Wake Forest Law Review
1Apr

The Memorandum Heard Around the College Athletics World: Why Student-Athletes in Non-Revenue-Generating Sports Should not Enjoy the Status of “Employee” Under the NLRA

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14 Wake Forest L. Rev. Online 47

Nick Tremps

Introduction

Over the past few decades, one particular legal issue has permeated throughout collegiate athletics. At the forefront of every collegiate student-athlete’s mind in recent years is the question: “should I be getting paid for this?” Or, at the very least, should they be receiving more rights and protections other than financial aid and some athletic gear to proudly wear around campus? At first blush, the answer to these questions for all collegiate student-athletes might appear to be yes. Such athletes spend countless hours training, practicing, and competing in their respective sports, all while balancing a full academic schedule and a social life—assuming they are fortunate enough to have any remaining time. Because these universities undeniably receive, at a minimum, nationwide recognition and increased tuition dollars as a result, student-athletes have begun to ask whether compensation or additional protections are warranted. Relevant to this inquiry is the National Labor Relations Act (the “NLRA” or the “Act”), one possible avenue for receiving such compensation or protections. However, this Note argues that the vast majority of collegiate student-athletes should not be able to enjoy the protections afforded by the NLRA.

The recent movement towards classifying student-athletes as “employees” of their respective institutions has its origins in Northwestern University & College Athletes Players Association.[1] In an issue of first impression for the National Labor Relations Board (the “NLRB” or the “Board”), a group of Northwestern University football players sought to unionize under the NLRA, basing their claim under the statutory definition of “employee” in § 152(3) of the Act.[2] While the Regional Director for Region 13 initially concluded that the athletes were employees within the meaning of Section 152(3) of the Act based in part on substantial findings that these athletes bring in significant revenue for the university,[3] the Board ultimately declined to exercise jurisdiction.[4] Thus, the Board left open the question of whether collegiate student-athletes were employees under the Act.

On September 29, 2021, General Counsel Jennifer Abruzzo of the NLRB issued Memorandum GC 21-08, which explains her prosecutorial position that “certain Players at Academic Institutions [are to be] employees under the Act.”[5] Specifically, the memorandum provides that “scholarship football players at private colleges and universities, or other similarly situated Players at Academic Institutions, [should be] employees under the Act.”[6] General Counsel Abruzzo further explained that she may pursue violations of § 158(a)(1) where an institution or employer misclassifies these students as “student-athletes.”[7] Importantly, Memorandum GC 21-08 reinstated NLRB GC Memorandum 17-01, which elaborated on Northwestern University and two other cases that further support the position that student-athletes are “employees” within the meaning of the Act.[8]

Memorandum GC 21-08 sets the stage for student-athletes from a variety of different athletic programs to claim “employee” status under the NLRA. However, the question remains open as to which student-athletes are “similarly situated” to the plaintiffs in Northwestern University.

In Part I, this Note discusses a brief history of the National Collegiate Athletic Association (the “NCAA”) and how the NCAA’s focus, purpose, and oversight have transitioned over time. Part II then discusses the statutory definitions of “employee” under federal law in relation to its applicability to collegiate student-athletes who compete in non-revenue-generating athletic programs at private universities. Specifically, it focuses on the NLRA and the protections that proponents argue should be afforded to these athletes. Part III proceeds by discussing recent developments in case law regarding student-athletes as “employees” under federal statutes, with a particular focus on cases discussing the NLRA. Importantly, Part IV outlines Memorandum 21-08, in which the General Counsel of the NLRB explains that her prosecutorial position moving forward is that collegiate football players at private universities, as well as other similarly situated players, are “employees” within the meaning of the Act. Finally, in Part V and VI, this Note discusses how revenue-generating student-athletes will inevitably be classified as “employees” under the NLRA and concludes that non-revenue-generating student-athletes should not be afforded the same classification because they are not able to satisfy two elements under the common-law test employed by the NLRB: that is, they neither “perform a service” for their respective institutions nor do they receive payment or compensation.

I. Overview of the NCAA

More than a century ago, the Intercollegiate Athletic Association of the United States was formed to address the pervasive injuries and deaths occurring at alarmingly high rates in intercollegiate football games.[9] Prior to President Theodore Roosevelt’s plea to address these issues,[10] schools dealt “with the same issues that we face today: the extreme pressure to win, which is compounded by the commercialization of sport, and the need for regulations and a regulatory body to ensure fairness and safety.”[11] Officially renamed the National Collegiate Athletic Association in 1910 and comprising sixty-two colleges and universities at the time,[12] the Association’s initial mission focused on “regulat[ing] the rules of college sport and protect[ing] young athletes.”[13] The NCAA’s continued, steadfast commitment to amateurism and ensuring the “student” remains in “student-athlete” traces back to the 1940s and the NCAA’s adoption of the “Sanity Code,” which established “principles that covered financial aid, recruitment and academic standards and were intended to ensure amateurism in college sports.”[14]

Today, the NCAA, a member-led organization, has maintained its protectionist view of student-athletes, focusing on “cultivating an environment that emphasizes academics, fairness, and well-being across college sports.”[15] The NCAA’s regulations center around the concept of amateurism, where “the student-athlete is considered an integral part of the student body, thus maintaining a clear line of demarcation between college athletics and professional sports.”[16] Accordingly, from its formation, the NCAA and student-athletes alike have been of the mindset that student-athletes attended universities primarily for educational reasons, and the NCAA was simply an organization formed to protect its student-athletes and to foster a fair and level playing field. However, since President Roosevelt’s seemingly simple request to “clean up the game,”[17] the NCAA’s member schools have come to include 1,098 colleges and universities competing in 102 different athletics conferences.[18] These universities are comprised of “[n]early half a million college athletes [that] make up the 19,886 teams that send more than 57,661 participants to compete each year in the NCAA’s ninety championships in twenty-four sports across three divisions.”[19]

The sheer number of athletes, teams, universities, and conferences has required the NCAA to implement a governance structure managed by full-time professional leadership.[20] The Board of Governors is the NCAA’s highest governing body, primarily made up of presidents and chancellors, along with two independent members who implement policies pertaining to the Association and other central issues.[21] While these policies have an indirect effect on student-athletes, policies that directly affect collegiate student-athletes derive from various legislative bodies or committees that propose rules and regulations with the goal of “upholding and advancing the Association’s core values of fairness, safety and equal opportunity for all student-athletes.”[22] Committee members—volunteers from member colleges and universities—ultimately decide which regulations or policies to adopt and implement.[23] In promulgating and adopting a rule, the NCAA ensures that the proposed rule reflects its time-honored adherence to the educational component of collegiate athletics. For example, the 2022–23 NCAA Division 1 Manual provides that “[i]ntercollegiate athletic programs shall be maintained as an important component of the educational program, and student-athletes shall be an integral part of the student body.”[24] Thus, despite the clear commercialization of modern college sports addressed in this Note, the NCAA nonetheless rightfully continues to ensure that student-athletes remain students first and athletes second.

II. Statutory Definitions of “Employee” and “Employer”

At the outset, it must be recognized that the NLRB “has exercised jurisdiction over private, nonprofit universities for more than [fifty] years”[25] and that the NLRA only covers private employers.[26] As a result, college athletes at public universities, even if deemed to satisfy the “employee” definition, cannot currently organize or enjoy any protections under the NLRA. The stated purpose of the NLRA is to federally manage labor relations by “encouraging the practice and procedure of collective bargaining . . . for the purpose of negotiating the terms and conditions of [workers’] employment or other mutual aid or protection.”[27] The NLRA begins with a lengthy preamble that summarizes the federal government’s reasonable position that strenuous labor relations largely impede interstate commerce.[28] Because of the interstate nature of modern collegiate athletics and the millions of dollars in revenue generated, proponents of student-athletes’ classification as “employees” rely on the NLRA to further their position.

Section 152 of the NLRA defines both “employer” and “employee,” albeit somewhat vaguely.[29] “Employer” is defined in pertinent part as “any person acting as an agent of an employer,” and “employee” is defined as “any employee . . . or any other person who is not an employer” as defined by the Act.[30] While the NLRA definition is not particularly helpful, the NLRB, following Supreme Court precedent, has applied the common-law definition in determining whether an individual qualifies as an “employee” under the NLRA.[31] The common-law definition provides that “an employee is a person who performs services for another under a contract for hire, subject to the others’ control or right of control, and in return for payment.”[32]

Once deemed an employee under the NLRA, an employee may engage in protected § 157 activity without interference from his or her employer. Section 157 provides that “[e]mployees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection . . . .”[33] Additionally, § 158(a)(1) protects these rights by prohibiting an employer from interfering with an employee’s § 157 rights in any way.[34] Accordingly, if a particular class of collegiate student-athletes is deemed to be employees of their universities, they may freely engage in protected concerted activity without obstruction or interference from their institutions or the institution’s agents.

While its application is outside the scope of this Note, the Fair Labor Standards Act’s (the “FLSA”) similarly ambiguous definition of “employee” shines light on the difficulty in classifying collegiate student-athletes as “employees” of their universities. The FLSA defines employer to include “any person acting directly or indirectly in the interest of an employer in relation to an employee . . . .”[35] Similar to the ambiguous definition provided by the NLRA, an employee is defined as “any individual employed by an employer.”[36] The FLSA differs, for purposes of this Note, in that it provides guarantees to employees for payment of a federally mandated minimum wage and overtime pay,[37] among other guarantees. In comparison, as mentioned above, the NLRA would protect collegiate student-athletes from employer-interference regarding any collective bargaining activity.[38]

III. Development of Recent Cases in Relation to Student-Athletes’ Employee Status Under Federal Law

A. Northwestern University

The recent development towards student-athletes receiving “employee” status under the NLRA first began with a group of scholarship football players at Northwestern University.[39] In their petition, the players contended that they were “employees” within the meaning of the Act and thus entitled to the protections afforded in §§ 157 and 158 of the Act.[40] In holding that the scholarship football players were “employees” under § 152(3),[41] the Regional Director analyzed various characteristics pertaining to the relationship between the employer (Northwestern University) and its alleged employees (the scholarship football players).

The Regional Director first analyzed the conditions that the players are subject to, such as requiring the freshmen and sophomore players to live in on-campus dormitories, abide by a strict social media policy, adhere to strict alcohol and drug policies, and submit to limitations on the athletes’ clothing.[42] The analysis then turned to the amount of time student-athletes devote to their sport, such as a month-long training camp before the start of the season, daily itineraries, practice schedules, and the twelve games per season that required significant travel time.[43] Finally and most importantly, the Regional Director analyzed the university’s revenue generated from its football team, noting that during the preceding season alone, the football team generated $30.1 million in revenue,[44] which the university used to subsidize its non-revenue-generating sports partially.[45] In concluding that the players were employees of Northwestern University within the meaning of the Act, the Regional Director also determined that “[l]ess quantifiable but also of great benefit to the Employer is the immeasurable positive impact to Northwestern’s reputation a winning football team may have on alumni giving and increase in number of applicants for enrollment at the University.”[46]

Despite this potentially monumental development, the NLRB ultimately declined to exercise jurisdiction regarding the Regional Director’s decision.[47] The Board first explained that the case “raises important issues concerning the scope and application of Section 2(3), as well as whether the Board should assert jurisdiction in the circumstances of this case even if the players in the petitioned-for unit are statutory employees . . . .”[48] However, the Board held that “it would not effectuate the policies of the Act to assert jurisdiction in this case, even if we assume, without deciding, that the grant-in-aid scholarship players are employees within the meaning of Section 2(3).”[49] Thus, while the Board did not reach the merits of the issue because asserting jurisdiction would not promote stability in labor relations,[50] a final judicial determination still lingered regarding whether Northwestern University’s football players were “employees” under the Act.

B. Trustees of Columbia University

While outside the collegiate student-athlete context, the NLRB addressed an issue in Trustees of Columbia University[51] that would serve as an important basis for future NLRB decisions. In Trustees of Columbia University, undergraduate and graduate student-assistants petitioned the Board for classification of “employee” status under § 152(3) of the NLRA.[52] At issue was “whether students who perform services at a university in connection with their studies are statutory employees within the meaning of Section 2(3) of the National Labor Relations Act.”[53]

The Board’s analysis began with the Act’s broad, inclusive language in § 152(3), expressly noting that none of the exceptions apply to students “employed” by their colleges or universities.[54] Similar to Northwestern University, the Board then employed the common-law employment test for an employer-employee relationship, which requires that “the employer have the right to control the employee’s work, and that the work be performed in exchange for compensation.”[55] First, the Board determined that Columbia University exerted significant control over the student assistants in that failure to adequately perform their duties resulted in counseling or removal from the position.[56] Second, the Board found that the student assistants received compensation for their services.[57] Importantly, however, the student-assistants’ compensation was in part a payment the student-assistants received that was distinct from any scholarship and was “not merely financial aid.”[58] The Board noted that the funding provided to the student-assistants was “not akin to any scholarship aid passed through the university” and that “[t]he Board and the courts have repeatedly made clear that the extent of any required ‘economic’ dimension to an employment relationship is the payment of tangible compensation.”[59]

In concluding that the student-assistants were common-law employees and thus entitled to bargain collectively and enjoy the protections of the NLRA, the Board reasoned that “where a university exerts the requisite control over the research assistant’s work, and specific work is performed as a condition of receiving the financial award, a research assistant is properly treated as an employee under the Act.”[60] However, the Board expressly stated that its holding did not require the Board to “find workers to be statutory employees whenever they are common-law employees, but only that the Board may” find them to be statutory employees.[61] Accordingly, the Board’s holding in Trustees of Columbia University sets the basis moving forward that student-athletes might be considered “employees” within the meaning of the Act if they satisfy the common-law definition employed by the NLRB.

C. Berger v. NCAA and Johnson v. NCAA

While the NLRB has applied the common-law definition of “employee” in interpreting § 152(3)’s broad language, it is important to recognize that there is a second test that modern courts have employed in determining whether an individual or particular class of individuals constitutes an “employee.” In Berger v. NCAA,[62] two women who competed on the University of Pennsylvania women’s track and field team sued the university, the NCAA, and more than 120 other Division 1 schools, “alleging that student athletes are ‘employees’ within the meaning of the FLSA.”[63] While the NLRA in pertinent part protects employees from employer-interference when engaging in protected concerted activity,[64] the FLSA provides other protections, such as requiring “every employer to pay ‘his employees’ a minimum wage . . . .”[65]

To determine a collegiate student-athlete’s status as an “employee” under the FLSA, the Seventh Circuit first explained that courts “must examine the ‘economic reality’ of the working relationship between the alleged employee and the alleged employer to decide whether Congress intended the FLSA to apply to that particular relationship.”[66] Under this economic reality test, the court reasoned that “the long tradition of amateurism in college sports, by definition, shows that student athletes . . . participate in their sports for reasons wholly unrelated to immediate compensation.”[67] Thus, the court concluded that this time-honored practice of amateurism outlines the economic reality between universities and their student-athletes, and therefore, the student-athletes could not satisfy this test.[68] In so doing, however, the court failed to correctly analogize student-athletes to students participating in work-study programs, which receive “employee” status under the FLSA.[69] Moreover, the court’s reasoning is somewhat circular: it relied on the amateur status of these athletes and the tradition of amateurism to determine that they were not “employees.”

Contrary to the Seventh Circuit’s holding, one of the most recent cases involving the “employee” status of student-athletes is Johnson v. NCAA.[70] In that case, the plaintiffs—primarily student-athletes from non-revenue-generating sports—alleged in part that their respective schools received significant financial benefits as a result of their participation in collegiate athletics,[71] and therefore, they were entitled to compensation.[72] Applying the economic realities test, the United States District Court for the Eastern District of Pennsylvania analyzed “the economic realities of the relationship in determining employee status under the FLSA” and concluded that the student-athlete plaintiffs could be considered employees.[73] However, this holding simply stated that the student-athlete plaintiffs could be considered employees under the FLSA, meaning the complaint merely survived the defendants’ motion to dismiss.[74] The defendants appealed to the Third Circuit, which agreed to hear an interlocutory appeal “on the question of whether Division 1 student-athletes can be employees of their schools solely by virtue of their participation in interscholastic athletics.”[75] Thus, while Berger and Johnson are instructive in that they demonstrate the emphasis courts place on the economic relationship between student-athletes and their respective institutions, there is no current judicial determination regarding whether student-athletes are employees within the meaning of the FLSA.

IV. General Counsel Jennifer Abruzzo’s Memorandum

On September 29, 2021, Jennifer Abruzzo, General Counsel of the NLRB, issued Memorandum GC 21-08.[76] Memorandum GC 21-08 “provide[d] updated guidance regarding [her] prosecutorial position that certain Players at Academic Institutions are employees under the Act”[77] and reinstated Memorandum GC 17-01, which addressed Northwestern University.[78] General Counsel Abruzzo explained that “certain Players at Academic Institutions are employees under the Act and are entitled to protection from retaliation when exercising their Section 7 rights.”[79] Most notably, the memorandum provided that “although the Board in Northwestern University declined to exercise jurisdiction over scholarship football players at that university, nothing in that decision precludes the finding that scholarship football players at private colleges and universities, or other similarly situated Players at Academic Institutions, are employees under the Act.”[80]

Relying in part on the Board’s previous decisions in Boston Medical Center Corp. and Trustees of Columbia University, Abruzzo concluded that certain collegiate student-athletes “perform services for their colleges and the NCAA, in return for compensation, and subject to [the NCAA’s and the college’s] control.”[81] She also grounded her position in the statutory language of § 152(3) and the underlying policies of the NLRA.[82] As in Trustees of Columbia University, where the Board noted that none of the exceptions applied to work-study students, Abruzzo similarly noted that the football players do not fall under any of the exceptions.[83] In reaching her conclusion, Abruzzo recognized the broad, expansive language of § 152(3) and that the Board has consistently applied common-law agency rules when applying the Act’s broad language.[84]

The memorandum included detailed findings concerning the football players in Northwestern University, reiterating that those players met the common-law test to establish an employer-employee relationship.[85] For example, the universities profited tens of millions of dollars, the players positively impacted the university’s reputation, and increased financial donations from alumni, all while receiving payment and being subject to the university’s strict control.[86] Thus, Abruzzo confidently concluded that the football players were “employees” within the meaning of the Act and undoubtedly satisfied the common-law test.[87] However, the question remains: which class of student-athletes are similarly situated to the football players in Northwestern University?

V. The Common-Law Definition of “Employee”

The NLRB has consistently applied the common-law definition of “employee” in determining whether an individual is an “employee” within the meaning of the Act. In GC Memorandum 21-08, addressed in Part IV, General Counsel Abruzzo explained that “[t]he Board has also applied common-law agency rules governing the employer-employee relationship when applying the Act’s expansive language and purpose to determine employee status.”[88] The common-law definition used by the NLRB is that “an employee is a person who performs services for another under a contract for hire, subject to the others’ control or right of control, and in return for payment.”[89] Notably, the U.S. Supreme Court has supported the NLRB’s use of the common-law definition.[90] For example, in NLRB v. Town & Country Electric,[91] the Court recognized that the language of § 152(3) is broad and noted that the Board’s interpretation of “employee” reflects Congress’ intent.[92] The Court explained that “[i]n the past, when Congress has used the term ‘employee’ without defining it, we have concluded that Congress intended to describe the conventional master-servant relationship as understood by common-law agency doctrine.”[93] Thus, in determining whether “employee” status can extend to a particular group of student-athletes, the NLRB will employ common-law agency rules.

VI. Non-Revenue-Generating Student-Athletes Are Not Employees Within the Meaning of the Act

Because collegiate student-athletes participating in non-revenue-generating sports at private colleges or universities are not similarly situated to the revenue-generating football players in Northwestern University, they should not be entitled to enjoy “employee” classification under the NLRA. Collegiate athletic programs can be bifurcated into two broad categories. The first category, which includes the Northwestern University football players, is revenue-generating sports. For purposes of this Note, revenue-generating sports include Division 1 men’s basketball and football programs.[94] As laid out below, many commentators and legal scholars conclude that these programs undoubtedly provide great financial services for their respective institutions. The second category is non-revenue-generating sports, which includes all other athletic programs, such as track and field, golf, tennis, baseball, soccer, and swimming.[95] While every student-athlete considers his or her sport important, as discussed below, the fact of the matter is that these athletes simply do not “perform services” equivalent to that of their revenue-generating counterparts.

A. Applying the Common-Law Test to Student-Athletes in Non-Revenue-Generating Sports
1. Non-Revenue-Generating Student-Athletes Do Not “Perform Services” for Their Institutions

As discussed above, the NLRB often applies common-law agency rules to determine if an employer-employee relationship exists. The common-law test provides that an employee is one “who perform[s] services for another and [is] subject to the other’s control or right of control”[96] in return for compensation.[97] Under this test, both Abruzzo and the Regional Director in Northwestern University properly concluded that the Northwestern University football players, as revenue-generating student-athletes, could be considered “employees” within the meaning of § 152(3) of the Act.

At the Division 1 level, college football and basketball programs generate exorbitant revenue not only for the institutions themselves but also for their respective conference and the NCAA.[98] In all athletic departments of NCAA member schools, “football is the key driver of athletic department operations,”[99] both in terms of revenue and general name recognition.[100] For example, in 2019, the top twenty-five teams in college football generated a combined $1.5 billion in profit for their colleges and universities.[101] At the conference level, the Big Ten Conference recently signed a broadcasting deal with major cable networks and a streaming service that will produce over $7 billion in revenue for the conference for the next seven years.[102] The College Football Playoff, comprised of college football’s top four teams, recently approved a postseason expansion estimated to generate nearly $2 billion a year.[103] Moreover, in 2016, the NCAA signed an eight-year extension with Turner Sports to continue broadcasting coverage of the NCAA basketball tournament, which will produce $8.8 billion for NCAA member schools.[104] Based on these numbers alone, it is clear that the student-athletes participating in Division 1 men’s basketball and football programs unquestionably “perform services” by generating enormous amounts of revenue for their universities or conferences and are thus “similarly situated” to the football players in Northwestern University.

