Wednesday, July 29, 2015

Ninth Circuit: Employee Who Threatens to Kill Co-Workers Not "Qualified Individual with Disability"

Timothy Mayo was a welder. He made some specific threats to kill certain supervisors at his employer, PCC Structurals, Inc.  Co-workers complained.  The company sent him home.  The police visited him and he checked into a hospital.  The company terminated his employment.

Mayo sued under Oregon's version of the ADA, which is modeled under the federal statute. The 9th circuit reviewed the employer's successful motion for summary judgment.

The court decided that a person who makes violent threats against co-workers cannot claim protection under disability discrimination laws:

Even if Mayo were disabled (which we assume for this appeal), he cannot show that he was qualified at the time of his discharge. An essential function of almost every job is the ability to appropriately handle stress and interact with others. See Williams v. Motorola, Inc., 303 F.3d 1284, 1290 (11th Cir. 2002). And while an employee can be qualified despite adverse reactions to stress, he is not qualified when that stress leads him to threaten to kill his co-workers in chilling detail and on multiple occasions (here, at least five times). This vastly disproportionate reaction demonstrated that Mayo could not perform an “essential function” of his job, and was not a “qualified individual.” This is true regardless of whether Mayo’s threats stemmed from his major depressive disorder. Cf. Newland v. Dalton, 81 F.3d 904, 906 (9th Cir. 1996) (“Attempting to fire a weapon at individuals is the kind of egregious and criminal conduct which employees are responsible for regardless of any disability.”).
The court was careful to limit its holding to serious threats of violence or harm, in a footnote:
We emphasize that we only address the extreme facts before us in this case: an employee who makes serious and credible threats of violence toward his co-workers. We do not suggest that off-handed expressions of frustration or inappropriate jokes necessarily render an employee not qualified. Nor do we imply that employees who are simply rude, gruff, or unpleasant fall in the same category as Mayo. See U.S. Equal Emp. Opportunity Comm’n, supra, at *15 (advising that an “anti-social” employee with a “psychiatric disability” can be a “qualified individual,” even if he is “abrupt and rude”).

The court also distinguished its line of cases in which it has excused "conduct resulting from a disability":

This ruling is consistent with our cases holding that “conduct resulting from a disability is considered to be part of the disability, rather than a separate basis for termination.” Humphrey v. Mem’l Hosps. Ass’n, 239 F.3d 1128, 1139–40 (9th Cir. 2001); see also Gambini v. Total Renal Care, Inc., 486 F.3d 1087, 1094–95 (9th Cir. 2007); Dark v. Curry County, 451 F.3d 1078, 1084 (9th Cir. 2006). Unlike in Humphrey, Gambini, and Dark, we do not need to consider whether PCC has offered a legitimate, nondiscriminatory reason for terminating Mayo, as he has failed to establish a prima facie case at step one of the McDonnell Douglas framework.
Only Gambini involved hostile action by the employee.  And the court pointed out that the employer in that case did not argue that Gambini was not a "qualified individual" on appeal.

Summing up, after recognizing the serious problems of mental illness in society, the court remarked:
we disagree with Mayo that employers must simply cross their fingers and hope that violent threats ring hollow. All too often Americans suffer the tragic consequences of disgruntled employees targeting and killing their co-workers. While the ADA and Oregon disability law protect important individual rights, they do not require employers to play dice with the lives of their workforce. We thus conclude that PCC’s actions in this case were lawful.
This case is Mayo v. PCC Structurals, Inc. and the opinion is here. 

Monday, July 20, 2015

U.S. DOL Issues Administrator Interpretation Re Independent Contractors

The U.S. Department of Labor issues "Administrator Interpretations" now instead of opinion letters. In the past, the DOL would respond to individual employers' or  other constituents' questions about an FLSA issue.  The DOL would offer its opinion about the specific situation and disclaim that it broadly applied to other factual contexts, etc.

But in 2010, the DOL started issuing "Administrator Interpretations." These are not tied to any particular request for advice.  Rather, the Wage-Hour Administrator would pick a topic and offer an interpretation of an existing regulation.  Courts do not give these interpretations the same deference as actual regulations. But they are considered.  And the U.S. Supreme Court recently upheld the practice, discussed here.

