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Legal Update - October 2017 Newsletter

Yogi Patel - Tuesday, October 10, 2017

Dear valued clients and supporters: This month's newsletter will focus on three significant employment law cases that are expected to be decided by the United States Supreme Court this term. The cases will address: (1) the enforceability of mandatory class-action waivers against employees; (2) the constitutionality of mandatory public-sector union fees; and (3) whether or not car service advisors are exempt employees under federal law.

Mandatory Class Action Waivers

 It has become increasingly common for employers to require employees to sign arbitration agreements as a condition of their employment. Such agreements seek not only to require the employees to seek any redress via arbitration, but also to prohibit the employees from bringing their claims together in a class action. Presently, in three separate but related cases, the Supreme Court will decide whether these employee arbitration agreements are enforceable because they require employees to waive their collective bargaining rights. While similar agreements have been upheld in the consumer context, Circuit Courts across the country have reached different conclusions as to whether employee arbitration agreements are enforceable, thus requiring the Supreme Court to settle the debate. As the Supreme Court's decision will have significant ramifications either on employees' rights to take collective action or on the enforceability of employment agreements, both employers and employees are advised to monitor the outcome of this decision.

Public-Sector Union Fees

 In another case on the current docket, the Supreme Court will address whether requiring public-sector employees to pay certain union fees violates their constitutional rights. Dating back to 1977, in the case Abood v. Detroit Board of Education, the Supreme Court has held that compulsory union dues were not unconstitutional so long as they were used for actions such as collective bargaining and grievance procedures and not for political activity. Recently, the Supreme Court was asked to reconsider the constitutionality of all mandatory union dues for public-sector employees, but Justice Antonin Scalia passed away before a decision was reached, leaving the Court deadlocked at a 4-4 vote. Now, with nine members again presiding, it appears the Court is now poised to issue a decisive ruling on this issue. Unions in particular have a strong interest in this case as it could result in the depletion of a significant source of revenue for them.

Car Service Employee Overtime Exemptions

 Finally, the Supreme Court is expected to resolve the question as to whether or not car dealership service providers are exempt from mandatory overtime requirements. The case is significant not only because of the narrow issue it will resolve regarding the exemption status of certain workers, but also in that it may provide additional guidance as to how much weight courts should give to the statements and opinions of agencies, such as the Department of Labor ("DOL"). The history of the service advisor exemption is essential to appreciating the significance of the current case. In 1966, Congress enacted an overtime exemption for car salesman and related employees, though service advisors were excluded by regulation. Courts later rejected this regulation and the DOL issued an opinion letter agreeing that service advisors could be exempt from mandatory overtime. Then, in 2011, almost 50 years later, the DOL reversed its position and stated that service advisors were not exempt. In 2012, five service advisors from California filed suit against their employer for failing to pay them overtime, a claim which was upheld by the Circuit Court. The Supreme Court then vacated the decision on the basis that the DOL's reversal of its position meant that courts should not rely on it. The case was sent down to the lower courts, made its way back up to the Circuit Court, which again concluded that the workers were nonexempt. Now the Supreme Court will rule again. Most experts expect that the Court will not only rule definitively as to whether or not service providers are exempt from overtime requirements, but also when Courts should rely on agency opinions more broadly.


Readers are encouraged to follow us on Twitter (@lloydpatelllp) and Facebook to receive updates on these and other issues throughout the month.

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