In comparison, student-athletes participating in non-revenue-generating athletic programs do not “perform services” for their institutions. As the author of this Note is a former Division 1 student-athlete in a traditional non-revenue-generating sport, in no way is this Note attempting to devalue these programs. However, these sports do not produce the same tangible returns for private institutions as men’s basketball and football programs. As previously discussed, in analyzing whether student-athletes “perform services” for their colleges or universities, courts emphasize the financial component of the relationship—specifically, the revenue generated from that sport.[105] Using revenue as the guiding metric, this Note highlights that non-revenue-generating sports, as a whole, simply do not generate the “cold, hard cash” [106] that sports like football and basketball produce.

Take the University of Notre Dame and Duke University as paradigmatic. In 2021, Notre Dame reported a combined revenue from men’s basketball and football of $91,563,855, offset by $48,630,144 in expenses, resulting in a net profit of $42,933,711.[107] In all other sports, the revenue generated amassed to a mere $4,436,705 while accruing $33,132,089 in expenses, resulting in a net loss of $28,695,384.[108] Similarly, Duke University reported a combined men’s basketball and football revenue of $59,860,751, expenses of $36,756,084, and a net profit of $23,104,667.[109] Non-revenue-generating sports, on the other hand, generated $27,774,939 in revenue, $34,157,042 in expenses, and a net loss of $6,382,103.[110]

These consistent, year-over-year losses from non-revenue-generating sports result in only 2.26 percent of NCAA member schools generating a profit from their athletic departments.[111] To combat the sizable financial losses of non-revenue-generating sports, these institutions are commonly forced to subsidize them through the profits realized from revenue-generating sports.[112] Because of the expenses accrued, profits from an institution’s men’s basketball and football programs are “diverted to cover the expenses of non-revenue programs,”[113] and those profits are “often dissipated in helping to keep other programs operating.”[114] It is for this additional reason that revenue-generating sports are “performing a service” for their institutions. While proponents argue that non-revenue-generating sports nonetheless “perform a service” by graduating at higher rates or promoting the university’s name in niche markets,[115] this is simply not enough to meet the requisite standards for an employer-employee relationship. Even in other contexts, the NLRB and U.S. Supreme Court have concluded that the Act covers an employee when the employer-employee relationship is an “economic relationship.”[116] That is, the employer must experience a direct financial benefit, and the employee must receive tangible compensation.[117] Because non-revenue-generating sports are essentially performing a financial or economic disservice to their institutions, they accordingly do not meet this component of the common-law test.

2. Non-Revenue-Generating Student-Athletes Are Subject to Their Institution’s Control or Right of Control

The common-law test for establishing an employer-employee relationship requires that the employee be “subject to the other’s control or right of control.”[118] In applying the test, the U.S. Supreme Court has considered whether the employer has the right to control the manner and means of the employee’s production.[119] As this author witnessed and experienced firsthand, the NCAA and its member institutions undoubtedly exert substantial control over all its student-athletes. Thus, while unable to satisfy the other two components of the test, student-athletes in non-revenue-generating sports are certainly controlled by or subject to the control of their respective institutions. While this Note does not expound upon the control wielded over student-athletes in revenue-generating sports, Abruzzo’s memorandum, for example, depicts the level of control Northwestern University and the NCAA had over members of the football team.[120]

For the majority of student-athletes in non-revenue-generating sports, the reality of intercollegiate athletics is that they typically spend more time training, practicing, and competing than they spend time in the classroom or studying.[121] At the NCAA level, the NCAA places copious restrictions on all of its Division 1 member institutions, such as academic eligibility requirements,[122] regulations and restrictions pertaining to each individual sport,[123] and numerous restrictions that further the NCAA’s amateurism principles.[124] Further, NCAA regulations also expressly state that a student-athlete’s financial aid may be reduced or canceled if the student-athlete commits any of the acts expressly provided in § 15.3.5 of the Division 1 Manual.[125]

The NCAA directs that it is the responsibility of each member institution to conduct and control its athletic department in a manner that ensures compliance with the NCAA’s Constitution and bylaws.[126] At the institutional or conference level, additional or supplemental regulations may also be placed on student-athletes. For instance, Stanford University’s Student-Athlete Handbook provides that “[e]very student-athlete is subject to NCAA, Pac-12, and Stanford University rules and regulations that can affect [their] collegiate eligibility.”[127] Additionally, the Athletic Policy Manual of Duke University provides that its Drug Testing Program is separate from the NCAA’s and that “the University may test for any substance … not contained on the NCAA’s list of banned substances . . . .”[128] Failure to comply with applicable institutional-level regulations may result in a reduction, cancellation, or nonrenewal of a student-athlete’s financial aid.[129]

Lastly, all student-athletes, including members of non-revenue-generating athletic programs, are subject to their respective team’s rules and regulations. Individual team rules and regulations have been a long-standing tradition in intercollegiate athletics.[130] While team rules in both revenue and non-revenue-generating sports were initially meant to implement goals or minor procedures for the upcoming season, these regulations have transformed into a system that “invades, inspects, lords over, stereotypes, discriminates and pronounces judgment on multiple aspects of players’ personal lives.”[131]

For example, at the University of Virginia, one rule orally imposed on golf team members, including this author, provided for removal from the morning workout if any team members wore another university’s article of clothing. Surprisingly, in the Texas Tech softball program and Kansas women’s basketball program, team policies also govern relationships and displays of affection.[132] Similar to failing to comply with NCAA regulations, a student-athlete’s financial aid may be reduced or even canceled if the student-athlete violates a team rule.[133] Although this conclusion is certainly not dispositive, student-athletes competing in both revenue and non-revenue-generating athletic programs are certainly subject to the control of their respective institutions.

3. Non-Revenue-Generating Student-Athletes Do Not Perform Services in Return for Compensation

Lastly, where “employee” status under the NLRA certainly fails for non-revenue-generating student-athletes, the common-law test mandates that the employee perform services for another in return for compensation.[134] In 2015, after gaining legislative autonomy, the Power Five Conferences[135] (the Atlantic Coast Conference, Southeastern Conference, Big 12 Conference, Big Ten Conference, and Pac-12 Conference) promulgated legislation that sought to expand statutory financial benefits to all scholarship student-athletes in the conferences.[136] Included in this legislation, and ultimately incorporated into the modern NCAA Division 1 Manual, was a provision permitting the expansion of institutional financial aid to cover “any other financial aid up to the [true] cost of attendance.”[137] This includes “the total cost of tuition and fees, room and board, books and supplies, transportation, and other expenses related to attendance at the institution.”[138] While only initially applicable to the member institutions of the Power Five Conferences, institutions in other conferences have followed suit.[139]

Despite certain conferences expanding the amount of institutional financial aid to cover the true cost of attendance, the NCAA—holding true to its amateurism principles—still mandates that “an individual loses amateur status and thus shall not be eligible for intercollegiate competition in a particular sport if the individual . . . [u]ses athletic skills (directly or indirectly) for pay in any form in that sport,” or engages in similar conduct prohibited in that section.[140] Thus, a student-athlete is still prohibited from receiving compensation from his or her institution outside of institutional financial aid or the minimum amount of stipends used to cover some costs associated with attending the institution.

Many scholars and commenters posit that a student-athlete’s scholarship constitutes compensation, arguing that “college players are already getting paid . . . in the form of free tuition and other benefits.”[141] However, this argument misses the mark. As one analogy aptly provides, contending that a student-athlete’s scholarship constitutes compensation is akin to arguing that a worker is not entitled to a salary because he or she receives insurance.[142] Moreover, the non-revenue-generating student-athlete’s financial aid differs substantially from that of employees in the general employment context. For instance, while employees in other settings are permitted to negotiate certain benefits, NCAA guidelines preclude any such negotiation on the part of the student-athlete.[143] These restrictions are enacted in part to preserve student-athletes’ amateur status by preventing them from receiving true compensation—or “pay,” to use the NCAA’s language—outside his or her institution’s financial aid.[144]

Importantly, any financial aid granted to a student-athlete in a non-revenue-generating program differs from the student-assistants’ compensation in Trustees of Columbia University. In that case, the NLRB concluded that the student-assistants’ services provided to the institution and its faculty resulted in “tangible compensation” or direct payments, and that this exchange constituted “compensation” under the common-law test for an agency relationship.[145] A scholarship is not “tangible compensation” in that the student-athlete is not free to spend it however he or she sees fit. In Trustees of Columbia University, the Board only considered the direct payments the student-assistants received, noting that they were distinct from scholarship aid.[146] Thus, because the NCAA prohibits compensation outside of institutional financial aid or stipends, and apart from any NIL payments that are outside the scope of this Note, non-revenue-generating student-athletes do not receive compensation from their institution and are unable to satisfy this element of the common-law test.

B. Non-Revenue-Generating Student-Athletes Also Fail to Satisfy the Statutory Definition Test

Both the NLRB and the Supreme Court have recognized § 152(3)’s exceptionally broad definition of “employee.”[147] Coupled with the definition’s breadth and the underlying policies of the NLRA, the NLRB is also entitled to significant deference in its statutory interpretation.[148] Further, the NLRB has determined that the absence of a particular group in the statute’s categorial exceptions is strong evidence of coverage.[149] Proponents of student-athletes’ “employee” classification, including Jennifer Abruzzo, therefore cite the absence of collegiate student-athletes in the categorial exceptions as strong evidence of classification.[150] Despite the NLRB’s deference and the presumption for statutory coverage, the NLRB has made clear that statutory coverage may not be extended if “there are strong reasons not to do so.”[151] In this particular context, there are several reasons not to do so.

Because private institutions constitute a small percentage of Division 1 schools, there are severe practical implications if non-revenue-generating student-athletes at private schools are permitted to enjoy the protections of the NLRA, such as collective bargaining. For example, if such a program at a private institution is deemed a bargaining unit, the NLRB would in effect create a convoluted intercollegiate environment where only a small percentage of student-athletes are protected under the Act. Notably, the Board in Northwestern University similarly declined to exercise jurisdiction because the “vast majority” of collegiate athletic programs are operated by state-run institutions.[152] Additionally, distinct from the student-assistants in Trustees of Columbia University, each institution’s teams would determine if an individual team classified a bargaining unit or whether all student-athletes would constitute one bargaining unit. Thus, one private institution may have one bargaining unit per team, and another may have one bargaining unit for its entire athletic program, which could lead to a wide array of discrepancies between the institutions. Lastly, and most significantly, granting “employee” status to non-revenue-generating student-athletes indubitably crosses the line of demarcation between professional and intercollegiate sports. As the Board in Northwestern University explained, while all players for professional sports teams may be represented for purposes of collective bargaining, granting “employee” status to some student-athletes will ultimately leave others completely unrepresented or outside the Board’s jurisdiction.[153] Moreover, the Board’s analysis in that case is applicable here, where enforcement of NCAA regulations and inclusion of additional regulations are left primarily to the individual institutions or the institutions’ respective conferences. Accordingly, there are strong policy reasons not to extend “employee” classification to non-revenue-generating student-athletes.

Conclusion

In the past decade, numerous court decisions, proposed legislation, and General Counsel Jennifer Abruzzo’s Memorandum all point to the inevitable conclusion that student-athletes participating in revenue-generating athletic programs will be classified as “employees” under the NLRA, and perhaps rightfully so. Thus, these athletes will be entitled to the protections afforded under §§ 157 and 158. However, the question remains as to how student-athletes in non-revenue-generating athletic programs will be classified under the NLRA. In employing the common-law test for an employer-employee relationship applied by the NLRB, these student-athletes should not be classified as “employees” of their respective institutions. While their revenue-generating counterparts undoubtedly perform a service for their college or university, the expenses imposed by non-revenue-generating sports on their institutions suggest that these programs do not meet this component of the common-law test. Despite being subjected to significant control of their university, this is not enough in the eyes of the courts and the NLRB to simply classify these student-athletes as employees. Further, the mere fact that many non-revenue-generating student-athletes receive institutional financial aid does not warrant a conclusion that they receive “compensation.” While non-revenue-generating athletic programs are unquestionably important to the landscape of intercollegiate athletics, they are not “similarly situated” to the Northwestern University football players and are thus not entitled to employee-status under the NLRA.

  1. . Nw. Univ., 362 N.L.R.B. 1350 (2015). ↑

  2. . Id. ↑

  3. . Id. ↑

  4. . Id. ↑

  5. . Memorandum GC 21-08 from Jennifer A. Abruzzo, Gen. Couns., NLRB, to All Reg’l Dirs., Officers-in-Charge, and Resident Officers, NLRB 1 (Sept. 29, 2021), https://apps.nlrb.gov/link/document.aspx/09031d458356ec26. ↑

  6. . Id. at 2 (emphasis added). ↑

  7. . Id. at 4. ↑

  8. . Id. at 1. ↑

  9. . History, NCAA, https://www.ncaa.org/sports/2021/5/4/history.aspx (last visited Mar. 29, 2024) (“During the 1904 season alone, there were 18 deaths and 159 serious injuries on the field.”). ↑

  10. . Id. ↑

  11. . Rodney K. Smith, A Brief History of the National Collegiate Athletic Association’s Role in Regulating Intercollegiate Athletics, 11 Marq. Sports L. Rev. 9, 12 (2000). ↑

  12. . History, supra note 9. ↑

  13. . Id. ↑

  14. . Id. ↑

  15. . Mission and Priorities, NCAA, https://www.ncaa.org/sports/2021/6/28/mission-and-priorities.aspx (last visited Mar. 29, 2024). ↑

  16. . NCAA, 2022–23 NCAA Division I Manual § 12.01.2 (2022) [hereinafter NCAA Division I Manual], https://www.ncaapublications.com/productdownloads/D123.pdf. ↑

  17. . History, supra note 9. ↑

  18. . What is the NCAA?, NCAA, https://www.ncaa.org/sports/2021/2/10/about-resources-media-center-ncaa-101-what-ncaa.aspx (last visited Mar. 29, 2024). ↑

  19. . Id. ↑

  20. . History, supra note 9. ↑

  21. . Governance, NCAA, https://www.ncaa.org/sports/2021/2/9/governance.aspx (last visited Mar. 29, 2024). ↑

  22. . Id. ↑

  23. . What is the NCAA?, supra note 18. ↑

  24. . NCAA Division I Manual, supra note 16, at xiii. ↑

  25. . Trs. of Columbia Univ., 364 N.L.R.B. 1080, 1081 (2016). ↑

  26. . Are You Covered?, NLRB, https://www.nlrb.gov/about-nlrb/rights-we-protect/the-law/employees/are-you-covered (last visited Mar. 29, 2024) (“Excluded from coverage under the Act are public-sector employees . . . .”). ↑

  27. . National Labor Relations Act of 1935, 29 U.S.C. § 151. ↑

  28. . Id. ↑

  29. . 29 U.S.C. § 152(2)–(3). ↑

  30. . Id. ↑

  31. . See Nw. Univ., 362 N.L.R.B. 1350, 1362–63 (2022) (citing NLRB v. Town & Country Elec., 516 U.S. 85, 94 (1995)). ↑

  32. . Id. at 1363. ↑

  33. . 29 U.S.C. § 157. ↑

  34. . Id. § 158(a)(1). ↑

  35. . Id. § 203(d). ↑

  36. . Id. § 203(e)(1). ↑

  37. . Wages and the Fair Labor Standards Act, U.S. Dep’t Lab., https://www.dol.gov/agencies/whd/flsa (last visited Mar. 29, 2024). ↑

  38. . See 29 U.S.C. § 157. ↑

  39. . See Nw. Univ., No. 13-RC-121359, 2014 N.L.R.B. LEXIS 221, at *2 (Mar. 26, 2014). ↑

  40. . Id. at *1. ↑

  41. . Id. at *2. ↑

  42. . Id. at *3–5, *10. ↑

  43. . Id. at *13–16. ↑

  44. . Id. at *13. This amount, the Regional Director noted, was offset by $21.7 million in expenses. Id. ↑

  45. . Id. ↑

  46. . Id. at *40–41. ↑

  47. . Nw. Univ., 362 N.L.R.B. 1350, 1350 (2022). ↑

  48. . Id. ↑

  49. . Id. ↑

  50. . Id. at 1352. ↑

  51. . 364 N.L.R.B. 1080 (Aug. 23, 2016). ↑

  52. . Id. at 1093. ↑

  53. . Id. at 1080. ↑

  54. . Id. ↑

  55. . Id. at 1094. ↑

  56. . Id. ↑

  57. . Id. ↑

  58. . Id. ↑

  59. . Id. at 1097, 1084−85 (emphasis added). ↑

  60. . Id. at 1096. ↑

  61. . Id. at 1083 (emphasis added). ↑

  62. . 843 F.3d 285 (7th Cir. 2016). ↑

  63. . Id. at 289. ↑

  64. . 29 U.S.C. § 158(a)(1). ↑

  65. . Berger, 843 F.3d at 290 (citing 29 U.S.C. § 206(a)(1)(C)). ↑

  66. . Id. ↑

  67. . Id. at 293. ↑

  68. . Id. at 291. ↑

  69. . Id. at 293. ↑

  70. . 556 F. Supp. 3d 491 (E.D. Pa. 2021). ↑

  71. . Id. at 507. ↑

  72. . Id. at 495. ↑

  73. . Id. at 506. ↑

  74. . Id. at 512. ↑

  75. . Johnson v. NCAA, No. 19-5230, 2021 WL 6125095 (E.D. Pa. Dec. 28, 2021); see also Third Circuit to Decide Whether Student Athletes May be Employees, McGuireWoods (Feb. 7, 2022), https://www.mcguirewoods.com/client-resources/Alerts/2022/2/third-circuit-to-decide-whether-student-athletes-may-be-employees. ↑

  76. . Abruzzo, supra note 5. ↑

  77. . Id. at 1 (emphasis added). ↑

  78. . Memorandum GC 17-01 from Richard Griffin, Jr., Gen. Couns., NLRB, on the Statutory Rights of University Faculty and Students in the Unfair Labor Practice Context to All Reg’l Dirs., Officers-in-Charge, and Resident Officers, NLRB (Jan. 31, 2017), https://apps.nlrb.gov/link/document.aspx/09031d4582342bfc. ↑

  79. . Abruzzo, supra note 5, at 2. ↑

  80. . Id. (emphasis added). ↑

  81. . Id. at 3. ↑

  82. . Id. at 2. ↑

  83. . Id. at 2–3 (“Those exceptions [in Section 2(3)] do not include university employees, football players, or students.”). ↑

  84. . Id. at 3. ↑

  85. . Id. at 4. ↑

  86. . Id. at 3–4 ↑

  87. . Id. at 4. ↑

  88. . Id. at 3. ↑

  89. . Nw. Univ., No. 13-RC-121359, 2014 N.L.R.B. LEXIS 221, at *40 (Mar. 26, 2014). ↑

  90. . Bos. Med. Ctr. Corp., 330 N.L.R.B. 152, 160 (1999). ↑

  91. . NLRB. v. Town & Country Elec., 516 U.S. 85 (1995). ↑

  92. . Id. at 94. ↑

  93. . Id. (citing Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 322–23 (1992)). ↑

  94. . See Robert A. McCormick & Amy Christian McCormick, The Myth of the Student-Athlete: The College Athlete as Employee, 81 Wash. L. Rev. 71, 97–98 (2006) (explaining that Division 1 men’s football and basketball programs are revenue-generating sports); Nicholas C. Daly, Note, Amateur Hour is Over: Time for College Athletes to Clock in Under the FLSA, 37 Ga. St. U. L. Rev. 471, 486 (2021) (defining revenue-generating sports as “Division 1 men’s basketball and Football Bowl Subdivision (FBS) football”). While some commentators also include other sports, such as men’s ice hockey, baseball, and women’s basketball, these sports only produce revenue for some universities and were included for purposes of a discussion that is outside the scope of this Note. See Christopher J. Gerace, The NCAA’s Transfer Conundrum, 94 Notre Dame L. Rev. 1819, 1819 n.4 (2019) (noting that “[t]hese are not the only sports that generate any revenue at all; rather, they are the sports specifically excluded from the NCAA’s ‘One-Time Transfer Exception’”). ↑

  95. . The NCAA governs twenty-four sports across all three divisions. What is the NCAA?, supra note 18. Thus, this Note argues that the vast majority of collegiate student-athletes, participating in the twenty-two sports outside of men’s basketball and football, should not be considered “employees” under the NLRA. ↑

  96. . Bos. Med. Ctr. Corp., 330 N.L.R.B. 152, 160 (1999). ↑

  97. . Id. ↑

  98. . Many commentators and legal scholars have convincedly argued that student-athletes in revenue-generating athletic programs, such as men’s basketball and football, should be considered employees of their university. Thus, this Note does not specifically address this issue. However, it is necessary to briefly provide context regarding the revenue these sports contribute to their university’s bottom-line. ↑

  99. . Spencer D. Wyld & David C. Wyld, College Football’s Bottom-Line Impact: Exploring the Relationship of Football Performance on Athletic Finances for Division I Institutions Today, The Sport J. (July 23, 2021), https://thesportjournal.org/article/college-footballs-bottom-line-impact-exploring-the-relationship-of-football-performance-on-athletic-finances-for-division-i-institutions-today/. ↑

  100. . Id. ↑

  101. . Chris Smith, College Football’s Most Valuable Teams: Reigning Champion Clemson Tigers Claw Into Top 25, Forbes (Sept. 12, 2019, 6:00 AM), https://www.forbes.com/sites/chrissmith/2019/09/12/college-football-most-valuable-clemson-texas-am/?sh=120198c0a2e7. ↑

  102. . Andrew Limbong, College Football is Back and Players Still Aren’t Getting Paid, NPR (Sept. 2, 2022, 3:13 PM), https://www.npr.org/2022/09/02/1120610858/college-football-nil-big-ten. ↑

  103. . Nicole Auerbach & Stewart Mandel, The Future of College Football, Inc.: Where the Sport’s Money and Management Go From Here, The Athletic (Sept. 27, 2022), https://theathletic.com/3627099/2022/09/27/college-football-ncaa-breakaway-revenue-sharing/. ↑