With that background, you are ready to read the DOL's latest "Administrator Interpretation."  The agency has weighed in on the test for whether someone is an independent contractor or employee.  As you will see, in Administrator Interpretation 2015-1, the Administrator makes clear the DOL's enforcement position.  Here is the conclusion, verbatim:

In sum, most workers are employees under the FLSA’s broad definitions. The very broad definition of employment under the FLSA as “to suffer or permit to work” and the Act’s intended expansive coverage for workers must be considered when applying the economic realities factors to determine whether a worker is an employee or an independent contractor. The factors should not be analyzed mechanically or in a vacuum, and no single factor, including control, should be over-emphasized. Instead, each factor should be considered in light of the ultimate determination of whether the worker is really in business for him or herself (and thus is an independent contractor) or is economically dependent on the employer (and thus is its employee). The factors should be used as guides to answer that ultimate question of economic dependence. The correct classification of workers as employees or independent contractors has critical implications for the legal protections that workers receive, particularly when misclassification occurs in industries employing low wage workers.
(emphasis mine).

The Interpretation reaches that conclusion by analyzing the federal "economic realities" test for whether a worker is economically dependent on the employer (and therefore an employee) or in business for him or herself.  It should be noted that this economic realities test differs from the "right of control" test that California courts use, although there is overlap.  However, the Interpretation opines that the right to control is just one factor and that the economic realities test is actually broader, in that it sweeps more workers into employee status.   That is because, the Interpretation provides, the "economic realities" doctrine explains whom the employer "suffers or permits" to work, which is the definition of "employ" under the Fair Labor Standards Act.

The Administrator goes through familiar economic realities factors such as:
 - Is the work performed an integral part of the business?  (If so, employee)
 - Does the worker's managerial skill affect his / her opportunity for profit / loss (if so, contractor)
 - What is the nature of the worker's "investment" vs. the employer's investment relative to the work?
 - Does the work require special skill or initiative? (If so, contractor)
 - Is the relationship permanent or indefinite (if so, employee)
 - What is the nature of employer control.

As you will see, the Administrator emphasizes that no one factor is determinative.  The overarching issue is whether, based on the totality of the circumstances, the worker is in business for him or herself, or is economically dependent on the employer.  However, if the Administrator's views of the test carry the day in court, there will be far fewer independent contractors out there.

The Administrator Interpretation, No. 2015-1 is here. 

California Governor Signs Bill Making Request for Reasonable Accommodation Grounds for Retaliation Claim Under FEHA

The Courts of Appeal have held that an employee's requesting reasonable accommodation is not a "protected activity" for which a retaliation claim will lie under the Fair Employment and Housing Act. (See, for example, Rope v. Auto-Chlor, discussed here).  That is because protected activity was (previously) defined as "opposing" some unlawful practice, or participation in an investigation or proceeding involving FEHA-based claims.  A request for accommodation is not "opposing" an unlawful practice, so it did not fall within the previous definition.

Not to worry. The Legislature just added to the list of protected activities an employee's request for accommodation, whether or not it is granted.  So, when an employer denies reasonable accommodation, that was and is separately actionable. Now, the employee likely will assert a retaliation claim as well, claiming that the denial was in retaliation for the employee's making the request.  

May the employer lawfully deny an accommodation because it's not "reasonable" or because the employee is not a "qualified individual," but still be liable for retaliation? We'll see how the courts react.

The new law is AB 987, text here.

Thursday, July 16, 2015

Court of Appeal: OK for Employers to Withhold Taxes on Lost Wages Verdict / Settlement

When an employee wins a wrongful termination lawsuit, or settles a case, part or all of the recovery usually will be compensation for lost wages.  After a verdict, though, the court enters a judgment.  Usually interest accrues from the date of the judgment, and continues to accrue unless the judgment is "satisfied."  Additionally, employees may enforce the judgment with collection proceedings.

