U.S. Supreme Court Creates New Standard for Proving Pregnancy Discrimination: What Does This Mean for Employers?

The Background.  Young was a part-time driver for the United Parcel Service (UPS). When she became pregnant, her doctor advised her that she should not lift more than 20 pounds. UPS, however, required drivers like Young to be able to lift up to 70 pounds. UPS told Young that she could not work while under a lifting restriction.  Young filed a lawsuit under the Pregnancy Discrimination Act (she did not allege an ADA disability) and claimed that UPS accommodated workers who were injured on the job, had disabilities covered by the ADA, or had lost Department of Transportation (DOT) certifications.  She argued that these policies showed that UPS discriminated against its pregnant employees because it had a light-duty-for-injury policy for numerous “other persons,” but not for pregnant workers.  UPS responded that, since Young did not fall within the on-the-job injury, ADA, or DOT categories, it had not discriminated against Young on the basis of pregnancy, but had treated her just as it treated all “other” relevant “persons.” 

This dispute made it to the U.S. Supreme Court who, on March 25, 2015, issued a ruling on the case granting relief to neither party, setting forth a new standard for how to consider pregnancy claims, and remanding for the trial court to consider the evidence based on the new standard.

The Supreme Court’s Ruling.  The Court departed from the normal discrimination analysis to craft something new for pregnant workers.  The Court now held that a pregnant employee can prove discrimination by showing that (1) she is pregnant; (2) she sought an accommodation for her pregnancy—like the 20 pound lifting restriction Young requested, and (3) that the employer did accommodate others “similar in their ability or inability to work.”  This standard is a departure from the analysis used by courts to consider other forms of discrimination.  In particular, there had never been a duty under the PDA to “accommodate” a pregnant employee before but there now appears to be.  Further, in a traditional discrimination analysis, the courts generally consider how other employees who perform the same or similar work are treated.  The new Young analysis seems to broaden this by considering any employee who is similar in his or her ability or inability to work.  This new standard remains murky and it will probably take several years for courts to make rulings on what exactly this means.

The analysis, however, does not end there.  If a pregnant employee can meet the above factors, the employer may then seek to justify its refusal to accommodate the plaintiff by relying on “legitimate, nondiscriminatory” reasons for denying accommodation.  That reason normally cannot consist simply of a claim that it is more expensive or less convenient to add pregnant women to the category of those whom the employer accommodates.  If the employer offers a “legitimate, nondiscriminatory” reason, the plaintiff may show that it is in fact pretextual.  The plaintiff may reach a jury on this issue by: (1) providing sufficient evidence that the employer’s policies impose a significant burden on pregnant workers, and that the employer’s “legitimate, nondiscriminatory” reasons do not justify the burden; and (2) by providing evidence that the employer accommodates a large percentage of non-pregnant workers while failing to accommodate a large percentage of pregnant workers.  As Justice Scalia noted in his dissent, this standard may merge the disparate treatment and disparate impact analyses.  For the uninitiated, disparate impact does not require proof of discrimination, only that a company policy has an unwarranted negative impact on a protected group.  For instance, laying off the highest salaried employees in a company may lead to termination of most of the older workers, who tend to have higher salaries due to longer tenure. 

In sum, the new standard creates a duty to accommodate pregnant workers that never existed before, articulates a new standard that could require several test cases to clarify, and arguably imports the dreaded “disparate impact” analyses into a pregnancy discrimination case.  Justice Scalia described the Court’s holding as “inventiveness posing as scholarship—which gives us an interpretation that is as dubious in principle as it is senseless in practice.”

What this means for Employers.  There is now, essentially, a duty to accommodate pregnant workers under the Pregnancy Discrimination Act.  In addition, under the ADAAA, almost all ailments are potential “disabilities” as a matter of law, including some “temporary conditions” depending on their severity.  The bottom line for employers, it will be far less expensive to treat pregnant employees the same as you would any other employee who is able to work with similar restrictions as the pregnant employee.  Therefore, if you give employees on workers’ compensation light-duty, you must now also offer available light-duty to pregnant workers.

In Defense of the Employment Non-Compete Agreement

On March 18, 2015, Crain’s Detroit published an article entitled “Laws on noncompete agreements hurt Michigan, new study says.”  The article argues that Michigan can reverse a drain of talent by banning non-competes.  This article comes on the heels of a bill proposal in the Michigan Legislature to limit non-compete agreements to business owners.

The study on non-competes itself seemingly has numerous flaws, such as the assumption that non-competes are the sole factor of why “inventors” would move to states without non-competes.  It also ignores the history of Silicon Valley as a technology destination, the availability of venture capital, and, the existing tech companies that give inventors a start before going out on their own.  This assumption ignores other social, economic, and demographic trends of Michigan’s talent drain.  For instance, many non-inventors leave Michigan for a myriad of reasons that do not relate to non-compete agreements.

But let’s assume that banning or restricting non-competes in Michigan would help keep “inventors” in the state.  The article focuses on employees and ignores the impact on job creators.  Businesses prefer to protect their interests with reasonable non-compete agreements to ensure that the investment made in employees will not lead to disaster when that employee bolts to a competitor with the company’s customer lists and product knowledge.  As the article points out, even with non-competes essentially unlawful in California, Apple and Google had agreed not to poach employees from each other.  Michigan needs to attract business to the State and businesses prefer the protections a non-compete can offer.

It is this reasonable balance of interests that makes Michigan’s non-compete law so beneficial.  The Crain’s article ignores the practical way Michigan’s non-compete statute operates.  Under Michigan’s law, a non-compete must be reasonable to be enforced.  This includes a realistic protection of business interests.  For instance, Jimmy John’s attempting to restrict its delivery personnel from competing simply will not be enforced since there is no business interest in doing so.  The “freaky-fast” delivery guy does not have the company’s customer list or knowledge of a secret Jimmy John’s recipe and therefore there is no basis to prevent competition.

On the other hand, a court will uphold a non-compete that protects an employer’s reasonable business interest and is still fair to the employee.  For example, consider a company that provides medical support services to hospitals.  Because the company spends a great deal of money to train its employees, it is known in the industry as producing high quality talent.  As such, competitors, rather than investing in their own training, often attempt to poach the company’s employees.  Thus, after investing a great deal of money in these employees, these employees would leave for a competitor and end up in the same hospital where they were working, but now competing against the company.  The imposition of a reasonable two-year non-compete that prevents these employees from competing at the same hospitals where they worked for the company is a reasonable way to help prevent damage to its business.  In this way, the employee is not prevented from working at any hospital, she just cannot turn around and compete at the same hospital where she worked for the company.  The company, in turn, has a reasonable protection from the investment it made in the employee. 

But Michigan non-compete law goes even further to protect employee interests.  The law expressly allows a Judge to rewrite, or “blue pencil,” a non-compete that is unfair.  Therefore, if a company were to try to enforce an unfair non-compete, a court could rewrite the unfair provisions in favor of the employee.

    

The current bill before the Michigan legislature to restrict non-competes is sold as a protection for workers.  But, in reality it would only hurt job creators and that is not good for workers.

Brett J. Miller is a principal attorney at the Kitch Law Firm in Detroit.  He specializes in labor and employment law and has litigated non-compete lawsuits and lectured on the subject.