Monthly Archives: January 2012

Supreme Court Gives Religious Employers a Big Defense in Discrimination Cases

Last week, the Supreme Court decided an employment discrimination case against a Lutheran school, Hosanna-Tabor v. EEOC. The case involved a teacher who claimed she was fired in retaliation for asserting her rights under the Americans with Disabilities Act. (The teacher, Cheryl Perich, had taken a leave of absence after being diagnosed with narcolepsy, and was asked to resign when she tried to return to work.) The school argued that it had to be free to choose the employees who acted in a ministerial role, and that its decision to fire Perich was therefore beyond the reach of the civil court system. The Supreme Court agreed, for the first time explicitly recognizing a “ministerial exception” to the ADA and other federal civil rights laws.

The parties agreed on the facts of the case. Perich was what the school refers to as a “called” teacher, which means she had completed a course of instruction on the Church’s beliefs and was asked to teach under the formal title “Minister of Religion, Commissioned.” This position gave Perich certain advantages over the school’s lay teachers, including more job security and some tax breaks. Perich’s duties were largely the same as those of the lay teachers.

Perich was diagnosed with narcolepsy and was out on disability leave at the start of the 2004-2005 school year. In January of 2005, she told the school she was ready to return soon; the school had already hired a lay teacher to replace her for the rest of the year. The congregation of the Church voted to give her a “peaceful release” from her call, by which it would pay a portion of her health insurance premiums if she resigned. Her response was not to peaceful: She refused to resign, told the school her doctor had released her to return to work on February 22, and showed up at the school on that day. She refused to leave until she was provided with a written acknowledgment that she had showed up. The school informed her that she would be fired, to which she responded that she had spoken to a lawyer and intended to assert her rights. She was fired and filed a lawsuit for retaliation under the ADA.

The Supreme Court found that Perich’s lawsuit was barred by the ministerial exception. Although lower courts had recognized this exception to federal laws prohibiting discrimination, this is the first time the Supreme Court has done so. Pursuant to this exception, grounded in the Establishment Clause and Free Exercise Clause of the First Amendment, religious bodies must be free to decide who will “preach their beliefs, teach their faith, and carry out their mission.” A discrimination lawsuit infringes that right by dictating whom the religious institution must hire or retain.

A couple of things interested me about this case. First of all, the Court refused to set clear guidelines on who qualifies as a “minister,” saying it was reluctant to adopt a “rigid formula” in its first case on the issue. The Court said that the facts in this case, including the effort required to be a called teacher, Perich’s use of the term for herself (and willingness to take advantage of the tax benefits), and her religious responsibilities, all added up to ministerial status. The concurring opinions took up this issue, with Justice Thomas proposing that courts should defer to the religious body’s good faith statement that someone is a minister. Justice Alito also wrote separately to emphasize that all religions should be entitled to this exception, not just those that have “ministers,” ordain certain members, or otherwise utilize the nomenclature and rites of the Protestant Church. This leaves a lot of leeway for future courts to decide how much analysis and probing is allowed of a religious institution’s assertion that a person qualifies as a minister under the exception.

Second, the school’s stated reason for firing Perich was that her threat to sue violated Lutheran doctrine that disputes should be resolved internally rather than through resort to the courts. But according to the facts, this threat came only after the school had told her she would be fired, so it’s hard to see how the internal dispute resolution process was still available to her. And, the Court’s unanimous opinion didn’t take up this part of the case at all. Essentially, the school is saying that this doctrinal belief essentially required it to retaliate against Perich, just as Catholic doctrine precluding ordination of women would require that Church to discriminate on the basis of sex. It’s not clear what evidence was presented to the lower courts based on the Court’s opinion, but it seems to me that religious employers relying on a defense this extreme should have to show that the belief is in fact held, and in good faith. For a court to analyze whether that belief is “valid” or correct in some ultimate sense would of course violate the First Amendment. But there should at least be some requirement that the belief is genuine and not a pretext for discrimination. A similar standard applies to employees who want a religious accommodation: Courts don’t examine the ultimate rectitude or logic of their beliefs, but do require that they be genuinely held and be religious in nature. To the extent religious organizations are claiming an exemption from laws so fundamental to our society, it seems they should be subjected to the same requirement. This wouldn’t give courts the right to say what a Church’s doctrine should be, but only what the Church’s doctrine actually is.


