Seventh Edition, 2022

PART I. INTRODUCTION TO EMPLOYMENT LAW

CHAPTER 1. THEMES OF EMPLOYMENT LAW

CHAPTER 2. LEGAL BOUNDARIES OF THE EMPLOYMENT RELATIONSHIP

1. Who is an Employee?
   Note 1 after Lauritzen. Myriad Definitions of Employee. The myriad definitions continue, complete with tugs of war in rulemaking between the Trump and Biden administrations and additional state legislation. For a 2023 update, see Independent Contractor Laws Are Ignoring Economy’s Evolution (Law360 Jan. 13, 2023).
2. Covered Employees and Employers

PART II. THE RISE AND FALL OF EMPLOYMENT AT WILL

CHAPTER 3. HISTORICAL FOUNDATIONS OF EMPLOYMENT AT WILL

CHAPTER 4. CONTRACT LIMITATIONS ON EMPLOYMENT AT WILL

1. Express Modification of At-Will Contracts, Written and Oral
2. Reliance and Implied-in-Fact Contracts
3. Employment Manuals

CHAPTER 5. TORT LIMITATIONS ON EMPLOYMENT AT WILL

1. Wrongful Discharge in Violation of Public Policy
2. Intentional Infliction of Emotional Distress

CHAPTER 6. GOOD-FAITH LIMITATIONS ON EMPLOYMENT AT WILL

PART III. EMPLOYEE AUTONOMY AND PRIVACY

CHAPTER 7. EMPLOYEE FREE SPEECH AND POLITICAL PROTECTIONS

1. Constitutional Protections for Public-Sector Workers
   Connick v. Myers
2. Political and Speech Rights in the Private Workplace
   Addendum to Note 4 on p. 264. In Thryv, Inc. 372 N.L.R.B. No. 22 (Dec. 13, 2022), the NLRB ruled that it would award “compensation for direct or foreseeable pecuniary harm,” in addition to the traditional remedies of backpay and reinstatement, in appropriate situations. The new remedy could cover items like medical expenses that workers had to pay because they lost health insurance because of an unlawful termination.Update to Note 5 on p. 264. For a report on further proceedings in the Whole Foods BLM mask case, click here. The district judge granted summary judgment for Whole Foods on the Title VII claim. In the NLRB proceeding, post-hearing briefs were filed in November 2022.

CHAPTER 8. EMPLOYEE PRIVACY RIGHTS ON AND OFF THE JOB

1. On-the-Job Privacy Claims
2. Off-Work Privacy Claims
3. Drug Testing
   1. Public-Employee Challenges
   2. Private-Employee Challenges
4. Honesty Tests and Other Background Screening

CHAPTER 9. EMPLOYER REFERENCES AND DEFAMATION

PART IV. EMPLOYEE DUTIES AND PROMISES

CHAPTER 10. DUTY OF LOYALTY AND TRADE SECRETS

CHAPTER 11. NONCOMPETE AGREEMENTS AND OTHER RESTRICTIVE COVENANTS

FTC proposed rule banning noncompetes. In January 2023, the Federal Trade Commission issued a notice of proposed rulemaking that would ban most noncompete agreements other than those connected to the sale of a business. The FTC suggests its authority to issue the rule comes from Section 5 of the Federal Trade Commission Act, which empowers the Commission “to prevent persons, partnerships, and corporations . . . from using unfair methods of competition in or affecting commerce or unfair or deceptive acts or practices in or affecting commerce.”

