High Court Rules in Several Key Cases Affecting Employers

Today, the U.S. Supreme Court issued a number of important rulings.  Two of these cases arise in the labor and employment law arena and are discussed below.  These rulings, and other decisions involving benefit issues, will be discussed in detail in the July/August issue of The Employment Law Authority.

Meacham v. Knolls Atomic Power Laboratory

The U.S. Supreme Court has held that if an employer wants to defend an age discrimination claim by asserting that the decision was based on “reasonable factors other than age,” the employer has the obligation to prove this to the judge or jury hearing the case.  The ruling did not come as a major surprise to most employment lawyers, but is considered to be a victory for workers.

The lawsuit was filed after the employer, Knolls Atomic Power Laboratory, underwent a reduction in force (RIF).  The plaintiffs claimed that the factors used by the employer to decide who to terminate had a disparate impact on older workers.  After a number of legal maneuvers, the Second Circuit Court of Appeals dismissed the case, finding that the burden was on the workers to show that the decision was not based on reasonable factors other than age.  The plaintiffs appealed this ruling to the U.S. Supreme Court.

The high court began by noting that the Age Discrimination in Employment Act (ADEA) specifically states that actions that might otherwise violate the law are not actionable if “the differentiation is based on reasonable factors other than age.”  This is commonly referred to as the RFOA defense.

The Supreme Court found that this is an “affirmative defense,” and therefore overturned the Second Circuit.  According to the justices, the burden was on the employer both to produce evidence that the decision was based on reasonable factors other than age and to persuade the judge or jury on this point.  Thus, the case was sent back to the Second Circuit to determine whether the employer met this obligation.  Meacham v. Knolls Atomic Power Laboratory, No. 06-1505, U.S. Supreme Court (June 19, 2008).

This result was expected by most in the employment law community, as the Second Circuit’s finding was contrary to prior rulings on this question.  Had the Court upheld the Second Circuit, it would have been significantly more difficult for workers to bring many claims under the ADEA.  As it turned out, employers will have to prove that any challenged decisions were based on reasonable factors other than age.  Maintaining accurate documentation of the decision-making process will often be critical in such situations.

Chamber of Commerce v. Brown

In a 7-2 decision, the Supreme Court held that the National Labor Relations Act (NLRA) preempts a California statute barring employers from using state funds to “assist, promote, or deter” union organizing campaigns.  According to the majority opinion authored by Justice John Paul Stevens, citing Machinists v. Wisconsin Employment Relations Comm’n, 427 U. S. 132, 140 (1976), the state law is preempted because it regulates within “a zone protected and reserved for market freedom.”

Led by the Chamber of Commerce, several employer groups brought this lawsuit in April 2002 seeking to enjoin enforcement of Assembly Bill 1889.  The bill, which was enacted in late 2000, prohibits employers that receive state grants or more than $10,000 in state program funds per year from using any portion of the money to “assist, promote, or deter union organizing.”  The employer groups argued that the bill would effectively prevent many companies from opposing unions at all.

The district court granted partial summary judgment in favor of the Chamber, holding that the NLRA preempted the California statute because it “regulat[ed] employer speech about union organizing under specified circumstances, even though Congress intended free debate.”  An en banc panel of the Ninth Circuit Court of Appeals upheld the state law, however, noting that employers remained free to express views on organizing with their own funds.  The case eventually reached the U.S. Supreme Court, where the majority concluded that the state law conflicts with the narrow zone of speech created by the NLRA to ensure free and fair elections.  Chamber of Commerce v. Brown, No. 06-939, U.S. Supreme Court (June 19, 2008).

According to Harold P. Coxson, Jr., a principal with Ogletree Governmental Affairs and a shareholder in Ogletree Deakins’ Washington, D.C. office: “The Supreme Court clearly got it right.  This ruling is an important reaffirmation of federal labor law preemption.  State and local laws and ordinances that seek to regulate conduct in labor-management relations in areas reserved to the free play of economic forces under the federal law, such as the express federal statutory right of employers to engage in noncoercive free speech with their employees in the context of union organizing, are preempted by the NLRA.  This decision will serve as a precedent, and an important deterrent, in the proliferating number of state and local jurisdictions where organized labor is attempting to exert political pressure to enact laws that circumvent the Act.”

Additional Information

Should you have any questions about the impact of these rulings, contact the Ogletree Deakins attorney with whom you normally work or the Client Services Department at 866-287-2576 or via e-mail at clientservices@ogletreedeakins.com.

Note: This article was published in the June 19, 2008 issue of the National eAuthority.