Today, in a decision authored by Justice Anthony Kennedy, the U.S. Supreme Court unanimously overturned a decision by the U.S. Court of Appeals for the Ninth Circuit in a case involving an employee’s assertion that a government employer had violated the Fourth Amendment by unreasonably obtaining and reviewing personal text messages sent and received on employer-issued pagers.  Justices Stevens and Scalia issued concurring opinions.

City of Ontario v. Quon (08-1332)

A recent decision by the California Supreme Court could have resounding implications for the enforceability of arbitration awards – a matter of great concern in employment law given the prevalence of arbitration agreements governing employment relationships – and opens the door for employees to petition the courts to compel arbitrators to decide the merits of their statutory claims.

As we reported previously, in December 2007 the National Labor Relations Board issued a decision relating to company e-mail policies in The Guard Publishing Company, d/b/a The Register-Guard, 351 NLRB No. 70 (2007), holding that an employer (i) may restrict the use of its computer systems to business related uses only, and (ii) could distinguish between personal and organizational solicitation in enforcing its no-solicitation policy.

Earlier this week, in The Register-Guard v. NLRB, No. 07-1528 (D.C. Cir July 7, 2009), the D.C. Circuit issued its decision reversing, in part, the Board’s decision.

Neither party requested review of (and, thus, the court did not address) the Board’s general holding that allowed restricting the use of company e-mail to business purposes.  The Court also chose not to address the Board’s position on distinguishing between the types of solicitation. Instead, it held that based on the facts of this particular case — where the policy in question did not actually make a distinction between types of solicitation — the employer could not discipline an employee for a union-related solicitation. As discussed below, the decision highlights the risks to employers who act based on the current Board law in the absence of a clear written policy that makes an explicit distinction between types of solicitation. Moreover, even if employers have such a policy now, the future Obama Board is likely to modify the current law.

Yesterday, in a highly anticipated 5-4 decision, the U.S. Supreme Court held in Ricci v. DeStefano that the City of New Haven engaged in unlawful intentional race discrimination in violation of Title VII of the Civil Rights Act of 1964 (“Title VII”) when it discarded a firefighter promotional test because of the racial makeup of the successful test takers. The City claimed that the test had a disparate impact on minorities and that, if it certified the test results and proceeded with promotions, it would have been sued for discrimination by minority test takers. The Court held that the City had to show a strong basis in evidence that it would be liable in such a suit – something more than the statistical results of the test – in order to justify throwing out the test and discriminating against the successful test takers, most of whom were white. It further held that, upon its review of the factual record, the City could not meet this burden. Reversing the Second Circuit (which had affirmed the trial court decision), it found that summary judgment should be entered against the City. The factual background of the case, opinion of the Court and the implications of the case for employers are discussed below.

In an important ruling that increases the burden on plaintiffs in cases under the federal Age Discrimination in Employment Act (ADEA), the United States Supreme Court held on June 18, 2009 that plaintiffs in age discrimination cases always bear the burden of proving that an adverse employment action would not have been taken against them “but for” their age. Gross v. FBL Financial Services, Inc., No. 08-441. This ruling draws a distinction between the ADEA and Title VII, under which plaintiffs need only show that their membership in a protected class was a “motivating factor” in an employer’s action, and eliminates any shifting of the burden of persuasion in so-called “mixed motive” cases under the ADEA.

Over the last few years, caregiver discrimination has become an emerging issue in employment law. A pair of recent court decisions and the potential impact of the Lilly Ledbetter Fair Pay Act of 2009, as well as signals from the Obama Administration, in particular the Equal Employment Opportunity Commission, suggest that the issue of discrimination because of a worker’s family caregiving responsibilities is gaining recognition and momentum. In March, both the First and Ninth Circuit found in favor of employees who had alleged that they had been discriminated against based on their caregiving responsibilities. In April, the EEOC issued a new technical assistance document on the subject. This recent activity serves as an important reminder to employers that the EEOC, plaintiffs’ attorneys and the courts are scrutinizing employment decisions that adversely affect caregivers more closely than ever to determine whether unlawful discrimination might be afoot. As such, employers would be wise to take proactive steps to avoid allegations of discrimination against caregivers.

