Category: Compliance/Legal Issues

Federal Judge Vacates Overtime Final Rule

by CUPA-HR | November 15, 2024

On November 15, a federal judge in the Eastern District Court of Texas ruled to strike down the Biden administration’s Fair Labor Standards Act (FLSA) overtime final rule. The ruling strikes down all components of the rule, meaning both the July and January salary thresholds are no longer in effect, and the triennial automatic updates will not take place. The decision applies to all covered employers and employees under the FLSA nationwide.

The Eastern District Court of Texas held a hearing on the business groups’ lawsuits challenging the overtime regulations on November 8. During the hearing, the judge suggested that it would be problematic if DOL’s salary basis replaced the duties test established under the FLSA regulations. He also noted that the Biden administration’s regulations were projected to have a larger number of workers impacted by the salary threshold increase than the Trump administration’s 2019 rule. The judge did not rule from the bench, but his remarks showed skepticism about the Biden administration’s rule.

Background

As a reminder, the final rule implemented a two-phase approach to increasing the minimum salary threshold under the FLSA overtime regulations. The first increase took effect on July 1, increasing the minimum salary threshold from the current level of $684 per week ($35,568 per year) to $844 per week ($43,888 per year). The second increase was set to take effect on January 1, 2025, and it would have increased the minimum salary threshold again to $1,128 per week ($58,656 per year). The final rule also adopted automatic updates to the minimum salary threshold that would occur every three years.

Soon after the final rule was published, several lawsuits were filed challenging the final rule. The suit claimed that the salary threshold that was supposed to go into effect on January 1, 2025, was so high it would result in more than 4 million individuals being denied exempt status, even though these individuals could be reasonably classified as exempt based on their duties, and in doing so, the rule violated both the statutory language of the FLSA and prior court decisions. The suits also challenged the automatic updates. The Eastern District Court of Texas granted a preliminary injunction for public employers in Texas prior to the July 1 effective date, stopping the rule from taking effect for those employers only. For private employers in Texas and all other employers in the country, the rule went into effect on July 1, and the January 1 effective date was still in play.

Looking Ahead

With the decision, the salary threshold set in the 2019 regulations ($35,568 per year or $683 per week) will be the salary threshold employers should adhere to. Whether President-elect Trump decides to increase the minimum salary threshold during his second term remains to be seen, but there will be no effort from his incoming administration to appeal the decision in favor of the Biden administration’s threshold. CUPA-HR will continue to keep members apprised of any updates related to the FLSA overtime regulations.

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November 15, 2024
2024 Election Results and Analysis of Future Policy Impacts

by CUPA-HR | November 14, 2024

The results of the 2024 election are in: Donald Trump will serve as the 47th president of the United States, while both the Senate and House of Representatives will be controlled by Republicans. With the Republican trifecta in the White House and Congress, Republicans can focus on passing their policy priorities through legislation in Congress and regulatory action at the federal agencies. CUPA-HR’s government relations team provides the following analysis to offer insight into possible leadership, policies and regulations we expect starting in January 2025.

Federal Agencies and Congressional Committees

Department of Labor

The Department of Labor (DOL), overseen by the secretary of labor, directs policy and regulations for employers, workers, and retirees in the U.S. Throughout the election season, news organizations have speculated President-elect Trump’s potential picks for the secretary position, though who will be nominated will be unknown until Trump announces it. According to Politico, two possible candidates are Patrick Pizzella and Bryan Slater. Under the first Trump administration, Pizzella served as deputy secretary of labor and acting secretary of labor between former secretaries Alex Acosta and Eugene Scalia. Slater, who currently serves as Virginia’s secretary of labor, had also previously served as assistant secretary at DOL under the previous Trump administration.

In addition to the secretary of labor, Trump will pick people to head the subagencies at DOL, including the Employee Benefits Security Administration, Occupational Safety and Health Administration, and Wage and Hour Division, among others. These agencies draft and implement regulations governing retirement and health benefits plans, workplace safety and health, and minimum wage and overtime pay requirements. Leaders of the DOL subagencies are typically selected later in the Cabinet-appointment process.

National Labor Relations Board

The party control of the National Labor Relations Board (NLRB) depends on actions taken by the Senate during the lame-duck session between the election and President-elect Trump’s inauguration. Current chair of the NLRB Lauren McFerran’s term is set to expire in December 2024, but she has been renominated to serve on the board for another five years by President Biden. Senate Democrats, who are likely to push for her confirmation now that the Senate and White House will be Republican-controlled in 2025, will need to vote to confirm her position, only needing a simple majority. If confirmed, NLRB would be under Democratic control until at least August 2026, more than a year and a half into the Trump administration, leaving President Trump unable to obtain a Republican majority on the board — and thereby control the policy at the NLRB — for nearly half of his second term.

