Important Employment Law Cases in 2016

As we move through 2016, many important employment law cases have required employers to shift focus to remain on the correct side of the law.

One issue that continues to arise is employers’ classification of workers as employees or independent contractors. Uber faced two class action lawsuits from California and Massachusetts each resulting in $100 million settlements with a stipulation within the agreement that required the drivers to identify as independent contractors. Many drivers believe the offer that Uber is proposing is not enough and the agreement is currently under the review of a federal court judge in California for preapproval. FedEx has also run into trouble for attempting to classify their workers as independent contractors which, after costly litigation has, led to a $240 million settlement for thousands of drivers across 20 states. These settlements resulted because the employers did not acknowledge the economic dependency that the workers have on them nor the overall control that they have. Courts generally use these factors to determine whether or not a worker is an employee or an independent contractor.[1].

Employers must have the business awareness to realize that the litigation costs and time wasted for misclassification is not worth the headache. The work relationship between employers and workers needs to be clear and based on the regulations set forth in the Fair Labor Standards Act (“FLSA”). Employers should also be aware that merely labeling a worker as an “independent contractor” does not safeguard them from workers’ claims. Courts look at the reality of the economic dependence and the nature of the relationship to determine whether or not the work relationship is that of an employee or an independent contractor.

In Lewis v. Epic Sys. Corp., No. 15-2997, 2016 U.S. App. LEXIS 9638 (7th Cir. May 26, 2016), the 7th Circuit Court of Appeals deemed arbitration agreements that preclude workers from pursuing claims collectively illegal. The Court split from the 5th Circuit which could set the class waiver issue up for a trip to the U.S. Supreme Court. This discrepancy amongst the Circuits can cause confusion for national employers who want to use class or collective action waivers. Until national precedent is set, employers need to stay abreast of rulings in their specific districts and follow this issue in case it reaches the U.S. Supreme Court.

Another major change has come from the 5th Circuit’s ruling that expands the rules under Title VII of the Civil Rights Act of 1964 (“Title VII”), which the Equal Employment Opportunity Commission (“EEOC”) can use to pursue pattern or practice of discrimination claims. This ruling came from EEOC v. Bass Pro Outdoor World, L.L.C., No. 15-20078, 2016 U.S. App. LEXIS 11031 (5th Cir. June 17, 2016), which held the EEOC could pursue pattern or practice allegations under Section 706 of Title VII rather than being restricted to using only Section 707 under Title VII. This ruling is out of the ordinary because Section 706 allows a plaintiff to file civil suits seeking to recover compensatory and punitive money damages while Section 707 covers pattern or practice claims. The rationale behind this combination of claims is that the EEOC can now seek money damages and can approach these claims with a higher sense of confidence. With this ruling employers must realize the monetary risk involved in Title VII pattern and practice cases. Employers should review their current practices to ensure that there is no room to acquire a Title VII violation in this area.

With the changes that have happened throughout the first half of 2016 the key to success for employers is to stay abreast on the development of the law. Employers need to review their current business practices for any weak points such as classification of workers and contract language appropriately describing the work relationship. In order to avoid legal liability employers must remain attentive and diligent in every aspect of their business.

~Author: Victoria Smith, University of Georgia 3rd Year Law Student, 2016 Gate City Bar Summer Associate

[1] Vin Gurrieri, The Top Employment Cases of 2016: Midyear Report, Law360 (July 1, 2016, 5:59PM), http://www.law360.com/employment/articles/812891?nl_pk=179244b0-9a97-41d4-aad1-4de1058ac5c4&utm_source=newsletter&utm_medium=email&utm_campaign=employment.