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Employment Law Update — March 13, 2020

A CIRCUIT SPLIT ON WHETHER OBESITY IS A DISABILITY. The Americans with Disabilities Act (ADA) prohibits discrimination against applicants and employees with disabilities that can otherwise perform the essential functions of their jobs. The ADA defines a “disability” as “a physical or mental impairment that substantially limits one or more major life activities of such individual” or “being regarded as having such an impairment.” Courts nationwide have reached differing conclusions as to the extent that obesity is a disability under the ADA. The latest to weigh in is the Fifth Circuit Court of Appeals, which has jurisdiction over federal cases originating in Louisiana, Mississippi, and Texas. On February 27, the court in Lumar v. Monsanto Co. held that a morbidly obese plaintiff was not disabled under the ADA because there was no evidence that his life activities were limited in any way. The Fifth Circuit joins a growing chorus of circuit courts addressing whether obesity is a disability under the ADA. The Second, Sixth, Seventh, and Eighth Circuits hold that obesity is not a disability absent an underlying physiological condition. Conversely, the First and Ninth Circuits hold that an underlying physiological condition is unnecessary. These variances further complicate ADA compliance for employers that – depending on the jurisdiction – may or may not be permitted to make employment decisions based on an applicant’s or employee’s weight.

SALARY HISTORY DOES NOT JUSTIFY SEX-BASED WAGE GAPS. The Equal Pay Act (EPA) prohibits pay disparities resulting from sex discrimination, but allows employers to consider “any other factor other than sex” to justify different pay for employees of the opposite sex. On February 27, the Ninth Circuit Court of Appeals held in Rizo v. Yovino that employers may never consider salary history to justify pay disparities between male and female employees because this risks perpetuating historical sex-based wage discrimination. Instead, only “job-related” factors like experience, education, training, and prior job performance can be considered. This holding is at odds with decisions by several circuit courts and the Equal Employment Opportunity Commission (EEOC) permitting salary history to be considered as part of a mix of other factors. It is also likely to have limited effect in California due to legislation that prohibits employers from seeking or considering salary history. Employers in other western states under the jurisdiction of the Ninth Circuit should, however, take this decision into consideration when setting rates of pay.

AB 5 LAWSUITS COMMENCE IN CALIFORNIA. AB 5, signed into law last year by Governor Newsom, makes it more difficult for employers to classify workers as independent contractors. Under the law workers are presumed to be employees rather than independent contractors for purposes of the Labor Code, Wage Orders, and Unemployment Code unless the three-part “ABC test” established by the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court is met. The Superior Court for the County of San Diego has issued the first major ruling in an action brought against an employer under AB 5 since the law took effect on January 1. On February 14, the court in People v. Maplebear, Inc. granted the San Diego City Attorney’s preliminary injunction against Instacart, finding that San Diego will likely succeed in proving that Instacart misclassified its workers. The court warned that the policy of California is “unapologetically pro-employee,” that all three branches of its government have now curtailed independent contractor classification, and that “the handwriting is on the wall.” This ruling should therefore serve as clear notice to employers that proponents of independent contractor classification are at a significant disadvantage in California.

AN UPTICK IN COBRA LITIGATION. Employers nationwide should be alert to a new wave of class action lawsuits alleging that their COBRA notices violate the Employee Retirement Income Security Act of 1974 (ERISA) because they do not mirror the model notice promulgated by the Department of Labor (DOL). An example of a complaint can be found here.  These cases allege, among other things, failure to adequately explain how to enroll in COBRA, missing details such as the name and contact information of the plan administrator or the address for the remittance of payments, and absence of an explanation of how coverage can be lost prematurely. Among other damages, these cases seek statutory penalties that can total up to $110 per day per person. Employers are encouraged to proactively review their COBRA notices to avoid potential exposure.

For further information about the above cases and recently enacted legislation, please contact your SRC employment attorney.

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The contents of this newsletter are intended for general informational purposes only and should not be construed as legal advice or a legal opinion.  You are advised to consult an attorney about any specific legal question.