Despite possibly not having control of the NLRB, President Trump may choose to fire the NLRB General Counsel Jennifer Abruzzo (Democrat), whose term is not set to expire until July 2025. In 2021, President Biden terminated then-General Counsel Peter Robb (Republican) within hours of his inauguration, despite Robb’s term not ending until November of that same year. This was the first time any sitting president had fired a sitting general counsel at an independent agency for policy differences. Federal courts upheld Robb’s termination, so President Trump is highly likely to terminate Abruzzo immediately upon taking office. As a reminder, Abruzzo issued several memos stating her position regarding employment status for student-athletes, severance agreements, and disclosure obligations under the National Labor Relations Act and Family Educational Rights and Privacy Act, all of which would likely be rescinded by Trump’s NLRB general counsel appointee.

Equal Employment Opportunity Commission

Unless a commissioner leaves their post before their term expires, the Equal Employment Opportunity Commission (EEOC) will maintain a Democrat majority (currently 3-1, with one Republican seat vacant) until July 2026. Despite this, President-elect Trump is likely to appoint Commissioner Andrea Lucas to serve as chair of the EEOC. Lucas and the EEOC would be limited in their ability to adopt new policies or reverse actions taken by the Democrat-controlled commission prior to July 2026. At that time, we expect the Republican-controlled EEOC to issue revised guidance that narrows the scope of the agency’s interpretation of Title VII protections in light of Bostock v. Clayton County and the legality of diversity, equity, and inclusion (DEI) initiatives in employment practices, possibly extending legal principles established under the Students for Fair Admission v. Harvard case.

Similar to the NLRB, we expect that President-elect Trump will replace the current EEOC General Counsel Karla Gilbride (Democrat). In her role, Gilbride has litigated on behalf of the EEOC in federal court, but the position typically does not provide policy recommendations to the full commission like the NLRB general counsel does.

Department of Education

The Department of Education (ED) oversees and implements policy and regulations governing federal assistance to education. With respect to higher education, ED governs issues like federal financial aid, Title IX compliance, and other laws aimed at promoting student success. Under the incoming Trump administration, Politico has speculated that there are a few possible contenders who could ultimately lead the agency.

One possible candidate for ED’s secretary is Betsy DeVos, who served as secretary of education during Trump’s first term. During DeVos’ first term as ED secretary, she led the agency to implement the 2020 Title IX regulations that are still currently in place in 26 states and hundreds of schools around the country, pending legal challenges to the Biden administration’s rule. However, DeVos resigned from her position as secretary of education after the January 6, 2021, riots at the U.S. Capitol, which may lead the incoming Trump administration to search for new candidates. Despite her resignation, DeVos has indicated that she is open to discussions about potentially serving in the role again.

As we also discuss below, Rep. Virginia Foxx (R-NC) will be stepping down from her role as chair of the House Education and the Workforce Committee, where she most recently led an investigation into antisemitism on campus in higher education. This, along with her previous experience serving as an English instructor and president of a community college, may set her up for a bid for the secretary position.

Some additional names that have been discussed by Politico are Virginia Governor Glenn Youngkin, Oklahoma State Superintendent of Public Instruction Ryan Walters, and Moms for Liberty founder Tiffany Justice.

House Education and the Workforce Committee

Republicans held control of the House in the 2024 election, but there will still be some shakeup in leadership for the Education and Workforce Committee. Chair of the committee Virginia Foxx will be stepping down from her role, leaving open the Republican leader position of the Committee. The two front-runners to chair the committee are Reps. Tim Walberg (R-MI) and Burgess Owens (R-UT), both currently serving on the committee. Notably, Walberg has served on the committee for 16 years, and Owens currently serves as the chair of the Higher Education and Workforce Development Subcommittee. For Democrats, current ranking member of the committee Bobby Scott (D-VA) is expected to maintain his position as leader of the Committee Democrats.

Walberg and Owens have both publicized their policy priorities. Walberg has stated that, under his leadership, the committee would focus on legislation to make college more affordable, boost apprenticeships, implement a short-term Pell grant for workforce training programs, and reauthorize the Workforce Innovation and Opportunity Act. Owens hopes to steer the committee with a more education-centric focus, stating that top priorities for him are school choice and oversight into how ED uses its funding.

Senate Health, Education, Labor, and Pensions Committee

Republicans in the Senate gained control during the 2024 election, flipping the previously Democrat-controlled chamber. As a result, Senator Bill Cassidy (R-LA) will likely rise to the role of chair on the Health, Education, Labor, and Pensions (HELP) Committee. Senator Bernie Sanders (I-VT) will shift into the ranking member position after serving as the chair of the full committee in the 118th Congress. Before his political career, Cassidy was a physician, meaning he could pivot the committee to focus more on health policy. Despite this, Cassidy has also advocated for the HELP committee to advance a Workforce Innovation and Opportunity Act reauthorization bill, and he has advocated for the committee to focus on other education issues as well.

Policy Implications of the Election

FLSA Overtime

As you already know, the Biden administration is in the process of implementing their FLSA overtime regulations. The final rule took a two-phased approach to increasing the minimum salary threshold. The first increase raised the salary threshold to $43,888 per year and took effect on July 1, 2024. The second increase would raise the salary threshold to $58,656 per year and is set to take effect on January 1, 2025. The regulations are currently being challenged in a federal district court in Texas, where a preliminary injunction to block the rule from taking effect has been placed only for public employers in the state of Texas. It remains to be seen how the federal judge will rule on the lawsuits, though a hearing for the cases was held on November 8 and a ruling is imminent.

