Many of the key principles in employment law spring from federal statutes, such as Title VII of the Civil Rights Act of 1964 (Title VII), the Fair Labor Standards Act (FLSA), and the Employee Retirement Income Security Act (ERISA). However, a student of this topic also must understand how courts have interpreted these statutes, as well as common law doctrines that may apply. Below is an outline of key cases in employment law with links to the full text of virtually every case, provided free by Justia.
Not everyone who performs work for a business is considered an employee. Some workers are classified as independent contractors, which means that they are not entitled to the rights and benefits of employees. However, a business cannot define a worker as an employee or an independent contractor simply by using that term for them.
Nationwide Mutual Ins. Co. v. Darden 一 The common-law test for determining who qualifies as an employee under ERISA considers the hiring party’s right to control the manner and means by which the product is accomplished. Other factors to consider include the skill required, the source of the instrumentalities and tools, the location of the work, the duration of the relationship between the parties, the extent of the hired party’s discretion over when and how long to work, and the method of payment, among others.
Secretary of Labor v. Lauritzen 一 For the purposes of social welfare legislation, such as the Fair Labor Standards Act, employees are those who as a matter of economic reality are dependent upon the business to which they render service. Criteria that courts have considered include the nature and degree of the alleged employer’s control over the manner in which the work is performed, the alleged employee’s opportunity for profit or loss, the alleged employee’s investment in equipment or materials required for the task (or employment of workers), whether the service rendered requires a special skill, the degree of permanency and duration of the working relationship, and the extent to which the service rendered is an integral part of the alleged employer’s business.
Clackamas Gastroenterology Associates, P.C. v. Wells 一 The common-law element of control is the principal guidepost to be followed in deciding whether director-shareholder physicians in a medical clinic should be counted as employees for the purposes of the Americans With Disabilities Act. Factors to be considered include whether the organization can hire or fire the individual or set rules for their work, whether the organization supervises their work, whether they report to someone higher in the organization, whether they can influence the organization, whether written agreements or contracts show that the parties intended the individual to be an employee, and whether the individual shares in the profits, losses, and liabilities of the organization.
Lopez v. Silverman 一 In determining whether joint employment existed, a court should apply an economic reality test that requires considering the totality of the circumstances. The weight of each factor depends on the light that it sheds on the workers’ economic dependence on the alleged employer.
Wage Rights of Employees
The Fair Labor Standards Act is the main federal law that governs wage rights, such as the right to a minimum wage and the right to overtime pay. Exemptions from FLSA protections apply to workers who are employed in an executive, administrative, or professional capacity.
Skidmore v. Swift & Co. 一 No principle of law precludes a determination that waiting time is working time under the Fair Labor Standards Act.
IBP, Inc. v. Alvarez 一 When employees must don protective clothing on the employer’s premises before they engage in the productive labor for which they are primarily hired, the time that employees spend walking between the changing area and the production area is compensable under the FLSA. However, the time that employees spend waiting to put on the protective gear is not compensable.
Auer v. Robbins 一 The salary-basis test denies exempt status when employees are covered by a policy that permits disciplinary or other deductions in pay as a practical matter. That standard is met if there is either an actual practice of making such deductions or an employment policy that creates a significant likelihood of such deductions.
Dalheim v. KDFW-TV 一 An employee’s primary duty for FLSA exemption purposes will usually be what they do that is of principal value to the employer, rather than the collateral tasks that they may also perform, even if these consume more than half of their time.
Truelove v. Northeast Capital & Advisory, Inc. 一 The definition of “wages” under New York law excludes forms of incentive compensation that are more in the nature of a profit-sharing arrangement and are both contingent and dependent on the financial success of the business enterprise.
Employee Benefits and ERISA
The Employee Retirement Income Security Act (ERISA) regulates pension benefit plans and welfare benefit plans provided by employers. Pension benefit plans provide retirement income or result in the deferral of income by employees for periods extending to the termination of covered employment or beyond. Welfare benefit plans provide participants or beneficiaries with benefits such as health care, vacation, and unemployment.