Employers must withhold taxes from wages, even wages recovered during a lawsuit.  If the employer does so an pays the "net" wage loss, after taxes, is that sufficient to satisfy a judgment?  For years, the answer to that question in California was "no."  At least, that's what one court of appeal had held. The employer would have to "gross up" the amount to include the witthholdings, a significant overpayment, or it would have to pay the gross sum and issue a 1099 to the employee, which could result in under-withholding penalties.

Well, another court of appeal has weighed in, and has now held that employers may satisfy a judgment by paying the net sum, after required tax withholding.

In the current case, Cifuentes recovered lost wages against Costco.  Costco withheld taxes from the recovery and sought a "satisfaction of judgment" ruling from the trial court. The court denied the motion, bound by the prior decision I mentioned, which is Lisec v. United Airlines, Inc. (1992) 10 Cal.App.4th 1500.

Costco appealed, and the court of appeal agreed with Costco that Lisec was wrongly decided.

When Costco paid the judgment, it had two alternatives. It could follow Lisec and risk liability to the IRS and other taxing authorities for the amount of tax it failed to withhold plus penalties. Or it could follow the prevailing federal view and risk a judicial declaration that the judgment is not satisfied. We conclude it chose correctly. Costco's potential exposure for failing to withhold the payroll taxes outweighed the inconvenience to Cifuentes of seeking a refund for the excess withholding.
* * * 
The IRC requires that taxes be withheld from wages because it is the most reliable means of assuring that they are paid. (See Baral v. United States (2000) 528 U.S. 431, 436-437.) By adopting the prevailing federal view, we ensure that California employers who withhold taxes from awards of lost wages are not penalized "for fulfilling [their] legal duty." (Noel, supra, 697 F.3d at p. 212.) Moreover, our decision does not leave plaintiff employees without an adequate remedy. They may seek a refund from the taxing authorities for any amounts withheld in excess of their tax obligation. (Rivera, supra, 430 F.3d at p. 1260.) As observed in Thomas v. County of Fairfax (E.D. Va. 1991) 758 F.Supp. 353, 367, footnote 26, "[c]ourts do not disagree . . . that tax authorities must receive their due, and that neither plaintiffs nor defendants should receive windfalls." 

So, this decision creates a split in the courts of appeal, which could result in California Supreme Court review.  Or the Sixth District could re-examine Lisec.  We will have to see.

In the meantime, this is a good case for justifying withholding taxes whether after trial or as a result of settlement. 

The case is Cifuentes v. Costco Corporation and the opinion is here. 

Wednesday, July 15, 2015

California Legislature Changes Paid Sick Leave Law, Effective Immediately

Governor Brown signed AB 304 - Here, which amends California's paid sick leave law effective immediately.  Here are the highlights:

Change to Labor Code section 246(a) - clarifies that an eligible employee is one who has worked for the same employer within California for at least 30 days.  The new provision also excludes "retired annuitants" (certain public sector retirees) from the definition of employee.

Change to section 246(b) accrual options. This amendment allows the employer greater flexibility regarding how employees earn the minimum paid sick leave:
(3) An employer may use a different accrual method, other than providing one hour per every 30 hours worked, provided that the accrual is on a regular basis so that an employee has no less than 24 hours of accrued sick leave or paid time off by the 120th calendar day of employment or each calendar year, or in each 12-month period.
(4) An employer may satisfy the accrual requirements of this section by providing not less than 24 hours or three days of paid sick leave that is available to the employee to use by the completion of his or her 120th calendar day of employment.

Change to section 246(e), which allows for PTO or sick policies in effect before January 1, 2015, or other equivalent policies that satisfy the law's requirements.  A grandfathered policy has to have provided at least one day/8 hours of sick leave by the 90th day of employment ad 3 days/24 hours by the ninth month.