  104. . Tyler Conway, NCAA Agrees to New Contract with Turner, CBS for March Madness Rights, Bleacher Rep. (Apr. 12, 2016), https://bleacherreport.com/articles/2632358-ncaa-agrees-to-new-contract-with-turner-cbs-for-march-madness-rights. ↑

  105. . Nw. Univ., No. 13-RC-121359, 2014 N.L.R.B. LEXIS 221, at *1 n.1, *41 (Mar. 26, 2014) (determining in part that football players at Northwestern University were employees within the meaning of the NLRA because the university generated millions of dollars in revenue per year from the student-athletes); Johnson v. NCAA, 556 F. Supp. 3d 491, 497 (E.D. Pa 2021) (discussing a university’s and the NCAA’s revenue generated from NCAA athletics and its student-athletes). ↑

  106. . Emma Healy, The Hidden Revenue Behind Non-Revenue Sports, The Heights (Feb. 8, 2021, 1:21 PM), https://www.bcheights.com/2021/02/08/importance-of-non-revenue-sports/. ↑

  107. . U.S. Dep’t Educ., Equity in Athletics Data Analysis, University of Notre Dame (2021–22), https://ope.ed.gov/athletics/#/institution/details (search “University of Notre Dame”; then click to continue; then click “Revenue and Expenses”). ↑

  108. . Id. ↑

  109. . U.S. Dep’t Educ., Equity in Athletics Data Analysis, Duke University (2021–22), https://ope.ed.gov/athletics/#/institution/details (search “Duke University”; then click to continue; then click “Revenue and Expenses”). ↑

  110. . Id. ↑

  111. . Kathy Johnson Bowles, Should Institutions Support Sports Programs That Don’t Make Money?, Inside Higher Ed (Dec. 14, 2021) (citing Finances of Intercollegiate Athletics, NCAA, https://www.ncaa.org/sports/2013/11/19/finances-of-intercollegiate-athletics.aspx (last visited Mar. 29, 2024)), https://www.insidehighered.com/blogs/just-explain-it-me/should-institutions-support-sports-programs-don%E2%80%99t-make-money. ↑

  112. . Kristi Dosh, Does Football Fund Other Sports At College Level?, Forbes (May 5, 2011, 9:02 PM), https://www.forbes.com/sites/sportsmoney/2011/05/05/does-football-fund-other-sports-at-college-level/?sh=356ee4d771c2 (“football, and sometimes men’s basketball, subsidizes a (sometimes large) portion of the expenses for other teams”). ↑

  113. . Rodney K. Smith & Robert D. Walker, From Inequity to Opportunity: Keeping the Promises Made to Big-Time Intercollegiate Student Athletes, 1 Nev. L.J. 160, 164 (2001). ↑

  114. . Id. ↑

  115. . See Healy, supra note 106. ↑

  116. . Trs. of Columbia Univ., 364 N.L.R.B. 1080, 1084 (2016).; Mastro Plastics Corp. v. NLRB, 350 U.S. 270, 281 (1956) (determining that the Act covered plastic manufacturing employees because the employment contract “deal[t] solely with the economic relationship between the employers and the employees”). ↑

  117. . Columbia Univ., 364 N.L.R.B. at 1085. ↑

  118. . Bos. Med. Ctr. Corp., 330 N.L.R.B. at 160. ↑

  119. . See Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730, 751 (1989). ↑

  120. . Abruzzo, supra note 5, at 4 (explaining that “the university control[ed] the manner and means of the players’ work on the field and various facets of the players’ daily lives to ensure compliance with NCAA rules; for example, the university maintain[ed] detailed itineraries regarding the players’ daily activities and football training, enforce[d] the NCAA’s minimum GPA requirement, and penalize[d] players for any college or NCAA infractions, which could result in removal from the team and loss of their scholarship”). ↑

  121. . Lynn O’Shaughnessy, Do College Athletes Have Time to Be Students?, CBS News (Feb. 18, 2011, 10:56 AM), https://www.cbsnews.com/news/do-college-athletes-have-time-to-be-students/ (“Athletes in some sports are spending more time in uniform than they are attending classes and studying.”). ↑

  122. . NCAA Division I Manual, supra note 16, art. 14. ↑

  123. . Id. art. 17. ↑

  124. . Id. § 12.1. ↑

  125. . Id. § 15.3.5. ↑

  126. . Id. at xiii. ↑

  127. . Stanford Univ., Student-Athlete Handbook 39 (2017), https://stanford_ftp.sidearmsports.com/custompages/Compliance/Handbook.pdf. ↑

  128. . Duke Univ., Athletic Policy Manual of Duke University 18 (2023), https://goduke.com/documents/2023/10/27/Athletic_Policy_Manual.pdf. ↑

  129. . Id. at 15; Stanford Univ., supra note 127, at 30–31. ↑

  130. . Luke Cyphers & Daniel Libit, “Must Let Head Coach Know…,” The Intercollegiate (last visited Mar. 29, 2024), https://theintercollegiate.com/must-let-head-coach-know/ (“Team rules have long been a staple of interscholastic and intercollegiate sports . . . .”). ↑

  131. . Id. ↑

  132. . Id. ↑

  133. . Id. ↑

  134. . Bos. Med. Ctr. Corp., 330 N.L.R.B. 152, 160 (1999) (citing NLRB v. Town & Country Elec., 516 U.S. 85, 90 (1995)). ↑

  135. . See In re Nat’l Collegiate Athletic Ass’n Athletic Grant-in-Aid Cap Antitrust Litig., 958 F.3d 1239, 1244 n.1 (9th Cir. 2020), aff’d sub nom. Nat’l Collegiate Athletic Ass’n v. Alston, 594 U.S. 69 (2021). ↑

  136. . Steve Berkowitz, NCAA Increases Value of Scholarships in Historic Vote, USA Today (Jan. 17, 2015, 4:31 PM), https://www.usatoday.com/story/sports/college/2015/01/17/ncaa-convention-cost-of-attendance-student-athletes-scholarships/21921073/. ↑

  137. . NCAA Division I Manual, supra note 16, § 15.2.8.1. ↑

  138. . Id. at 186. ↑

  139. . Matthew J. Mitten et al., Sports Law and Regulation 117 (5th ed. 2020). ↑

  140. . NCAA Division I Manual, supra note 16, § 12.1.2. ↑

  141. . E.g., Chrissy Clark, NCAA Players Already Get Paid. It’s Called Free Tuition, The Federalist (Aug. 8, 2019), https://thefederalist.com/2019/08/08/ncaa-players-already-get-paid-its-called-free-tuition/. ↑

  142. . Taylor Branch, Why Scholarships Don’t Count as Payment for College Athletes, The Atl. (Sept. 26, 2011), https://www.theatlantic.com/entertainment/archive/2011/09/why-scholarships-dont-count-as-payment-for-college-athletes/245637/. ↑

  143. . Sam C. Ehrlich, “But They’re Already Paid”: Payments In-Kind, College Athletes, and the FLSA, 123 W. Va. L. Rev. 1, 13 (2020). ↑

  144. . Id. ↑

  145. . Trs. of Columbia Univ., 364 N.L.R.B. 1080, 1085 (2016). ↑

  146. . Id. at 1097. ↑

  147. . Id. at 1080 (“our starting point in determining whether student assistants are covered by the Act is the broad language of Section 2(3)”); NLRB v. Town & Country Elec., Inc., 516 U.S. 85, 90 (1995). ↑

  148. . Town & Country Elec., 516 U.S. at 94. ↑

  149. . Columbia Univ., 364 N.L.R.B. at 1083. ↑

  150. . Abruzzo, supra note 5, at 2–3. ↑

  151. . Columbia Univ., 364 N.L.R.B. at 1081. ↑

  152. . Nw. Univ., 362 N.L.R.B. 1350, 1354 (2015). ↑

  153. . Id. at 1353. ↑

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5Mar

Are College Athletes Employees?  Unpacking the NLRB’s Decision in Trustees of Dartmouth College

Categories: Current Issues Blog
Comments Off on Are College Athletes Employees?  Unpacking the NLRB’s Decision in Trustees of Dartmouth College

By William Gilchrist

The NCAA is currently facing the latest challenge to its amateur athlete model from the National Labor Relations Board (“NLRB”), which recently found that members of the Dartmouth men’s varsity basketball team are “employees” under the National Labor Relations Act (the “Act”).[1]  The decision, which has been described as “the first step to potential employee status for college athletes,” comes at a time when the NCAA and universities across the United States are facing growing calls to treat athletes as employees.[2]

On February 5, 2024, Regional Director Laura Sacks released a Decision and Direction of Election in Trustees of Dartmouth College, finding that because “Dartmouth has the right to control the work performed . . . and because the players perform that work in exchange for compensation, the petitioned-for basketball players are employees within the meaning of the Act.”[3]

I. The NLRB

The NLRB is an independent federal agency tasked with enforcing the Act, which protects the right of private sector employees to join together to improve wages and working conditions.[4]  The NLRB’s responsibilities are carried out by a general counsel and five-member board, both of whom are appointed by the President.[5]  

Collective bargaining is one of the key rights granted by the Act, and employees have the right to petition the NLRB for a determination of who will represent them.[6]  Parties may file three types of petitions with the NLRB to determine whether an individual may represent a group of employees.[7]  An RC petition, like the one filed in Trustees of Dartmouth College, is generally filed by a union seeking to be certified as a group of employees’ bargaining representative.[8]

Once the petition is filed, a regional director will conduct an investigation and hold a formal hearing.[9]  The regional director will then issue a dismissal or decision directing election that may be appealed to the Board through a request for review.[10]  If the Board grants the request, it will issue a decision affirming, modifying, or reversing the action of the regional director.[11]

II. Trustees of Dartmouth College

Trustees of Dartmouth College involves an attempt by Service Employees International Union, Local 560 (the “Union”) to represent the fifteen players on the Dartmouth men’s varsity basketball team.[12]  As the exclusive representative of certain Dartmouth employees since 1966, the Union has negotiated several collective-bargaining agreements on behalf of employees with Dartmouth.[13]  These negotiated agreements are subject to final approval by the entire bargaining unit and typically involve employee wages, hours of work, and other issues.[14]

As a private university and member of the Ivy League, Dartmouth argues that the Union’s petition should be denied because the players are not employees, and the Board’s assertion of jurisdiction will create instability in labor relations.[15]  However, after evaluating each side’s arguments, Regional Director Laura Sacks ultimately concluded that the players are employees and that asserting jurisdiction would not create instability in labor relations.[16]

In reaching her decision, Director Sacks looked to the common-law definition of employment cited in Columbia University,[17] which “generally requires that the employer have the right to control the employee’s work, and that the work be performed in exchange for compensation.”[18]  Director Sacks also noted that the players perform work that benefits Dartmouth by generating alumni engagement, financial donations, and publicity, all resulting in increased student interest and enrollment applications.[19]

Despite an agreement among Ivy League schools not to provide athletic scholarships,[20] Dartmouth still provides significant financial benefits to its players in return.[21]  These benefits include a streamlined admissions process, tickets to games, meals, lodging, equipment and apparel, and a “Peak Performance” program designed especially for varsity athletes.[22]

The university also exercises control over the players by “designing and monitoring their summer workouts, requiring them to sign handbooks and other documents, dictating the time they spend practicing, directing those practices, and scheduling their road trips such that each meal and sleep period occurs at the coaching staff’s discretion.”[23]  Dartmouth’s significant exercise of control over the players’ work, combined with the substantial benefits it provides to the players, was ultimately enough to overcome the lack of receipt of traditional compensation in the form of a weekly paycheck or scholarship.[24]

Lastly, while there was some debate about whether the Dartmouth men’s varsity basketball team is profitable,[25] these concerns were dismissed on the grounds that “the profitability of any given business does not affect the employee status of the individuals who perform work for that business.”[26]

III. Implications outside of the Ivy League

While the decision remains a key first step in recognizing college athletes as employees, its implications for athletes in other conferences remain unclear.[27]  The Board’s decision in Northwestern University,[28] a similar case evaluating the employee status of college athletes, has the potential to limit the application of Trustees of Dartmouth College outside the Ivy League.[29]

In Northwestern University, the Board declined to assert jurisdiction over the Northwestern football team.[30]  Unlike Dartmouth, Northwestern is the only private university in its conference and one of only seventeen private institutions in the Football Bowl Subdivision (FBS), which was comprised of 125 schools at the time.[31]  Due to the “inherent asymmetry of the labor relations regulatory regimes applicable to individual teams[,]” the Board declined to assert jurisdiction in Northwestern University after concluding that doing so “would not promote stability in labor relations.”

Following the Board’s ruling in Northwestern University, the NLRB is unlikely to exercise jurisdiction over teams in conferences with a significant public-school presence.  However, as NCAA conferences continue to undergo dramatic restructuring,[32] the potential impacts of the Board’s decision are subject to change.

Although the recent decision in Trustees of Dartmouth College is a critical first step towards recognizing athletes as employees, the case is still ongoing.  An election for the players to vote on representation by the Union is currently scheduled for March 5, 2024.[33]  However, Dartmouth opposed the election on February 29th, filing a Request for Review and Emergency Motion to Stay the Election or Impound the Ballots.[34]  As a result, Dartmouth will likely appeal the decision regardless of whether the election occurs on March 5th, leaving athletes’ employee status uncertain for the foreseeable future.

[1] Decision and Direction of Election at 2, Trustees of Dartmouth College, 01-RC-325633, (NLRB Feb. 5, 2024).

[2] Ralph D. Russo, Billions in TV revenue, athletes as employees on the line as college sports faces more legal threats, AP News (Oct. 16, 2023, 10:14 PM), https://apnews.com/article/college-athletes-nil-eb702d33a87bca98084ea492eccdf84c.

[3] Decision and Direction of Election at 2, Trustees of Dartmouth College, 01-RC-325633 (NLRB Feb. 5, 2023).

[4] Who We Are, National Labor Relations Board, https://www.nlrb.gov/about-nlrb/who-we-are (last visited Mar. 3, 2024).

[5] Id.

[6] The NLRB Process, National Labor Relations Board, https://www.nlrb.gov/resources/nlrb-process (last visited Mar. 3, 2024).  Collective bargaining is “a process by which a labor organization, designated or selected by a majority of an employer’s employees, negotiates on behalf of employees with the employer over wages and other terms and conditions of employment[.]” GC Collective Bargaining Resources, National Labor Relations Board, https://www.nlrb.gov/guidance/key-reference-materials/gc-collective-bargaining-resources#:~:text=Collective%20bargaining%20is%20a%20process,%2C%20anti%2Ddiscrimination%20and%20anti%2D (last visited Mar. 3, 2024). 

[7] The NLRB Process, National Labor Relations Board, https://www.nlrb.gov/resources/nlrb-process (last visited Mar. 3, 2024).

[8] Id. The two other types of petitions are RD and RM petitions.  RD petitions are filed by employees seeking to remove a currently recognized union, while an RM petition is filed by an employer seeking an election because one or more parties have sought recognition as a bargaining representative.  Id.

[9] Id.

[10] Id.

[11] Id.

[12] Decision and Direction of Election at 1, Trustees of Dartmouth College, 01-RC-325633 (NLRB Feb. 5, 2024).

[13] Id.

[14] Id.

[15] Id. at 2.

[16] Id.

[17] Columbia University, 364 NLRB 1080, 1094 (2016).

[18] Decision and Direction of Election at 14, Trustees of Dartmouth College, 01-RC-325633 (NLRB Feb. 5, 2024).

[19] Id. at 2.

[20] See Melissa Korn, Ivy League’s Agreement to Ban Athletic Scholarships Is Illegal, Lawsuit Says, The Wall Street Journal (Mar. 7, 2023), https://www.wsj.com/articles/ivy-leagues-agreement-to-ban-athletic-scholarships-is-illegal-lawsuit-says-e1e7c29c.

[21] Decision and Direction of Election at 17, Trustees of Dartmouth College, 01-RC-325633 (NLRB Feb. 5, 2024).

[22] Id. at 11–12, 19.  Some of the financial benefits provided to players include shoes valued at $1,200 per year, equipment and other clothing valued at $2,950 per year, tickets with an estimated value of $1,200 over the course of the season, as well as travel, lodging, and meals.  Id.

[23] Id. at 18.

[24] Id.

[25] Id. at 12–13.

[26] Decision and Direction of Election at 18, Trustees of Dartmouth College, 01-RC-325633 (NLRB Feb. 5, 2024).

[27] See Northwestern University, 362 NLRB 1350 (2015).

[28] 362 NLRB 1350 (2015).

[29] See id.

[30] Id. at 1355–56.  The Northwestern University Board also declined to consider whether the Northwestern football players were employees but left open the possibility of reconsidering jurisdiction in the future.  Id.

[31] Id. at 1354.  Northwestern was a member of the Big Ten Conference in 2015 and remains the only private university in the Big Ten.  See id. at 1351; Big Ten Football, Fox Sports, https://www.foxsports.com/college-football/big-ten/teams (last visited Mar. 3, 2024).  There are currently 134 schools in the FBS.  Bill Bender, College football realignment 2024 explained: How every FBS conference will look by school, Sporting News (Oct. 25, 2023), https://www.sportingnews.com/us/ncaa-football/news/college-football-realignment-2024-conferences-school/gcxqsjmp7rxxhyxz6yhlyysi#:~:text=Sam%20Houston%20and%20Jacksonville%20State,join%20the%20FBS%20in%202024..

[32] See Matt Bonesteel & Shelly Tan, Here’s how college sports has changed after conference realignment, The Washington Post (Sept. 1, 2023, 10:29 AM), https://www.washingtonpost.com/sports/2023/08/07/college-sports-conference-realignment/.

[33] Notice of Election, Trustees of Dartmouth College, 01-RC3-25633 (NLRB Feb. 9, 2024).

[34] Motion to Stay an Election, Trustees of Dartmouth College, 01-RC3-25633 (NLRB Feb. 29, 2024).

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18Mar

Elon Musk’s Firing Fiasco: Should We Provide Better Protection for Those Affected?

Categories: Current Issues Blog
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By Matthew Goldstein

In the five months since Elon Musk purchased a 44 billion dollar 100% ownership stake in Twitter,[1] he has committed a series of firings that have had significant negative impacts on the lives of thousands of people.[2] Specifically, Musk has terminated around 5500 of Twitter’s 7500 employees since he became the owner and CEO of the company.[3] While periodic hirings and firings, or even mass layoffs in response to unexpected or novel market conditions, are an expected part of any corporation, what is particularly problematic about Twitter is how the company has gone about handling its scores of terminations.

For many employees, an expected layoff experience might entail some notice that they were being terminated as well as some time for them to prepare for the end of their job and reentrance into the employee marketplace. In order to ensure these basic expectations for employees, the federal government has enacted the Worker Adjustment and Retraining Notification Act (WARN).[4] The act requires all employers with over 100 employees to give at least 60 days of notice for any mass layoff which it defines as a termination of the smaller of 33% of employees or 50 employees.[5] WARN also requires the notice to be specific and to be given to each individual employee ahead of the 60 day notice window.[6] Additionally, California has its own version of WARN called the California Worker Adjustment and Retraining Notification Act (CalWARN).[7]  In addition to the 60 day notice requirement of WARN, CalWARN also includes provisions giving employers specific civil liability and remedies for failing to give notice including back pay, civil penalties, and attorney’s fees.[8]

Twitter’s approach seems to stray quite far away from these statutory requirements. Twitter employees might hear a vague declaration from Musk that layoffs will happen only to discover that hours later they are completely locked out of all company laptops and email accounts and are then left to conclude that they must have been fired.[9]

Employees who were locked out of their systems and effectively terminated on the spot without any real notice quickly discovered the degree to which Twitter was likely in violation of WARN and CalWARN and decided to file a class action lawsuit citing violations of these statutes as well as breach of contract and other California employment law claims.[10] While these claims may have been merited, a court order in January compelled each of the individuals bringing claims in the suit to arbitration as it was mandated by their contracts.[11] While the court compelled arbitration on these seemingly valid claims, it declined to comment on the validity of the class at issue and chose to table the issue as the case develops.[12] For the time being, it seems like Twitter will be facing relatively minimal consequences for these probable violations.[13]

To protect the rights of employees in the state from similar violations in the future, one California Legislature representative has proposed a bill to amend CalWARN.[14] The bill would employ a number of protections including expanding the definition of employee to include independent contractors, giving similar civil remedies to independent contractors as employees, expanding the notice period to 90 days, and, most importantly, curb the power of employers to easily and quietly settle disputes with employees.[15] Specifically, the bill would seek to ban any general release, waiver of claims, or nondisparagement or nondisclosure agreement either as a condition of employment or as a post-termination form of settlement unless in the form of extra consideration on top of the remedies guaranteed by the bill.[16] While the bill likely would not have prevented the terminated Twitter employees from being compelled to arbitration, it would give them a significant bargaining advantage during that arbitration process and compel companies like Twitter to pursue more equitable outcomes.

Furthermore, the most recent development in Musk’s erratic termination behavior demonstrates the pressing need for this kind of behavior to be curbed to protect both employees and investors. On March 6, 2023, a Twitter employee named Halli Thorleifsson reached out to Musk on Twitter claiming that he and 200 other Twitter employees were locked out of their systems and could not confirm with human resources whether or not they had been fired.[17] After tweets back and forth between Halli and Musk in which Musk publicly disclosed and mocked Halli’s disability and work ethic in front of Musk’s massive Twitter following, Halli eventually received notice that he had been terminated and asked Musk if he would pay him what he was owed.[18] Halli was referring to the fact that his employment at Twitter resulted from the sale of his own technology company to Twitter and his subsequent election to be paid with a salary rather than a lump sum for his company in order to pay more taxes to his home country of Iceland.[19] If Twitter were to fire him, they would owe him the full lump sum of the value of his company which could have put Twitter on the hook for a hefty and unnecessary bill.[20]

Beyond the likely WARN and CalWARN violations and other various possible legal and ethical violations towards employees that this kind of action provides, there is also the consideration of how Musk’s actions negatively financially impact others. For example, most CEOs are constrained by a fiduciary duty of care to their shareholders to “discharge their duties with the care that a person in a like position would reasonably believe appropriate under similar circumstances.”[21] However, Musk has no such duty to the shareholders of Twitter because he fully owns the company and therefore does not face the same limitations that many other CEOs do.