As the Trump administration will not take office until after the January 1 threshold, the regulation will take effect, pending further appeals, if the final rule is upheld in federal court. If the rule is struck down, we expect the Trump administration will let the court’s decision remain and make no further effort to appeal the decision. If the Trump administration decides to increase the minimum salary threshold during this upcoming term, they will likely use the methodology from the 2019 rule to increase the threshold.

Title IX

Similar to the overtime final rule, the Biden administration issued Title IX regulations in 2024 that are also facing legal challenges. The Biden administration’s Title IX rule took effect on August 1, 2024, but several lawsuits challenging the rule have resulted in preliminary injunctions blocking ED from enforcing it in 26 states and hundreds of other schools in states that did not challenge the final rule.

The Biden administration’s regulations replaced the previous Trump administration’s 2020 Title IX regulations. If the regulations are upheld in federal court, we expect that the incoming secretary of education will repeal the Biden administration’s regulations in favor of keeping the 2020 regulations in effect across the country.

Immigration

There are several policies and regulations that CUPA-HR has been tracking on the immigration front that face uncertain futures under the incoming Trump administration. During the first term, the Trump administration placed a proposed rule on the regulatory agenda aiming to restrict the Optional Practical Training program, which allows international students who graduate from U.S. institutions to work in their degree-related field for at least 12 months after graduating. The Trump administration also finalized a couple of final rules that would have increased wage obligations for H-1B visas and narrowed eligibility for H-1B visas to positions that qualified as “specialty occupations.” These rules were struck down in court, so while Trump is unlikely to implement the same rules, we could see similar attempts to increase H-1B wage obligations and narrow the H-1B program.

Additionally, the incoming Trump administration will likely look to reverse policies implemented by the Department of Homeland Security under the Biden administration, including dropping any appeal of the recent court ruling against the “Keeping Families Together” program for undocumented spouses and children of U.S. citizens, as well as rescinding the guidance to streamline the H-1B visa waiver process for Deferred Action for Childhood Arrivals (DACA) recipients. Similarly, if the Biden administration does not finalize the H-1B modernization rule before the end of his term, a new Trump administration may seek to implement a more restrictive version, reshaping the rule to reflect its own priorities rather than those outlined in the Biden administration’s October 2023 proposal.

Legislative Priorities

With Republicans controlling both the House and the Senate, legislative priorities should be mostly aligned between the two chambers and the White House. However, their ability to pass legislation will still depend on bipartisan support, as Republicans hold a narrow majority in the House and do not have a large enough majority in the Senate to bypass the 60-vote filibuster. Despite these challenges, we expect Republicans to focus on issues like paid leave, workforce development, and affordable college and workforce training.

Though paid leave is a priority for both parties, Republicans and Democrats have previously not agreed on the best approach to establish it through federal legislation. In his first term, Trump and other Republicans backed paid leave legislation that allowed parents to collect a portion of their future child tax credits early to use for leave and receive smaller credits in the following years. This proposal ran counter to the Democrat-supported Family and Medical Insurance Leave (FAMILY) Act, which would establish a payroll tax to fund a paid family and medical leave program that can be used to pay workers who are new parents or who are caring for their own health issues or those of their family. Republicans and Democrats will need to find a compromise if they are to pass any paid leave legislation in the upcoming Congress, as they will need 60 votes in the Senate to bypass a filibuster.

Despite their differences on paid leave, Republicans and Democrats have made bipartisan efforts to pass legislation to improve workforce development and create a short-term Pell grant. During this Congress, both the House and Senate have worked to pass legislation to reauthorize the Workforce Innovation and Opportunity Act, which serves as the nation’s primary federal workforce development legislation designed to help Americans receive training and support to obtain skills necessary for high-quality jobs and careers. Additionally, there has been bipartisan support to pass legislation that would expand the Pell grant program to cover short-term workforce development and training programs that are outside the traditional higher education path. Again, Republicans and Democrats will need to find consensus on these issues in order to bypass the Senate’s 60-vote filibuster, but bipartisan issues like workforce development and short-term Pell grants appear to have a possible path to becoming law.

CUPA-HR is hosting a 2024 election analysis webinar on November 21 at 12 PM ET. Registration is free for CUPA-HR members. Additional updates will be provided through future blogs and Washington Insider alerts.

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November 14, 2024
HR and the Courts — November 2024

by CUPA-HR | November 13, 2024

Each month, CUPA-HR General Counsel Ira Shepard provides an overview of several labor and employment law cases and regulatory actions with implications for the higher ed workplace. Here’s the latest from Ira.