CHAPTER 12. EMPLOYEE INVENTIONS

PART V. PROHIBITIONS ON STATUS DISCRIMINATION

CHAPTER 13. EMPLOYMENT DISCRIMINATION

1. Individual Disparate Treatment
   1. The Basic Model
   2. Under the Age Discrimination in Employment Act
2. Systemic Disparate Treatment
3. Disparate Impact
   1. The Basic Model
   2. Under the Age Discrimination In Employment Act
4. Gender Discrimination
   1. Sexual Harassment
   2. Sex-Based Social Conventions
   3. Sexual Orientation and Expression
      In 303 Creative, LLC v. Elenis, the Supreme Court carved out a First Amendment exception to the obligation not to discriminate based on sexual orientation. In 303 Creative, the Court held that a business could deny services based explicitly on sexual orientation if the business is providing “expressive services” and providing the services would require the business to make a statement that would interfere with the business’s desired message (in this case, being opposed to same-sex marriage). 303 Creative was a case interpreting a state public-accommodation statute; it was not an employment case. As a result, application of the principle to employment cases is currently murky, at best. But at the least, the case opens the door to claims that the First Amendment may also protect discrimination by certain types of businesses in their employment practices. Interestingly, although the case is about a First Amendment objection to providing services to gay and lesbian persons, 303 Creative does not limit the exception to that kind of discrimination; it is possible that the First Amendment exception for “expressive” businesses might apply to all types of discrimination.
5. Reasonable Accommodation
   1. Who is Protected?
   2. Employee Duties: Essential Functions, Reasonable Accommodation, and Undue Hardship
      Note 3, page 549. In Groff v DeJoy, the Supreme Court reinterpreted TWA v. Hardison, the seminal decision on the burden of accommodation for religion under Title VII. Since 1977, Hardison had been interpreted to require an employer to accommodate religion only if the accommodation did not impose more than a de minimus cost or interfere with the rights of another employee. In Groff, the Court unanimously held that that was a misinterpretation of Hardison. The new standard is that an employer must accommodate religion unless the accommodation would result in substantial increased cost in relation to the conduct of the particular business.
6. Exceptions to the Non-Discrimination Obligation

1. 1. Bona Fide Occupational Qualifications
   2. The Ministerial Exception
      In 303 Creative, LLC v. Elenis, noted above under Chapter 13.D.3, the Court recognized another Constitutional exception to non-discrimination obligations. Interestingly, the exception is based on free speech, rather than religion, so the exception has a potentially broader reach than the ministerial exception.
   3. Affirmative Action
      In Students for Fair Admissions, Inc. v. President and Fellows of Harvard College, 2023 WL 4239254 (June 29, 2023), the Supreme Court held that affirmative action in college admissions violated the Equal Protection Clause of the Constitution. The Court held that the admissions programs at Harvard and the University of North Carolina did not meet either of the standards required to justify affirmative action in admissions. First, it held that fostering diversity in higher education (including the interests in training future leaders, acquiring new knowledge based on diverse viewpoints, promoting a robust marketplace of ideas, and preparing engaged and productive citizens) was not a sufficiently measurable compelling government interest to serve as a justification. Second, it held that the affirmative action programs were not sufficiently narrowly tailored for a variety of reasons, including overly vague racial categories and, importantly, the absence of an endpoint for the programs. On the latter, the Court relied on Justice O’Connor’s speculation in Grutter, 20 years earlier, that affirmative action may no longer be required in 25 years.
      Students for Fair Admissions does not directly address affirmative action in employment, even by public employers. The justification found insufficient in the case – diversity in higher education – is not one recognized in employment, and the Court did not opine on the validity of past discrimination or segregated job categories as justifications. Some of the skepticism in the case about narrow tailoring may apply, such as concerns about the vagueness of racial categories, but some may not, such as the concern about no endpoint. And, of course, since the case was about the Equal Protection Clause, the holding did not address Title VII (although a concurrence indicated that the same analysis should apply to Title VI, which would make the analysis apply to most private universities and imply that it would also apply under Title VII). Even though the case does not apply directly to Title VII, the case casts doubt on the continued validity of employment-based affirmative action programs in its general approach and broad statements, such as “[e]liminating racial discrimination means eliminating all of it.”

PART VI. REGULATION OF WAGES AND HOURS

CHAPTER 14. THE FAIR LABOR STANDARDS ACT

1. Minimum Wages and Overtime
   1. Working Time
      Secretary U.S. Dep’t of Labor v. American Future Systems, Inc., 873 F.3d 420 (3rd Cir. 2017) (holding that breaks of less than 20 minutes are compensable work time under the FLSA) 
   2. Wages
2. Child Labor
3. Coverage and Exemptions
   In February 2023, the Supreme Court decided the pending case mentioned in Note 3, page 631. In Hewitt v. Helix Energy, the Court held that an employee who was paid a daily rate was not paid on a “salary basis” and, as a result, was not exempted from overtime compensation under the exemption for bona fide executives. An interesting aspect of the case is that Justice Kavanaugh, in the last paragraph of his dissent, argued that the salary-basis test in the Department of Labor’s regulations may be inconsistent with the Fair Labor Standards Act. The majority declined to address the issue since it was not presented below.

