KEY EMPLOYMENT LAW DECISIONS FROM THE US SUPREME COURT

The 2024-2025 term of the Supreme Court has produced some notable decisions impacting employment law, with several significant cases still pending. This term’s docket contained several high-stakes cases addressing issues ranging from employee classification to disability rights and drug testing liability.

PEOs need to stay on top of these decisions, as they impact guidance that they provide to their clients. Here’s a summary of the key rulings.

AMES V. OHIO DEPARTMENT OF YOUTH SERVICES

Issue: The applicability of the “background circumstances” rule to Title VII discrimination claims.

In a unanimous decision on June 5, 2025, the Court addressed the issue of discrimination claims brought by individuals in majority groups under Title VII of the Civil Rights Act. The Court rejected the “background circumstances” test, which previously required majority-group plaintiffs to demonstrate unusual circumstances suggesting their employer was predisposed to discriminate against them. This ruling clarifies that Title VII’s protections apply equally to all individuals regardless of their group status, ensuring they are subject to the same standard when alleging workplace discrimination.

Impact: This decision has the potential to lower the threshold for proving discrimination claims, making it easier for individuals to bring such claims. The ruling emphasizes that Title VII’s protection is focused on individuals, and does not impose a higher evidentiary burden on majority-group plaintiffs. This change may have broader implications for corporate diversity, equity, and inclusion (DEI) practices, as employers may now face a different standard for demonstrating discrimination against their majority group.

E.M.D. V. CARRERA

Issue: What is the appropriate burden of proof for employers under the Fair Labor Standards Act (FLSA) when classifying employees as exempt?

This case centered on the Fair Labor Standards Act’s (FLSA) overtime requirements, and the Court determined that employers do not need “clear and convincing evidence” to demonstrate a worker is exempt from those requirements. Instead, the standard of a “preponderance of the evidence” applies, meaning employers only need to show it’s “more likely than not” that the exemption applies. This decision could simplify the defense against misclassification and unpaid overtime lawsuits, but employers should still maintain robust documentation and adhere to salary and duty requirements under both FLSA and state laws.

Impact: The Supreme Court ruled that the “preponderance of the evidence” standard is sufficient, aligning with the majority of circuits. This decision eases the evidentiary burden on employers and provides greater clarity for FLSA exemption disputes

STANLEY V. CITY OF SANFORD

Issue: Does the Americans with Disabilities Act (ADA) protect retirees from discriminatory changes to health benefits?

A retired firefighter with Parkinson’s disease challenged a city policy that reduced health insurance coverage for disabled retirees. The Eleventh Circuit ruled that the ADA applies only to current employees and job applicants. The Court ruled that the ADA does not extend its protection to former employees seeking post-employment benefits discrimination based on their disability. The ADA’s employment provisions are limited to individuals who currently hold or are seeking an employment position and can perform its essential functions with or without accommodation.

Impact: The Supreme Court declined to overturn the Eleventh Circuit, effectively limiting ADA protections to active employment relationships. This leaves a circuit split unresolved and may prompt future legislative or judicial clarification.

LACKEY V. STINNIE

Issue: Can plaintiffs be considered “prevailing parties” eligible for attorney’s fees based on a preliminary injunction?

Summary: Although not a traditional employment case, this decision has implications for employment discrimination lawsuits under 42 U.S.C. § 1981. The plaintiffs received a preliminary injunction after a court found they were likely to succeed on the merits, but the case became moot when the law in question was repealed.

Impact: The Court held that a preliminary injunction alone does not confer prevailing party status unless it results in a material alteration of the legal relationship. This ruling may limit fee recovery in employment discrimination cases that are resolved before final judgment

MEDICAL MARIJUANA, INC. V. HORN

Issue: Can CBD companies be held liable under RICO for economic harm caused by failed drug tests?

Summary: A truck driver sued a CBD company after losing his job due to a failed THC drug test, despite using a product marketed as THC-free. The case raised the question of whether economic harm from personal injury (job loss) qualifies as an injury to “business or property” under the Racketeer Influenced and Corrupt Organizations Act (RICO).

Impact: The Supreme Court ruled that economic losses stemming from personal injuries do not qualify under RICO, limiting the scope of civil liability for CBD and similar product manufacturers in employment contexts

OTHER DEVELOPMENTS

M&K Employee Solutions v. Trustees of the IAM Pension: The Court has agreed to hear a technical question under the Employee Retirement Income Security Act (ERISA) regarding the calculation method for an employer’s withdrawal liability from a multiemployer pension fund. The ruling will resolve a circuit split over when assumptions used to determine withdrawal liability must be adopted. The Court will address whether 29 U.S.C. § 1391’s instruction to compute withdrawal liability “as of the end of the plan year” requires the plan to base the computation on the actuarial assumptions most recently adopted before the end of the year, or allows the plan to use different actuarial assumptions that were adopted after, but based on information available as of, the end of the year.

CASA, INC.

Issue: whether federal district courts have the equitable authority to issue universal (nationwide) injunctions—orders that block a federal policy from being enforced against anyone, not just the plaintiffs in a case.

The case consolidated three lawsuits challenging Executive Order 14160 (EO), which sought to restrict birthright citizenship by redefining who is “subject to the jurisdiction” of the U.S. under the 14th Amendment.

District courts issued universal injunctions halting enforcement of the EO nationwide. The Trump administration appealed, not to defend the EO’s constitutionality, but to challenge the scope of the injunctions.

In a 6–3 decision authored by Justice Barrett, the Court held that universal injunctions likely exceed the equitable authority granted to federal courts under the Judiciary Act of 1789. The Court granted a partial stay, limiting the injunctions to only those plaintiffs with standing, rather than applying them nationwide.

Impact: The Court’s ruling in this case, often associated with birthright citizenship, also impacts employment law by limiting the use of nationwide injunctions in district courts.

CONCLUSION

The 2024–2025 Supreme Court term has clarified several key areas of employment law, particularly around evidentiary standards, fee recovery, and the scope of federal protections. PEOs should take note of these decisions, as they will influence litigation strategies, compliance policies, and workplace rights.

This article is designed to give general and timely information about the subjects covered. It is not intended as legal advice or assistance with individual problems. Readers should consult competent counsel of their own choosing about how the matters relate to their own affairs.