More Than 35,000 University of California Service Employees Vote to Strike

The union representing over 35,000 service and patient care employees at all 10 campuses and five medical centers of the University of California reports that the membership has voted overwhelmingly to strike if collective bargaining contracts cannot be reached. The American Federation of State, County and Municipal Employees (AFSCME) Local 3299 is the union representing the service and patient care employees. The contract covering 25,000 patient care employees expired on July 31, 2024, and the contract covering 11,000 service employees expired November 7, 2024. The union stated it would provide the university with 10 days advance notice of any strike.

The union claims higher costs, especially for housing, has led to a major crisis for its members. The union has filed charges with the California Public Employee Relations Board alleging that the university has not shared information on UC finances as part of the bargaining process.

University Sues NLRB, Claims Requirement to Turn Over Information Violates FERPA

Vanderbilt University has sued the National Labor Relations Board in federal court, claiming that the agency’s requirement to turn over student information violates its obligations under the Family Educational Rights and Privacy Act. The NLRB and the United Auto Workers (UAW), the union seeking to organize the unit of graduate student employees, have requested information on about 2,200 graduate student employees, including work locations, shifts, and job classifications. Vanderbilt claims that providing such information would jeopardize the university’s ability to receive federal funds due to FERPA.

Vanderbilt is seeking an injunction requiring the NLRB to vacate the rules as applied so the university will not have to violate FERPA. Vanderbilt asserts that the NLRB’s rules are arbitrary and capricious and contrary to law given the conflict with the university’s obligations under FERPA (Vanderbilt University v. NLRB (M.D. Tenn. No. 3:24-cv-01301, Comp filed, 10/29/24)). Vanderbilt has asserted more than 80 students have objected to the disclosure of the information. We will follow developments in the case as they unfold.

Educator’s Anti-Male Bias Title IX Claim Can Go to Trial

The 2nd U.S. Circuit Court of Appeals ruled that an educator’s Title IX claims can go to trial. The educator alleges that a New York state school district’s harassment probe, which resulted in a ruling against him, violated his Title IX rights. He was accused by a student of inappropriate conduct and touching in his mobile agricultural education trailer. The 2nd Circuit noted that the alleged perpetrator was not given timely notice of the allegations, was not told what was specifically alleged, and was denied the chance to review the evidence and present evidence of his own.

The appeals court reversed the decision of the trial court, thereby giving the alleged perpetrator the right to a trial over the claim that the Title IX investigation was flawed and biased against him as a male (Schiebel v. Schoharie Central District (2nd Cir., No. 23-01080, 11/1/24)). The appeals court also noted that only one other student was interviewed, despite other students and adults allegedly being present, and that student did not confirm the allegations of the alleged victim.

Union Election Petitions Filed With NLRB Have Doubled Since Fiscal Year 2021

The NLRB reports that union election petitions for the most recent fiscal year have totaled 3,286, or more than double the amount in fiscal year 2021. The number of election petitions also amounts to a 27% increase over the previous fiscal year of 2023. The NLRB reported a 7% increase in the number of unfair labor practice filings it has received since fiscal year 2023.

The NLRB has jurisdiction over private colleges and universities. Public college and universities in most states are subject to state-based rules in conducting union election matters. Commentators generally report anecdotally that state-based union election petitions are also increasing. There have been increased reports of union organizing among higher ed student employee work groups.

NLRB General Counsel Says New College Athlete Employment Legislation Unnecessary

NLRB General Counsel Jennifer Abruzzo stated that there is no need for special legislation concerning student-athlete employment status, since there is existing legislation under the Fair Labor Standards Act, minimum wage laws, and the National Labor Relations Act (NLRA). No new laws, such as those promoted by the NCAA, are necessary, she said. Abruzzo made these remarks at a symposium hosted by Temple University in October. The general counsel pointed out that the situation under the FLSA is currently being played out in the courts.

Court of Appeals Reverses NLRB Order for Elon Musk to Delete Tweet That Workers Will Lose Stock Options if They Unionize

The 5th U.S. Circuit Court of Appeals reversed an earlier decision that affirmed the NLRB’s order against Musk and Tesla. In 2021, the NLRB ordered that Musk delete a tweet saying that employees of Tesla would lose stock options if they were to unionize. The appeals court ruled 9 to 8 that the NLRB order was not enforceable. The appeals court declined to rule one way or the other whether the tweet violated the NLRA, rather holding that the NLRB’s proposed remedy was not enforceable.

Bloomberg reported that the decision was a “blow” to the NLRB’s authority to enforce the labor law’s prohibitions on an employer’s allegedly coercive anti-union statements, particularly when they appear on social media.

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November 13, 2024
U.S. Appeals Court Overturns $15 Minimum Wage for Federal Contractors

by CUPA-HR | November 12, 2024

On November 5, the 9th U.S. Circuit Court of Appeals reversed a lower district court’s decision to dismiss a lawsuit challenging the Biden administration’s executive order and the Department of Labor (DOL)’s final rule to increase the minimum wage for federal contractors. The ruling orders the legal challenge to proceed, which could ultimately strike down the executive order and final rule.

