatory time and by forcing them to use that time when they did not want to.
The Fifth Circuit Court of Appeals reversed the trial court’s grant of summary judgment to the employees. The trial judge, relying on the eighth circuit’s decision in Heaton v. Moore, found that compensatory time was consumable by the worker on the worker’s terms. In its reversal, the fifth circuit ruled that the FLSA does not specifically address whether employers can force employees to use their compensatory time, but rejected the employees’ contention that they had discretion to use their compensatory time as they saw fit as long as it was not unduly burdensome to the employer. The court focused on an FLSA provision that permits employers to pay down accumulated compensatory time and held that the provision reflected Congress’ intent to give employers the ability to control the accrual of such time. Because Texas law prohibits collective bargaining in the public sector, the Sheriff’s Department was free to implement a policy with rules on how compensatory time was to be used.
The Supreme Court’s decision in this case will be reported in a future column of "The Law at Work."
In another case implicating the Fair Labor Standards Act, the Second Circuit Court of Appeals held that an employee who averaged between 7 and 8 hours a day traveling between his home and assigned jobs was not entitled to overtime pay for his travel time. In Kavanagh v. Grand Union,12 the plaintiff worked for the defendant as a refrigerator and utility mechanic from 1994 to 1996. He lived on Long Island, New York, and traveled to different Grand Union supermarkets in New York, New Jersey, and Connecticut to conduct his work. His standard shift was from 8:00 a.m. to 4:30 p.m.; he was compensated for time spent traveling from job to job during his shift, but not for hours spent traveling between his home and his first job of the day and between his last job of the day and his home. His employer required him to be at home every night and had the right to reassign him to different job locations on the basis of need. Kavanagh sought payment for travel between his home and more distant job locations, which sometimes required him to spend an average of 7 to 8 hours a day commuting.
The second circuit ruled that, although the required travel time was unfair to Kavanagh, it was a contemplated, normal part of his job, and that the FLSA, through regulations promulgated by the U.S. Department of Labor,13 does not require employers to pay employees for "normal travel time" to and from work. The statute does require employers to pay overtime at 1½ times the employee’s regular rate of pay; however, the Portal-to-Portal Act states that employers are not required to pay overtime for time spent traveling to and from work. The court interpreted "normal travel time" to mean the time normally spent by an employee traveling to and from work, a subjective standard defined by the usual travel time in the particular employment relationship. Even if the distance required for normal travel is extremely long, the time spent traveling is not compensable if the travel is the standard practice for a specific employee.
A dissenting judge argued that Kavanagh should have been paid for commuting time that went beyond what was objectively reasonable for traveling between home and work.
Collective bargaining hearings
The U.S. Court of Appeals for the Sixth Circuit recently held that alleged misconduct on the part of the Steelworkers Union in the hours just before a representation election at Gormac Custom Manufacturing in Ohio was sufficient to warrant a full hearing on the employer’s contentions. The National Labor Relations Board (NLRB) issued a bargaining order that found the union’s conduct appropriate without a full hearing; the employer wanted to investigate whether the Steelworkers’ alleged misrepresentation of support for the union among Gormac’s employees substantially affected the outcome of the election.
In June 1996, the Steelworkers won a representation election at Gormac Manufacturing. Forty-five production and maintenance employees were eligible to vote. Of the eligible employees, 19 voted for the union, 16 voted against it, 4 ballots were challenged, and 6 employees did not vote. The NLRB certified the election, meaning that the Steelworkers were recognized as the employees’ bargaining agent and the employer was required to bargain with the union in good faith. Gormac objected to the outcome because of a brochure the union distributed 3 hours prior to the election. The brochure indicated that 31 Gormac employees intended to vote in favor of the union and listed the names and signatures of each employee. The company alleged that the brochure contained misleading information, basing its allegations in part on the actual election results, according to which only 19 employees voted in favor of the union.
The NLRB found that the Steelworker’s brochure was not a pervasive deception or misrepresentation and ruled that Gormac was violating the National Labor Relations Act by refusing to bargain with the union. In reversing the decision, the sixth circuit held that the company established substantial and material factual issues regarding the validity of the election and thus was entitled to a hearing on the matter. The court relied on the fact that the brochure was made public only 3 hours prior to the election, that the company likely did not even know that the brochure had been distributed until after the election, that the misrepresentation was serious because of the potential breach of employees’ confidentiality and unauthorized use of their names, and that the election results were close.
In another recent case, Contempo Design, Inc. v. Chicago and Northeast Ill. Dist. Council of Carpenters,14 the U.S. Court of Appeals for the Seventh Circuit held that a union was still covered by a "me-too" collective bargaining agreement and its provisions because the union did not notify the employer of its intention to terminate the agreement. Because the "me-too" agreement contained a no-strike provision, the union breached the agreement when its members went on strike against Contempo Design.
Contempo provides a number of services for conventions and trade shows, namely, constructing, setting up, taking down, and storing exhibits and displays. Under the "me-too" or "hard card" agreement, Contempo and the Chicago and Northeast Illinois District Council of Carpenters union agreed to be covered by collective bargaining agreements reached between the union and the Woodworkers Association, an employer group representing employers of carpenters. The agreement stipulated that either party could terminate its participation by notifying the other party in writing of its intention to terminate at least 3 months prior to the expiration of the agreement. In early 1995, the association temporarily broke up when employers decided that they wanted to negotiate contracts individually. Eventually, an agreement was reached in which all 15 employers signed; that contract runs from June 1, 1995, to May 31, 2000. Dissatisfied with the new agreement, the union notified Contempo in June 1995 that it wished to negotiate a new collective bargaining agreement and threatened action if the company did not agree to a new contract. The company refused to negotiate, because the "me-too" agreement had never officially been terminated by the union. In March 1996, the union struck Con-tempo, and a new collective bargaining agreement was reached after 2 days; the company later filed suit seeking damages for the breach of the "me-too" agreement by the union.
The seventh circuit found that the conduct of the parties did not show an intent to waive the notification requirement to terminate the agreement. The court noted that the union did not demonstrate any actions that would have constituted a termination. With regard to damages, the seventh circuit ruled that the only recovery the company was entitled to was the cost of the strike, estimated at $11,574 over the 2 days that it took place. The court rejected the district court’s holding that Contempo was entitled to receive the difference between the cost of wages and benefits it paid out as the result of a new agreement reached with the union following the 2-day strike and the cost of wages and benefits it would have paid out under the "me-too" agreement.
1 Case No. 98–436 (1999).
2 517 U.S. 44 (1996).
3 Case No. 97–1008 (1999).
4 Case No. 98–208 (1999).
5 Case No. 98–369 (1999).
6 Case No.97–1184 (1999).
7 5 U. S. C. §7114(a)(4).
8 158 F.3d 241 (5th Cir. 1998).
9 43 F.3d 1176 (8th Cir. 1994), cert. denied, 515 U.S. 1104 (1995).
10 29 U.S.C. § 207(o).
12 Case No. 98–7696, 2nd Cir.
13 29 C.F.R. § 785.35. (Ed. Note: The Bureau of Labor Statistics, which publishes the Monthly Labor Review, is an agency under the U.S. Department of Labor.)
14 Case No. 98–3206, 7th Cir.
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