CHAPTER 15. STATE WAGE-AND-HOUR LAWS

1. Wage Payment Laws
2. Garnishment: Payment of Wages to Third Parties
3. Other State Laws Regulating Wages and Hours

CHAPTER 16. LEAVE TIME

1. The Right to Leave Time
   As part of its response to the coronavirus crisis, Congress enacted the Families First Coronavirus Response Act (the “Act”). The Act required employers to provide paid leave time to employees who were: (1) subject to a quarantine order; (2) advised to self-quarantine by a health care provider; (3) experiencing COVID-19 symptoms; (4) caring for an individual with symptoms or self-quarantined; or (5) caring for a child whose school or place of care was closed for reasons related to COVID-19.Interestingly, the requirement only applied to employers with fewer than 500 employees. Employers were entitled to reimbursement for the costs of leave through tax credits. Department of Labor guidance on the Act can be found here. The program has now expired.
2. Conditions of the Leave

Chapter 17. UNEMPLOYMENT AND UNEMPLOYMENT INSURANCE

1. The Unemployment Insurance Program
   1. History and Financial Structure of Unemployment Insurance
   2. Causes of Unemployment and the Role of UI
   3. Work Search Requirements
   4. Work Sharing and Short-Time Compensation
   5. Covid-19 and Unemployment Insurance
2. Disqualification From UI Benefits
   1. Voluntary Quits
   2. Willful Misconduct
3. Federal Regulation of Plant Closings

PART VII. EMPLOYEE BENEFITS

CHAPTER 18. PENSIONS

1. The Problem with Pensions
2. Protecting Employees from Forfeiture
3. Fiduciary Duties
4. Ensuring Retirement Security
   1. Defined Benefit Plans
   2. Defined Contribution Plans

CHAPTER 19. EMPLOYER-PROVIDED HEALTH INSURANCE

1. 1. The Employer Mandate
   2. ERISA Preemption
   3. Special Problems in Regulating Employer-Provided Health Insurance
      1. Enforcement
      2. Retiree Healthcare
         In notes 1 and 2 following the Tackett case, Professor Hillman criticizes Tackett’s application of “ordinary contract principles.” Professors Malin and Finkin argue that the case got it wrong at a more basic level by seeking to apply ordinary contract principles; instead, the court should have recognized long-standing principles of labor law that recognize the special nature of collective bargaining agreements and the role of arbitrators in administering them. In labor law, arbitration is not simply a more efficient substitute for litigation, as is the case for most other contracts. It is also part-and-parcel of the parties’ duty to bargain with each other under the National Labor Relations Act and a substitute for labor strife. Martin H. Malin & Matthew W. Finkin, Are Collective Bargaining Agreements Still Special, 37 ABA J. Lab. & Emp. L. ___ (2022)(forthcoming).
      3. Wellness Programs
   4. Thinking About Health Care Policy
      1. Why an Employment-Based System?
      2. The Potential Advantages of a More Systemic Approach
      3. A Theory of Government-Mandated Health Insurance

PART VIII. WORKPLACE INJURIES AND DISEASES

CHAPTER 20. WORKERS’ COMPENSATION

1. 1. Basic Features of Workers’ Compensation Programs
   2. The Exclusivity of Workers’ Compensation
   3. Occupational Injuries
      1. In the Course of Employment
      2. Arising Out of Employment
      3. Accident
      4. Personal Injury
   4. Occupational Diseases
      1. Procedural Requirements
      2. Substantive Requirement
   5. Cash Benefits
   6. Death Benefits
   7. Medical and Rehabilitation Benefits

CHAPTER 21. THE OCCUPATIONAL SAFETY AND HEALTH ACT

1. An Overview of the Act
   Paul Krugman wrote an interesting essay analyzing the slow growth of productivity in the construction industry since the 1970s and in the overall economy in the 1970s. Paul Krugman, Regulation, Productivity, and the Meaning of Life, N.Y. Times Feb. 7, 2023. His key point is that productivity per worker is a useful measure for some purposes and a key explanation for rising GDP, but productivity and GDP growth are not ends in themselves. Using the chart below, he shows the dramatic decline in workplace injuries after the enactment of OSHA. While OSHA regulations may have imposed costs on construction sites that lowered productivity, the regulations may also have made the workplace much safer–a benefit not captured by productivity or GDP measures.
   