Can an Arbitration Agreement Waive the Right to Bring a Class Action?

For at least two decades, employers nationwide have been requiring employees to sign arbitration agreements. In a typical arbitration agreement, the employee gives up the right to sue over employment-related claims, instead agreeing to have such disputes heard in an arbitration proceeding. (Twenty years ago, the U.S. Supreme Court decided Gilmer v. Interstate/Johnson Lane, in which it made clear that employees could be required to arbitrate claims protected by statute, such as discrimination claims. Many employers and their lawyers interpreted this case as a green light to impose arbitration agreements on employees.)

Advocates for employees have brought piles of cases challenging arbitration agreements, arguing that the rules by which these agreements are judged should be different when one party has all or most of the bargaining power, as is the case in the employment relationship — particularly when the employee is required to sign the agreement as a condition of employment. (Generally, employees would prefer to proceed publicly, before a jury of their peers, with all of the protections offered by the judicial system, rather than privately, before a professional arbitrator whose decision is largely unappealable and who has a much freer hand in deciding which evidence to admit, how long the proceeding will last, and so on.) For the most part, however, these cases have failed, and arbitration agreements have been upheld. Progressive members of Congress have introduced various versions of legislation (here’s a recent example) that would prohibit the enforcement of pre-dispute arbitration agreements in consumer, civil rights, and employment cases, but have had no success to date.

But the legal landscape is different in California, where state law is more protective of employees, consumers, and others who often find themselves at the mercy of more powerful adversaries. The California Supreme Court and Courts of Appeal have continually refused to enforce arbitration agreements that overreach in favor of the employer. In the case of Armendariz v. Foundation Health Psychcare Services, the California Supreme Court held that arbitration agreements may be enforced as to statutory claims (such as discrimination) only if they comply with five rules intended to ensure that the employee’s claims receive a fair hearing. These rules, called the Armendariz factors, are:

  1. The agreement can’t limit the damages and other remedies available to employees. If, for example, an employee would be entitled to ask for punitive damages in court, such damages must also be available in arbitration.
  2. The employee must be allowed to conduct sufficient discovery — the opportunity to seek documents and information regarding the dispute. The Court noted that employers typically hold most of the relevant information in an employment dispute, and limiting the employee’s ability to collect that evidence could unfairly affect the outcome of the case.
  3. The arbitrator must issue a written decision that includes the essential findings and conclusions on which the award is based. The intent of this rule is to give employees sufficient information to appeal the decision, even though appeals of arbitration awards are quite limited.
  4. The employer must pay all costs and fees that are unique to arbitration. In other words, an employer can’t make it more expensive for an employee to arbitrate than it would have cost to bring a claim in court.
  5. The agreement must provide for neutral arbitrators.

Also unique to California is the state’s protection of an employee’s right to bring a class or collective action: a dispute brought on behalf of a group of similarly situated employees who have the same claim against the employer (for example, that the employer improperly failed to provide rest breaks or pay overtime). Many arbitration agreements preclude not only class actions in court, but also class or collective arbitration proceedings. Instead, employees agree to bring their disputes only on their own behalf as individuals.

In the case of Gentry v. Superior Court, the California Supreme Court laid out some more factors for courts to consider in deciding whether to enforce this type of agreement, including the size of the potential damages, the potential for retaliation against employees, the likelihood that employees who aren’t part of the proceedings may be ignorant of their rights, and other real-world facts that might pose an obstacle to employees seeking to vindicate their statutory rights through individual arbitration proceedings. Despite the language of an arbitration agreement, a court can order class arbitration of claims that cannot be waived under California law (such as the right to overtime) if it decides that a group proceeding would be significantly more effective at vindicating and enforcing employee rights.

California courts have continued to apply the Gentry case despite the U.S. Supreme Court’s finding, in AT&T v. Concepcion, that California courts may no longer prohibit the enforcement of class action waivers in arbitration agreements entered into by consumers. And last week, the National Labor Relations Board gave the state some support: The NLRB ruled that arbitration agreements prohibiting group actions violate the National Labor Relations Act (NLRA), even at companies where employees are not represented by a union. The NLRA protects the rights of all employees to engage in concerted activity to try to improve the terms and conditions of their employment, whether through a union or otherwise. The NLRB found that prohibiting group proceedings in arbitration violates this right.