Williams v. Wright 一 A plan, fund, or program under ERISA is established if a reasonable person can ascertain the intended benefits, a class of beneficiaries, the source of financing, and procedures for receiving benefits.
Vizcaino v. Microsoft Corp. 一 When reviewing the decision of a plan administrator who has discretion, the exercise of that discretion is reviewed under the arbitrary or capricious standard, or for abuse of discretion, which comes to the same thing.
Bronk v. Mountain States Tel. & Tel., Inc. 一 ERISA does not prohibit an employer from distinguishing between groups or categories of employees, providing benefits for some but not for others. However, it may not make these distinctions based on age or length of service.
Firestone Tire & Rubber Co. v. Bruch 一 The term “participant” is naturally read to mean an employee in currently covered employment (or reasonably expected to be in currently covered employment), or a former employee who has a reasonable expectation of returning to covered employment or who has a colorable claim to vested benefits. To establish that they may become eligible for benefits, a claimant must have a colorable claim that they will prevail in a suit for benefits, or that eligibility requirements will be fulfilled in the future.
Lockheed Corp. v. Spink 一 When employers or other plan sponsors adopt, modify, or terminate pension plans, they do not act as fiduciaries but are analogous to settlors of a trust.
Andes v. Ford Motor Co. 一 A corporate organizational change that results in the termination of employees is not a prototype of the sort of action that Section 510 was primarily designed to cover.
McGann v. H & H Music Co. 一 ERISA does not broadly prevent an employer from discriminating in the creation, alteration, or termination of employee benefits plans. Section 510 does not prohibit welfare plan discrimination between or among categories of diseases.
ERISA explicitly provides for field preemption, which means that it supersedes state laws related to employee benefit plans. This is a more robust form of preemption than the preemption attached to many other federal employment laws, such as anti-discrimination laws.
Massachusetts v. Morash 一 A policy of paying discharged employees for their unused vacation time does not constitute an employee welfare benefit plan within the meaning of ERISA, and a criminal action to enforce that policy is not foreclosed.
FMC Corp. v. Holliday 一 ERISA’s deemer clause demonstrates Congress’ clear intent to exclude from the reach of the saving clause self-funded ERISA plans by relieving them from state laws purporting to regulate insurance. State laws directed toward such plans are preempted because they relate to an employee benefit plan but are not saved because they do not regulate insurance.
Pilot Life Ins. Co. v. Dedeaux 一 ERISA preempts state common law tort and contract actions asserting improper processing of a claim for benefits under an insured employee benefit plan.
Aetna Health Inc. v. Davila 一 If an individual at some point in time could have brought their claim under ERISA Section 502(a)(1)(B), and no other independent legal duty is implicated by a defendant’s actions, the individual’s cause of action is completely preempted.
Pegram v. Herdrich 一 Mixed treatment and eligibility decisions by HMO physicians are not fiduciary decisions under ERISA.
Title VII of the Civil Rights Act of 1964 prohibits workplace discrimination on the basis of race, color, religion, sex, or national origin. Other federal anti-discrimination laws include the Americans With Disabilities Act and the Age Discrimination in Employment Act. The classic form of discrimination is disparate treatment, which means that an employer had a discriminatory motive to treat certain employees less favorably based on a protected characteristic.
McDonnell Douglas Corp. v. Green 一 In a private, non-class action complaint under Title VII charging racial employment discrimination, the complainant has the burden of establishing a prima facie case, which they can satisfy by showing that they belong to a racial minority, they applied and were qualified for a job that the employer was trying to fill, they were rejected, and the employer continued to seek applicants with their qualifications.
