The U.S. Supreme Court term that ended in June brought important decisions in cases involving religious accommodation, same-sex marriage and the Affordable Care Act. The High Court has agreed to hear several cases during its 2015-2016 term that will also have significant ramifications for employers.
THE CASES: The court will hear arguments concerning:
- The “fair share” fees public employee unions charge (Friedrichs v. California Teachers Association et al.)
- The harm that can be done by online information that may have been published in violation of the Fair Credit Reporting Act (FCRA) (Spokeo, Inc. v. Robins)
- Arbitration agreements and the Federal Arbitration Act (DirecTV Inc. v. Imburgia)
- Reimbursement of benefits payments when an injured person sues and wins damages (Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan).
Friedrichs v. California Teachers Association
Rebecca Friedrichs filed suit against the California Teachers Association, claiming its method of collecting “fair share” fees violates teachers’ First Amendment rights. Fair share fees are fees public unions may charge workers who elect not to join the union. The fees cover work the union performs on their behalf, such as negotiating contracts or handling grievances. Unions are barred from using these funds for political purposes.
California collects the equivalent of full union dues and then forces employees to specifically request refunds. The plaintiffs in the case present two questions:
- Do public-sector agency shop arrangements violate employees’ freedom of speech and assembly rights?
- Does California’s “opt-out” arrangement violate the First Amendment by forcing public employees to express a political opinion to obtain their refund?
Spokeo, Inc. v. Robins
The website spokeo.com provides personal information about individuals. Thomas Robins sued, alleging the site published false information about him. Spokeo moved to dismiss the case, arguing that Robins had not shown any harm. He countered that the site showed him to be wealthier than he was, adversely affecting his employment prospects. Plus, he argued that Spokeo’s FCRA violation alone provided him standing to sue. The Supreme Court will decide.
DirecTV Inc. v. Imburgia
Amy Imburgia filed a class action alleging that satellite TV provider DirecTV improperly charged early termination fees. Prior to the Supreme Court’s 2011 decision in AT & T Mobility, LLC v. Concepcion, most arbitration agreements were unenforceable under state law. Imburgia had already filed her class action when the court decided Concepcion. One month after the decision DirecTV moved to compel arbitration.
The arbitration agreement claims that it is subject to state law. The Supreme Court will decide whether the FAA covers arbitration agreements that follow state law.
Montanile v. Board of Trustees
Robert Montanile suffered significant injuries in a 2008 car accident. His insurer, the National Elevator Industrial Health Benefit Plan, paid $120,000 in medical bills. Montanile sued the other driver and collected $500,000. The health plan claims it is entitled to reimbursement under the Employee Retirement Income Security Act (ERISA). Montanile claims the money is already earmarked for other issues related to the accident and therefore is not recoverable under ERISA.
HOW TO COMPLY: Friedrichs v. California Teachers Association will tell us much about the future of “fair share” fees. Public unions will follow this case closely to learn whether and under what arrangements may they collect the fees.
The outcome of Spokeo, Inc. v. Robins may affect how employers give and use employee references. If Robins prevails in his argument that he merely has to prove Spokeo violated the FCRA to have standing, then employees may try the same tactic if they believe they have received a bad reference. Employers will always have the truth as a defense, but they may face more litigation depending on this decision.
Employers that use arbitration agreement should watch DirecTV Inc. v. Imburgia. Examine those agreements now to determine if they follow state or federal law.
In most cases, employers are going to be better off under federal law, but it’s a good idea to consult an attorney to determine which venue is best. This is another reason not to use boilerplate arbitration agreements.
At first blush, employers may not see any relevance to the Montanile ERISA case, but the case could produce ripple effects that employers must prepare for.
For example, the court may look at whether Montanile had notice of the plan’s “clawback” provisions when he or his insurer sued the other driver. Prudent attorneys may advise employers or their health plans to provide such a notice in the future.
Because the Supreme Court decides several employment cases each year, employers should consult with their attorneys regularly to ascertain whether the decisions affect the employer’s policies and procedures. Regular reviews help prevent unpleasant surprises.