In April 2021, the Biden administration published executive order 14026, which directed DOL to issue regulations to increase the minimum wage for federal contractors to $15 per hour beginning on January 30, 2022. Subsequently, in November 2021, DOL issued its final rule to implement the executive order, setting the minimum wage for federal contractors to $15 per hour on January 30, 2022, and requiring the secretary of Labor to annually review and determine the minimum wage amount beginning in January 2023.

The executive order and final rule were challenged by five states: Arizona, Idaho, Indiana, Nebraska and South Carolina. In their suit, the states claimed that the Biden administration violated the Federal Property and Administrative Services Act (FPASA) and exceeded its authority granted under the law by imposing a wage mandate through an executive order. They also argued that DOL violated the Administrative Procedure Act (APA), which governs how federal agencies proceed through the notice-and-comment rulemaking process, when implementing the final rule. The lawsuit was originally dismissed by a federal judge in the U.S. District Court of Arizona, leading the states to appeal to the 9th Circuit.

In the 9th Circuit’s ruling, two of the three judges on the panel sided with the states’ arguments, reversing the dismissal of the case from the lower district court. The majority opinion held that the minimum wage mandate exceeded the president’s authority under FPASA and that DOL’s final rule was subject to arbitrary-or-capricious review under the APA. As such, the circuit court sends the case back to the district court, where the federal judge will proceed with the case and issue a further ruling to uphold or strike down the executive order and final rule. For now, the order and final rule are still in place, but the future of both is uncertain. CUPA-HR will keep members apprised of any updates related to this lawsuit and further laws and regulations impacting federal contractors.

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November 12, 2024
DOL Issues Report on Coercive Contractual Provisions
by CUPA-HR | October 22, 2024

On October 17, the Department of Labor’s (DOL) Office of the Solicitor (SOL) issued a Special Enforcement Report on “coercive contractual provisions.” The report lists several provisions they have seen included in employment contracts that the department believes “may discourage workers from exercising their rights under worker protection laws.” The report demonstrates recent actions taken by SOL to combat such provisions, but it does not include new enforcement actions against employers that use these provisions.

In the report, SOL claims the provisions discussed are coercive, violate the law and have significant impacts on the most vulnerable workers. The report details seven types of contractual provisions they find especially concerning:

Contractual provisions requiring workers to waive statutory protections, including those requiring workers to waive their rights to bring claims and recover damages under the Fair Labor Standards Act

Contractual provisions that purport to require employees to agree that they are independent contractors

Indemnification-type provisions and related counterclaims purporting to shift liability for legal violations to workers or other entities

“Loser pays” provisions attempting to require employees to pay the employer’s attorney’s fees and costs if the employees do not prevail in litigation or arbitration

“Stay or pay” provisions, including some training repayment assistance provisions, that purport to require workers to pay damages to their employer for leaving a contract early

Confidentiality, non-disclosure and non-disparagement provisions

Company policies that purport to require workers to report safety concerns to their employer before contacting any government agencies

The report emphasizes that the Department of Labor is “not bound by private contracts or arbitration agreements between workers and employers” and thus “has a unique role to play in fighting the use of these ‘fine print’ or ‘coercive’ contractual provisions.” It provides examples of cases where the courts have found such agreements unenforceable or where DOL has pursued an injunction in federal court seeking an order blocking one or more contract provisions.

Importantly, the report is largely a restatement of current law and, for the most part, does not outline new enforcement actions against employers for using these provisions. Instead, the report outlines the work SOL has done recently to fight against the coercive contractual provisions, including cases and amicus briefs filed against employers using such business practices.

CUPA-HR will continue to monitor for additional resources from the Department of Labor that may impact contractual labor provisions.

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October 22, 2024
Department of Labor Publishes AI Framework for Hiring Practices
by CUPA-HR | October 16, 2024

On September 24, the Department of Labor (DOL), along with the Partnership on Employment & Accessible Technology (PEAT), published the AI & Inclusive Hiring Framework. The framework is intended to be a tool to support the inclusive use of artificial intelligence in employers’ hiring technology, specifically for job seekers with disabilities.

According to DOL, the framework was created in support of the Biden administration’s Executive Order on the Safe, Secure and Trustworthy Development and Use of Artificial Intelligence. Issued in October 2023, the executive order directed the Secretary of Labor, along with other federal agency officials, to issue guidance and regulations to address the use and deployment of AI and other technologies in several policy areas. Notably, it also directed DOL to publish principles and best practices for employers to help mitigate harmful impacts and maximize potential benefits of AI as it relates to employees’ well-being.

The new AI Framework includes 10 focus areas that cover issues impacting the recruitment and hiring of people with disabilities and contain information on maximizing the benefit of using and managing the risks associated with assessing, acquiring and employing AI hiring technology.