But if employers changed their existing policy after January 1, 2015, the grandfathering provision does not apply. Instead, the employer has to comply with the accrual method in section 246(b) or "front load" 3 days of paid sick leave at the beginning of each 12 month period.
(e) An employer is not required to provide additional paid sick days pursuant to this section if the employer has a paid leave policy or paid time off policy, the employer makes available an amount of leave applicable to employees that may be used for the same purposes and under the same conditions as specified in this section, and the policy satisfies one of the following:
(1) Satisfies the accrual, carry over, and use requirements of this section.
(2) Provided paid sick leave or paid time off to a class of employees before January 1, 2015, pursuant to a sick leave policy or paid time off policy that used an accrual method different than providing one hour per 30 hours worked, provided that the accrual is on a regular basis so that an employee, including an employee hired into that class after January 1, 2015, has no less than one day or eight hours of accrued sick leave or paid time off within three months of employment of each calendar year, or each 12-month period, and the employee was eligible to earn at least three days or 24 hours of sick leave or paid time off within nine months of employment. If an employer modifies the accrual method used in the policy it had in place prior to January 1, 2015, the employer shall comply with any accrual method set forth in subdivision (b) or provide the full amount of leave at the beginning of each year of employment, calendar year, or 12-month period. This section does not prohibit the employer from increasing the accrual amount or rate for a class of employees covered by this subdivision.
Section 246(h) allows for employers that grant unlimited vacation / sick leave to include the words "unlimited" on the pay stub to satisfy the wage statement requirement.

Section 246(k) prescribes options for employers to calculate the "pay" for sick leave under this law:
(k) For the purposes of this section, an employer shall calculate paid sick leave using any of the following calculations:
(1) Paid sick time for nonexempt employees shall be calculated in the same manner as the regular rate of pay for the workweek in which the employee uses paid sick time, whether or not the employee actually works overtime in that workweek.
(2) Paid sick time for nonexempt employees shall be calculated by dividing the employee’s total wages, not including overtime premium pay, by the employee’s total hours worked in the full pay periods of the prior 90 days of employment.
(3) Paid sick time for exempt employees shall be calculated in the same manner as the employer calculates wages for other forms of paid leave time.
Section 247.5 clarifies that, although employers must keep records of sick leave taken, the employer does not have to inquire why someone took paid time off.   As such, the employer is not liable for failure to accurately keep records when, for example,  it has a PTO policy and the employee does not announce the purpose of the PTO.

Those are the big amendments to the law.  They take effect immediately.  Employers that change their sick leave rules / policies as a result of these amendments should ensure they comply with the appropriate notice requirements!

Be careful out there.

Tuesday, June 30, 2015

U.S. DOL Proposes Revisions to Some FLSA Exemptions' Minimum Salaries and More

The announcement is only 285 pages, and you can read the entire Notice of Proposed Rulemaking Here.   The actual regulations are about 9 pages beginning on page 286 of the PDF.

I know you're reading headlines focusing on the salary test for exempt workers under the FLSA.   Yes, indeed the DOL proposes to raise that salary threshold for the exempt executive, administrative and artistic / learned professional exemptions.  That proposal is a salary of $921 / week or a minimum salary of $47,892 per year (unless you're in Samoa).  Here's the proposed general provision, a revision to 29 CFR 541.600:

To qualify as an exempt executive, administrative or professional employee under section 13(a)(1) of the Act, an employee must be compensated on a salary basis as of [EFFECTIVE DATE OF FINAL RULE] at a rate per week of not less than $921 (or $774 per week, if employed in American Samoa by employers other than the Federal government), exclusive of board, lodging or other facilities. As of [DATE TBD] on each subsequent year, such employee must be compensated on a salary basis at a rate per week of not less than the updated salary rate published annually by the Secretary in the Federal Register at least 60 days earlier (with the rate for American Samoa to be calculated at 84 percent of the updated salary rate, provided that when the highest industry minimum wage for American Samoa equals the minimum wage under 29 U.S.C. 206(a)(1), exempt employees employed in all industries in American Samoa shall be paid the full salary rate), exclusive of board, lodging or other facilities.

The proposal includes a way to increase the base salary without passing new regulations or laws. Under the proposal, the minimum salary will go up each year based on an announcement by the Secretary of Labor, to occur 60 days before the change. The change will be based on a calculation the DOL has not decided upon yet.  It will either rely on the "CPI-U" inflation index, or by adjusting the salary basis to maintain pace with actual wages paid to salaried workers.