2. Substantive Criteria for OSHA Standards
   1. Technological and Economic Feasibility
   2. Reducing a Significant Risk
      Professor Sunstein has recently emphasized the importance of The Benzene Case, declaring that the case established “the foundation of modern administrative law.”
      “There is a good argument that the foundations of modern administrative law were laid in 1980, with the disparate opinions of a sharply divided Court in Industrial Union Department v. American Petroleum Institute (commonly referred to as “the Benzene Case”). Consider four points. (1) The Benzene Case is now understood to be the first contemporary appearance of the Major Questions Doctrine. (2) The Benzene Case marked the return of the nondelegation doctrine, signaled most plainly by Justice William Rehnquist’s elaborate concurring opinion, but also by a favorable reference in the plurality opinion by Justice John Paul Stevens and an open-minded sentence from Justice Lewis Powell. (3) The Benzene Case is the origin of contemporary cost-benefit default principles, permitting or requiring agencies to exempt de minimis risks, to consider costs, and to engage in some form of cost-benefit balancing, unless Congress has squarely said otherwise. (4) The Benzene Case essentially defined “significant risk,” with a precise numerical definition (one in one thousand) that persists at the Department of Labor to this day. At the same time, a close analysis of the plurality opinion in the Benzene Case shows that it is best understood as a specification, above all, of the Absurdity Canon – a Church of the Holy Trinity v. United States for the modern administrative state. So understood, the Benzene Case had, and continues to have, an important and salutary effect on regulatory programs. Its significant current role, more than four decades after the opinions were issued, is an intriguing case study in doctrinal development, and in particular in how Supreme Court decisions can plant small seeds that become big trees.”
      Cass R. Sunstein, It All Started With Benzene (Sept. 11, 2023. Available at SSRN: https://ssrn.com/abstract=4568007.
   3. Cost-Benefit Analysis
3. The General Duty Clause
4. Employee Rights and Responsibilities

PART IX. ENFORCEMENT OF EMPLOYMENT RIGHTS

CHAPTER 22. ENFORCEMENT ARCHITECTURE

CHAPTER 23. ARBITRATION

Epic Systems Corp. v. Lewis (U.S. 2018)

PAGA suits. Note 2 on page 1066 discusses the possibility of labor enforcement through statutes that authorize employees to enforce labor rights through lawsuits filed under private attorneys general acts (PAGA suits). Two important developments have occurred since the textbook went to print.
First, in Viking River Cruises, Inc. v. Moriana, 142 S. Ct. 1906 (2022), the Court held that the provision of California’s PAGA Act that precluded division of actions into individual and representative suits was preempted by the FAA. The Court held that the provision was preempted because it “unduly circumscribes the freedom of parties to determine ‘the issues subject to arbitration’ and ‘the rules by which they will arbitrate.’” Id. At 1923. This meant that the plaintiff in Moriana had to arbitrate her individual claim, which meant that she would no longer have standing to litigate the statutory claim of others through the PAGA action. So her PAGA claim was dismissed.
In a short concurrence, Justice Sotomayor pointed to an easy work-around:

The Court concludes that the FAA poses no bar to the adjudication of respondent Angie Moriana’s “non-individual” PAGA claims, but that PAGA itself “provides no mechanism to enable a court to adjudicate non-individual PAGA claims once an individual claim has been committed to a separate proceeding.” Thus, the Court reasons, based on available guidance from California courts, that Moriana lacks “statutory standing” under PAGA to litigate her “non-individual” claims separately in state court. Of course, if this Court’s understanding of state law is wrong, California courts, in an appropriate case, will have the last word. Alternatively, if this Court’s understanding is right, the California Legislature is free to modify the scope of statutory standing under PAGA within state and federal limits.

Id. at 1925-26 (emphasis added).
The next year, the California Supreme Court followed up on Justice Sotomayor’s suggestion. In Adolph v. Uber Technologies, 2023 WL 4553702 (July 17, 2023), the Court held that workers retain standing to pursue PAGA claims if they experience a labor code violation, even if they subsequently settle or release their individual claim. The Court acknowledged that trial courts have discretion to stay or proceed with the PAGA claim while the individual action is heard in arbitration, but the normal course for such an action will likely be that the court will stay and retain the PAGA claim while the arbitration takes place. If the worker succeeds in arbitration, the PAGA action could proceed. If the worker fails in arbitration, the PAGA action would be dismissed because the worker, not having suffered a labor code violation, would not have standing (but, of course, another employee could assert a similar claim).