Texas Dept. of Community Affairs v. Burdine 一 When a plaintiff in a Title VII case has proved a prima facie case of employment discrimination, the defendant bears only the burden of explaining clearly the non-discriminatory reasons for its actions. It is sufficient if the defendant’s evidence raises a genuine issue of fact as to whether it discriminated against the plaintiff.
Reeves v. Sanderson Plumbing Products, Inc. 一 A prima facie case of discrimination, combined with sufficient evidence for a reasonable jury to reject the employer’s non-discriminatory explanation, may be adequate to sustain a finding of liability for discrimination under the ADEA.
EEOC v. Abercrombie & Fitch Stores, Inc. 一 To prevail in a disparate treatment claim based on religious discrimination, an applicant needs to show only that their need for an accommodation was a motivating factor in the employer’s decision. They do not need to show that the employer had knowledge of their need.
Hazen Paper Co. v. Biggins 一 A decision based on years of service is not necessarily age-based, since this factor is analytically distinct from age.
Price Waterhouse v. Hopkins 一 In the specific context of sex stereotyping, an employer that acts on the basis of a belief that a woman cannot be aggressive, or that she must not be, has acted on the basis of gender.
Desert Palace. Inc. v. Costa 一 Direct evidence of discrimination is not required for a plaintiff to obtain a mixed motive jury instruction under Title VII.
McKennon v. Nashville Banner Publishing Co. 一 An employee discharged in violation of the ADEA is not barred from all relief when, after their discharge, their employer discovers evidence of wrongdoing that, in any event, would have led to their termination on lawful and legitimate grounds had the employer known of it.
Teamsters v. U.S. 一 In pattern or practice cases, the government must show that discrimination was the standard operating procedure of the defendant. Statistics may be used in proving discrimination.
Hazelwood School District v. U.S. 一 Once a prima facie case has been established by statistical workforce disparities, the employer must have an opportunity to show that the claimed discriminatory pattern was a product of pre-Title VII hiring, rather than unlawful post-Title VII discrimination.
The second type of employment discrimination involves a disparate impact, which means that a business practice is non-discriminatory on its face but has a discriminatory effect on a protected group. Any such practice must be related to the job and consistent with business necessity.
Griggs v. Duke Power Co. 一 An employment practice that operates to exclude members of a protected group is prohibited if it cannot be shown to be related to job performance, even if the employer lacked discriminatory intent.
Connecticut v. Teal 一 A non-job-related test that has a disparate impact and is used to limit or classify employees is used to discriminate within the meaning of Title VII, even if it was not designed or intended to have this effect and even if an employer tries to compensate for its discriminatory effect.
Dothard v. Rawlinson 一 To establish a prima facie case of discrimination, a plaintiff need only show that facially neutral standards select applicants for hire in a significantly discriminatory pattern. If the employer proves that the challenged requirements are job-related, the plaintiff may show that other selection devices without a similar discriminatory effect would also serve the employer’s legitimate interest.
Wards Cove Packing Co. v. Atonio 一 The proper comparison in a disparate impact case is generally between the racial composition of the at-issue jobs and the racial composition of the qualified population in the relevant labor market.
Smith v. City of Jackson 一 While the ADEA authorizes recovery in disparate impact cases, ADEA Section 4(f)(1) significantly narrows its coverage by permitting any otherwise prohibited action when the differentiation is based on reasonable factors other than age.
Meacham v. Knolls Atomic Power Laboratory 一 An employer defending a disparate impact claim under the ADEA bears both the burden of production and the burden of persuasion for the “reasonable factors other than age” (RFOA) affirmative defense.
Ricci v. DeStefano 一 Before an employer can engage in intentional discrimination for the asserted purpose of avoiding or remedying an unintentional disparate impact, the employer must have a strong basis in evidence to believe that it will be subject to disparate impact liability if it fails to take the race-conscious, discriminatory action.