The proposal retains the "highly compensated" exemption standard, which relaxes the duties test. But the "highly compensated" salary will increase to $122,148, again indexed in future years.

There will also be an hourly "computer exemption" rate of $27.63 for those employees who can otherwise satisfy the "computer" exemption.

The proposed regulations include explanations of how the salary test may be met, as well as language stating that additional hourly pay, bonuses, commissions, etc. above the minimum salary will not defeat the exemptions.

But wait, there's more.  The proposed regulations are all about salary.  But the DOL in its Notice is also "seeking input" on whether to change the "duties" tests for the exemption.  That is, the DOL is actively considering adopting California's standards regarding the white-collar exemption duties test.  California law, as you know, measures time spent on exempt duties and discourages "working managers" who "pitch in."

You don't believe me?  Sure you do. But here's an excerpt of the DOL's announcement regarding the duties test:
While the Department is not proposing specific regulatory changes at this time, the Department is seeking additional information on the duties tests for consideration in the Final Rule. Specifically, the Department seeks comments on the following issues:

A. What, if any, changes should be made to the duties tests?

B. Should employees be required to spend a minimum amount of time performing work that is their primary duty in order to qualify for exemption? If so, what should that minimum amount be?

C. Should the Department look to the State of California’s law (requiring that 50 percent of an employee’s time be spent exclusively on work that is the employee’s primary duty) as a model? Is some other threshold that is less than 50 percent of an employee’s time worked a better indicator of the realities of the workplace today?

D. Does the single standard duties test for each exemption category appropriately distinguish between exempt and nonexempt employees? Should the Department reconsider our decision to eliminate the long/short duties tests structure?

E. Is the concurrent duties regulation for executive employees (allowing the performance of both exempt and nonexempt duties concurrently) working appropriately or does it need to be modified to avoid sweeping nonexempt employees into the exemption? Alternatively, should there be a limitation on the amount of nonexempt work? To what extent are exempt lower-level executive employees performing nonexempt work?
If DOL follows through with this proposal, it will  - not hyperbole - drastically change wage hour law in states outside California. Those of you who know anything about California employment law, you know what will happen. For starters, there will have to be many, many conversions of now-exempt employees to non-exempt, resulting in huge overtime liability going forward, at the new, inflated wages caused by inflated minimum wage law. 

And second, for those employers that do not convert, FLSA collective actions will ensue like you have never seen before.  

These regulations are just a first step and may be revised, particularly based on comments the DOL receives. If you'd like to leave comments, the linked Notice provides instructions:

ADDRESSES: You may submit comments, identified by Regulatory Information Number (RIN) 1235-AA11, by either of the following methods: Electronic Comments: Submit comments through the Federal eRulemaking Portal Follow the instructions for submitting comments. Mail: Address written submissions to Mary Ziegler, Director of the Division of Regulations, Legislation, and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Avenue, N.W., Washington, D.C. 20210. Instructions: Please submit only one copy of your comments by only one method. All submissions must include the agency name and RIN, identified above, for this rulemaking. Please be advised that comments received will become a matter of public record and will be posted without change to, including any personal information provided. All comments must be received by 11:59 p.m. on the date indicated for consideration in this rulemaking. Commenters should transmit comments early to ensure timely receipt prior to the close of the comment period as the Department continues to experience delays in the receipt of mail in our area. For additional information on submitting comments and the rulemaking process, see the “Public Participation” section of this document. For questions concerning the interpretation and enforcement of labor standards related to the FLSA, individuals may contact the Wage and Hour Division (WHD) local district offices (see contact information below). Docket: For access to the docket to read background documents or comments, go to the Federal eRulemaking Portal at
It will be interesting to see if the DOL can issued these regulations before the November 2016 election. If they can't, it will be interesting to see what the new president / DOL secretary says about this issue. 

Stay tuned....

Thursday, June 25, 2015

Supreme Court Holds Tax Subsidies Available Under Affordable Care Act to Those Who Buy Insurance on Federal Exchange

Our blog is 9 years old!  Our Firm is, not coincidentally, celebrating its 9th anniversary as well. Thank you for reading!  