Even though there are no shareholders to hold him accountable for responsibly managing Twitter, that doesn’t stop his actions from potentially harming his employees, business partners, and other businesses. For example, the stock price of Tesla, another corporation of which Musk is the CEO, has decreased about 20% in the months since Musk’s Twitter acquisition.[22] While this decrease certainly cannot be solely blamed on Musk’s actions, the spontaneous and widely criticized actions of Tesla’s publicly notorious CEO certainly did not increase investors’ confidence.

Ultimately, it seems that the current state of the law is unable to reasonably constrain the behavior of Musk. In times where a single individual fully wields the power of a 44-billion-dollar corporation at a whim and can significantly impact the lives of thousands if not millions of people, the legal landscape must be updated to ensure those people reasonable protections. While propositions to amend California’s labor code to better protect the state’s employees is a good start, more must be done at both the state and federal level to ensure reasonable protections for the employment and financial interests of all who could be affected.

[1] Kate Conger & Lauren Hirsch, Elon Musk Completes $44 Billion Deal to Own Twitter, N.Y. Times (Oct. 27, 2022), https://www.nytimes.com/2022/10/27/technology/elon-musk-twitter-deal-complete.html.

[2] Kate Conger et al., In Latest Round of Job Cuts, Twitter Is Said to Lay Off at Least 200 Employees, N.Y. Times (Feb. 26, 2023), https://www.nytimes.com/2023/02/26/technology/twitter-layoffs.html.

[3] Id.

[4] 20 C.F.R. § 639 (1989).

[5] 20 C.F.R. § 639.3 (1989).

[6] 20 C.F.R. § 639.7 (1989).

[7] Cal. Lab. Code § 1402 (2003).

[8] Id.

[9] Charissa Cheong, A Twitter employee has been flooded with support after saying he was locked out of his emails and laptop at 3am: ‘This isn’t looking promising’, Insider (Nov. 4, 2022), https://www.insider.com/twitter-employee-chris-younie-locked-out-emails-laptop-3am-2022-11.

[10] Cornet v. Twitter, Inc., No. 3:22-cv-06857-JD, 2022 WL 18396334, at *1 (N.D. Cal. Dec. 14, 2022).

[11] Cornet v. Twitter, Inc., No. 3:22-cv-06857-JD, 2022 WL 187498, at *3 (N.D. Cal. Jan 13, 2023).

[12] Id.

[13] Id.

[14] A.B. 1356, 2023-2024 Leg., Reg. Sess. (Cal. 2023).

[15] Id.

[16] Id.

[17] Anisha Kohli, Why Elon Musk’s Very Public Dismissal of a Disabled Employee Could Be Costly, Time (Mar. 8, 2023), https://time.com/6261117/musk-twitter-halli-layoff-payout.

[18] Id.

[19] Id.

[20] Id.

[21] Model Bus. Code § 8.30(b) (A.B.A. 2016).

[22] Yahoo Finance, Tesla, Inc., https://finance.yahoo.com/quote/TSLA/ (Last visited Mar. 14, 2023).

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5Mar

The Blurry Limits of the Equal Pay Act’s “Factor Other Than Sex”: An Argument For Limiting The Use of Salary History and the Benefit to Employers

Categories: Online
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*Nicole Tronolone

11 Wake Forest L. Rev. Online 21 (Opens PDF in New Tab)

I.      Introduction

President John F. Kennedy signed the Equal Pay Act into law on June 10, 1963, remarking that such legislation constituted a “significant leap forward.”[1]  Advocates of the bill heralded the legislation as “a matter of simple justice” ensuring that “there is no longer any excuse for paying women less than men for performing the same work, if there ever was any.”[2]  Today, more than fifty years after Congress enacted the legislation, the pay gap persists.  In 1963, when the law was enacted, women earned $0.59 to a dollar earned by men.[3]  In 2018, fifty-five years later, women earned only $0.81 to a dollar earned by men—evidencing only meager progress towards closing the gender pay gap.[4]  The persistence of the gap is, in part, created by the sustained use of prior salary information in setting employee compensation rates for new employees.[5]  Currently, federal courts are split in their interpretation of a critical catch-all phrase in the Equal Pay Act (“EPA”)—an exception that permits an employer to pay individuals of different sexes disparate salaries for substantially equal work so long as the differential is based on a “factor other than sex.”[6]  Employers have used this exception as justification for relying on prior salary history.  Use of salary history inquiries, however, serves to perpetuate the wage gap, locking women into cycles of lower pay and “piling on” wage disparity from job to job.[7]

Prior to the Ninth Circuit’s 2018 en banc decision in Rizo v. Yovino,[8] federal courts had articulated three general approaches to the catch-all exception to the EPA.  The Seventh Circuit’s pro-employer approach unequivocally permits the use of prior salary as either a standalone factor or in conjunction with other factors, creating a broad interpretation of the exception.[9]  The Eighth Circuit has taken a slightly more restrictive approach, allowing the use of prior salary as the sole determinant of new salary but implementing a case-by-case reasonableness inquiry.[10]  In contrast, the Tenth and Eleventh Circuits greatly limit the use of prior salary history, holding that the use of such information as the sole factor in setting an employee’s compensation violates the EPA.[11]  The Ninth Circuit’s 2018 en bancdecision created a fourth category—the most restrictive interpretation of the EPA—prohibiting the use of salary history entirely.[12]  Although many hoped the Supreme Court would resolve the split, after granting certiorari, the Court vacated and remanded Rizo on purely procedural grounds.[13]  In early 2020, the Ninth Circuit reheard the case en banc, and issued a majority opinion that echoed the previous decision: Prior salary may not be considered in salary determinations.  The Supreme Court has since declined to resolve the issue, leaving the circuit split unresolved and employers in an uncertain position, particularly those who may be subject to conflicting circuit interpretations and a dizzying array of local and state laws prohibiting or limiting the use of salary history inquiries.[14]

This Comment will first provide an overview of the history and text of the EPA, including the Supreme Court’s interpretation of the claim structure and available defenses for employers.  Next, this Comment will detail the current status of the circuit split on this issue.  This Comment will argue that the majority reasoning articulated in the Ninth Circuit’s 2020 en banc decision in Rizo is the best approach to resolving the ambiguity surrounding the “factor other than sex” exception to the EPA.  Finally, this Comment will analyze the impact the split has on employers as well as the benefits created by broad prohibitions on the use of salary history.

II.    Gender Wage Gap and the EPA

The origins of the EPA can be traced to the influx of female workers into the economy during World War II in response to severe labor shortages.[15]  Following the war, men returning home displaced women from their wartime roles, sending the number of women in the workplace back to pre-World War II levels.[16]  Women who managed to remain in the workforce were often reclassified into new roles and suffered decreased wages.[17]  By 1963, women made an average of $21,959 per year, compared to an average annual male salary of $37,253—a 41.1 percent wage gap.[18]

Although several bills were introduced throughout the 1950s advocating for equal pay,[19] equal pay legislation did not gain significant traction until the Kennedy administration.  President Kennedy signed the EPA into law as an amendment to the Fair Labor Standards Act on June 10, 1963, characterizing it as merely a “first step” towards economic equality.[20]

Despite the EPA’s egalitarian promise of equal pay for equal work, the wage gap persists today, more than fifty years after the legislation’s enactment.  The wage gap has moderately narrowed since 1963,[21] but the rate of change has slowed significantly since 2001.[22]  At the current rate women are not expected to receive pay parity until 2106.[23]  Women of color experience an even greater disparity, with African-American and Latina women making $0.63 and $0.55 to the dollar, respectively, when compared with non-Hispanic white men.[24]  Over the course of a forty-seven year career, a female college graduate will earn roughly $1.2 million less than a white male college graduate.[25]  These figures highlight the importance of a consistent and transparent approach to the EPA’s protections.[26]

In Corning Glass Works v. Brennan,[27] the Supreme Court stressed that the EPA was not meant to be a passive prohibition on discrimination, but rather Congress’s remedy to  the “endemic problem”[28] of different wage structures “based on an ancient but outmoded belief that a man, because of his role in society, should be paid more than a woman even though his duties are the same.”[29]  The solution to such a problem is to require that “equal work . . . be rewarded by equal wages.”[30]  The Court has characterized congressional intent for the EPA to be “more than a token gesture to end discrimination”[31] and advised that the broad remedial nature of the statute be “construed and applied so as to fulfill the underlying purposes which Congress sought to achieve.”[32]

Under the EPA, employers are prohibited from discriminating between employees on the basis of sex in the wage rate for equal work unless the wage differential is made “pursuant to (i) a seniority system; (ii) a merit system; (iii) a system which measures earnings by quantity or quality of production; or (iv) a differential based on any other factor other than sex.”[33]  Through this language, the EPA provides for four exceptions to the equal pay for equal work mandate of the legislation.[34]  The fourth exception, a catch-all category providing for “any other factor other than sex,” is the subject of the current circuit split, with courts differing in their interpretations of whether salary history falls within the exception.

To establish his or her prima facie case under the EPA, a plaintiff must demonstrate “that an employer paid different wages to employees of opposite sexes ‘for equal work on jobs the performance of which are performed under similar working conditions.’”[35]  Once the plaintiff has established his or her prima facie case, the burden shifts to the employer to prove the differential was made pursuant to one of the statutory exceptions.[36]  Although the Supreme Court has characterized the proof structure of the EPA as “straightforward,”[37] deciphering the implications of a “factor other than sex” has proved otherwise.

III.   Circuit Split: Is Salary History a “Factor Other Than Sex” Under the EPA’s Affirmative Defenses?

A.     Seventh Circuit: Salary History Is Unequivocally a “Factor Other Than Sex”

In addressing the scope of the catch-all exception the Seventh Circuit has adopted the broadest construction of “factor other than sex,” holding that “wages at one’s prior employer are a ‘factor other than sex’ and . . . an employer may use them to set pay consistently with the Act.”[38]  Disapproving of any approach that requires a court to second-guess the motivations of an employer’s use of a “factor other than sex,” the Seventh Circuit emphasizes “Section 206(d) does not authorize courts to set their own standards of ‘acceptable’ business practices.  The statute asks whether the employer has a reason other than sex—not whether it has a ‘good’ reason.”[39]  Under this approach salary history always constitutes a “factor other than sex,” enabling an employer to assert an affirmative defense under the EPA to liability for sex-based wage differentials.[40]

B.    Eighth Circuit: Case-by-Case Analysis of the Use of Prior Salary History

Similarly, the Eighth Circuit does not recognize a blanket prohibition against the use of prior salary.[41]  In contrast to the Seventh Circuit’s approach, the Eighth Circuit acknowledges the potential for employers to use prior salary history in a discriminatory manner.[42]  Despite this concern, the Eighth Circuit has held that such opportunity for misuse does not warrant a per se prohibition against the use of salary history policies.[43]  Rather, courts must undertake careful examination of the record to ensure the employer is not relying on the “market forces” theory “to justify lower wages for female employees simply because the market might bear such wages.”[44]  By requiring a case-by-case reasonableness assessment of an employer’s use of the “factor other than sex” defense, the Eighth Circuit adopts a slightly narrower interpretation of the EPA exception, though one largely supportive of the use of salary history policies.

C.    Tenth and Eleventh Circuits: The Use of Salary History Alone in Setting Compensation Does Not Constitute a “Factor Other Than Sex”

Before the Ninth Circuit’s en banc decision completely prohibiting the use of salary history, the Tenth and Eleventh Circuits had adopted the most restrictive interpretations of a “factor other than sex.”[45]  The approach shared by these circuits permits the use of salary history only when used in conjunction with additional factors.[46]  Although an employer may consider an applicant’s prior salary, a pay disparity may not be premised on this factor alone.[47]

D.    Ninth Circuit: En Banc Decision Prohibits Any Use of Salary History

In its 2018 en bancdecision in Rizo v. Yovino, the Ninth Circuit overturned existing circuit precedent and adopted an approach even more restrictive than that of the Tenth and Eleventh Circuits.[48]  A few months later the Supreme Court granted certiorari for Yovino v. Rizo, and it appeared as though the circuit split regarding the interpretation of “factor other than sex” would finally be resolved.[49]  The Supreme Court, however, vacated the case on a distinct procedural posture issue and avoided the EPA question entirely.[50]  Following the remand, the Ninth Circuit reheard the case en banc, and issued an opinion reaffirming its restrictive approach: employers may not use salary history when determining pay levels.[51]

In February 2014, Plaintiff Aileen Rizo filed suit against Defendant Jim Yovino in his official capacity as Superintendent of Fresno County Office of Education (“FCOE”).[52]  Rizo filed four causes of action including violation of the EPA and sex discrimination under Title VII.[53]  In 2009, Rizo applied for, and was offered, a position as a math consultant in FCOE’s Science, Technology, Engineering, and Mathematics program.[54]  In accordance with FCOE’s Standard Operating Procedure 1440, Rizo’s initial salary was determined by adding 5 percent to her most recent salary and placing her on Step 1 of the county’s salary schedule.[55]  Three years later, Rizo learned of a male colleague who had just been hired by FCOE as a math consultant but placed on Step 9 of the salary schedule.[56]  Rizo argued she established her prima facie case for an EPA claim by showing that she, a woman, was placed on a lower salary schedule step than a male employee hired to perform substantially the same work.[57]  The County did not dispute that Rizo had satisfied her prima facie case, thereby shifting the burden to the County to prove the wage disparity resulted from one of the EPA’s four available exceptions.[58]  The County argued that since it had used her salary history in application of its standard operating procedure, the differential fell within the catch-all exception of a “factor other than sex” and thus was permissible.[59]

The district court acknowledged it was placed in the unique position of interpreting whether the use of prior salary alone properly fell within the catch-all exception.[60]  The court distinguished Rizo from Ninth Circuit precedent[61] in Kouba v. Allstate.[62]  In Kouba, the Ninth Circuit held, “the Equal Pay Act does not impose a strict prohibition against the use of prior salary.”[63]  Noting that the employer in Kouba relied on multiple factors in setting an employee’s salary, the district court differentiated Rizo as the County determined her new salary solely through the use of her prior salary.[64]  Thus, the district court found that the standard operating procedure violated the EPA and denied FCOE’s motion for summary judgement.[65]

FCOE petitioned for, and was granted, interlocutory appeal from the district court’s order denying summary judgment.[66]  The three-judge panel of the Ninth Circuit found that the case was controlled by Kouba, rejecting any strict prohibition on salary history, and vacated and remanded the district court’s order.[67]

In late 2017, the Ninth Circuit granted Rizo’s petition for a rehearing en banc to determine the continued applicability of Kouba.[68]  All eleven circuit court judges agreed that an employer’s use of prior salary alone to set an employee’s new salary violates the EPA, and thus Fresno County’s standard operating procedure was impermissible.[69]  Beyond this however, the circuit was severely split in its reasoning regarding the limits of the catch-all exception, a “factor other than sex.”[70]  Authoring the six-judge majority opinion, Judge Stephen Reinhardt held that the EPA prohibits an employer from relying on prior salary as a justification, either alone or in conjunction with other factors, for a wage differential between male and female employees.[71]  Relying on the text, history, and purpose of the EPA, Judge Reinhardt explicitly overruled Kouba, refuting the Ninth Circuit’s prior contention that reliance on prior salary is job related and therefore permissible under the catch-all exception.[72]  The United States Supreme Court granted certiorari to review the en bancdecision.[73]  Although many employers hoped for a resolution of the uncertainty surrounding the exception,[74] the Supreme Court’s per curiam opinion was entirely focused on the resolution of a different question.[75]  Because the Ninth Circuit’s decision was issued eleven days after the death of Judge Stephen Reinhardt, the Supreme Court held the use of his vote rendered the decision void and vacated the en bancjudgment, remanding for further proceedings.[76]

Upon remand, the Ninth Circuit reconsidered FCOE’s appeal en banc in early 2020.[77]  Similar to the decision issued in 2018, all eleven judges agreed that FCOE’s use of prior salary as the sole factor in setting Rizzo’s salary violated the EPA.  However, the judges remained split over the consideration of prior salary in conjunction with other factors.

The majority opinion, authored by Judge Christen, incorporated the arguments advanced by Judge Reinhardt.  Starting with the text of the EPA, the majority argues each word of the statute—”any other factor other than sex”[78]—should be given effect and concludes that the catch-all defense is limited to job-related factors.[79]  Employing two canons of construction, noscitur a sociis and ejusdem generis, the majority held that the text of the EPA requires the catch-all to be job-related.[80]

The majority also looked to the legislative history and purpose of the EPA for additional support for its interpretation of the catch-all exception.  As emphasized in Corning Glass, Congress intended the EPA to remedy the “serious and endemic problem” of wage discrimination in private employment.[81]  After determining that the fourth exception includes only job-related factors, the majority concluded that prior pay is not such a job-related factor.[82]  This en banc decision ratifies the narrow scope of the catch-all provision previously articulated by the late Judge Reinhardt. Under the majority’s approach, prior salary may not be used in determining an employee’s salary as it serves no job-related purpose.[83]  This limiting construction, however, was not adopted by the entire circuit; the two concurrences criticize the extent of the majority’s ban on the use of prior salary, arguing it should be permitted in conjunction with other factors.[84]

In July 2020, the Supreme Court denied certiorari for the case, declining to resolve the circuit split.  As a result, circuits remain deeply divided on the legal question of whether prior salary constitutes a “factor other than sex” either alone or in combination with other factors and employers continue to face conflicting requirements.

IV.   The Impact of the Circuit Split on Employers

In response to the lack of clarity regarding the use of salary history on the federal level, and growing concerns regarding the role of salary history in perpetuating gender inequality, many states and localities have enacted legislation limiting the use of salary history in setting new employees’ salaries.[85]  The specifics of the legislation differ among jurisdictions, creating nuances that frustrate the development of a “one-size fits all approach to compliance.”[86]  Beyond the uncertainty created by the circuit split, employers are faced with a patchwork of state and local laws that further complicates a standard approach to recruiting.

For many employers, questions regarding salary history have long been a standard aspect of the hiring process.[87]  This type of inquiry quickly provides employers with information about a potential applicant early in the interview process.[88]  Salary history inquiries allow employers to remove from consideration those candidates with higher previous salaries than the amount budgeted for the job in question, while allowing candidates who previously earned less to be “snapped up at a bargain.”[89]  This early screening is considered to be the greatest advantage of using salary history to set new employees’ compensation.[90]  Salary history bans and interpretations of the EPA that exclude salary history as an available affirmative defense force employers to reconfigure hiring practices and compensation policies.[91]

To ensure compliance with the dynamic legal landscape regarding the use of salary history, many employers have proactively begun to eliminate these inquiries from their hiring procedures.[92]  For companies with national footprints and workforces, the necessity of a uniform hiring approach is critical.[93]  Rather than create a set of disparate hiring policies, each tailored to the unique requirements of the jurisdiction, these companies have sought to preempt any future changes.[94]  Nearly half of the executives surveyed in a 2017 study concerning the implications of salary history bans indicated that they would change their policies to comply with the most restrictive legislation rather than creating policies that vary by location.[95]  As a result, human resources experts forecast the elimination of salary history policies to emerge as a recruiting best practice.[96]  The need for a consistent interpretation of the EPA’s “factor other than sex” exception is important in providing employers with a clear mandate, one on which they can craft legal and enforceable policies.

A.     The Most Effective Interpretation of “Factor Other Than Sex”

The deepening circuit split and proliferation of state and local legislation on the topic beg the question: Which circuit approach should be adopted as the national standard, and to what extent, if at all, does salary history constitute a “factor other than sex” as an affirmative defense to gender wage disparities under the EPA?  The Ninth Circuit’s 2020 en bancdecision provides a bright-line rule for employers; consideration of salary history is not permitted under the EPA, either alone or in combination with other factors, in justifying a gender-based wage disparity.[97]  This approach, although by far the most narrow interpretation of the EPA’s “factor other than sex,” best reflects legislative history and conforms with the legislative text.  Furthermore, prohibiting the use of salary history in setting employee salary rates benefits employers and employees alike by shifting the basis of compensation to the skills, experience, and responsibilities of the candidate, a notable step in the right direction to eliminating gender pay inequity.

B.    Advantages of Ninth Circuit’s Approach

The complete prohibition on the use of salary history, adopted by the Ninth Circuit initially in 2018 and again in 2020, provides clear guidance to employers and reflects the original intent of the EPA.  A salary history inquiry “forces women and, especially women of color, to carry lower earnings and pay discrimination with them from job to job.”[98]  The EPA was designed to force employers to address explicit gender discrimination and justify any wage differentials.  Broad constructions of “factor other than sex” that permit reliance on salary history simply enable employers to perpetuate such discrimination without articulating a non-discriminatory reason for the disparity.

The text of the EPA’s catch-all affirmative defense allows employers to justify wage-based pay differentials if the disparity is due to any “factor other than sex.”[99]  At the time of the legislation’s enactment salary history was directly related to sex.  The extreme wage disparity of the mid-1960s, with women earning roughly $0.59 to a man’s $1.00 for substantially the same work, reflects this reality.[100]  The text of the EPA, as originally enacted, understood women’s salaries to be inherently gendered and the product of long-standing discrimination.  Because legislators at the time of the EPA’s passage considered women’s salaries to be a product of their sex, any interpretation of the catch-all exception that permits salary history as a “factor other than sex” is contrary to the original interpretation of the affirmative defenses available to employers.