Harassment in the Workplace
Harassment may support a claim under federal law when an employee must endure the offensive conduct as a condition of their continued employment, or when the conduct is so severe or pervasive that it creates a work environment that would be intimidating, hostile, or abusive to a reasonable person. This is known as a hostile work environment.
Harris v. Forklift Systems, Inc. 一 Title VII is violated when the workplace is permeated with discriminatory behavior that is sufficiently severe or pervasive to create a discriminatorily hostile or abusive working environment. This standard requires an objectively hostile or abusive environment, as well as the victim’s subjective perception that the environment is abusive.
Harassment and other unlawful conduct on the job is usually perpetrated by individual supervisors or coworkers. An employer is generally not vicariously liable for coworker misconduct unless it failed to act reasonably in response to behavior of which it knew or should have known. By contrast, an employer is generally liable for supervisor misconduct.
Faragher v. City of Boca Raton 一 An employer is subject to vicarious liability to a victimized employee for an actionable hostile environment created by a supervisor with immediate or successively higher authority over the employee. When no tangible employment action is taken, the employer may raise an affirmative defense if they can show that they exercised reasonable care to prevent and correct promptly any sexually harassing behavior, and the plaintiff unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.
Pennsylvania State Police v. Suders 一 A plaintiff alleging sexual harassment can establish constructive discharge if they can show that the abusive working environment became so intolerable that their resignation qualified as a fitting response. An employer may assert the Faragher affirmative defense unless the plaintiff quit in reasonable response to an adverse action officially changing their employment status or situation.
Kolstad v. American Dental Ass'n 一 An employer’s conduct does not need to be independently egregious to satisfy the requirements for a punitive damages award in a Title VII case. However, in the punitive damages context, an employer may not be vicariously liable for the discriminatory employment decisions of managerial agents when these decisions are contrary to the employer’s good-faith efforts to comply with Title VII.
Vance v. Ball State University 一 An employee is a supervisor for the purposes of vicarious liability under Title VII only if they are empowered by the employer to take tangible employment actions against the victim.
Staub v. Proctor Hospital 一 If a supervisor performs an act motivated by discriminatory animus that is intended by the supervisor to cause an adverse employment action, and if that act is a proximate cause of the ultimate employment action, the employer is liable.
Retaliation for Protected Activity
Title VII and most other anti-discrimination laws contain provisions that shield employees from retaliation for engaging in protected activities. These include filing a claim or making a charge of discrimination, as well as assisting or participating in an investigation of discrimination.
Burlington Northern & Santa Fe Railway Co. v. White 一 The anti-retaliation provision of Title VII covers only those employer actions that would have been materially adverse to a reasonable employee or applicant. The plaintiff must show that the challenged action well might have dissuaded a reasonable worker from making or supporting a charge of discrimination.
Clark County School District v. Breeden 一 A retaliation claim will not withstand a summary judgment motion when nobody could reasonably believe that the incident of which the plaintiff complained violated Title VII.
Hochstadt v. Worcester Foundation for Experimental Biology 一 A plaintiff’s overall conduct may be so generally inimical to their employer’s interests and so excessive as to be beyond the protection of the anti-retaliation provision, even if their actions were generally associated with their complaints of illegal employer conduct.
Whirlpool Corp. v. Marshall 一 A regulation could permit private employees of a private employer to avoid workplace conditions that they believe pose grave dangers to their own safety, when the employees have no power under the regulation to order their employer to correct the hazardous condition or to clear the dangerous workplace of others.
Kelsay v. Motorola, Inc. 一 To uphold and implement the public policy behind a workers’ compensation law, a cause of action should exist for retaliatory discharge.
Active whistleblowing often involves reporting a legal violation by the employer to the authorities while continuing to work, whereas passive whistleblowing involves refusing to work or perform a certain task for the employer. Laws may protect both forms of whistleblowing.
Nees v. Hocks 一 There can be circumstances in which an employer discharges an employee for such a socially undesirable motive that the employer must respond in damages for any injury done.