The California Court of Appeal has issued an important decision that has significant implications for California employers that have tip-sharing arrangements for their employees. In Chau v. Starbucks Corp., 2009 WL 1522708 (Cal. Ct. App. Jun. 2, 2009), the court held that an employer can allow employees who have both supervisory and customer service duties to receive a portion of the tips that are left by patrons in collective tip-boxes. The court further held that customers who place tips in a collective tip-box (rather than giving the tip directly to a specific employee) intend their gratuity to bedistributed among all members of the team that provided customer service to them, including employees who may have some supervisory duties. As a result, the San Diego trial court’s judgment granting over $105 million in restitution to a class of more than 100,000 current and former Starbucks coffee baristas has been overturned.


On May 18, 2009, the Internal Revenue Service (the “IRS”) issued new proposed regulations that allow plan sponsors of Internal Revenue Code (“Code”) Section 401(k) or 403(b) safe harbor plans to reduce or suspend non-elective contributions mid-year if they are experiencing a “substantial business hardship.” Prior to the proposed regulations, a plan sponsor could suspend non-elective contributions under a safe harbor plan only by terminating the plan. The proposed regulations apply to both traditional safe harbor plans and those that qualify as “qualified automatic contribution arrangements” (QACAs), a type of automatic enrollment plan introduced under the Pension Protection Act of 2006 for plan years beginning in or after 2008. The proposed regulations mirror current regulations that allow sponsors of plans with safe harbor matching contributions to reduce or suspend such contributions mid-year.

Plan sponsors may rely on the proposed regulations immediately (i.e., effective for amendments adopted after May 18, 2009) pending issuance of final regulations. If the final regulations are more restrictive than the proposed regulations, the final regulations will only apply prospectively.

On May 1, 2009, we reported that the Court of Appeals for the District of Columbia Circuit had just ruled that the National Labor Relations Board, which has functioned with only two of its five members since January 1, 2008, had lost its quorum and, as a result, had no statutory authority to issue any of the nearly 400 decisions that were released during the preceding 16-month period. Laurel Baye Healthcare of Lake Lanier, Inc., 2009 U.S. App. LEXIS 9419 (D.C. Cir. 2009).

On May 18, the NLRB issued a press release announcing that, notwithstanding the D.C. Circuit’s decision in Laurel Baye Healthcare, Chairman Liebman and Member Schaumber would continue to issue decisions in unfair labor practice and representation cases. The Agency emphasized that two other Courts of Appeal, the First and Seventh Circuits, had upheld the two-member Board’s authority to decide cases, and that the issue currently is pending review in seven other circuit courts.

In a 7-2 decision, the United States Supreme Court has held that AT&T did not violate the Pregnancy Discrimination Act (“PDA”) when it based its calculation of employees’ pensions in part on a pre- PDA accrual rule that treated pregnancy leave less favorably than other forms of disability leave. AT&T Corp v. Hulteen, No. 07-543 (May 18, 2009). The Court’s decision reversed the Ninth Circuit and confirmed the presumption that discrimination statutes will not be applied retroactively.


Plaintiffs were Noreen Hulteen and three other AT&T employees who had taken pregnancy leave before April 29, 1979, the effective date of the PDA. At the time they took leave, AT&T based employee pension benefits on a seniority system (i.e., a system based on length of service) that provided less service credit for pregnancy leaves than it did for other forms of temporary disability leave. When the PDA took effect, AT&T changed its system and began to provide full service credit for pregnancy leaves. It did not, however, retroactively adjust the accrued service credits of Plaintiffs or any other employees who previously had taken pregnancy leave. Therefore, when those employees retired, they received an overall pension amount that was less than it would have been if AT&T had afforded full service credit to their pre-PDA pregnancy leaves.

Plaintiffs and their union filed suit against AT&T in the Northern District of California alleging discrimination on the basis of sex and pregnancy in violation of Title VII of the Civil Rights Act of 1964, as amended by the PDA. Plaintiffs argued that it was unlawful for AT&T, in the present day, to apply a seniority-based pension system that incorporated antiquated pre-PDA accrual rules that had differentiated on the basis of pregnancy. Doing so, Plaintiffs contended, carried forward the old service credit differential so as to produce a disparate effect in the amount of the pension benefits of employees who had taken pre-PDA pregnancy leave. The district court agreed, holding that AT&T had engaged in unlawful pregnancy discrimination, and the Ninth Circuit, en banc, affirmed. Because the Ninth Circuit’s decision directly conflicted with rulings from other circuits, the Supreme Court granted certiorari to resolve the circuit split.