5 important Supreme Court labor and employment law decisions of 2014
December 26, 2014 12:22 PM
Overview:
The Supreme Court weighed in on some key labor and employment cases in 2014, including two ERISA cases and one challenge to certain requirements of the Affordable Care Act. The decisions promise to have significant ramifications for employers and benefit plans.
<i>Burwell v. Hobby Lobby Stores, Inc.</i>
For religious reasons, three private companies objected to including coverage for certain forms of contraception in their employer-provided health care plans, as required under the ACA. The Supreme Court, in an opinion bound to have significant ramifications, determined that the HHS regulations create a substantial burden on the company owners religious exercise and held that the companies did not have to follow the regulation.
<i>Heimeshoff v. Hartford Life & Accident Insurance Co.</i>
This case involved an appeal of an insurance companys denial of an employees long-term disability benefit claim under her employers insurance plan. Julie Heimeshoff filed suit against the insurance company in district court, but after the plans stated three-year statute of limitations had expired. The district court and an appeals court dismissed the case under the statute of limitations. A unanimous Supreme Court agreed that because ERISA does not mandate a statute of limitations, the court must uphold the plans language.
<i>Fifth Third Bancorp v. Dudenhoffer</i>
Former Dudenhoffer employees alleged the employer violated its duties as a fiduciary of the company ESOP by ignoring signs that the company stock was risky and overvalued. They also accused the employer of misrepresenting its financial strength to investors and thereby artificially inflating its stock. The employer argued an earlier decision provides fiduciaries with a presumption that their purchase or sale of company stock was prudent. The Supreme Court sided with the employees and held that ESOP fiduciaries are not entitled to any enhanced deference when purchasing or selling company stock.
<i>Harris v. Quinn</i>
A 5-to-4 majority of the Supreme Court ruled that, in some cases, unions could not collect fees from one particular class of public employees who did not want to join. The Harris plaintiffs were home health care personal assistants arguing against the need to pay fair share dues as part of a collective bargaining agreement between the State of Illinois, their employer, and a labor union selected to represent them.
<i>Lane v Franks</i>
Edward Lane sued Central Alabama Community College President Steve Franks after Lane was fired from his job leading the school's program for at-risk youth. Lane had uncovered a state representative was on the program's payroll despite doing no work for the group. Franks fired him after Lane testified in an FBI case against the elected official. In a unanimous decision, the Supreme Court justices ruled that the First Amendment "protects a public employee who provided truthful sworn testimony, compelled by subpoena, outside the course of his ordinary job responsibilities."
Upcoming litigation
Halbig v. Burwell
The Supreme Court has also agreed to review a challenge to the tax subsidies allowed under the Affordable Care Act. The Supreme Court said it will hear a Republican-backed appeal of a July 22 decision of the U.S. District Court for the Eastern District of Virginia that upheld the validity of subsidies offered to individuals on the federal exchange. On the same day, a three-judge panel on the D.C. Circuit Court of Appeals declared the laws premium subsidies invalid in more than two dozen states due to the laws specific language. See related story:SCOTUS to review ACA subsidies experts predict little change
Tibble v. Edison International
The U.S. Supreme Court has agreed to consider a case that could make it easier for pension plan participants to sue their plans for imprudently managing investments. Lower courts have held that Edison International employees could not sue their 401(k) plan administrator for breach of fiduciary duty because their claims were time-barred under ERISA, which gives workers six years to sue after the date of the last action which constituted a part of the breach or violation. The employees contend the fiduciary has a continuing duty to make prudent investments in a plan no matter when the investments were first selected.
The Supreme Court has also agreed to review a challenge to the tax subsidies allowed under the Affordable Care Act. The Supreme Court said it will hear a Republican-backed appeal of a July 22 decision of the U.S. District Court for the Eastern District of Virginia that upheld the validity of subsidies offered to individuals on the federal exchange. On the same day, a three-judge panel on the D.C. Circuit Court of Appeals declared the laws premium subsidies invalid in more than two dozen states due to the laws specific language. See related story:
Tibble v. Edison International
The U.S. Supreme Court has agreed to consider a case that could make it easier for pension plan participants to sue their plans for imprudently managing investments. Lower courts have held that Edison International employees could not sue their 401(k) plan administrator for breach of fiduciary duty because their claims were time-barred under ERISA, which gives workers six years to sue after the date of the last action which constituted a part of the breach or violation. The employees contend the fiduciary has a continuing duty to make prudent investments in a plan no matter when the investments were first selected.
