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This past week brought several notable developments in employment law.
The full Fifth Circuit agreed to revisit a major constitutional challenge to the Pregnant Workers Fairness Act (PWFA), raising policy and accommodation questions for employers.
Meanwhile, the U.S. Supreme Court denied certiorari in two notable employment cases. One upholds the current burden-shifting framework for discrimination claims. The other keeps conflicting class certification standards in place across jurisdictions.
All three decisions increase uncertainty for employers and should be closely watched.
Pregnant Workers Fairness Act in Legal Limbo
The U.S. Court of Appeals for the Fifth Circuit recently vacated a panel decision that affirmed the constitutionality of the PWFA. The full court will now consider whether the U.S. Constitution required physical presence for a quorum when Congress passed the PWFA as part of the December 2022 Consolidated Appropriations Act. In its lawsuit, Texas challenged the law, arguing that reliance on proxy voting during the COVID-19 era violated constitutional requirements.
U.S. District Court Judge James Wesley Hendrix initially agreed with the Lone Star State. He found that lawmakers' proxy voting to approve the omnibus spending package the PWFA was attached to violated the Constitution's quorum clause. He enjoined the U.S. Equal Employment Opportunity Commission (EEOC) from enforcing the PWFA against Texas and the state's agencies. This meant that if Texas state employees brought charges claiming violations of the PWFA, the EEOC could not accept or investigate the charges. It also could not issue right-to-sue letters to aggrieved workers or sue on their behalf.
On appeal, a split panel of the Fifth Circuit reversed, ruling that physical presence was not necessary. Writing for the majority, Judge James E. Graves held, "The House's proxy-voting rule did not violate anyone's fundamental rights," adding, "There is a reasonable relationship between the rule and the result it seeks — majoritarian rule. And the constitutional text, history, and tradition indicate that the Quorum Clause contains no physical-presence requirement that the House's rule could have flouted."
Judge Cory T. Wilson wrote the lone dissent. He said that, in his view, the House "acted outside its authority" in passing the spending package because Congress "is not free to define the Constitution's quorum requirement out of existence."
With the Fifth Circuit now set to reconsider the constitutionality of the PWFA through en banc review, the law's fate in Texas hangs in the balance. Until a definitive ruling is issued, employers and employees in the state face ongoing uncertainty regarding the application and enforcement of the PWFA.
McDonnell-Douglas Lives—At Least for Now
The U.S. Supreme Court declined on Jan. 19 to revisit its longstanding McDonnell Douglas Corp. v. Green burden-shifting framework for assessing discrimination claims, despite two justices' repeated entreaties to give the holding a fresh look.
Specifically, in Licinio v. State of New York, the justices denied a certiorari petition by Julio Licinio. He alleged he was removed from his position as dean of New York Upstate Medical University's College of Medicine and returned to a full-time faculty role because of his opposition to "entrenched structural racism." Meanwhile, the state school attributed Licinio's demotion to his subpar performance and inappropriate behavior. Ultimately, U.S. District Judge Frederick J. Scullin awarded the state summary judgment, finding Licinio could not rebut the school's rationale for the challenged employment decision. The Second Circuit agreed with Judge Scullin on appeal.
In his petition to the Supreme Court, Licinio claimed the McDonnell Douglas framework "has no basis in text or procedure, and it routinely bars juries from hearing meritorious discrimination claims." "Under this judge-made test," Licinio added, "courts ask the wrong question — not whether discrimination occurred, but whether the employer's excuses are plausible enough to end the case before trial."
Licinio's criticisms of the McDonnell Douglas framework echo the rare dissents to cert denial recently written by Justice Clarence Thomas and Justice Neil Gorsuch in Hittle v. City of Stockton, as well as the concurring opinion the two penned in Ames v. Ohio Department of Youth Services. In both cases, the justices criticized the "atextual" nature of applying legal standards — like showing "pretext" — that have no basis in Title VII's plain language.
While Licinio's efforts may have been unsuccessful, there may still be a shift on the horizon, relaxing what a plaintiff must show to prove his employer's stated reason for making an adverse employment decision is actually a pretext for unlawful discrimination.
Circuits Remain Split on Collective Class Certification under the Fair Labor Standards Act (FLSA)
Also on Jan. 19, the U.S. Supreme Court declined to settle the differences among federal courts on certifying collective actions under the Age Discrimination in Employment Act and FLSA. As a result, courts continue to apply different standards, leading to ongoing uncertainty.
Most federal courts have traditionally followed the so-called Lusardi approach—a two-step, relatively lenient process for class certification. Under Lusardi, plaintiffs must first make a modest factual showing that they are "similarly situated" to other employees whose interests they seek to represent. This often results in broad but conditional certification and notice to potential class members. This low bar can place significant settlement pressure on employers, even when the alleged similarities among employees are questionable.
Recognizing that certifying an overly broad class of workers could amount to unlawful solicitation, the Fifth Circuit adopted a stricter, one-step approach in Swales v. KLLM Transport Services LLC. Rather than allowing for conditional notice based on a preliminary showing, the Swales standard requires plaintiffs to demonstrate, "at the outset," that it is "more likely than not" they are similarly situated to the employees they seek to represent.
Courts in the Fifth Circuit must now weigh all available evidence before issuing notice, setting a much higher threshold for certification. The rationale behind Swales is to avoid improper leverage against employers and to ensure that only truly similarly situated employees are included from the beginning of the lawsuit.
Recently, the Seventh Circuit in Richards v. Eli Lilly and the Sixth Circuit in Clark v. A&L Homecare have also shifted away from Lusardi. Each adopted their own, stricter certification standards that differ from the Swales standard. The Supreme Court's refusal to hear Richards means these different standards remain in effect.
While most courts still use Lusardi, the stricter rules the Fifth, Sixth and Seventh Circuits established may influence where plaintiffs choose to file suit, particularly for employers with a multistate presence. Employers should remain vigilant about the divergent collective action certification standards across jurisdictions.
Employers and practitioners should be mindful of these key developments as the legal landscape continues to change. Staying informed is essential for effective compliance and risk management.
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