The 10 focus areas are:

Identify Employment and Accessibility Legal Requirements

Establish Roles, Responsibilities and Training

Inventory and Classify the Technology

Work with Responsible AI Vendors

Assess Possible Positive and Negative Impacts

Provide Accommodations

Use Explainable AI and Provide Notices

Ensure Effective Human Oversight

Manage Incidents and Appeals

Monitor Regularly

Under each focus area, DOL and PEAT provide key practices and considerations for employers to implement as they work through the AI framework. It is important to note, however, that the framework does not have force of law and that employers do not need to implement every practice or goal for every focus area at once. The goal of the framework is to lead employers to inclusive practices involving AI technology over time.

DOL encourages HR personnel — along with hiring managers, DEIA practitioners, and others — to familiarize themselves with the framework. CUPA-HR will keep members apprised of any future updates relating to the use of AI in hiring practices and technology.

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October 16, 2024
HR and the Courts — October 2024

by CUPA-HR | October 15, 2024

Each month, CUPA-HR General Counsel Ira Shepard provides an overview of several labor and employment law cases and regulatory actions with implications for the higher ed workplace. Here’s the latest from Ira.

NCAA & Power Conferences Receive Preliminary Approval of Name, Image and Likeness and Anti-Trust Settlement — Ivies Win Dismissal of Anti-Trust Lawsuit

A federal district court judge has given preliminary approval to the NCAA and Power Conferences’ revised $2.8 billion settlement proposal to be paid to college athletes over 10 years. The judge set a fairness hearing for April 2025, with all objections to be filed by January 31, 2025. The federal judge in the Northern District of California concluded that the revised settlement was “fair, reasonable and adequate” (In Re College Athlete NIL Litigation (N.D. Ca. No. 4:20-cv-03919, 10/7/24)).

Commentators immediately voiced concerns that the settlement addresses a small group of male athletes in specific sports to the disadvantage of female athletes. In addition, a number of Division I athletes may express objection on the grounds that the settlement continues to give the NCAA too much control over the free market compensation for student-athletes.

Separately, the eight Ivy League institutions won a dismissal of a federal lawsuit that claimed their ban on athletic scholarships violated anti-trust laws. The federal district court judge assigned to the case granted the Ivy League’s motion for summary judgement, holding that the plaintiffs failed to allege any properly defined market and therefore failed to allege market wide anti-competitive effects (Choh v. Brown University, et. al. (D. Conn. No. 3:23-cv-00305, 10/10/24)).

University of Louisville School of Medicine Loses First Amendment Retaliation Claim Brought by Terminated Professor

A former professor at the University of Louisville School of Medicine will receive a trial over his First Amendment retaliation claims regarding statements he made about gender dysphoria to a conservative think tank. Following comments he made during an event sponsored by the Heritage Foundation, the former medical school professor was demoted and his annual contract was not renewed. The professor expressed the view that gender dysphoria in children “is a sociocultural, psychological phenomenon that cannot be fully addressed with drugs and surgery.”

The 6th U.S. Circuit Court of Appeals ruled unanimously that the university officials who terminated Allan M. Josephson should have known that he was engaged in protected speech, and that terminating him would violate his First Amendment rights. Moreover, the court ruled that the professor’s outside speech was not part of his professorial duties, and therefore subject to his First Amendment claims. The court concluded that a trial is necessary, as there are facts in dispute regarding the rationale for the actions taken against the professor (Josephson v. Ganzel (6th Cir., No. 23-05293, 9/10/24)).

Tenured Professor Loses Defamation Case Against Harvard

A federal district court judge partially dismissed a noted behavioral scientist’s $25 million defamation and breach-of-contract lawsuit against Harvard University. Professor Francesca Gino was placed on administrative leave following claims of data fraud in her research. Gino claimed that the university’s notice on her faculty page that she had been placed on administrative leave after conducting an investigation of her research was libelous because the university acted with ill will.

The court concluded that the professor was a “public figure” and therefore faces a higher standard for proving defamation. A public figure in these circumstances can only prove defamation if the alleged defamer had knowledge that their statement was untrue or acted with reckless disregard for the truth. Moreover, the court concluded that the issue of “research integrity and potential misconduct” is one of public concern, adding to the reason for the dismissal of the defamation claim (Gino v. Presidents and Fellows of Harvard College (D. Mass. No. 1:23-cv-11775, 9/11/24)).

Regarding the professor’s breach-of-contract claims, the professor alleged that the university’s decision to place her on administrative leave and its related disciplinary sanctions were the same as tenure removal. The judge concluded that it is premature to rule on the breach-of-contract claims.

Public School Employees Lose Free Speech Case Challenging Anti-Racism Training

In a case with possible application to public higher ed training, the 8th U.S. Circuit Court of Appeals affirmed the dismissal of a case brought by two Missouri public school employees who claimed that anti-bias employee training violated their First Amendment rights. The lawsuit failed because the court concluded that they were never asked to leave nor were they disciplined for expressing contrary views and that they received professional development credit for attending the anti-racism training (Henderson v. Springfield R-12 School District (8th Cir No. 2301374, 9/12/24)).

The decision provides some clarity on such training, as the court noted that the employees were not compelled to express certain views or refrain from expressing certain views during the training. The appellate court did reverse the trial judge’s ruling requiring the plaintiffs to pay $300,000 in attorney fees for filing a frivolous claim.

