Four Supreme Court Employment Decisions in One Day!

Score: employees 2, employers 2.

High Court rules:

Disability retirement program did not discriminate on age (employers win)

Employer has burden of proving reasonable factor other than age in age discrimination disparate impact cases (employees win).

Insurer conflict of interest is factor to consider in ruling on ERISA plan claim denial(employees win).

National Labor Relations Act preempts California regulation of union-related activities of state-funded employers (employers win).

Retirement Plan Did Not Discriminate on Age

First up: Kentucky Retirement Systems v. EEOC.

This case involved a state employee retirement plan that calculated disability benefits by adding to an employee’s actual years of service the years the disabled employee would have had to continue working to become eligible for normal retirement, adding no more than the number of years the employee had previously worked.

The employee at issue continued working after becoming eligible for retirement at age 55, and then became disabled and retired at age 61.

He claimed age discrimination on the basis that the plan did not count certain years he worked (those after age 55) solely because he became disabled after age 55. The EEOC sided with him.

The Supreme Court held this was not age discrimination because not based on his age, per se, but his retirement status, i.e., the fact he was retirement-eligible when he became disabled.

Though that fact was correlated with age, it is viewed as a distinct factor other than age, especially since the age discrimination law allows age to be considered in calculating retirement benefits.

Age Discrimination Disparate Impact Burden of Proof

The case is Meacham v. Knolls Atomic Power Laboratory

The New York Times explains this complex age discrimination burden-of-proof issue:

The Supreme Court ruled for older workers . . . in a closely watched age discrimination case, placing on employers the burden of proving that a layoff or other action that hurts older workers more than others was based not on age but on some other “reasonable factor.”

The 7-to-1 decision overturned a ruling by the federal appeals court in New York, which said employees had the burden of disproving an employer’s defense of reasonableness.

The case was brought by 28 employees who lost their jobs during cutbacks at a federal research laboratory . . . . All but one . . . were at least 40, the age at which protections begin under the federal Age Discrimination in Employment Act.
The issue in the case, while technical, is important for the litigation of age discrimination cases in which an employer’s action or policy that appears neutral on its face has a disparate impact on older workers.

ERISA Conflict of Interest Decision

The case is Metropolitan Life Ins. Co. v. Glenn

Reuters summarizes Met Life’s conflict of interest and its effect under ERISA:

The Supreme Court sided against MetLife . . . , ruling that insurance companies or employers have a conflict of interest when they both decide claims under employee benefit plans and pay the benefits.

The justices ruled that federal courts should consider that conflict in deciding whether the plan administrator has abused its discretion in denying benefits under an employee’s health or disability claim.

The Employee Retirement Income Security Act [ERISA] permits a person denied benefits under an employee benefit plan to challenge the denial in federal court.

The high court concluded the plan’s administrator, such as an insurance company like MetLife or an employer, has a conflict when it performs the dual role of determining whether an employee is eligible for benefits and then pays the benefits.

Justice Stephen Breyer wrote for the court majority that a reviewing federal court should consider that conflict in determining whether the plan administrator abused its discretion in denying benefits.

He said the significance of the conflict will depend on the circumstances of the particular case.

Labor Relations Preemption Decision

The final case of this busy Supreme Court day is Chamber of Commerce of United States v. Brown

Here, the Court dealt with a California law prohibiting several classes of employers that receive state funds from using the funds “to assist, promote, or deter union organizing.”

Forbes describes the unfavorable ruling for labor on state regulation of employer speech:

In a 7-2 decision . . . , the court ruled that California law is too restrictive in its regulation of businesses and their influence on unions in the workplace. The state has tried to limit the amount of its money employers can use to “assist, promote or deter union organizing.” However, the Supreme Court said a federal labor law pre-empts those limitations.

The decision . . . is the latest chapter in a decades-long saga involving employee organization vs. employer free speech. In this latest round, the court . . . sided with the employers.

While Congress has restricted the union-related activities of employers in some areas, that “does not invite the states to override federal labor policy in other settings,” wrote Justice John Paul Stevens–considered the court’s most senior liberal–in the majority opinion. Justices Stephen Breyer and Ruth Bader Ginsburg dissented.

How drastically the Supreme Court’s decision will affect labor laws in other states is still unclear. According to the U.S. Chamber of Commerce, at least 20 other states have similar laws in place or have proposed to enact them. Robin Conrad, executive vice president for the organization’s National Chamber Litigation Center, says the justices’ ruling “shuts the door on attempts by other states to use their spending powers to get around federal labor laws.”

But Craig Becker, associate general counsel for the AFL-CIO, is not so sure that a sweeping rewrite of state and local labor laws is in the works. “They’re certainly going to be scrutinized,” he says. . . .

The justices said a 1976 case prevents states and the National Labor Relations Board from regulating activity that should be controlled by economic forces. According to the court, California’s labor law contained provisions that “regulate within a zone protected and reserved for market freedom.”

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