In comparison to the approaches adopted by other circuits, the Ninth Circuit’s bright-line rule provides a decisive and reasoned interpretation of the catch-all exception.  The Seventh Circuit’s approach allows employers to perpetuate gender discrimination by locking women into a cycle of lower wages than their male colleagues, in direct contrast to the stated purposes of the EPA.  The Eighth Circuit’s case-by-case analysis leaves employers with a limited understanding as to how a court will evaluate a claimed affirmative defense.  Finally, the Tenth and Eleventh Circuits’ limited use of salary history, in conjunction with other factors, is redundant.  If an employer has an alternative criterion to justify a wage disparity, such as an applicant’s education or prior experience, then salary history should be rendered unnecessary.  In contrast, drawing from the text and purpose of the EPA, the Ninth Circuit’s approach provides clear direction for employers, prohibiting the use of salary history.

C.    Benefits to Employers from Eliminating Salary History Inquiry

Given the extent of changes to recruiting policies that are required to ensure compliance with judicial and legislative changes to the use of salary history, it is unsurprising that employers have been reluctant to adapt.  Without doubt, the adoption of the Ninth Circuit’s interpretation of “factor other than sex,” prohibiting any sort of reliance on salary history, will require significant alterations to recruiting processes.[101]  Lost in the current discourse concerning salary history bans, however, is a discussion of their potential advantages to employers.  Employers can incur both economic and non-monetary benefits from ending inquiries into applicants’ prior salaries.  Embracing salary history bans and reimagining human resources policies to ensure employees are compensated based on their experience and skills rather than their previous salaries can help employers recruit and retain top talent while limiting the expenses associated with a changing workforce.

1.     Monetary Benefits

Ending the use of salary history in compensation determinations can result in direct economic benefits for employers, including better valuation of skills, fewer wage discrimination lawsuits, and reduced employee turnover.

Although helpful in initial application reviews, salary history is largely unrelated to a candidate’s ability to do the job.[102]  Instead, employers should seek to “price the job, not the person.”[103]  Removing salary history questions from employment applications forces employers to identify the core knowledge and skill requirements of the job and measure the job’s value to the organization rather than simply relying on a previous employer’s perception of the position’s value.  Because past salary “often reflects the historical market forces which value the equal work of one sex over the other,” prior salary is an imperfect proxy for the market value of an applicant or a position.[104]  Through approaches intended to address the wage gap, such as pay audits and increased reliance on market data regarding compensation levels, employers will not only have a better sense of any wage gaps within their organization, but also a clearer understanding of the true “going-rate” of certain positions.

Furthermore, eliminating salary history inquiries protects employers from potential wage discrimination lawsuits.[105]  Beyond ensuring compliance with the complex legal landscape of salary history bans, removing this information from applications ensures employers have additional, defensible reasons for a wage differential such as an employee’s experience or education.[106]

Finally, employers benefit economically from the increased efficiency created by an engaged workforce with minimal employee turnover.  Shifting to more transparent pay structures, including eliminating the use of salary history data, improves employee engagement while decreasing the likelihood of turnover.[107]  Employees feel valued for their contributions and are more likely to perceive a sense of fairness and collaboration within an organization.[108]  The costs associated with employee turnover are substantial, with the costs to replace the employee approximating 20 percent of the employee’s salary.[109]  While changing recruiting approaches and human resources policies to eliminate the use of salary history create upfront expenses, employers stand to benefit economically from such changes long-term.

2.     Non-Monetary Benefits

Ending reliance on salary history also fosters non-monetary benefits for employers.  In addition to the advantages of a more engaged workforce, employers that do not rely on salary history are able to draw from a larger and more talented candidate pool and are perceived as better places to work.[110]  Recent research indicates that employers without access to prior salary data actually interview more applicants than those provided with such data.[111]  Instead of relying on prior salary as an indicator of productivity, employers ask more substantive questions regarding the applicant’s role at previous jobs, inquiring into the skills and responsibilities involved in former positions.[112]  By using prior salary as a screening mechanism, employers have effectively used this data as a proxy of an applicant’s interest in a position.[113]  This, however, limits an employer’s prospective applicant pool, shutting out potentially talented employees from even initial interviews.[114]  Those reentering the workforce, particularly female workers who have taken time off for familial reasons, are penalized if they choose to apply for lower-paying, less demanding roles.[115]  Non-monetary compensation, including greater benefits, flexibility, and paid time off, can be major selling points for certain applicants.[116]  The use of salary history, however, would exclude those same applicants from consideration despite their potential experience and value if their prior salaries are above the employer’s perceived cut-off.

Lastly, employers benefit from the positive public perception associated with eliminating the use of prior salary information.  As salary history bans become more widespread, applicants may view salary history inquiries negatively, perceiving them as a violation of privacy and assuming that disclosure of their salary would put them at a disadvantage.[117]  Although employees are open to discussing their salaries among friends and colleagues,[118] this type of inquiry from a prospective employer may come across as “intrusive and heavy-handed.”[119]  Changing the conversation from prior salary history to a discussion of an applicant’s target or expected salary can benefit an employer’s brand and help to recruit talent.[120]

Proponents of the use of salary history argue that salary history bans limit an employer’s ability to quickly and efficiently screen candidates.[121]  Prior salary information is seen as a fast, low-cost method of assessing an applicant’s candidacy for a job, evaluating whether the employer can afford the applicant and identifying a starting point for salary negotiations.[122]  This initial screen, however, can be achieved through other means that do not have the discriminatory impact of prior salary inquiries.  Employers can avoid spending time on candidates outside of their target ranges by providing candidates with a salary range or pay band expectations at the outset of the application process.[123]  This can help to set the expectations of both the applicant and the employer, leading those applicants seeking higher salaries to pursue other opportunities while also ensuring employers do not rely on the market forces theory, dropping compensation below the internally anticipated range simply because an applicant’s prior salary is lower.

V.     Conclusion

While signing the EPA, President Kennedy observed that “much remains to be done to achieve full equality of economic opportunity.”[124]  Over fifty years later, this statement continues to ring true today.[125]  The fourth exception delineated in the EPA, permitting wage differentials between sexes so long as the disparity is based on a “factor other than sex,” remains an area where further change is required.

Currently, federal circuits are deeply split on the issue of whether the use of an employee’s salary history is a permissible basis for a wage disparity under the EPA’s catch-all exception.[126]  Although it briefly appeared as though the Supreme Court would resolve the uncertainty surrounding this exception, the Court’s decision in Yovino v. Rizo failed to settle the issue.[127]  As a result, employers are faced with vastly different judicial interpretations of the exception in addition to an increasingly complex landscape of local and state laws on the issue.[128]

The approach first articulated by Judge Reinhardt in his 2018 decision, and later affirmed by the Ninth Circuit’s 2020 en bancdecision in Rizo v. Yovino, provides the most effective interpretation—prohibiting the use of prior salary from consideration as either the sole factor or one of multiple criteria.  Eliminating the use of salary history information helps to disrupt the cycle of wage discrimination suffered by minority employees and can provide both economic and non-monetary benefits to employers.  As the late Judge Reinhardt noted, “Allowing prior salary to justify a wage differential perpetuates this message, entrenching in salary systems an obvious means of discrimination—the very discrimination that the Act was designed to prohibit and rectify.”[129]

* J.D. Candidate 2021, Wake Forest University School of Law; International Politics, B.S. 2016, Georgetown University.  Thank you to the Board and Staff of the Wake Forest Law Review for their time and effort on this Comment.  I would also like to thank my mother, Susan Foster, for reading countless drafts of this Comment and listening to endless discussions on pay parity.

      [1].   Beth Pearsall, 50 Years After the Equal Pay Act, Parity Eludes Us, Am. Ass’n Univ. Women (Mar. 18, 2013), https://ww3.aauw.org/article/50-years-after-the-equal-pay-act-parity-eludes-us/.

      [2].   109 Cong. Rec. 9213 (1963) (statement of Rep. Matsunaga).

      [3].   Abby Lane & Katharine Gallagher Robbins, The Wage Gap Over Time, Nat’l Women’s L. Ctr. (May 3, 2012), https://nwlc.org/blog/wage-gap-over-time/.

      [4].   See Robin Bleiweis, Quick Facts About the Gender Wage Gap, Ctr. Am. Progress (Mar. 24, 2020), https://www.americanprogress.org/issues/women/reports/2020/03/24/482141/quick-facts-gender-wage-gap/ (calculating the gender wage gap using 2018 data from U.S. Census Bureau); see also Kevin Miller & Deborah J. Vagins, The Simple Truth about the Gender Pay Gap5, 7 (2018), https://www.aauw.org/app/uploads/2020/02/AAUW-2018-SimpleTruth-nsa.pdf.

      [5].   See Miller & Vagins, supra note 4, at 21.

      [6].   Equal Pay Act of 1963, 29 U.S.C. § 206(d)(1)(iv).

      [7].   Rizo v. Yovino, 887 F.3d 453, 469 (9th Cir. 2018) (McKeown, J., concurring); see also Miller & Vagins, supra note 4, at 21.

      [8].   887 F.3d 453 (9th Cir. 2018).

      [9].   Wernsing v. Dep’t of Hum. Servs., Ill., 427 F.3d 466, 468 (7th Cir. 2005).

     [10].   Taylor v. White, 321 F.3d 710, 720 (8th Cir. 2004); see also Drum v. Leeson Elec. Corp., 565 F.3d 1071, 1073 (8th Cir. 2009) (applying Taylor).

     [11].   Riser v. QEP Energy, 776 F.3d 1191, 1199 (10th Cir. 2015); Angove v. Williams-Sonoma, Inc., 70 F. App’x 500, 508 (10th Cir. 2003); Irby v. Bittick, 44 F.3d 949, 955 (11th Cir. 1995).

     [12].   Rizo, 887 F.3d at 460–61.

     [13].   Yovino v. Rizo, 139 S. Ct. 706, 710 (2019).  In its per curiam decision, the Court addressed the issue of whether a judge who died prior to the issuance of the opinion can be counted as a member of the majority, failing to resolve the uncertainty surrounding the EPA exception.  Id. at 707–08.

     [14].   Joanne Sammer, Employers Adjust to Salary-History Bans, SHRM (June 5, 2019), https://www.shrm.org/resourcesandtools/hr-topics/compensation/pages/employers-adjust-to-salary-history-bans.aspx; see also 9th Circuit: Employers May Not Use Pay History as Defense to Equal Pay Act Claims, McGuireWoods (Apr. 12, 2018), https://www.mcguirewoods.com/client-resources/Alerts/2018/4/9th-Circuit-Employers-Pay-History-Defense-Equal-Pay-Act-Claims.

     [15].   Equal Pay Act of 1963, Nat’l Park Serv., https://www.nps.gov/articles/equal-pay-act.htm (last updated Apr. 1, 2016).  The number of women in the civilian workforce grew rapidly during this time, increasing from roughly 24 percent at the beginning of the twentieth century to 37 percent by 1945.  See id.  An early push for equal compensation came from union leaders as they attempted to ensure that men’s wages after the war would not be undercut by the “cheaper” women’s labor.  See id.

     [16].   See id.

     [17].   See id.

     [18].   Lane & Robbins, supra note 3.

     [19].   Pearsall, supra note 1.  Additionally, in his 1956 State of the Union Address, President Dwight D. Eisenhower urged Congress to move forward with such legislation, remarking: “Legislation to apply the principle of equal pay for equal work without discrimination because of sex is a matter of simple justice.”  Annual Message to the Congress on the State of the Union. Jan 5, 1956, Eisenhower Libr. (Jan. 5, 1956), https://www.eisenhowerlibrary.gov/sites/default/files/file/1956_state_of_the_union.pdf.

     [20].   Equal Pay Act of 1963, supra note 15.

     [21].   In 2018, women’s earnings constituted 82 percent of men’s earnings.  Bleiweis, supra note 4.

     [22].   Id.  From 1960 to 2001 the rate of change was 0.38 percent per year; from 2001 to 2017 the rate was 0.26 percent per year.  Miller & Vagins, supra note 4, at 5.

     [23].   Miller & Vagins, supra note 4, at 5.

     [24].   Nat’l P’ship Women & Families, America’s Women and the Wage Gap1 (2020), https://www.nationalpartnership.org/our-work/resources/economic-justice/fair-pay/americas-women-and-the-wage-gap.pdf.

     [25].   Am. Ass’n Univ. Women, Quick Facts 1 (2019), https://www.aauw.org/app/uploads/2020/03/quick-facts-Equal-Pay-nsa.pdf.

     [26].   In 2018, the Ninth Circuit criticized the current status of the promise of equal pay, noting that “[a]lthough the Act has prohibited sex-based wage discrimination for more than fifty years, the financial exploitation of working women embodied by the gender pay gap continues to be an embarrassing reality of our economy.”  Rizo v. Yovino, 887 F.3d 453, 456 (9th Cir. 2018), vacated, 139 S. Ct. 706 (2019).

     [27].   417 U.S. 188 (1974).

     [28].   Id. at 195.

     [29].   S. Rep. No. 88-176, at 1 (1963).

     [30].   Id.

     [31].   Corning Glass Works, 417 U.S. at 205, 208 (“To permit the company to escape [the] obligation [of paying male and female workers equally for the same work] by agreeing to allow some women to work on the night shift at a higher rate of pay as vacancies occurred would frustrate, not serve, Congress’s ends.”).

     [32].   Id. at 208.

     [33].   Equal Pay Act, 29 U.S.C. § 206(d)(1).

     [34].   Id.

     [35].   Corning Glass Works, 417 U.S. at 195 (citing Equal Pay Act of 1963, 29 U.S.C. § 206(d)(1)).  Although the EPA has similar objectives to Title VII in prohibiting discrimination in employment, the two statutes have distinct proof structures.  In contrast to Title VII’s McDonnell Douglas burden-shifting framework, the EPA “creates a type of strict liability” for those employers who pay sexes differently for the same work.  Compare McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802 (1973) (“The complainant in a Title VII trial must carry the initial burden under the statute of establishing a prima facie case of racial discrimination. . . . The burden then must shift to the employer to articulate some legitimate, nondiscriminatory reason for the employee’s rejection.”), with Maxwell v. City of Tucson, 803 F.2d 444, 446 (9th Cir. 1986).  Unlike Title VII, a plaintiff who demonstrates a wage disparity is not required to prove discriminatory intent under the EPA.  See Maxwell, 803 F.2d at 446.

     [36].   Corning Glass Works, 417 U.S. at 196.  The statutory exceptions are affirmative defenses that must be both pled and proved by the employer.  Kouba v. Allstate Ins. Co., 691 F.2d 873, 875 (9th Cir. 1982); see also Corning Glass Works, 417 U.S. at 196–97.

     [37].   Corning Glass Works, 417 U.S. at 195 (referring to the EPA’s “basic structure and operation” as “straightforward”).

     [38].   See Wernsing v. Dep’t of Hum. Servs., Ill., 427 F.3d 466, 468 (7th Cir. 2005).

     [39].   Id. at 468.  In defense of its broad interpretation, the Seventh Circuit criticizes other circuits that have adopted a narrower construction and argues that those circuits have violated the text and explicit exceptions of EPA.  See id. at 470.

     [40].   See id.; see also Dey v. Colt Constr. & Dev. Co., 28 F.3d 1446, 1462 (7th Cir. 1994) (citing Fallon v. Illinois, 882 F.2d 1206, 1211 (7th Cir. 1989)) (“We explained in Fallon that the EPA’s fourth affirmative defense ‘is a broad “catch-all” exception [that] embraces an almost limitless number of factors, so long as they do not involve sex.’”); Covington v. S. Ill. Univ., 816 F.2d 317, 322 (7th Cir. 1987).

     [41].   See Taylor v. White, 321 F.3d 710, 717–20 (8th Cir. 2003).

     [42].   See id. at 718 (“While we recognize that salary retention policies might lead to wage decisions based on factors unrelated to an individual’s qualifications for a particular job, such policies are not necessarily gender biased.”).

     [43].   See id.

     [44].   Drum v. Leeson Elec. Corp., 565 F.3d 1071, 1073 (8th Cir. 2009); see also Corning Glass Works v. Brennan, 417 U.S. 188, 205 (1974) (rejecting employer’s “market forces” argument that the gender-based wage differential arose due to a job market that allowed women to be paid less than men for the same work).

     [45].   See Riser v. QEP Energy, 776 F.3d 1191, 1199 (10th Cir. 2015); Angove v. Williams-Sonoma, Inc., 70 F. App’x 500, 508 (10th Cir. 2003); Irby v. Bittick, 44 F.3d 949, 955 (11th Cir. 1995).

     [46].   See Riser, 776 F.3d at 1199; Angove, 70 F. App’x at 508.  In Riser v. QEP Energy, the Tenth Circuit reiterated existing circuit precedent holding that “the EPA ‘precludes an employer from relying solely upon a prior salary to justify pay disparity.’”  776 F.3d at 1199 (quoting Angove, 70 F. App’x at 508).

     [47].   See Riser, 776 F.3d at 1199.  Similarly, the Eleventh Circuit has also rejected employers’ sole reliance on prior salary as a valid “factor other than sex” exception to the EPA’s pay equity mandate, but has permitted “mixed-motive” salary determinations.  See Irby, 44 F.3d at 955.  In Irby v. Bittick, the Eleventh Circuit held that “[w]hile an employer may not . . . rest[] on prior pay alone, . . . there is no prohibition on utilizing prior pay as part of a mixed-motive, such as prior pay and more experience.”  Id.

     [48].   See Rizo v. Yovino, 887 F.3d 453, 456 (9th Cir. 2018) (“We took this case en banc in order to clarify the law, and we now hold that prior salary alone or in combination with other factors cannot justify a wage differential.”), vacated, 139 S. Ct. 706 (2019); see also id. at 468 (“Because Kouba, however construed, is inconsistent with the rule that we have announced in this opinion, it must be overruled.”).

     [49].   Yovino v. Rizo, 139 S. Ct. 706, 710 (2019).

     [50].   Id. at 707 (“The petition in this case presents the following question: May a federal court count the vote of a judge who dies before the decision is issued?”).

     [51].   See Rizo v. Yovino, 950 F.3d 1217, 1231 (9th Cir. 2020) (“[I]f called upon to defend against a prima facie showing of sex-based wage discrimination, the employer must demonstrate that any wage differential was in fact justified by job-related factors other than sex.  Prior pay, alone or in combination with other factors, cannot serve as a defense.”).

     [52].   See Rizo v. Yovino, No. 14-cv-0423, 2015 WL 13236875, at *1 (E.D. Cal. Dec. 4, 2015).

     [53].   See id.

     [54].   See id. at *3.

     [55].   See id. at *2–3.

     [56].   See id. at *4.

     [57].   See id. at *6.

     [58].   See id.

     [59].   See id.

     [60].   See id. at *7.

     [61].   See id. (“The Ninth Circuit inKouba was not called upon to, and did not, rule on the question of whether a salary differential based solely on prior earnings would violate the EPA, even if motivated by legitimate, non-discriminatory business reasons.”).

     [62].   691 F.2d 873 (9th Cir. 1982).

     [63].   Id. at 878.

     [64].   See Rizo, 2015 WL 13236975, at *6–7.

     [65].   See id. at *8–9 (“[N]othwithstanding its non-discriminatory purpose, SOP [Standard Operating Procedure] 1440 necessarily and unavoidably conflicts with the EPA.”).

     [66].   See Rizo v. Yovino, 854 F.3d 1161, 1165 (9th Cir. 2017).

     [67].   See id. at 1163.  The panel emphasized that the Circuit continued to adhere to the interpretation articulated in Kouba: That the EPA does not impose a per se prohibition on the use of prior salary, and, further, the use of prior salary as the sole factor of consideration does not change this reasoning.  See id. at 1166 (“We do not agree with the district court that Kouba left open the question of whether a salary differential based solely on prior earnings violates the Equal Pay Act. To the contrary, that was exactly the question presented and answered in Kouba.”).

     [68].   See Rizo v. Yovino, 887 F.3d 453, 459 (9th Cir. 2018).

     [69].   See id. at 456; id. at 469 (McKeown, J., concurring); id. at 477 (Callahan, J., concurring); id. at 478 (Watford, J., concurring).

     [70].   See id. at 460 (“We conclude, unhesitatingly, that ‘any other factor other than sex’ is limited to legitimate, job-related factors such as a prospective employee’s experience, educational background, ability, or prior job performance. . . . Prior salary, whether considered alone or with other factors, is not job related and thus does not fall within an exception to the Act that allows employers to pay disparate wages.”); id. at 469 (McKeown, J., concurring) (“In my view, prior salary alone is not a defense to unequal pay for equal work. . . .  However, employers do not necessarily violate the Equal Pay Act when they consider prior salary among other factors when setting initial wages.”); id. at 477 (Callahan, J., concurring) (“[N]either Congress’s intent, nor the language of the Equal Pay Act, nor logic, requires, or justifies, the conclusion that a pay system that includes prior pay as one of several ingredients can never be a ‘factor other than sex . . .’”); id. at 478 (Watford, J., concurring) (“[P]ast pay can constitute a ‘factor other than sex,’ but only if an employee’s past pay is not itself a reflection of sex discrimination.”).

     [71].   Id. at 456.  “To hold otherwise—to allow employers to capitalize on the persistence of the wage gap and perpetuate that gap ad infinitum—would be contrary to the text and history of the Equal Pay Act, and would vitiate the very purpose for which the Act stands.”  Id. at 456–57.

     [72].   Id. at 468.  “Reliance on past wages simply perpetuates the past pervasive discrimination that the Equal Pay Act seeks to eradicate. Therefore, . . . past salary may not be used as a factor in initial wage setting, alone or in conjunction with less invidious factors.”  Id.

     [73].   Yovino v. Rizo, 139 S. Ct. 706, 710 (2019).

     [74].   See Christopher Wilkinson & Alex Guerra, Business Groups Urge U.S. Supreme Court to Review Ninth Circuit Decision Rejecting Use of Prior Salary to Set Pay, Orrick: Equal Pay Pulse (Oct. 12, 2018), https://blogs.orrick.com/equalpaypulse/2018/10/12/business-groups-urge-u-s-supreme-court-to-review-ninth-circuit-decision-rejecting-use-of-prior-salary-to-set-pay/.

     [75].   Yovino, 139 S. Ct. at 707.