Petermann v. Int’l Brotherhood of Teamsters 一 An employer must be denied its generally unlimited right to discharge an employee whose employment is for an unspecified duration when the reason for the dismissal is the employee’s refusal to commit perjury.
Tameny v. Atlantic Richfield Co. 一 When an employer’s discharge of an employee violates fundamental principles of public policy, the discharged employee may maintain a tort action and recover damages traditionally available in these actions.
Geary v. U.S. Steel Corp. 一 An employee at will has no right of action for wrongful discharge when the complaint discloses a plausible and legitimate reason for terminating an at-will employment relationship, and no clear mandate of public policy is violated.
Palmateer v. Int’l Harvester Co. 一 The foundation of the tort of retaliatory discharge lies in the protection of public policy, and there is a clear public policy favoring investigation and prosecution of criminal offenses.
Wrongful Termination and Employment Contracts
Employment in all states except for Montana is at will, which means that the employee or the employer can end their relationship at any time for any reason that is not illegal. However, an employer manual or an individual contract between an employer and an employee may restrict the grounds for termination.
Woolley v. Hoffman-La Roche, Inc. 一 When an employer of a substantial number of employees circulates a manual that provides that certain benefits are an incident of the employment, courts should construe these provisions in accordance with the reasonable expectations of the employees.
Bullock v. Auto. Club of Michigan 一 To the extent that they did not constitute a unilateral modification of the policy basis of the plaintiff’s claim, employment manuals submitted by the defendant were seen on the record as an offer to modify the discharge-for-cause provision of an alleged express contract.
Dore v. Arnold Worldwide, Inc. 一 A clear and unambiguous at-will provision in a written employment contract, signed by the employee, cannot be overcome by evidence of a prior or contemporaneous implied-in-fact contract requiring good cause for termination.
Foley v. Interactive Data Corp. 一 Factors that may be used to ascertain the existence and content of an employment agreement, in addition to consideration and express terms, may include the personnel policies or practices of the employer, the employee’s longevity of service, actions or communications by the employer reflecting assurances of continued employment, and the practices of the industry in which the employee is engaged.
Guz v. Bechtel National, Inc. 一 An employee’s mere passage of time in the employer’s service, even when marked with tangible indicia that the employer approves the employee’s work, cannot alone form an implied-in-fact contract that the employee is no longer at will.
Fortune v. National Cash Register Co. 一 When commissions are to be paid for work performed by the employee, the employer’s decision to terminate an at-will employee should be made in good faith.
Monge v. Beebe Rubber Co. 一 A termination by the employer of a contract of employment at will is a breach of the employment contract when it is motivated by bad faith or malice, or based on retaliation.
Sabetay v. Sterling Drug, Inc. 一 No obligation can be implied that would be inconsistent with other terms of the contractual relationship in which the law accords the employer an unfettered right to terminate employment at any time.
Cotran v. Rollins Hudig Hall Int’l, Inc. 一 Good cause in the context of implied employment contracts is defined as fair and honest reasons, regulated by good faith on the part of the employer, that are not trivial, arbitrary, capricious, unrelated to business needs or goals, or pretextual. The termination must result from a reasoned conclusion that is supported by substantial evidence gathered through an adequate investigation that includes notice of the claimed misconduct and a chance for the employee to respond.
Tort Claims Against Employers
Although an employee may receive tort damages when they are fired in violation of public policy, or when a statute provides, they generally cannot receive them when an employer breaches a contract. However, an employee may bring related tort claims against an employer after their termination, such as intentional infliction of emotional distress or defamation.
Foley v. Interactive Data Corp. 一 The covenant of good faith and fair dealing applies to employment contracts, and a breach of the covenant may give rise to contract but not tort damages.
Hunter v. Up-Right, Inc. 一 When an employer used a falsehood to do what it otherwise could have accomplished directly, there is no fraud claim because the employee could not have relied to their detriment on the misrepresentation in suffering constructive dismissal.