Former Student’s Title IX Claim Dismissed as Alleged University Internship Did Not Exist

A federal district court judge dismissed allegations of a sexually abusive internship at the University of Michigan because the plaintiff could not prove the internship actually existed. The court noted that none of the usual formalities, such as an application or a university authorization of an internship, were established.

In light of this, the court dismissed the Title IX claims and allegations of failure to investigate sex harassment and abuse allegations as the plaintiff did not allege discrimination while “participating in or at least attempting to participate in” a university program or activity, as the internship did not exist. The University of Michigan prevailed in the case (Doe v. Baum ((2024 BL 340244 E.D. Mich. No. 4-21-cv-12492, 9/26/24)).

University of Texas Professor Loses First Amendment Complaint

A federal district judge dismissed a University of Texas professor’s First Amendment claim that his speech was “chilled” by unspecific threats following comments critical of “critical race theory and DEI-based ideology.” The judge dismissed the case, holding that the unspecific threats did not rise to the level of an adverse employment action (Lowery v. Mills ((W.D. Tex. No. 1:23-cv-00129, 10/2/24)).

The judge ruled in favor of the University of Texas McCombs School of Business. The judge noted in a footnote, however, that the dismissal was not meant to approve of the university’s actions and that “in the context of a world-class university like UT, differences of opinion should be tolerated by those in authority, no matter that they are uncomfortable, so long as they do not incite violence or disrupt the school’s ability to function as a teaching institution.”

Supreme Court to Review Split in Circuits Regarding Higher Ed ERISA Lawsuit

The Supreme Court has agreed to hear arguments over the split in circuit courts of appeals as to when a university may be sued by employees under the Employee Retirement Income Security Act (ERISA). Employees of Cornell University alleged that improper service provider fees were charged to their pension fund. They are appealing an adverse 2nd Circuit decision stating employees must plead that the alleged “prohibited transaction” by the service provider involved either “unnecessary services” or the fees were “unreasonable” (Cunningham v. Cornell University (US No. 23-1007 cert granted 10/4/24)).

The 2nd U.S. Circuit Court of Appeals, the 3rd Circuit, the 7th Circuit, and the 10th Circuit all require the additional pleading that alleges some kind of fraud or impropriety in order to allow the case to move forward. This contrasts with the 8th Circuit and the 9th Circuit, which apply the “ERISA-as-written” rule. That rule allows a plaintiff to simply allege that a transaction between an employer and a pension or welfare plan service provider occurred and proceed with discovery over whether fraud or some other impropriety exists. We will follow developments in this case as it proceeds.

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October 15, 2024
Appeals Court Upholds DOL’s Authority to Use Minimum Salary Threshold to Determine Overtime Exemptions

by CUPA-HR | September 12, 2024

On September 11, the 5th U.S. Circuit Court of Appeals issued a ruling in Mayfield v. U.S. Department of Labor that upholds DOL’s authority to implement a minimum salary threshold to determine exempt status under the Fair Labor Standards Act (FLSA) overtime pay requirements. While the ruling does not answer how other lawsuits challenging the Biden administration’s rule will be decided, the ruling is significant and could help other federal judges determine whether or not to strike down the Biden administration’s increased minimum salary thresholds.

Background

The case’s plaintiff, Robert Mayfield, filed a lawsuit against the Trump administration’s overtime rule in August 2022. In his lawsuit, he argued that the FLSA language on overtime exemptions only mentions a worker’s job-related duties and that implementing a salary threshold to determine exempt status exceeds DOL’s statutory authority. The Western District Court of Texas, a lower court where the lawsuit was originally filed, sided with DOL, stating that the agency has the statutory authority to implement the FLSA overtime minimum salary threshold. Mayfield appealed the decision to the 5th Circuit soon after.

The Decision

In its decision that sides with the Department of Labor, the 5th Circuit Court held that DOL may use a minimum salary requirement as part of its test for determining whether or not an employee qualifies as an executive, administrative and professional (EAP) employee exempt from the FLSA overtime pay requirements. Notably, the 5th Circuit Court argued that DOL does have statutory authority under the FLSA to use a salary threshold to “define and delimit the terms of exemption.”

Though the decision allows for DOL to use a minimum salary threshold, the 5th Circuit Court did state that there is a limit to the power granted to DOL to do so. Specifically, the decision states that DOL may only use the minimum salary requirement to the extent that the salary threshold established in the regulations is a reasonable proxy for who is and who is not an EAP employee. They argued that DOL’s power to rely on proxy is not “unbounded” and that the agency “cannot enact rules that replace or swallow the meaning” of the FLSA’s terms that they seek to define.

Looking Ahead

Outside of the Mayfield case, there are three pending lawsuits in the Eastern District Court of Texas to challenge the Biden administration’s overtime final rule. That rule implements a two-phase approach to increasing the minimum salary threshold under the FLSA. The first increase took effect on July 1, increasing the minimum salary threshold from the current level of $684 per week ($35,568 per year) to $844 per week ($43,888 per year), and the second increase is set to take effect on January 1, 2025, increasing the minimum salary threshold again to $1,128 per week ($58,656 per year).