To celebrate, I will post about King v. Burwell, opinion here, the Supreme Court's latest ruling upholding the Affordable Care Act (aka Obamacare, PPACA, etc.).  The Court saved one of the key provisions of the Act, 6-3, in a statutory interpretation case.  Chief Justice Roberts authored the majority opinion, writing for himself, and Justices Kennedy, Sotomayor, Kagan, Ginsburg, and Breyer. 

Whatever you think of the ACA, this is a good opinion to read because it explains in simple terms how the law works, why it was designed the way it was, and what the dispute was in King v. Burwell.   

Here's the overview of the Act in the Court's words. I insert emphasis:
First, the Act adopts the guaranteed issue and community rating requirements. The Act provides that “each health insurance issuer that offers health insurance coverage in the individual . . . market in a State must accept every . . . individual in the State that applies for such coverage.” 42 U. S. C. §300gg–1(a). The Act also bars insurers from charging higher premiums on the basis of a person’s health. §300gg.
Second, the Act generally requires individuals to maintain health insurance coverage or make a payment to the IRS. 26 U. S. C. §5000A. Congress recognized that, without an incentive, “many individuals would wait to purchase health insurance until they needed care.” 42 U. S. C. §18091(2)(I). So Congress adopted a coverage requirement to “minimize this adverse selection and broaden the health insurance risk pool to include healthy individuals, which will lower health insurance premiums.” Ibid. In Congress’s view, that coverage requirement was “essential to creating effective health insurance markets.” Ibid. Congress also provided an exemption from the coverage requirement for anyone who has to spend more than eight percent of his income on health insurance. 26 U. S. C. §§5000A(e)(1)(A), (e)(1)(B)(ii).
Third, the Act seeks to make insurance more affordable by giving refundable tax credits to individuals with household incomes between 100 percent and 400 percent of the federal poverty line. §36B. Individuals who meet the Act’s requirements may purchase insurance with the tax credits, which are provided in advance directly to the individual’s insurer. 42 U. S. C. §§18081, 18082.
So, there are three principal components to the ACA that work closely together:
Congress found that the guaranteed issue and community rating requirements would not work without the coverage requirement. §18091(2)(I). And the coverage requirement would not work without the tax credits. The reason is that, without the tax credits, the cost of buying insurance would exceed eight percent of income for a large number of individuals, which would exempt them from the coverage requirement.
Next, the ACA created the system of "exchanges" where consumers could shop for and buy the insurance:
In addition to those three reforms, the Act requires the creation of an “Exchange” in each State where people can shop for insurance, usually online. 42 U. S. C. §18031(b)(1). An Exchange may be created in one of two ways. First, the Act provides that “[e]ach State shall . . . establish an American Health Benefit Exchange . . . for the State.” Ibid. Second, if a State nonetheless chooses not to establish its own Exchange, the Act provides that the Secretary of Health and Human Services “shall . . . establish and operate such Exchange within the State.” §18041(c)(1).
Now you know just about everything you might want to know about the 2000 page law.  The Supreme Court already upheld the law a couple of years ago.  So, what was the issue in King v. Burwell?  Glad you asked:

The issue in this case is whether the Act’s tax credits are available in States that have a Federal Exchange rather than a State Exchange. The Act initially provides that tax credits “shall be allowed” for any “applicable taxpayer.” 26 U. S. C. §36B(a). The Act then provides that the amount of the tax credit depends in part on whether the taxpayer has enrolled in an insurance plan through “an Exchange established by the State under section 1311 of the Patient Protection and Affordable Care Act [hereinafter 42 U. S. C. §18031].” 26 U. S. C. §§36B(b)–(c) (emphasis added).
So, some states have their own exchanges for insurance shoppers, such as "Covered California" here in the Golden State.  Other states rely on the federal exchange.   The ACA's tax credit language, though, says that the law's tax credits depend on the taxpayer's membership in an "Exchange established by the state."  Does that include the federal exchange?

Yes, said the IRS.  The IRS issued a regulation in which it said that an "Exchange established by the State" would include the federal exchange (presumably because the state decided to rely on the federal exchange as its "established" Exchange.)