     [76].   Id. at 707–10.  The Court noted that the Ninth Circuit’s use of Judge Reinhardt’s vote “effectively allowed a deceased judge to exercise the judicial power of the United States after his death” while “federal judges are appointed for life, not for eternity.”  Id. at 710.

     [77].   Rizo v. Yovino, 950 F.3d 1217, 1221 (9th Cir. 2020).

     [78].   Equal Pay Act of 1963, 29 U.S.C. § 206(d)(1) (emphasis added); see also Rizo, 950 F.3d at 1224 (“The fourth exception is often shortened to ‘any factor other than sex,’ but here we are called upon to define its precise contours and we examine every word: ‘any other factor other than sex.’”) (internal citations omitted) (emphasis in original).

     [79].   Rizo, 950 F.3d at 1224 (“Because the three enumerated exceptions are all job-related, and the elements of the ‘equal work’ principle are job-related, Congress’ use of the phrase ‘any other factor than sex’ . . . signals that the fourth exception is also limited to job-related factors.”).

     [80].   Id. at 1224–25.  Noscitur a sociis advises courts to interpret words that are grouped together as carrying similar meanings.  See Yates v. United States, 574 U.S. 528, 543 (2015) (citing Gustafson v. Alloyd Co., 513 U.S. 561, 575 (1995)) (“[W]e rely on the principle of noscitur a sociis—a word is known by the company it keeps—to ‘avoid ascribing to one word a meaning so broad that it is inconsistent with its accompanying words, thus giving unintended breadth to the Acts of Congress.’”).  When applied to the ambiguous “factor other than sex” exception, this canon requires the general exception to be interpreted similarly to the specific job-related exceptions of seniority, merit, and productivity delineated by the EPA.  Rizo, 950 F.3d at 1224 (“Because the enumerated exceptions are job-related, the more general exception that follows them refers to job-related factors too.”).  Similarly, ejusdem generis requires general words at the end of a list to be understood as related and similar to the preceding, specific words.  See Norfolk & W. Ry. Co. v. Am. Train DispatchersAss’n, 499 U.S. 117, 129 (1991) (“Under the principle of ejusdem generis, where a general term follows a specific one, the general term should be understood as a reference to subjects akin to the one with specific enumeration.”).  Through this lens, the catch-all exception “any other factor than sex” must be limited to job-related reasons. Rizo, 950 F.3dat 1225 (“Because all of the enumerated exceptions are job-related, the general exception that follows—’any factor other than sex’—is limited to job-related factors.”).

     [81].   Corning Glass Works v. Brennan, 417 U.S. 190, 195 (1963); see also S. Rep. No. 88-176, at 1 (1963).

     [82].   Rizo, 950 F.3d at 1228 (“But prior pay itself is not a factor related to the work an employee is currently performing, nor is it probative of whether sex played any role in establishing any employee’s pay.”).

     [83].   See id. at 1229 (“[W]e conclude that the wage associated with an employee’s prior job does not qualify as a factor other than sex that can defeat a prima facie EPA claim.”).  See also Rizo v. Yovino, 887 F.3d 453, 468 (9th Cir. 2018) (“Reliance on past wages simply perpetuates the past pervasive discrimination that the Equal Pay Act seeks to eradicate.  Therefore, we readily reach the conclusion that past salary may not be used as a factor in initial wage setting, alone or in conjunction with less invidious factors.”) vacated, 139 S. Ct. 706 (2019).

     [84].   See Rizo, 950 F.3d at 1232 (McKeown, J., concurring) (“But the majority goes too far in holding that any consideration of prior pay is ‘inconsistent’ with the Equal Pay Act, even when it is assessed alongside other job-related factors . . .”); id. at 1242 (Callahan, J., concurring) (“Nonetheless, the majority goes beyond what is necessary to resolve this appeal and mistakenly proclaims that prior salary can never be considered as coming within the fourth exception to the Equal Pay Act.”).  Judges McKeown and Callahan also authored concurrences to the 2018 en banc decision authored by Judge Reinhardt, similarly criticizing the bright-line rule barring employers from ever considering prior pay.  See Rizo, 887 F.3d at 469 (McKeown, J., concurring) (“[T]he majority goes too far in holding that any consideration of prior pay is ‘impermissible’ under the Equal Pay Act.”); id. at 472–73 (Callahan, J., concurring) (“I write separately because in holding that prior salary can never be considered the majority fails to follow Supreme Court precedent.”).  Judge Watford authored a separate concurrence in 2018 but joined the majority in 2020.  See id. at 478.  But see Rizo, 950 F.3d at 1219.

     [85].   Salary History Bans, Alliance 2020, https://www.alliance2020.com/resources/salary-history-bans/ (last visited Feb. 20, 2021).  As of February 2021, eighteen states and fifteen localities have legislation banning the use of salary history.  See id.

     [86].   Arthur H. Mazor et al., Equal Pay Legislation Banning Salary History Questions 1 (2018), https://www2.deloitte.com/content/dam/Deloitte/us/Documents/human-capital/us-equal-pay-legislation-banning-salary-history-questions.pdf.

     [87].   Susan Milligan, Salary History Bans Could Reshape Pay Negotiations, SHRM (Feb. 16, 2018), https://www.shrm.org/hr-today/news/hr-magazine/0318/pages/salary-history-bans-could-reshape-pay-negotiations.aspx (describing salary history questions as “asked and answered almost reflexively during initial hiring discussions”).

     [88].   See id.

     [89].   See id.

     [90].   See John Feldman, Banning the Salary History Ban: The Pros and Cons for Employer and Applicant, Forbes (Aug. 21, 2018, 9:00 AM), https://www.forbes.com/sites/forbeshumanresourcescouncil/2018/08/21/banning-the-salary-history-ban-the-pros-and-cons-for-employer-and-applicant/#52061fc84fc0.  Through salary history an employer can alert a candidate to a potential wage incompatibility between the employer’s expected salary range and the applicant’s previous compensation levels early in the process, “increasing their interview-to-hire ratio and shortening their time to hire.”  Id.

     [91].   Milligan, supra note 87.

     [92].   For example, Amazon, Wells Fargo, American Express, Cisco, Google, and Bank of America have changed their recruiting policies, removing any questions regarding salary history.  Yuki Noguchi, More Employers Avoid Legal Minefield by Not Asking About Pay History, NPR (May 3, 2018, 5:34 PM), https://www.npr.org/2018/05/03/608126494/more-employers-avoid-legal-minefield-by-not-asking-about-pay-history.

     [93].   To illustrate this complexity, consider the structure of two household names.  In 2018, Apple had over 2.4 million employees in the United States across all fifty states, four times greater than the number of U.S. employees it had in 2010.  See, e.g., Apple’s US Jobs Footprint Grows to 2.4 Million, Apple: Newsroom (Aug. 15, 2019), https://www.apple.com/newsroom/2019/08/apples-us-job-footprint-grows-to-two-point-four-million/ (expanding workforce to include employees in all fifty states).  Projecting similar growth, Amazon announced the creation of 3,000 jobs for “remote workers” in March 2019.  Abigail Hess, Amazon is Hiring 3,000 Remote Workers in 18 States,CNBC (Mar. 11, 2019), https://www.cnbc.com/2019/03/11/amazon-is-hiring-3000-remote-workers-in-18-states.html.  The job listings for these customer service positions indicated the roles were distributed across eighteen states.  See id.  With these workforce expansions, both of these companies would now be subject to each of the varying interpretations of “factor other than sex.”  Considering the impact of the circuit split alone, without the effects of state and local laws, Apple and Amazon may set the salaries of new employees in Wisconsin, located in the Seventh Circuit, on the sole basis of prior salary. However, for employees one state away in Iowa, located in the Eighth Circuit, the companies would have to show the use of prior salary for employees did not improperly rely on the prohibited market forces theory.  The same companies could only rely on prior salary history for employees in New Mexico and Alabama, located in the Tenth and Eleventh Circuits respectively, if they also used other factors, such as experience and education, to justify the wage disparity.  Add to this confusion the restrictions of various state and local laws, and the landscape becomes bewildering.

     [94].   See Noguchi, supra note 92.  This is a sharp transformation from the long-standing practices of many employers, with some even going so far as to obtaining applicants’ W-2s to confirm previous salaries.  Milligan, supra note 87; see also John Feldman, What Should Employers Be Aware of When Requesting W-2 Forms from Job Applicants?, Forbes (June 6, 2017, 9:00 AM), https://www.forbes.com/sites/forbeshumanresourcescouncil/2017/06/06/what-should-employers-be-aware-of-when-requesting-w-2-forms-from-job-applicants/#4523a83064a8.

     [95].   Korn Ferry Executive Survey: New Laws Forbidding Questions on Salary History Likely Changes the Game for Most Employers, Korn Ferry (Nov. 14, 2017), https://www.kornferry.com/press/korn-ferry-executive-survey-new-laws-forbidding-questions-on-salary-history-likely-changes-the-game-for-most-employers (“choosing to comply with the most stringent legislation is the likely mode of adapting to the new legislation, as opposed to complying to each local legislation”).

     [96].   Milligan, supra note 87.

     [97].   Rizo v. Yovino, 950 F.3d 1217, 1231 (9th Cir. 2020).

     [98].   Nat’l Women’s L. Ctr., Asking for Salary History Perpetuates Pay Discrimination from Job to Job 1 (2018), https://nwlc.org/wp-content/uploads/2018/12/Asking-for-Salary-History-Perpetuates-Discrimination-1.pdf.  This cycle of discrimination is precisely what the EPA was designed to remedy.  The legislation was introduced in response to a report issued by President Kennedy’s Commission on the Status of Women recommending equal pay statutes for comparable work.  President’s Comm’n on the Status of Women,American Women 37 (1963); see also Audio tape: John F. Kennedy,Statement by the President on the Establishment of the President’s Commission on the Status of Women (Dec. 14, 1962) (transcript available in the John F. Kennedy Presidential Library and Museum) (“It is my hope that the Commission’s Report will indicate what remains to be done to demolish prejudices and outmoded customs which act as barriers to the full partnership of women in our democracy.”).

     [99].   Equal Pay Act of 1963, 29 U.S.C. § 206(d)(1).

   [100].   Lane & Robbins, supra note 3.

   [101].   See Mazor et al., supra note 86.

   [102].   Bob Corlett, Why Employers Need to Stop Asking for Salary History, Right Now, Staffing Advisors: Blog (Apr. 24, 2017), https://blog.staffingadvisors.com/why-employers-need-to-stop-asking-for-salary-history-right-now.

   [103].   Lydia Frank, Employers Should Stop Asking for Salary History, But Not for the Reason You Think, PayScale (June 27, 2017), https://www.payscale.com/compensation-today/2017/06/employers-should-stop-asking-salary-history-but-not-for-the-reason-you-think.

   [104].   Nat’l Women’s L. Ctr., supra note 98, at 2.

   [105].   Jon Heuvel, Should Salary History Questions be Outlawed?, Personnel Today (Sept. 3, 2019), https://www.personneltoday.com/hr/should-salary-histories-be-consigned-to-history/.

   [106].   The taboo associated with sharing salary information with colleagues and peers is eroding as millennials are more willing to discuss this information with their peers.  Joe Pinsker, The Extreme Discomfort of Sharing Salary Information, The Atl. (Oct. 16, 2018), https://www.theatlantic.com/family/archive/2018/10/talking-about-salaries-coworkers/573172/; see also Jessica Lutz, Millennials Are Slowly Killing Salary Secrecy—And That’s a Good Thing, Forbes (Nov. 30, 2017, 8:30 AM), https://www.forbes.com/sites/jessicalutz/2017/11/30/millennials-are-slowly-killing-salary-secrecy-and-thats-a-good-thing/#5d6792826015.  This culture of pay transparency is beneficial to employers because “when people don’t know how their pay compares to their peers they’re actually more likely to feel underpaid—and even discriminated against.”  David Burkus, Why You Should Know How Much Your Coworkers Get Paid, TED: Ideas (Apr. 4, 2017), https://ideas.ted.com/why-you-should-know-how-much-your-coworkers-get-paid/.  By providing employees with a transparent, reasoned understanding of “what fair pay is for their position and skill set at their company” employers reduce the chance of an expensive lawsuit.  Glassdoor,Global Salary Transparency Survey, Employee Perceptions of Talking Pay 3 (2015), https://media.glassdoor.com/pr/press/pdf/GD_Survey_GlobalSalaryTransparency-FINAL.pdf.

   [107].   Burkus, supra note 106.

   [108].   See id.

   [109].   Heather Boushey & Sarah Jane Glynn, There Are Significant Business Costs to Replacing Employees, Ctr. for Am. Progress (Nov. 16, 2012, 3:44 AM), https://www.americanprogress.org/issues/economy/reports/2012/11/16/44464/there-are-significant-business-costs-to-replacing-employees/.

   [110].   Nat’l Women’s L. Ctr., supra note 98, at 3.

   [111].   Moshe A. Barach & John J. Horton, How Do Employers Use Compensation History:? Evidence from a Field Experiment 3 (CESifo Working Paper No. 6559, 2017), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3014719.

   [112].   See id.  In response to the lack of data regarding an applicant’s salary history, “employers responded to their information deficit primarily by acquiring more of their own information.”  Id.  Although more effort is required to thoroughly screen applicants without salary history information, by getting a sense of prior job attributes through questioning rather than the use of a salary proxy, employers cast a wider net and hired a broader pool of applicants than those that would have been hired based on prior salary alone.  See id.

   [113].   See Nat’l Women’s L. Ctr., supra note 98, at 3.

   [114].   See id. at 3.  Using salary history as an indicator for interest in a position can remove more experienced workers with higher salaries from consideration even if they are interested into pursuing positions with less responsibilities or lower time commitments.  Employers relying on the prior salaries of these applicants would deem them too expensive for the position and they would be screened out of the application process.  See id. at 1.

   [115].   See id. at 2.

   [116].   See Kerry Jones, The Most Desirable Employee Benefits, Harv. Bus. Rev. (Feb. 15, 2017), https://hbr.org/2017/02/the-most-desirable-employee-benefits.  Furthermore, the unprecedented impact of COVID-19 on the workplace has increased the desire for flexibility and remote working.  See Mary Baker, Future of Work Tops HR Priorities for 2020–21, Gartner (July 6, 2020), https://www.gartner.com/smarterwithgartner/future-of-work-tops-hr-priorities-for-2020-21/; Rainer Strack et al., People Priorities for the New Now, BCG (Apr. 30, 2020), https://www.bcg.com/publications/2020/seven-people-priorities-in-reponse-to-covid.

   [117].   Susan M. Heathfield, Pros and Cons of Asking for the Salary History of a Candidate, The Balance Careers, https://www.thebalancecareers.com/what-is-a-salary-history-1919067 (last updated Jan. 17, 2020).

   [118].   See supra note 106 and accompanying text.

   [119].   Liz Ryan, When Someone Demands Your Salary History, Give Your Salary Requirement Instead, Forbes (Jan. 16, 2017, 6:38AM), https://www.forbes.com/sites/lizryan/2017/01/16/when-they-demand-your-salary-history-give-your-salary-requirement-instead/#10296db5a8bb.

   [120].   See id.

   [121].   Heathfield, supra note 117.

   [122].   Id.

   [123].   Milligan, supra note 87.

   [124].   Audio tape: John F. Kennedy, supra note 98.

   [125].   See Lane & Robbins, supra note 3 and accompanying text.

   [126].   See supra Part III for a discussion of the circuit split on the interpretation of the EPA’s “factor other than sex” exception.

   [127].   Yovino v. Rizo, 139 S. Ct. 706, 710 (2019).

   [128].   See Milligan, supra note 87.

   [129].   Rizo v. Yovino, 887 F.3d 453, 468 (9th Cir. 2018).

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20Jan

Sharing is Caring: H-2B Visa Portability as the Lasting Solution to Temporary Problems

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visa, approved, journey, template, service, tour, paperwork, visit, ticket, tourism, trip, international, immigration, sign, national, contract, permission, foreign, certificate, passport, business, hand, office, banner, paper, form, apply, application, document, authorization, embassy, agreement, text, product, logo, font, design, brand, graphic design, graphics, communication, illustration

Makenzie Taylor

Each year, 66,000 H-2B visa guest workers enter the United States to perform nonagricultural temporary and seasonal jobs[1] in industries such as forestry, landscaping, hospitality, seafood processing, and construction.[2] The workers typically perform “relatively low-skilled” jobs and often work in “geographic areas where the number of available U.S. workers is limited.”[3] They comprise less than 0.001% of total U.S. employment.[4]

Far from reducing job availability for U.S. workers, the H-2B program is essential to many smaller and seasonal businesses.[5] It “supplies a source of supplementary labor for [physically demanding] jobs that U.S. workers are unwilling to take.”[6] H-2B workers provide a “legal, stable and motivated work force,” allowing businesses to grow and create more jobs for Americans as well.[7] U.S. workers, though cheaper to hire, are not always available, interested, or dependable.[8]

By contrast, employers have reported that H-2B employees are consistently reliable and hard-working, and their productivity helps offset the cost of recruiting and hiring them.[9] H-2B employment also correlates with higher U.S. employment rates.[10] Without the program, many employers would go unstaffed, close their doors, and cause “lost income for American businesses, and lost tax revenues” for the States.[11]

The Problem

Despite these benefits, the program’s cumbersome nature discourages employer participation: “[T]he system [is] complicated, time-consuming, costly and inefficient.”[12] Petitioning employers must prove “[t]here are not enough U.S. workers who are able, willing, qualified, and available to do the temporary work.”[13] They must make “extensive efforts to recruit U.S. workers,” file documentation with four different government agencies, and foot the bill for guest workers’ visas and transportation costs.[14]

Once the 66,000 annual cap is reached, the U.S. Citizenship and Immigration Services (USCIS) stops accepting petitions and will not issue additional visas until the next year.[15] This means that even after expending significant time and money into the petition process, many employers fail to secure their necessary workforce and are in a worse position than before they applied. Even one small mistake in the “complicated application process can mean delayed approval or visas denied—both extremely costly for employers.”[16] The uncertainty involved in the petition process incentivizes employers to petition for more H-2B workers than they actually need, “just in case their business takes off or some of their workers quit after the quota is hit.”[17] Employers who do so, and whose petitions are approved, further decrease the likelihood of other employers receiving their necessary visas.

Employers may use the premium processing track to “expedite the adjudication of certain forms,” but doing so costs an additional fee of $1,500 per petition.[18] Employers are also financially responsible for guest workers’ roundtrip transportation to and from their home countries, daily meals and lodging, and for each “visa, visa processing, and other related fees.”[19] Finally, businesses often require consultants and lawyers to navigate the process, adding to their costs.[20]

Each employer individually shoulders the full financial burden of this process, because H-2B workers may not “switch employers during their visa terms.”[21] In order for a guest worker to continue working for a second employer after her original visa term ends, the putative secondary employer must file and receive approval for a petition “requesting classification and an extension of the alien’s stay in the United States.”[22] H-2B workers are required to leave the States at the end of their authorized period of stay,[23] so if the secondary petition has not yet been granted, the worker must travel home before turning around and returning to the States for the second job. This unnecessarily duplicative process only adds to employer cost and restricts the employees’ access to stable employment.

The Solution

Visa portability, whereby an H-2B worker may transfer her employment from one authorized employer to another without an intermediate petition process, is the best solution to this problem.[24] Portability would encourage cost-spreading, allowing employers to share in recruitment, visa, and transportation expenses for shared workforces. For example, Colorado’s Steamboat ski resort hires H-2B employees as dishwashers for its winter season, from late November to April.[25] Lindy’s Seafood in Maryland hires H-2B workers as crab pickers from April through December.[26] Visa portability would allow Steamboat to send its H-2B workers to Lindy’s at the end of the ski season for the start of Lindy’s crab-processing season, as long as both companies proved a seasonal need for temporary workers and were approved by USCIS. Steamboat and Lindy’s could share the costs of the visa petition and travel expenses and provide workers with a longer term of employment. This would increase efficiency and make H-2B employment more affordable—benefitting both the workers and U.S. businesses.

The Department of Labor has already set the stage for this change by allowing for broader dissemination of job offer information.[27] It has instructed that job orders may be stored as electronic records in an electronic job registry, resulting in a “complete, real-time record of job opportunities for which H-2B workers are sought.”[28] H-2B employers could use a similar system to match approved employers with available employees who are already in the States.[29] Additionally, requiring H-2B workers to fulfill their contract with the petitioning employer before accepting a new job would assuage any employer fears of H-2B workers jumping to new employers upon arrival.[30]

Conclusion

The H-2B visa program is an essential supplement to the U.S. workforce and economy, enabling small- and mid-size businesses to successfully perform seasonal and temporary operations in essential industries. Far from taking jobs away from U.S. workers, H-2B employees comprise a small segment of the workforce and their employment correlates with higher U.S. worker employment. In order to increase the program’s feasibility for businesses and ease its burden on both employers and foreign workers, the best solution is a policy of visa portability. This solution would increase efficiency, reduce costs, and provide more stable employment for a crucial segment of the workforce.

[1] H-2B Temporary Non-Agricultural Workers, USCIS (May 29, 2020), https://www.uscis.gov/working-in-the-united-states/temporary-workers/h-2b-temporary-non-agricultural-workers.

[2] Kati L. Griffith, United States: U.S. Migrant Worker Law: The Interstices of Immigration Law and Labor and Employment Law, 31 Comp. Lab. L. & Pol’y J. 125, 135 (2009).

[3] Madeline Zavodny & Tamar Jacoby, The Economic Impact of H-2B Workers 4 (2010), https://www.uschamber.com/sites/default/files/documents/files/16102_LABR%2520H2BReport_LR.pdf.

[4] Id. at 23.

[5] Charles C. Mathes, Note, The Department of Labor’s Changing Policies Toward the H-2B Temporary Worker Program: Primarily for the Benefit of Nobody, 80 Fordham L. Rev. 1801, 1814 (2012).

[6] Id.

[7] Zavodny & Jacoby, supra note 3, at 10.

