By: Abby S. Busler
The fall session of the U.S. Supreme Court is in full swing and has commenced a review of timely cases related to labor and employment law. In particular, two cases were granted certiorari and will be decided during this upcoming term. First, the U.S. Supreme Court will hear a case regarding the Age Discrimination in Employment Act. Second, the U.S. Supreme Court will determine whether an employment contract falls within the exemptions of the Federal Arbitration Act and is therefore subject to arbitration.
Age Discrimination
On October 1, 2018, the U.S. Supreme Court heard the arguments in the Mount Lemmon Fire District v. Guido case. In 2009, a Fire District in Arizona terminated two full-time firefighter captains, at ages 46 and 54. At that time, the captains were the two oldest full-time employees. The captains filed age discrimination charges with the Equal Employment Opportunity Commission (EEOC). The EEOC determined that the Fire District violated the Age Discrimination in Employment Act (ADEA). Consequently, the captains filed suit against the Fire District. The Fire District argued that it was not an “employer” within the meaning of the ADEA because it had less than twenty employees. The District Court held in favor of the Fire District. The Ninth Circuit reversed the decision, holding that a political subdivision of the state qualified as an employer subject to the requirements of the ADEA regardless of whether it had twenty employees.
The U.S. Supreme Court will settle the current Circuit Court split as to whether political subdivisions can be sheltered from the ADEA if they have less than twenty employees. Currently, the Sixth, Seventh, Eighth and Tenth Circuits have all held that the same twenty-employee minimum applies equally to both private employers and political subdivisions of the state, thus requiring political subdivision to have at least twenty employees to qualify under the ADEA. As Wisconsin is located in the Seventh Circuit, the law may change depending on how the U.S. Supreme Court settles this current split of Courts. If the Court upholds the Ninth Circuit decision and determines that political subdivisions are not required to have at least twenty employees to qualify as an employer under the ADEA, then Wisconsin’s current practice of exempting political subdivisions with less than twenty employees from the ADEA requirements will change and smaller political subdivisions may have to be more mindful of ADEA violations than historically required.
Independent Contractor vs. Employee and the Federal Arbitration Act
On October 3, 2018, the U.S. Supreme Court heard the arguments in the New Prime Inc. v. Oliveira case. Oliveira completed an apprenticeship program with Prime, an interstate trucking company and once completed, Prime recommended that Oliveira set up a limited liability company and work for Prime as an independent contractor. Oliveira was an independent contractor with Prime for a few months, then ended his independent contractor agreement and became an employee of Prime. Oliveira’s responsibilities as an employee were substantially similar to his responsibilities as an independent contractor. Oliveira brought a class action lawsuit as an employee, alleging violations of the Fair Labor Standards Act (FLSA). Oliveira also brought an individual claim for violation of Maine labor statutes. Oliveira claimed that Prime violated the state minimum wage statute in paying its employees and independent contractors. Prime compelled arbitration with Oliveira under the Federal Arbitration Act (FAA), arguing that the independent contractor agreement was still valid and held Oliveira to the specific arbitration provision that governed the dispute. However, Oliveira opposed the arbitration under the grounds that his employment contract was exempt under Section 1 of the FAA because he was an employee and not an independent contractor at the time of the suit.
The District Court and U.S. Court of Appeals for the First Circuit denied the motion to compel arbitration stating that the transportation-worker agreements that establish an independent-contractor relationship are contracts of employment under Section 1 exemption of the FAA. The U.S. Supreme Court will determine whether Section 1 of the FAA, which exempts “contracts of employment” in certain industries, applies to agreements that purport to establish an independent-contractor relationship. The Supreme Court’s decision will have industry-wide implications, either solidifying, or undermining arbitration requirements of trucker’s contracts with purported independent contractor carriers.
Abby S. Busler serves as member of the firm’s Labor & Employment team and the School and Higher Education practice group in Green Bay. Her practice primarily focuses on counseling education clients in school law and labor and employment issues. Ms. Busler can be reached at abusler@dkattorneys.com or 920.431.2230.
This article was published in the October 2018 edition of The Business News.