The Court, though, did not defer to the IRS's interpretation. Rather, the Court held that the statute itself authorized the tax credits regardless of whether the taxpayer purchased insurance on a state or federal exchange.  To do so, the Court's majority engages in a lengthy analysis and explanation of why a federal exchange counts as a state exchange.  It's in the opinion, and you may almost be convinced.  So much for calling balls and strikes, CJ.    Anyway:
The upshot of all this is the phrase “an Exchange established by the State under [42 U. S. C. §18031]” is properly viewed as ambiguous. The phrase may be limited in its reach to State Exchanges. But it is also possible that the phrase refers to all Exchanges—both State and Federal—at least for purposes of the tax credits. If a State chooses not to follow the directive in Section 18031 that it establish an Exchange, the Act tells the Secretary to establish “such Exchange.” §18041. And by using the words “such Exchange,” the Act indicates that State and Federal Exchanges should be the same. But State and Federal Exchanges would differ in a fundamental way if tax credits were available only on State Exchanges—one type of Exchange would help make insurance more afford- able by providing billions of dollars to the States’ citizens; the other type of Exchange would not.

By the way, if you think I'm cynical, you're right. But the Court sort of acknowledged that it was doing some gymnastics to save the law:

Petitioners’ arguments about the plain meaning of Section 36B are strong. But while the meaning of the phrase “an Exchange established by the State under [42 U. S. C. §18031]” may seem plain “when viewed in isolation,” such a reading turns out to be “untenable in light of [the statute] as a whole.” Department of Revenue of Ore. v. ACF Industries, Inc., 510 U. S. 332, 343 (1994). In this instance, the context and structure of the Act compel us to depart from what would otherwise be the most natural reading of the pertinent statutory phrase.
And (emphasis mine):
Reliance on context and structure in statutory interpretation is a “subtle business, calling for great wariness lest what professes to be mere rendering becomes creation and attempted interpretation of legislation becomes legislation itself.” Palmer v. Massachusetts, 308 U. S. 79, 83 (1939). For the reasons we have given, however, such reliance is appropriate in this case, and leads us to conclude that Section 36B allows tax credits for insurance purchased on any Exchange created under the Act. Those credits are necessary for the Federal Exchanges to function like their State Exchange counterparts, and to avoid the type of calamitous result that Congress plainly meant to avoid.


In a democracy, the power to make the law rests with those chosen by the people. Our role is more confined—“to say what the law is.” Marbury v. Madison, 1 Cranch 137, 177 (1803). That is easier in some cases than in others. But in every case we must respect the role of the Legislature, and take care not to undo what it has done. A fair reading of legislation demands a fair understanding of the legislative plan.

Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter. Section 36B can fairly be read consistent with what we see as Congress’s plan, and that is the reading we adopt.
Justices Scalia, Thomas and Alito dissented.  Justice Scalia explains that this decision has little to do with statutory construction or the Court's role:

This case requires us to decide whether someone who buys insurance on a [federal exchange] gets tax credits. You would think the answer would be obvious—so obvious there would hardly be a need for the Supreme Court to hear a case about it. In order to receive any money under §36B, an individual must enroll in an insurance plan through an “Exchange established by the State.” The Secretary of Health and Human Services is not a State. So an Exchange established by the Secretary is not an Exchange established by the State—which means people who buy health insurance through such an Exchange get no money under §36B.

* * *

Words no longer have meaning if an Exchange that is not established by a State is “established by the State.” It is hard to come up with a clearer way to limit tax credits to state Exchanges than to use the words “established by the State.” And it is hard to come up with a reason to include the words “by the State” other than the purpose of limiting credits to state Exchanges.  * * * *  
Under all the usual rules of interpretation, in short, the Government should lose this case. But normal rules of interpretation seem always to yield to the overriding principle of the present Court: The Affordable Care Act must be saved. 
And it was, 6-3.

Sunday, June 07, 2015

Court of Appeal: Claimed Inability to Work With Particular Supervisor Need Not Be Accommodated

An employee clashes with her manager, takes a medical leave of absence for "stress," receives repeated extensions, and her doctor says she can come back to work, but only under a new manager.  Heard that one before?   That's what Higgins-Williams v. Sutter Medical Foundation is about.