Lewis v. Equitable Life Assurance Society 一 If plaintiffs can establish a cause of action for defamation, the fact that the defamation occurred in the context of employment discharge should not defeat recovery.
An employee may have privacy rights at work under the Constitution or applicable statutes or regulations, as well as the common law. However, more limited protections apply than in the criminal setting.
O’Connor v. Ortega 一 Both the inception and the scope of the intrusion must be reasonable when a public employer intrudes on the constitutionally protected privacy interests of government employees for non-investigatory, work-related purposes, as well as for investigations of work-related misconduct.
Ontario v. Quon 一 A government employer had a right to read text messages sent and received on a pager that the employer owned and issued to an employee.
Cort v. Bristol-Myers Co. 一 In measuring the nature of an intrusion into employee privacy, the nature of the employee’s job is significant.
Rulon-Miller v. IBM Corp. 一 The fair dealing portion of the covenant of good faith and fair dealing is at least the right of an employee to the benefit of rules and regulations adopted for their protection, such as a company policy that insures the right of privacy to the employee.
Barbee v. Household Automotive Finance Corp. 一 Customs, practices, and physical settings weigh heavily against finding a broadly based and widely accepted community norm that supervisors have a privacy right to engage in intimate relationships with their subordinates.
The First Amendment and Public Employees
The constitutional right to freedom of speech may be limited for public employees due to the government interest in efficiently providing services through its employees. Protections generally apply only to speech regarding a matter of public concern, and the time, place, and manner of the speech may affect whether it is protected. Also, speech is protected only if the employee was speaking as a citizen rather than acting in their official role.
Pickering v. Board of Education 一 When a public employee’s false statements concerned issues that were currently the subject of public attention and did not interfere with the performance of their duties or the general operation of their employer, they were entitled to the same protection as if the statements had been made by a member of the general public.
Connick v. Myers 一 When a public employee speaks as an employee on matters only of personal interest, a federal court is generally not the appropriate forum to review the wisdom of a personnel decision taken by a public agency allegedly in reaction to the employee’s behavior.
Garcetti v. Ceballos 一 When public employees make statements pursuant to their official duties, the Constitution does not insulate their communications from employer discipline.
Lane v. Franks 一 A public employee’s sworn testimony outside the scope of their ordinary job duties is entitled to First Amendment protection.
Heffernan v. City of Paterson 一 When an employer demotes an employee out of a desire to prevent the employee from engaging in protected political activity, the employee is entitled to challenge that unlawful action under the First Amendment.
Borough of Duryea v. Guarnieri 一 A government employer’s allegedly retaliatory actions against an employee do not give rise to liability under the Petition Clause of the First Amendment unless the employee’s petition relates to a matter of public concern.
Arbitration of Employment Disputes
Employers often try to require employees to waive their rights to resolve disputes with the employer in court. Instead, a dispute may proceed through arbitration, in which a neutral decision-maker or group of decision-makers reviews the positions of each side before resolving the dispute. Arbitration clauses often appear in employment agreements or applications.
Alexander v. Gardner-Denver Co. 一 An employee’s statutory right to trial de novo under Title VII is not foreclosed by prior submission of their claim to final arbitration under the non-discrimination clause of a collective bargaining agreement.
Wright v. Universal Maritime Service Corp. 一 For a union to waive employees’ rights to a federal judicial forum for statutory anti-discrimination claims, the agreement to arbitrate these claims must be clear and unmistakable.
14 Penn Plaza, LLC v. Pyett 一 A provision in a collective bargaining agreement that clearly and unmistakably requires union members to arbitrate ADEA claims is enforceable as a matter of federal law.
This outline has been compiled by the Justia team for solely educational purposes and should not be treated as an independent source of legal authority or a summary of the current state of the law. Students should use this outline as a supplement rather than a substitute for course-specific outlines.