[8] See id. (explanation by a forestry contractor that he has “hired dozens and dozens of American workers. Only a handful have ever shown up for work. Of those, we have never had one last more than two days.”).

[9] Zavodny & Jacoby, supra note 3, at 10.

[10] Id. at 2.

[11] Mathes, supra note 5, at 1813. See also Suzanne Monyak, Trump to Suspend New Work Visas Through 2020, Law360 (June 22, 2020, 3:37 PM), https://www.law360.com/articles/1285526/trump-to-suspend-new-work-visas-through-2020 (reporting that in June 2020, President Trump restricted visas to “free up 525,000 jobs for Americans,” but he exempted food supply and seafood industry H-2B workers, evidencing the U.S. economy’s need for these workers and demonstrating that they do not compete with U.S. workers for jobs).

[12] Zavodny & Jacoby, supra note 3, at 20.

[13] Forms: H-2A, H-2B, and H-3 Visa, USCIS (Dec. 1, 2020), https://www.uscis.gov/forms/explore-my-options/h-2a-h-2b-and-h-3-visa.

[14] Zavodny & Jacoby, supra note 3, at 2.

[15] Zavodny & Jacoby, supra note 3, at 6.

[16] Id. at 20.

[17] Id. at 21.

[18] Premium Processing Fee Increase Effective Oct. 19, 2020, USCIS (Oct. 16, 2020), https://www.uscis.gov/news/premium-processing-fee-increase-effective-oct-19-2020.

[19] Fact Sheet #78F: Inbound and Outbound Transportation Expenses, and Visa and Other Related Fees under the H-2B Program, U.S. Dep’t of Labor, Wage and Hour Div. (2015), https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/whdfs78f.pdf.

[20] Zavodny & Jacoby, supra note 3, at 21. See also Griffith, supra note 2, at 136 (revealing the admission of some employers that “they opt out of the H-2 program entirely and hire undocumented workers because the ‘process is too expensive, taxing, and time-consuming’”).

[21] Griffith, supra note 2, at 135.

[22] 8 C.F.R. § 214.2 (h)(2)(i)(D) (2020).

[23] Fact Sheet #69: Requirements to Participate in the H-2B Program, U.S. Dep’t of Labor, Wage and Hour Div. (2009), https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/whdfs69.pdf.

[24] See Mathes, supra note 5, at 1812–13 (explaining that legislation was introduced in 2005 that allowed “temporary guestworkers to change employers without penalty,” but the bill was never voted on).

[25] Employment FAQ, Steamboat Ski & Resort Corp, https://www.steamboat.com/employment/faq (last visited Jan. 6, 2021).

[26] Job Opportunities, Lindy’s Seafood, Inc., https://www.lindysseafood.com/job-opportunities (last visited Jan. 6, 2021).

[27] Temporary Non-Agricultural Employment of H-2B Aliens in the United States, 77 Fed. Reg. 10038, 10128 (Feb. 21, 2012).

[28] Id.

[29] Mathes, supra note 5, at 1850.

[30] Id.

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17Sep

The Catch-22 of the COVID-19 Remote Workforce: A Payroll, Income, and Unemployment Tax Nightmare

Categories: Current Issues Blog
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By Alex Lewis

            Working remotely has become the new normal, and it may stay that way after COVID-19.[1] Although many professionals enjoy the safety, freedom, and flexibility that comes with remote work, a potential tax nightmare may be around the corner for some in 2021. If employees did not switch over their withholding once they started working remotely in a different state, those individuals could incur a higher tax bill in their resident state and possibly incur penalties.[2] Additionally, companies that now have employees working in states other than the business’s home office may unintentionally trigger income or sales tax nexus in their employees’ home states.[3] These employers may also be required to pay unemployment insurance tax in those states that employees now call home.[4] Although some state legislatures have released guidance for determining nexus and apportionment of income due to remote workers, many states have yet to address the issue.[5] Out of all the uncertainty caused by COVID-19, one thing is clear—preparing and paying income, payroll, and unemployment tax for both individuals and corporations could be complicated and expensive.

Individual Income Tax Implications 

            Typically, the state in which a taxpayer resides taxes all of their income, regardless of where it is earned.[6] Additionally, when a taxpayer works in more than one state during a year, the individual must, in most states, allocate their income to the respective state in which it was earned.[7] When this happens, the taxpayer’s resident state will give a tax credit to the taxpayer for the state income taxes paid to another state.[8]

            When employees began working remotely due to COVID-19, the taxpayer may now have less income to allocate to the state in which they normally worked (if it is located in another state).[9] Since less income will be allocated to the state in which they normally work, the amount of taxes due and the amount of credit that the taxpayer will be able to claim on their resident state income tax return will be lower.[10] The smaller credit could cause the taxpayer to have a much higher income tax liability in their resident state, which could result in tax penalties for failing to make estimated payments in their resident state.[11]

            Although some states have exempted income earned in the state because of COVID-19,[12] others have not.[13] Thus, employees should check with their employer and change their withholding requirements to their resident state to ensure that they do not incur tax penalties as a result of working remotely.[14]

Business Income/Payroll/Unemployment Tax Implications 

            Businesses that allowed their employees to work remotely due to the COVID-19 pandemic may face far more challenges. There are a variety of ways that states require businesses to apportion income.[15] Most states require businesses only to apportion income based on the sales made within the state.[16] Those states will likely be unaffected by the COVID-19 remote workforce. However, other states apportion income with a multi-factor model, which allocates income based on sales, property, and payroll.[17]

            The remote workforce will change these calculations because remote employees will change the amount of payroll allocated to each state. Some states have released guidance exempting income earned by employees in the state that were relocated due to COVID-19.[18] Under these exemptions, income earned by remote workers due to COVID-19 will not be included in the apportionment calculation.[19] Other states only allow an employer to exempt payroll from the apportionment calculation during periods when a government shelter-in-place mandate was in effect.[20] Thus, a business may need to determine the specific dates employees worked remotely and cross-check those dates with shelter-in-place mandate dates to calculate the payroll factor appropriately. In rare situations, a company may trigger nexus in a state, and an additional filing requirement, simply because they had a remote worker in the state, even though the business did not have any sales or property in the state.            

            States that do not have traditional corporate income tax regimes could cause further issues for companies. In extreme circumstances, companies may be required to register and pay certain income and other taxes.[21] For example, in Texas, a non-Texas entity does not have to pay their corporate franchise tax unless it (1) has over $500,000 of gross receipts from doing business in Texas; (2) obtains a use tax permit; or (3) has physical presence in the state.[22] Establishing physical presence includes having employees or representatives doing business in the state.[23] So, if a company normally does not have over $500,000 in gross receipts in Texas, but now has an employee working remotely in the state due to COVID-19, the entity must now pay Texas franchise tax. Washington’s business and occupation tax (“B&O”) has similar tax characteristics.[24] In Washington, a business must pay B&O tax if it (1) has physical presence nexus in Washington; (2) has more than $100,000 in combined gross receipts sourced to Washington; or (3) is organized or commercially domiciled in Washington. Thus, a remote worker could trigger nexus for a company even if they do not normally meet the $100,000 threshold.[25]

            Finally, companies that now have employees working remotely could cause the employer to pay unemployment insurance tax in the state in which the employee relocated.[26] Some states require an employer to file with the state and begin paying unemployment insurance tax once an employer has one employee working in the state.[27] In some circumstances, an employee may be exempt from triggering unemployment insurance taxes.[28]

Conclusion

            With so many changes happening for employers and workers, many taxpayers may not yet be worried about their next tax bill in 2021—but maybe they should be. Making sure that employers are withholding income to the correct state could alleviate future tax issues. Also, for businesses that are merely trying to stay afloat during the pandemic, the potential additional filing requirements will be an unwelcome surprise next year. Although some states have offered guidance on how to allocate payroll to the state, the nonuniformity in tax laws across states creates a hassle and could lead to a higher tax bill (or, at least, a higher tax preparation bill). States still have time to issue helpful guidance to employers regarding their payroll allocation. If corporations are lucky, some states may entirely waive the physical presence threshold that would otherwise trigger a filing requirement. Conversely, since most states are facing severe budget deficits, they may be less forgiving and will not waive any remote work performed by employees.[29] If more states follow Georgia’s guidance, employers will undoubtedly incur additional headaches trying to cross-check governmental shelter-in-place mandates with specific dates that employees worked remotely.[30] Nevertheless, with some employers now embracing remote work as a permanent solution, Americans may feel the pandemic’s tax effects for years come.[31]

[1] Why Remote Working Will Be the New Normal, Even After COVID-19, EY (Sept. 7, 2020), https://www.ey.com/en_be/covid-19/why-remote-working-will-be-the-new-normal-even-after-covid-19.

[2] Katherine Loughead, In Some States, 2020 Estimated Tax Payments Are Due Before 2019 Tax Returns, Tax Found. (May 22, 2020), https://taxfoundation.org/2020-quarterly-estimated-tax-payments-2019-tax-returns/.

[3] Daniel N. Kidney, State and Local Tax Implications of Remote Employees During the COVID-19 Pandemic, Wipfli (June 19, 2020), https://www.wipfli.com/insights/articles/tax-covid-19-remote-employee-nexus (stating that nexus is typically created by having “physical presence” in the state).

[4] Larry Brant, Having Employees Working Remotely May Become the New Norm—There May Be Tax and Other Traps Lurking Out There for Unwary Employers, Foster Garvey (May 26, 2020), https://www.foster.com/larry-s-tax-law/tax-traps-remote-employees-covid19.

[5] Coronavirus Tax Relief FAQs, Ga. Dep’t of Revenue, https://dor.georgia.gov/coronavirus-tax-relief-faqs (last visited Sept. 16, 2020).

[6] See Idaho Code § 63-3011; see also Credit for Taxes Paid to Another State, Va. Tax, https://www.tax.virginia.gov/credit-for-taxes-paid-to-another-state (last visited Sept. 16, 2020).

[7] See Mont. Admin. R. 42.15.110(3) (requiring an employee to only allocate income that is “sourced” to the respective state); see also Or. Dep’t of Revenue, Publication OR-17 Individual Income Tax Guide 47 (2019), https://www.oregon.gov/dor/forms/FormsPubs/publication-or-17_101-431_2019.pdf (requiring an employee to apportion income by taking the number of days worked in the respective state divided it by the total number of days worked everywhere in a year).

[8] Idaho Code § 63-3029(1).

[9] See Or. Dep’t of Revenue, supra note 7, at 47.

[10] Idaho Code § 63-3029(3)(a)(i).

[11] See Loughead, supra note 2 (stating that Delaware, Indiana, Montana, Nebraska, New Jersey, New York, Oklahoma, and Rhode Island require estimated state income tax payments).

[12] FAQ Articles, N.D. Tax, https://www.nd.gov/tax/faqs/articles/412-/ (last visited Sept. 16, 2020).

[13] Guidance for Individuals Temporarily Living and Working Remotely in Vermont, Vt. Dep’t of Taxes, https://tax.vermont.gov/coronavirus#temporarily (last visited Sept. 16, 2020).

[14] For example, assume an individual taxpayer normally lives in New York, but works in Massachusetts and has a taxable income of $100,000. In a normal year, the taxpayer will pay $5,050 (calculated using the 5.05 percent Massachusetts individual income tax rate) in tax to Massachusetts. Thus, the taxpayer will be able to claim a $5,050 credit for taxes paid to another state on their New York return, reducing the amount of taxes owed to New York. Now, assume that because of a stay-at-home order, the taxpayer works at home for 75 percent of the year, and only 25 percent of its income will be allocated to Massachusetts. Then, the taxpayer will only receive a $1,262.5 credit on their New York tax return, causing the taxpayer to underpay their taxes substantially unless a withholding change is made. If no change is made, the taxpayer may incur penalties. See 2019 Personal Income Tax Rates, Mass. Dep’t of Revenue, https://www.mass.gov/info-details/major-2019-tax-changes#2019-personal-income-tax-rates- (last visited Sept. 16, 2020) (providing Massachusetts state income tax rates); Who Must Make Estimated Tax Payments?, N.Y. State Dep’t of Tax’n & Fin. (Aug. 5, 2020), https://www.tax.ny.gov/pit/estimated_tax/who_must_make.htm.

[15] State Apportionment of Corporate Income, Fed’n of Tax Adm’rs (Feb. 2020), https://www.taxadmin.org/assets/docs/Research/Rates/apport.pdf.

[16] Id.

[17] Id.

[18] See Frequently Asked Questions About the Income Tax Changes Due to the COVID-19 National Emergency, Neb. Dep’t of Revenue, https://revenue.nebraska.gov/businesses/frequently-asked-questions-about-income-tax-changes-due-covid-19-national-emergency (last visited Sept. 16, 2020).

[19] See id.

[20] See Coronavirus, supra note 5.

[21] Texas: Franchise Tax, Economic Nexus Rule is Finalized, KPMG (Dec. 20, 2019), https://assets.kpmg/content/dam/kpmg/us/pdf/2019/12/19611.pdf

[22] 34 Tex. Admin. Code § 3.586(f).

[23] Id. § 3.586(d)(5).

[24] Out of State Business Reporting Thresholds and Nexus, Wash. State Dep’t of Revenue (Apr. 2020), https://dor.wa.gov/education/industry-guides/out-state-businesses#:~:text=1%2C%202020%2C%20a%20business%20must,sourced%20or%20attributed%20to%20Washington (last visited Sept. 16, 2020).

[25] Wash. Admin. Code § 458-20-193(102)(a)(ii) (stating that even the “slightest presence” of a single employee may trigger the physical presence nexus).

[26] Stephen Miller, Out-of-State Remote Work Creates Tax Headaches for Employers, SHRM (June 16, 2020), https://www.shrm.org/resourcesandtools/hr-topics/compensation/pages/out-of-state-remote-work-creates-tax-headaches.aspx.

[27] Out-of-State Employers with Employees Living in Idaho, Idaho State & Fed. Res. for Bus. (July 30, 2020), https://business.idaho.gov/out-of-state-employers-with-employees-living-in-idaho/.

[28] Occupations Exempted from Unemployment Insurance Coverage, Wash. State Emp. Sec. Dep’t https://esdorchardstorage.blob.core.windows.net/esdwa/Default/ESDWAGOV/employer-Taxes/ESD-exempt-professions-chart.pdf (last visited Sept. 16, 2020).

[29] States Grappling with Hit to Tax Collections, Ctr. on Budget and Pol’y Priorities (Aug. 24, 2020), https://www.cbpp.org/sites/default/files/atoms/files/4-2-20sfp.pdf.

[30] See Coronavirus, supra note 5.

[31] Why Remote, supra note 1.

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5Feb

Fourth Circuit Weighs in on When an Employer-Required Medical Exam Can Violate the Americans With Disabilities Act

Categories: 4th Cir. Blog Issues in the 4th Circuit
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By Katy Thompson and Lanie Summerlin

          In Equal Employment Opportunity Commission v. McLeod Health Inc., Cecilia Whitten (“Whitten”) was employed by McLeod Health, Inc. (“McLeod”) for twenty-eight years as the editor of McLeod’s internal employee newsletter[1].  Whitten was born with postaxial hypoplasia of the lower extremity, so she lacks certain bones in her feet, legs, and right hand. Therefore, Whitten has limited mobility and has always struggled with falling.[2]  In 2012, Whitten fell three times: twice outside of work and once at work.  As a result, McLeod required Whitten to undergo several fitness-for-duty exams.[3]  McLeod concluded that Whitten was a high-fall risk.  Whitten proposed several reasonable accommodations, but McLeod determined that these accommodations would prevent Whitten from fulfilling her job’s essential function of travelling to the company’s different campuses to collect stories.[4]  Whitten was placed on medical leave and ultimately terminated.[5]

            Whitten filed a complaint with the Equal Employment Opportunity Commission (“EEOC”), prompting EEOC to bring a suit against McLeod on Whitten’s behalf. The district court granted summary judgment to McLeod on both claims and the EEOC appealed.[6]  The issue before the Court was whether McLeod violated the Americans with Disabilities Act (“ADA”) by (1) requiring Whitten to undergo medical exams despite a lack of evidence that the exams were necessary (“illegal-exams” claim); and/or (2) terminating Whitten on the basis of her disability (“wrongful-discharge” claim).[7]

EEOC’s Arguments

            On appeal, the EEOC argued that summary judgment was not appropriate on either claim because there was sufficient evidence for a reasonable jury to rule in favor of the EEOC.[8]

            Under the ADA, an employer may not require an employee to undergo a medical exam unless the exam is job-related and consistent with business necessity.  Specifically, the employer must reasonably believe the employee’s ability to perform an essential job function is limited by a medical condition or that, due to a medical condition, the employee’s performance of an essential job function would pose a direct threat to the safety of the employee or others.[9]  The EEOC appealed summary judgment on the illegal exams claim by arguing that it had provided enough evidence for a reasonable jury to conclude that travelling to the company’s different campuses was not an essential function of Whitten’s job.[10]  McLeod’s description of Whitten’s position did not include travelling to McLeod’s campuses, and Whitten could gather information for the employee newsletter over the phone.  Also, the EEOC argued that McLeod’s belief that Whitten’s falls made her a direct threat was unreasonable because her falls did not cause injury.[11]

            Furthermore, to establish a wrongful-discharge claim a plaintiff must prove (1) she has a disability; (2) she is a qualified individual; and (3) her employer took adverse employment action against her because of her disability.[12]  The EEOC claimed that the first and third elements were clearly met and that it had presented enough evidence on the second element to preclude summary judgment.[13]  A qualified individual must be able to perform the essential functions of the job with or without a reasonable accommodation.[14]  The EEOC argued that a reasonable jury could determine, based on the evidence presented for the illegal-exams claim, that Whitten was a qualified individual because travelling was not an essential function of her job.[15]

McLeod’s Arguments

            On appeal, McLeod argued that summary judgment on both the illegal-exams claim and the wrongful-discharge claim was appropriate.[16]

            Specifically, in regards to the illegal-exams claim, McLeod argued that it did not violate the ADA by requiring Whitten to undergo work-related medical exams because it reasonably believed, based on objective evidence, that Whitten could not perform an essential function of her job without posing a direct threat to herself.[17]  McLeod claimed, and the district court agreed, that one of the essential functions of Whitten’s job was to navigate to and within the medical campuses.[18]  Thus, McLeod argued, the medical exams did not violate the ADA because McLeod believed Whitten’s disability rendered her unable to travel to and within the company’s different campuses without posing a direct threat to herself.[19]

            With respect to the wrongful-discharge claim, McLeod argued that summary judgment was appropriate because Whitten was not a “qualified individual” within the meaning of the ADA.  Specifically, McLeod asked the Court to affirm on the basis that the EEOC had not proven Whitten was a “qualified individual;” the medical exams indicated she could not perform an essential function of her job, regardless of whether she was provided with a reasonable accommodation.[20]

Holding: Summary Judgment Inappropriate as to Both Claims

            The Fourth Circuit reversed summary judgment on both claims and remanded the case to the lower court.[21]  Reviewing the grant of summary judgment on both claims de novo, the Court disagreed with the district court’s determination that McLeod had showed there was no genuine dispute as to a material fact; therefore, summary judgment was inappropriate.[22]

            The Court examined the evidence presented by both parties but disagreed with the district court’s finding that the EEOC failed to produce enough evidence for a jury to rule in its favor.[23] The Court acknowledged that the record contained evidence supporting McLeod’s position that it reasonably believed, based on objective evidence, that Whitten could not navigate to or within its campuses without posing a direct threat to herself.[24]  Based on the testimony of one of Whitten’s superiors, as well as her own testimony agreeing that her job required her to “safely navigate marketing department functions,” the Court found that a reasonable jury court rule in favor of McLeod.[25]

            However, the Court also found that a reasonable jury, based on the evidence presented in the lower court, could rule in favor of the EEOC.[26]  The Court looked at McLeod’s own written description of Whitten’s job, which contained no mention of navigating to and from company events or conducting in-person interviews.[27]  Although Whitten testified that she believed she collected better content by travelling to McLeod’s campus locations, she did not believe it was an “essential” function of her job because she could collect information and conduct interviews over the phone.[28]  Because the Court determined that the EEOC had produced “more than a scintilla of evidence” in support of its position that navigating to and from McLeod’s campus locations was not an essential function of Whitten’s job, the Court reversed summary judgment as to the illegal-exams claim.[29]

            The Court noted that even if the EEOC had failed to produce enough evidence that navigating to and from campus locations was an essential function of her job, McLeod would still not be entitled to summary judgment.[30]  The Court analyzed what McLeod knew before it required Whitten to take the medical exams; specifically, that (1) McLeod knew Whitten had performed the essential function of her job for twenty-eight years, despite her disability; (2) Whitten had recently fallen several times (once at work), none of which resulted in any severe injuries; (3) Whitten missed deadlines, came in late, and struggled with her workload; and (4) Whitten’s supervisor noted she recently appeared winded and groggy.[31]  The Court determined that a reasonable jury, based on the evidence, could have found that McLeod lacked a reasonable, objective basis for requiring Whitten to undergo work-related medical exams.[32]

            As to the wrongful-discharge claim, the question at issue was whether the EEOC had produced enough evidence to convince a jury that Whitten was a “qualified individual” within the meaning of the ADA.[33]  The Court noted that the district court, in analyzing the “wrongful-discharge” claim, relied on its finding that navigating to and from McLeod’s campus locations was an essential function of Whitten’s job.[34]  Because the medical exams had revealed that no reasonable accommodation would permit Whitten to perform that function, the district court concluded that the EEOC had not proven Whitten was qualified to continue her work with the company’s employee newsletter.[35]  However, because the Court had already determined that it was uncertain whether navigating to and from McLeod’s campus locations was an essential function of Whitten’s job, and because the medical exams may have been unlawful, the Court held that McLeod was not entitled to summary judgment.[36]

Conclusion

            Ultimately, the Fourth Circuit held that McLeod was not entitled to summary judgment on either of the EEOC’s ADA claims and remanded for further proceedings.[37]  The Court held that a reasonable jury could conclude that travelling was not an essential function of Whitten’s job.[38]  If a jury made this determination, then there could be sufficient evidence (1) that McLeod’s required medical exams were illegal; and (2) that Whitten was illegally terminated on the basis of her disability.[39]  This case is important because it provides an example of the level of evidence a plaintiff must offer to survive a summary judgment motion on ADA claims.  Also, this ruling sends a message to employers that the Fourth Circuit takes ADA claims very seriously, and it could encourage the EEOC to bring more ADA claims in this circuit.

