High Court Considers Employee Minimum in Discrimination Laws

January 12, 2006 (PLANSPONSOR.com) - US Supreme Court justices are considering a Louisiana case about whether employers are effectively shielded from federal sexual harassment lawsuits because they are too small.

The case РJenifer Arbaugh vs. Y&H Corp. Рinvolves an employee of the Moonlight Caf̩ in New Orleans who alleged that she became the victim of a sexually hostile work environment during her tenure there, according to a Business Insurance report. Justices heard oral arguments in the case on Wednesday.

At the time, the company was owned by Y&H Corp., a corporation with two partners. The lawsuit went to the US District Court for the Eastern District of Louisiana, and in 2002, a jury awarded Arbaugh $40,000 in damages.

After the verdict, Y&H argued that the jury award should be thrown out because the federal court had no jurisdiction in the case in light of a provision of Title VII of the Civil Right Act specifying that it didn’t apply to businesses with fewer than 15 employees.

Taking the position that Y&H didn’t have the required number of employees if one excluded the two owners, their wives – who also worked for the business – and Y&H’s delivery truck drivers, the district court agreed with Y&H and threw out the case in 2003. A three-judge panel of the US 5th Circuit Court of Appeals agreed with the district court a year later and Arbaugh took the matter to the nation’s high court.

Brett Prendergast, the New Orleans attorney who represented Y&H, argued that the employee headcount provision was deliberate, even though it meant that very small businesses “can engage in the most egregious” acts of discrimination. Congress decided that providing small business with protection was more important, Prendergast asserted.

But Daryl Joseffer, assistant to the US solicitor general, backed Arbaugh. Determining who is an employee “is a long-standing issue for the jury” to decide, he said.