Justices to Hear Cases on Drug Tests and Ex-Worker ADA Rights

The US Supreme Court agreed to hear at least five cases this year that could potentially reshape the employment law landscape, including when plaintiffs are entitled to attorney’s fees and whether workers must go through administrative processes before filing a federal civil rights violation claim in state court.

Employers’ burden for showing federal overtime exemptions and the contours of the Americans with Disabilities Act and the Racketeer Influenced and Corrupt Organizations Act’s causes of action are among a handful of disputes with workplace implications to be tackled by justices this upcoming term.

Here’s how the high court’s new term is shaping up for employment law:

State Administrative Remedies

The justices will kick off the term on Oct. 7 with Williams v. Washington, a dispute regarding whether workers must exhaust state administrative remedies before bringing federal civil rights violation claims in state court.

At issue is an Alabama Supreme Court ruling that a group of residents can’t sue the state Department of Labor over “extreme delays” in processing their unemployment compensation benefits during the Covid-19 pandemic because they didn’t initially exhaust the necessary administrative procedures.

The residents claimed their due process and Social Security Act rights were violated. They invoked Section 1983, a federal civil rights law allowing lawsuits against state officials for alleged constitutional violations, and told the nation’s high court that the statute has no administrative exhaustion requirement.

State officials urged the justices to affirm the Alabama Supreme Court ruling. Section 1983 doesn’t expressly preempt the state’s administrative exhaustion scheme designed to assess and adjudicate unemployment compensation claims efficiently, they said.

The Supreme Court’s 1982 Patsy v. Board of Regents decision held that plaintiffs don’t have to exhaust all available remedies before a state agency to bring a civil rights claim in federal court. However, the state contended that Patsy wasn’t a preemption dispute, and Section 1983 cannot compel state courts to adjudicate federal claims outside of their jurisdiction.

Prevailing Party

An Oct. 8 oral argument in Lackey v. Stinnie will touch on whether a party that secured a preliminary injunction in civil rights litigation based on the likelihood of success can still be considered the prevailing party entitled to attorneys’ fees.

While Lackey isn’t a workplace dispute, legal scholars said the Supreme Court’s ultimate decision could impact employment bias cases filed under Section 1981 of the 1866 Civil Rights Act, which bans racial discrimination in the making and enforcing of contracts. Most recently, critics of workplace diversity efforts have invoked Section 1981 in several ongoing legal challenges on the basis that those programs discriminate against non-Black workers, primarily White men.

In Lackey, a proposed class of motorists challenged a Virginia law that automatically suspends the license of anyone convicted of a crime who fails to pay a court-ordered debt. They secured a temporary court relief before the state legislature later overturned the law, mooting the case.

The state urged the Supreme Court to undo the Fourth Circuit’s order granting the drivers’ bid for attorney’s fees. They never won their case on the merits, which is required under federal law to be a “prevailing party” entitled to such fees, it said.

Failed Drug Test

The high court will hear Medical Marijuana Inc. v. Horn on Oct. 15 to determine if a truck driver could invoke the RICO Act, against CBD makers. He accused them of falsely marketing a product that caused him to fail a drug test and lose his job.

The Second Circuit ruled that Douglas Horn’s RICO claims against the makers of THC product Dixie X could proceed because his job loss amounts to an economic injury covered by the law. Horn said he wouldn’t have consumed the product if it had been advertised as containing THC, the psychoactive compound in marijuana.

RICO is primarily used to prosecute individuals and organizations involved in ongoing organized criminal activities. It also allows plaintiffs whose “business or property” suffered an injury due to a defendant’s conduct to bring certain civil cases for fraud and potentially collect triple the damages and attorneys’ fees.

The CBD makers asked the justices to resolve a circuit split over RICO’s civil cause of action. The statute’s “business or property” requirement excludes personal injuries like job and wage loss, yet the Ninth and Second circuits wrongly allow plaintiffs to argue these are economic damages recoverable in a civil RICO suit, their petition said.

The Eleventh, Seventh, and Sixth circuits correctly bar RICO recovery for economic harm from personal injuries, they said.

But Horn argued that the CBD makers’ request risks denying recovery whenever a personal injury exists in the chain of causation between predicate racketeering activity and an otherwise compensable business or property injury. No federal circuit court has adopted such a broad rule, he said.

Overtime Exemption

The burden employers must meet when showing that workers were properly classified as exempt from federal overtime requirements will be examined at oral argument set for Nov. 5.

EMD Sales Inc., an international foods distributor, wants to overturn the Fourth Circuit’s order in E.M.D. Sales Inc. v. Carrera U.S. in favor of three sales representatives, who alleged that it owes them overtime pay. EMD failed to present “clear and convincing evidence” that the workers aren’t covered by the Fair Labor Standards Act’s overtime protections, the appeals panel said.

The decision is an outlier from the federal appeals courts that have addressed the issue. The Eleventh, Tenth, Ninth, Seventh, Sixth, and Fifth circuits all apply the “preponderance of evidence” standard, which requires the party with the burden of proof to only convince the judge or jury that the evidence more likely than not proves their case.

Affirming the Fourth Circuit’s heightened standard of proof would expose employers to greater liability under the FLSA, and give workers an advantage in bringing allegations they’re owed overtime pay and make it easier for them to win at trial, employment law scholars said.

The Fourth Circuit’s opinion was “unreasoned and inconsistent with” high court precedent and should be summarily reversed, the US Solicitor General told the justices in a brief the high court requested.

Post-Employment ADA Rights

Stanley v. City of Sanford gives the justices an opportunity to clean up a conflict among six circuit courts on whether the Americans with Disabilities Act permits a disabled former employee to sue over allegedly discriminatory post-employment policies.

The justices agreed to hear former Florida firefighter Karyn Stanley’s bid to vacate an Eleventh Circuit ruling that she lacked standing to sue the City of Sanford because the ADA only applies to workers who currently hold or seek a job.

Stanley, who had the US government’s backing on appeal, took early disability retirement due to Parkinson’s disease. She alleged that a city policy change giving her two years of free health insurance after leaving her job, instead of longer-term coverage, was biased against disabled workers in violation of the ADA.

A decision for the city could put the health care of disabled workers in jeopardy, disability rights advocates said.

The high court’s review could bring clarity to employers regarding the ADA’s applicability in such cases but also potentially increase their compliance burdens, which might discourage them from offering post-employment benefits to workers with disabilities, management-side attorneys said.

The oral argument date hasn’t been scheduled yet.