[1] No. 17-2335, 2019 WL 385654, at *1 (4th Cir. Jan. 31, 2019).

[2] Id.

[3] Id. at *2.

[4] Id. at *3.

[5] Id.

[6] Id.

[7] Id.

[8] Id.

[9] Id.

[10] Id. at *4.

[11] Id.

[12] Id. at *5.

[13] Id.

[14] Id.

[15] Id.

[16] Id. at *3.

[17] Id. at *4.

[18] Id.

[19] Id.

[20] Id. at *5.

[21] Id.

[22] Id. at *3.

[23] Id. at *4–5.

[24] Id. at *4.

[25] Id. at *4.

[26] Id.

[27] Id.

[28] Id.

[29] Id.

[30] Id.

[31] Id.

[32] Id. at *5.

[33] Id.

[34] Id.

[35] Id.

[36] Id.

[37] Id.

[38] Id. at *4.

[39] Id. at *5.

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16Nov

Weekly Roundup – 11/12-11/16

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By Jim Twiddy and Kayla West

United States v. Miguel Zelaya

In this criminal case, the Fourth Circuit affirmed the trial court’s convictions of Miguel Zelaya, Luis Ordonez-Vega, Jorge Sosa, and William Gavidia. Each were convicted of participating in a racketeering conspiracy under the Racketeer Influenced and Corrupt Organizations Act (“RICO”). Some of the defendants were also convicted of committing violent crimes in related and unrelated events. Appellants were members in the gang, MS-13. Each of the defendants were charged with violent action associated with their racketeering activity. Sosa and Gavidia moved for severance because they had not been charged with murder, unlike the other defendants. Ordonez-Vega moved to exclude testimony from New York police officers who had knowledge about his previous gang affiliation in New York. Sosa moved for mistrial based on a witness’ reference to an uncharged MS-13 murder during her testimony to establish Sosa as a gang member. Gavidia moved for a new trial following the verdict. All four Appellants moved for a judgment of acquittal based on insufficient evidence. All of these motions were denied. Appellants raised multiple issues on appeal including the denial of their motion for acquittal. Sosa and Gavidia challenged the denial of their motions for severance and new trials, Ordonez-Vega challenged the admission of certain evidence, Sosa challenged the jury instructions, and Gavidia challenged his sentence. The Fourth Circuit addressed each of these challenges in turn, articulating the relevant standard for each conviction and applying that standard for the facts relevant to each challenge. Essentially, all of these claims turned on whether there was sufficient evidence for a reasonable jury to come to the conclusions from the trial court. In each of these challenges, the Fourth Circuit found that there was sufficient evidence to support all of the jury’s findings. All of challenged trial court holdings were affirmed. Judge Floyd, dissenting in part, argued that, with respect to some of these convictions, the government lacked sufficient evidence to show that the violence was connected to membership in a gang.

 

Catherine D. Netter v. Sheriff BJ Barnes

In this civil case, Appellant argued that her unauthorized review and disclosure of confidential personnel files to support her racial and religious discrimination claims constituted protected activity under Title VII. Appellant filed a complaint with her employer and the EEOC. Appellant reviewed, copied, and supplied the confidential personnel files to support her claims. After she was discharged by her employer, she filed a new charge with the EEOC. The EEOC dismissed the charged but allowed her to supplement her existing Title VII discrimination complaint with a new retaliation claim. After discovery, the district court granted summary judgment to Appellant’s employer on all claims. Appellant filed an appeal, challenging only the portion of the district court’s order that concerns her retaliation claim. The Fourth Circuit held that Appellants actions were in violation of N.C. Gen. Stat. § 153A–98(f) which establishes a Class 3 misdemeanor for “knowingly and willfully examin[ing] . . . , remov[ing] or copy[ing] any portion of a confidential personnel file” without authorized access. Further, illegal actions do not constitute a protected activity for participation clause claims under Title VII. Thus, the Fourth Circuit affirmed the decision of the district court.

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25Sep

Fourth Circuit Rules on Mandatory Age-Discrimination Remedies

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By Mackenzie Bluedorn and Jacqueline Canzoneri

Relevant Facts

This case began as an age discrimination claim.  The Equal Employment Opportunity Commission (“EEOC”) initially challenged that Baltimore County’s (“County”) retirement plan violated the Age Discrimination in Employment Act (“ADEA”) because its age-based contributions required older employees to pay higher percentages of their salaries.[1]  When adopting its retirement benefit plan in 1945, the County stated that employees were eligible to retire and receive pension benefits at the age of 65, no matter how long the individual had actually been employed and contributing the plan.[2] Because the payments of an employee who joined the plan at an older age would accrue less interest than payments made by younger employees before the employees actually started to draw from the fund, the County determined that older employees should be charged higher rates.[3] Although the retirement benefit plan was amended several times over the years, the different contribution percentages based on age were never fully eliminated.[4] In response to this policy, the EEOC first brought civil suit in the District Court of Maryland in 2007, requesting injunctive relief to bar the discriminatory contribution percentages and reimburse employees subject to the age discrimination through back pay.[5]

 

Procedural Posture

This opinion was the third issued in a series of appeals for this case.  In 2010, the court of appeals initially reversed and remanded the district court’s holding in favor of Baltimore County, prompting the district court to reconsider whether the retirement benefit rates violated the ADEA.[6]  The issue once again reached the court of appeals for opinion in 2014. The second time, the district court had determined that the rates were impermissible and granted partial summary judgment on liability in favor of the EEOC, but the court of appeals then remanded again for consideration of damages.[7]  Although the parties had entered into a consent order for injunctive relief, the order did not discuss monetary relief and stated that the issue would be considered on a later date.[8]

The case then reached the court of appeals for a third time in 2018 after the EEOC appealed the district court’s determination on damages that it had discretion to deny an award of back pay otherwise afforded under the ADEA.  In reaching its decision, the district court held that it had discretion over whether or not to award that remedy or, in the alternative, that even if back pay were mandatory under enforcement of the ADEA, the court’s equitable powers still granted it the authority to deny back pay because the EEOC delayed so long in originally bringing this case.[9] The underlying issue for the court of appeals to consider on this third appeal was under the ADEA, is the monetary award of retroactive back pay discretionary, after liability has been established.

 

Plaintiff-Appellant Argument: Equal Employment Opportunity Commission (“EEOC”)

While Baltimore County grounded its argument in statutory language of the ADEA, the EEOC highlighted specific Fair Labor Standards Act (“FLSA”) provisions that have been incorporated into the ADEA.[10]  Most notably, the ADEA adopted the FLSA provision that violators “shall be liable” for back pay.[11] The EEOC argued that because back pay is a mandatory legal remedy under the FLSA, and because the ADEA adopted this language, it is not a discretionary issue. The choice of language reflected Congress’ intent that remedies under both of these statutes should be construed in the same manner. Thus, the District Court lacked discretion to determine whether back pay was owed.

 

Defendant-Appellee Argument: Baltimore County (“County”)

Baltimore County argued that back pay was properly denied because the district court is granted wide authority under the ADEA.  Specifically, the County claimed that the court has broad authority under 29 U.S.C. § 626(b) “to grant such legal or equitable relief as may be appropriate,” which could include the denial of back pay.[12]  Under broad authority, the court should be allowed to determine appropriate remedies, similar to the discretionary nature of back pay under Title VII. The County tried to expand precedent, by relying on various United States Supreme Court cases regarding Title VII pension issues.[13]  In those cases, the Court held that retroactive monetary awards are discretionary under Title VII and did not award any retroactive monetary relief.[14]

As the district court itself determined following the second remand of this case, it would be equitable to deny back pay in this instance, even if it were mandatory under the ADEA, because the EEOC had delayed initiating this suit for years.[15]  The County emphasized the long delay in the EEOC’s action, which led to the County incurring substantially more liability in back pay.[16]

 

Holding & Rationale

The Court of Appeals for the Fourth Circuit agreed with the EEOC’s interpretation of the ADEA’s language and concluded that retroactive monetary award of back pay is mandatory, not discretionary, upon the finding of liability.  The initial matter of liability was already decided through issuance of partial summary judgment in favor of the EEOC following the first remand of the case. To assess the statutory language of the ADEA, the court considered the plain language of the statute, congressional intent, United States Supreme Court precedent, and legislative history.

The court addressed the plain language of enforcement under 29 U.S.C. § 626(b).  As a threshold matter, the court stated that the ADEA was a remedial statute and therefore warrants liberal interpretation. Furthermore, because specific FLSA language regarding back pay was incorporated into the ADEA enforcement provision, interpretation of the provision should mirror prior interpretations of the relevant back pay provisions in the FLSA.[17]  As such, under the FLSA, retroactive monetary damages are considered mandatory. Thus, by extension, there was an apparent congressional intent that such damages should also be mandatory under the ADEA.[18]

In regard to relevant precedent, the court’s touchstone of inquiry was a United States Supreme Court case, Lorillard v. Pons,[19] where the Court applied a similar analytical framework while interpreting another portion of the ADEA.[20]  There, the Court stated that since the ADEA adopted specific FLSA language, it should be interpreted as its original counterpart was interpreted.[21] The Fourth Circuit also rejected the County’s reliance on the Title VII pension cases because there, back pay was an equitable remedy, whereas here under the ADEA, back pay would be a legal remedy.[22]

Next, the court considered legislative history.  While drafting the enforcement clause of the ADEA, Congress was faced with various potential enforcement mechanisms.[23]  Ultimately, Congress specifically chose to incorporate FLSA remedial measures into the ADEA.[24] This conscious decision of incorporation, and rejection of other options, is relevant legislative history that assists with judicial interpretation of statutory language.[25]

Finally, the court next addressed the district court’s alternative holding that, even if the statutory language indicated back pay was mandatory, the court still had discretion through its equitable powers.  The court of appeals fully rejected the district court’s comparison of the ADEA to Title VII, under which the Supreme Court had held that retroactive monetary awards were, in fact, discretionary.[26] The court of appeals explained that an award of back pay under Title VII was up to a court’s discretion because it was an equitable remedy; under the ADEA, however, back pay was a legal remedy, and only the amount of back pay was open-ended, to be determined at the discretion of the factfinder.[27]

 

Conclusion

The district court’s opinion was vacated and remanded for the consideration of the amount of back pay owed to the affected employees under the ADEA.

 

 

[1] EEOC. v. Baltimore Cty., 747 F.3d 267, 1–2 (4th Cir. 2014).

[2] Id. at 3.

[3] Id. at 4–5.

[4] Id. at 6.

[5] Id. at 7.

[6] EEOC. v. Baltimore Cty., No. 16-2216, 2018 U.S. App. LEXIS 26644, at *2 (4th Cir. Sept. 19, 2018).

[7] Id.

[8] Id.

[9] Id. at *2–*3.

[10] Id. at *4–*5.

[11] Id. at *5.

[12] Id. at *3.

[13] Id. at *9.

[14] Id.

[15] Id. at *3.

[16] Id. at *11.

[17] Id. at *5–*6.

[18] Id. at *7.

[19] 434 U.S. 575 (1978).

[20] Baltimore Cty., 2018 U.S. App. LEXIS 26644, at *8.

[21] Id.

[22] Id. at *10.

[23] Id. at *8.

[24] Id. at *9.

[25] Id.

[26] Id. at *10.

[27] Id.

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21Sep

Weekly Roundup: 9/17-9/23

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By: Thomas Cain & Noah Hock

Equal Employment Opportunity Commission v. Baltimore County

In this case, the Equal Employment Opportunity Commission (“EEOC”) sought back pay for employees based on Baltimore County’s discriminatory practice involving improper contribution rates to the county’s age-based employee benefit plan. The district court found the county liable under the Age Discrimination in Employment Act (“ADEA”) and granted the EEOC partial summary judgment, but it denied a motion for back pay because the EEOC’s undue delay in investigating substantially increased the county’s back pay liability. The Fourth Circuit vacated the district court decision, ruling that an award of back pay is mandatory under the ADEA after a finding of liability. Thus, the case was remanded for a determination of back pay amounts to which affected employees are entitled.

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7Sep

Weekly Roundup: 9/3 – 9/7

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By: Lanie Summerlin

Henderson v. Bluefield Hosp. Co.

In this civil appeal, the National Labor Relations Board (“NLRB”) appealed the District Court’s refusal to grant preliminary injunctive relief under section 10(j) of the National Labor Relations Act. The NLRB sought preliminary injunctions against two hospitals until NLRB agency adjudication of a complaint filed against the hospitals by the National Nurses Organization Committee (“Union”) was complete. The injunctions would have required the hospitals to bargain with the Union in good faith, and NLRB argued the injunctions were necessary to protect the nurses’ fundamental right to be represented through collective bargaining. The District Court denied these injunctions because it ruled the NLRB failed to prove this type of relief was necessary to preserve the remedial power of the NLRB. The Fourth Circuit affirmed the District Court’s decision and emphasized that the NLRB has the burden of proving irreparable harm absent the injunction. Ultimately, the Fourth Circuit held the NLRB failed to meet this burden because its theories of harm were speculative; the NLRB failed to explain why its own forms of relief available after completion of the agency process would be insufficient.

U.S. v. Bell

In this criminal appeal, Quintin Bell (“Bell”) challenged his convictions of four counts of drug trafficking and one count of illegal possession of a firearm. Bell argued the District Court erred in (1) denying his motion to suppress statements he made to police officers who were executing a search warrant on his residence; (2) admitting evidence of another arrest of Bell under Federal Rules of Evidence Rule 404(b); (3) denying Bell’s motion to disclose the identity of a confidential informant; and (4) enhancing Bell’s sentence to 480 months’ imprisonment due to his prior convictions. The Fourth Circuit held the District Court did not err in denying Bell’s motion to suppress his statements because Bell was not being interrogated at the time the statements were made; the officer’s question was directed to Bell’s wife and Bell voluntarily answered. The Fourth Circuit also held the District Court did not abuse its discretion by admitting evidence of Bell’s other arrest because this evidence’s relevance to Bell’s motive and intent was not substantially outweighed by the risk of unfair prejudice to Bell. In regards to the confidential informant, the Fourth Circuit held the District Court did not err in refusing to disclose the informant’s identity because Bell failed to prove the informant’s identity was necessary to establish his own guilt or innocence. The Fourth Circuit also reviewed Bell’s criminal record and held that his 480 month sentence was appropriate due to the nature of the crimes on his record. Overall, the Fourth Circuit affirmed Bell’s convictions. Judge Wynn dissented; he argued the Fourth Circuit should have remanded the issue of Bell’s statements to police officers to the District Court for a determination of whether Bell perceived himself as being interrogated. Judge Wynn also argued that Bell’s prior convictions do not qualify as predicate convictions to enhance his sentence.

VanDevender v. Blue Ridge of Raleigh

This civil appeal focuses on the District Court’s decisions as to two judgment as a matter of law (“JMOL”) motions filed by Blue Ridge of Raleigh (“Blue Ridge”). Blue Ridge operated a long-term skilled nursing facility in Raleigh, North Carolina, but consistently failed to meet state-mandated staffing levels and supplies requirements. The estates of three deceased ventilator-dependent patients at Blue Ridge brought claims of wrongful death nursing home malpractice against Blue Ridge. The jury awarded compensative and punitive damages to each Plaintiff. However, the District Court granted Blue Ridge’s motion for JMOL as to all three Plaintiffs’ punitive damages awards because it ruled the Plaintiffs had not produced sufficient evidence. The District Court denied Blue Ridge’s motion for JMOL as to Plaintiff Jones’s compensatory damages. Plaintiffs appealed the JMOL as to their punitive damages, and Blue Ridge cross-appealed the denial of JMOL as to Plaintiff Jones’s compensatory damages. The Fourth Circuit held the District Court erred in granting JMOL as to the Plaintiffs’ punitive damages. Based on the record, the Fourth Circuit held that a jury could determine Blue Ridge’s staffing policies and managerial decisions constituted willful or wanton conduct. It held that the District Court erred by requiring the Plaintiffs to prove malice, which is not required for willful or wanton conduct. The Fourth Circuit emphasized that Blue Ridge failed to follow state and federal laws on staffing and intentionally failed to follow its own patient safety policies. Additionally, the Fourth Circuit affirmed the District Court’s denial of Blue Ridge’s JMOL motion as to Plaintiff Jones’s compensatory damages. There was sufficient evidence that Blue Ridge breached the standard of care it owed to Plaintiff Jones by being understaffed without proper supplies. The Fourth Circuit remanded with instructions for the District Court to enter punitive damages for all three Plaintiffs consistent with North Carolina’s statutory limits.

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27Nov

Fresh from the Fourth Circuit: Bakery Employees Entitled to Overtime Compensation for Deliveries

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By: Katherine Wenner & Holly Ingram

A. Overview

On November 17th, the Fourth Circuit published an opinion for Schilling v. Schmidt Baking Co., Inc.. The Court considered whether the District Court erred in its dismissal of Plaintiffs’ claims under the FLSA. The Fourth Circuit reversed the District Court’s dismissal and held that Plaintiffs fell within a group of “covered employees” under the Technical Corrections Act of 2008’s exception to the FLSA and thus were entitled to overtime wages for hours they worked in excess of forty hours per week.

B. Facts and Procedural History

The Plaintiffs, Ronald Schilling, Russel Dolan, and Jonathan Hecker (collectively, “Plaintiffs”), worked as district sales managers for Schmidt Baking Company, Inc. (“Schmidt”). There, they were considered nonexempt salaried employees. Plaintiffs frequently worked more than forty hours per week; however, for all hours worked Plaintiffs were paid their regular wage rate and did not receive overtime wages for hours worked beyond forty hours per week.

Schmidt provides baked goods to restaurants, grocery stores, and small business across the Mid-Atlantic. Schmidt contracted with independent operators to execute some of their deliveries. Additionally, Schmidt maintained a mixed fleet of company vehicles at each of their depots, including some vehicles which weighed under 10,000 pounds and others weighing over 10,000 pounds.

In the event that various delivery operators were unable to perform their delivery duties, Plaintiffs delivered the necessary baked goods. Plaintiffs spent between 65%-85% of their time each week performing deliveries, the majority of which were made in their personal vehicles weighing less than 10,000 pounds.

Plaintiffs filed this federal action alleging that they were entitled to payment of overtime wages under the Fair Labor Standards Act and various Maryland labor laws. Schmidt moved to dismiss the complaint for failure to state a claim for which relief can be granted and in the alternative, moved for summary judgment. The District Court treated Schmidt’s motion as a motion to dismiss, and granted it without a hearing. Plaintiffs appealed. At oral arguments, Plaintiffs conceded that were it not for the Technical Corrections Act of 2008 exception, they would be excluded from overtime compensation under the FLSA.

C. Employees driving vehicles in a mixed fleet are entitled to overtime wages under the Technical Corrections Act of 2008.

To determine whether Plaintiffs were entitled to overtime, the opinion began with an overview of the Fair Labor Standards Act (“FLSA”) and the statutory scheme at issue. The FLSA establishes a federal minimum wage to combat the dangers of long working hours, which may pose negative health implications for employees. There are, however, certain classes of employees exempt from overtime protections and one such class is employees falling under the Motor Carrier Act (“MCA”) Exemption. In 2005 and 2008 Congress amended the MCA Exemption to clarify that certain employees were subject to the FLSA’s overtime requirements. Now, FLSA overtime requirements apply to certain “covered employees,” which includes “an individual”:

(1) who is employed by a motor carrier or motor private carrier . . .;

(2) whose work, in whole or in part, is defined—

(A) as that of a driver, driver’s helper, loader, or mechanic; and

(B) as affecting the safety of operation of motor vehicles weighing 10,000 pounds or less in transportation on public highways in interstate or foreign commerce . . . ; and

(3) who performs duties on motor vehicles weighing 10,000 pounds or less.

SAFETEA–LU Technical Corrections Act of 2008 Pub. L. No. 110–244 § 306(c)(1)–(3) (2008) (emphasis added). Thus, employers may be obligated to pay overtime to employees under the FLSA, if the employee is “covered.” Consequently, the central issue in this case was whether Plaintiffs were “covered employees.”

In addition to considering persuasive authority from the Third Circuit, the Court held that Plaintiffs were “covered employees” after examining the text, structure, and intent of the statute at issue. First, the Court explained that in McMasters v. Easter Armored Services, Inc., the Third Circuit concluded that when an employee spends some time driving vehicles over 10,000 pounds and some time driving vehicles under 10,000 pounds, such employees may still fall within the “covered” definition. 780 F.3d 167, 168–70 (3d Cir. 2015). The Court then proceeded to analyze the text, structure, and intent of Congress’s 2008 amendment to the MCA Exemption. It concluded that Congress mandated certain drivers be entitled to overtime compensation and that the statute allows a driver to only partially work with a vehicle under 10,000 pounds. Additionally, the Court noted that there was no evidence Congress intended for employees working in a mixed fleet to be exempt from overtime compensation. The Court did not create a strict definition of how much time is enough to constitute “in part,” but its decision indicates that employees operating in a mixed fleet may be entitled to overtime pay, despite the MCA Exemption.

Here, the Court concluded that the Plaintiffs satisfied the statute’s requirements for “covered employees.” Though at times Plaintiffs drive vehicles weighing over 10,000 pounds, because they spend a majority of their working hours driving vehicles weighing less than 10,000 pounds, they easily satisfy the “in part” requirement. Thus, the Court held Plaintiffs were entitled to FLSA overtime wages.

D. Conclusion

The Fourth Circuit reversed the District Court’s dismissal of Plaintiffs’ FLSA claims. The Plaintiffs were “covered employees” under the Technical Corrections Act of 2008, thus were entitled to overtime wages under the FLSA.

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