The decision from the 5th Circuit does not have an immediate impact on the lawsuits challenging the Biden administration’s overtime rule, nor does it provide a definitive answer on how lower courts decide in those legal challenges. As such, the Biden administration’s July 1 salary threshold continues to be in effect,* and the second increase to the salary threshold is still set to take effect on January 1, 2025. CUPA-HR will keep members apprised of additional updates related to the FLSA overtime pay regulations.

*A preliminary injunction to block DOL from enforcing the overtime final rule was placed for public employees in the state of Texas. Private institutions in Texas and all other institutions outside of Texas need to be in compliance with the July 1 salary threshold.

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September 12, 2024
HR and the Courts — September 2024

Each month, CUPA-HR General Counsel Ira Shepard provides an overview of several labor and employment law cases and regulatory actions with implications for the higher ed workplace. Here’s the latest from Ira.

Fired Professor Who Praised Hitler Loses Free Speech Retaliation Lawsuit

The New Jersey Institute of Technology prevailed in a federal lawsuit brought by a former philosophy lecturer alleging retaliatory discharge. The professor’s employment agreement was not renewed after a New York Times article exposed his involvement in the “alt-right” (a far-right, white nationalist movement), including his praising Adolph Hitler as a “great European leader” and linking IQ to race. In dismissing the lawsuit, the U.S. District Court for the District of New Jersey held that the professor’s speech disrupted, and would likely continue disrupting, the university’s administration and interfered with the university’s mission (Jorjani v. N.J. Inst. of Technology ((D.N.J. No. 2:18-cv-11693, Jud entered 7/31/24)).

The judge held that public employers can restrict the speech of employees without violating the First Amendment when necessary to maintain effective and efficient operations. The judge also emphasized that the university did not need to wait for protests and demonstrations in order to show disruptions in operations before acting.

NLRB: Private Colleges and Universities Must Bargain With Unions Representing Student Employees Over FERPA-Protected Information

On August 6, 2024, the general counsel of the National Labor Relations Board (NLRB) issued a memo acknowledging the potential conflict between the National Labor Relations Act (NLRA) and the Family Educational Rights and Privacy Act (FERPA) regarding union requests for personal information about student employees. The NLRB general counsel concluded that colleges and universities in this situation must bargain with the applicable union over disclosure of such information and explain why the information request would violate FERPA.

Further, the NLRB concluded that the college or university can bargain with the union over the distribution of FERPA waivers to applicable student employees but that asking the union to hand out such waivers would be unreasonable and a violation of the employer’s duty to bargain in good faith because the union does not have the student contact information. The general counsel concluded that the college or university should hand out the waivers when the union does not have the student employees’ contact information.

Proposed $2.8 Billion NCAA Settlement on Hold as Some Student-Athletes Object

Some student-athletes claiming the NCAA artificially capped the size of college athlete scholarships too low, as well as those pursuing fair-pay claims, objected to the $2.8 billion proposed settlement of the NCAA and the Power Five conferences antitrust case. Plaintiffs in these two areas are asking the Northern District of California court to carve out their claims from the proposed settlement so that they can pursue individual claims in further litigation. The federal judge overseeing the matter questioned the proposed settlement and concluded that the settlement needed a better explanation of damages and a clearer understanding of how much each class member can expect to gain (In re College Athlete NIL Litigation (N.D. Cal. No. 4:20-cv-3919. Brief filed 8/9/24, Fontenot v. NCAA D. Colo. No. 1:23-cv-03076, and Cornelio v. NCAA D. Colo. No. 1:24-cv-02178)).

Two former Brown University student-athletes have dropped their objection, concluding it will not preclude them from proceeding separately in an antitrust claim against the Ivy League. The two former men’s and women’s basketball players have alleged separately that the Ivies have engaged in an illegal agreement which raised the price of an Ivy League education by illegally suppressing compensation for their services. They alleged that Brown only provided them with need-based assistance that did not cover the full cost of their education.

Boston University Graduate Workers Strike Is Longest in the Last Decade

Lasting over 150 days, the Boston University graduate workers strike is the longest student employee strike in the last decade, according to the National Center for the Study of Collective Bargaining in Higher Education and the Professions, located at the City University of New York’s Hunter College. The BU strike, which began on March 25, eclipses a similar work stoppage of 147 days at the University of Michigan in 2023. An unauthorized “wildcat” strike at the University of California, Santa Cruz may have lasted longer but the National Center points out that strike was unauthorized by the applicable union. The center concludes that this is part of the significant increase in unionization of both undergraduate and graduate student workers that has occurred over the past few years.

The Boston University graduate workers formed their union in December 2022. The union is still engaged in efforts to secure their first collective bargaining agreement. September 3 will be the beginning of the second semester in which the grad student workers are striking. Teaching and regular higher education functions have continued at the university, though some interference with regular activities has been reported.

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September 11, 2024