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Legal Developments

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During the week of June 24, the U.S. Supreme Court issued decisions in two cases of importance to SHRM and the HR profession: Vance v. Ball State University regarding supervisor liability and United States v. Windsor challenging the constitutionality of the Defense of Marriage Act. The Court also announced that it will hear the National Labor Relations Board v. Noel Canning case regarding the validity of the Obama administration’s recess appointments to the National Labor Relations Board (NLRB).

Vance v. Ball State University

On June 25, in a 5-4 opinion in Vance v. Ball State University, the Court adopted a more narrow definition of “supervisor,” ruling that “an employee is a ‘supervisor’ for purposes of vicarious liability under Title VII only if he or she is empowered by the employer to take tangible employment actions against the victim.” In its opinion, the Court provided examples of employment actions to include, “hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits.” The Court also specifically rejected the EEOC’s guidance that defines “supervisor” as anyone who has the “authority to direct the employee’s daily work activities,” remarking that “the vagueness of the EEOC’s standard would impede the resolution of the issue before trial….”

SHRM submitted an amicus brief supporting the employer in this case and encouraging the Court to narrow the definition of “supervisor” for purposes of an employer’s vicarious liability. The Court previously ruled on this issue in two 1998 cases, Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1998) and Faragher v. Boca Raton, 524 U.S. 775 (1998). Since that time, the lower federal courts have been split on whether a “supervisor” is a person who has the authority to take specific workplace actions -- such as hiring, firing and promoting -- or one who merely controls an employee’s day-to-day tasks. The Court’s decision is a victory for employers in that it provides a brighter line for determining which employees are “supervisors” and, therefore, which employees will be considered under Title VII as acting as agents of the employer.

The dissenting justices commented that “the ball is once again in Congress’ court to correct the error into which this Court has fallen….” Whether Congress takes up the suggestion in the Court’s dissenting opinion, time will tell.

United States v. Windsor

On July 26, the Court issued its ruling in United States v. Windsor overturning a provision of the Defense of Marriage Act (DOMA) which denied federal benefits to same-sex couples. The 5-4 ruling will also affect how workplace benefits may be administered in certain states. The Court’s decision affects over 1,000 federal laws and extends the marriage benefits within federal laws -- such as Social Security benefits; joint tax returns; veteran’s benefits; and family, military and medical leave laws -- to all legally married couples, whether heterosexual or homosexual.

How the Court’s decision affects HR will depend on how an employer currently administers benefits and whether the employer is located in one of 12 states, plus the District of Columbia, where same-sex marriages are legal. Workplaces in those states will need to review their employee benefits packages to ensure compliance with the DOMA decision.

Most significant in the workplace may be the ruling’s impact on health insurance premiums. Prior to the ruling, the value of a gay spouse’s benefits coverage was treated as taxable imputed income. Now, both same-sex couples and heterosexual couples are able to pay from pretax earnings with regard to their federal tax liability. If the employee and his or her spouse reside in a state that recognizes same-sex marriage, they will likely avoid a state tax liability on the employer-paid portion of the spouse’s premium. However, if the couple resides in a state that does not recognize same-sex marriage, that subsidized premium will likely still be subject to state and local income tax. In addition, 401(k) retirements plans and pensions will now automatically consider all legally recognized spouses as beneficiaries of such accounts under federal law.

National Labor Relations Board v. Noel Canning

Also on July 25, the Court agreed to consider the case National Labor Relations Board v. Noel Canning, which will determine whether the president’s recess-appointment power may be exercised during recesses occurring within a session of the U.S. Senate or is limited to recesses that occur between sessions. The case will also decide whether the president is able to fill vacancies existing during a recess or is limited to vacancies that come about for the first time during the recess.

Prior to the Court’s decision to hear the case, the NLRB lost two federal appeals court cases on this issue. The U.S. Court of Appeals for the District of Columbia ruled that the Obama Administration violated the Constitution when the president appointed three members to fill vacancies on the National Labor Relations Board (NLRB). These rulings call into question virtually every decision the board has made since the recess appointments were announced. SHRM, as part of a coalition of employers, associations and other organizations known as the Coalition for a Democratic Workplace, filed an amicus brief in support of certiorari with the Supreme Court. The Court will hear this case during its next term, which begins in October 2013. SHRM will be submitting an amicus brief in this case.

SHRM Webcast

On July 16, SHRM will present a webcast that examines the impact of the Supreme Court decisions on same-sex marriage. William Helfand of the law firm Chamberlain Hrdlicka will review the Court's decision outline the real impact on your workplace today and what's on the horizon as courts and legislatures wrestle with the issue of same-sex marriage. Details and registration for this program will be available beginning July 8 on the SHRM webcast home page,

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