The plaintiff-employee took CFRA/FMLA leave initially. Then she exhausted it and returned to work. Her manager immediately gave her a negative evaluation. The regional manager, Perry, began to single plaintiff out for negative treatment, such as being curt with plaintiff while being friendly with others. Then plaintiff's boss accused the plaintiff of being irresponsible with her badge and Perry allegedly grabbed her arm.  The plaintiff had a "panic attack," and did not return to work again.

Sutter granted a series of extended absences as temporary accommodations.  Plaintiff's doctor continued to insist that she could return to work under a new supervisor and perform her duties without restriction.  The doctor then certified that plaintiff could return to work in her original department, but on light duty.  The doctor would not commit to a return to work date when the plaintiff could perform her essential functions with or without an accommodation (that did not include a new supervisor).

Sutter then drew the line:

On January 24, 2011, Sutter informed plaintiff (1) that Dr. Chen had stated on January 6, 2011, that plaintiff could not return to work then, but that plaintiff wanted to return on March 1, 2011, on light duty in the Connecting to Work Program; (2) that Dr. Chen did not provide any information as to if or when plaintiff would be able to return to her clinical assistant position; (3) that there was no information to support a conclusion that additional leave as an accommodation would effectuate plaintiff‟s return as a clinical assistant; and (4) that if plaintiff did not provide such information by January 31, 2011, her employment would be terminated February 1, 2011.

Plaintiff and her doctor apparently did not get the gist of this communication.

On January 28, 2011, Dr. Chen informed Sutter that plaintiff was not medically cleared to return to work at that point, and that plaintiff would continue her regimen of psychotherapy and medications. In her deposition, plaintiff testified she did not feel she could have returned to work in the Shared Services Department with regional manager Perry or supervisor Prince on February 1, 2011. Plaintiff also testified at her deposition
that at the time of her termination, she "was willing to try‟ to return to work on March 1, 2011, in the Shared Services Department under manager Perry.
Sutter then terminated the plaintiff's employment on February 1, 2011.

So, the plaintiff sued for disability discrimination, retaliation, failure to prevent, and denial of accommodation under the Fair Employment and Housing Act.  The Court of Appeal affirmed the trial court's grant of summary judgment.

The basis for the Court of Appeal's decision is significant.  The Court reaffirmed previous case law in which the court held that inability to work for a particular supervisor is not a covered disability:

An employee's inability to work under a particular supervisor because of anxiety and stress related to the supervisor‟s standard oversight of the employee‟s job performance does not constitute a disability under FEHA. (Hobson v. Raychem Corp. (1999) 73 Cal.App.4th 614, 628 (Hobson) [“the inability to perform one particular job, or to work under a particular supervisor, does not constitute a qualified disability” under FEHA (italics added)]; see Weiler v. Household Finance Corp. (7th Cir. 1996) 101 F.3d 519, 522, 524-525 [both Hobson and Weiler apply the narrower federal test of disability of “substantially limits” a major life activity, rather than the broader California test of simply “limits”; Hobson was disapproved on this point in Colmenares v. Braemar Country Club, Inc. (2003) 29 Cal.4th 1019, 1031, fn. 6] (Colmenares).)

As stated above, the Court of Appeal acknowledged that the Hobson decision applied a less employee-friendly definition of disability. But the Court then held that even under the current formulation, inability to work for the current supervisor is not a disability, because it does not "limit" the major life activity of working.

The Court then held that because the plaintiff did not have a disability, she could not succeed under her claims for common law wrongful termination, denial of accommodation or failure to engage in the interactive process.

Of note, the Court of Appeal remanded the case to the trial court regarding its award of costs to Sutter.  Costs no longer are awarded to prevailing defendants as a matter of right in FEHA cases, following the California Supreme Court's decision in Williams v. Chino Valley Independent Fire Dist. (2015) 61 Cal.4th 97 (discussed here)

This case is Higgins-Williams v. Sutter Med. Foundation, and the opinion is here.