In what appears to be something of a trend, the Pennsylvania State Legislature is considering a bill entitled “The Pennsylvania Fair Employment Opportunity Act,” attached here, which would prohibit employers from discriminating against job applicants who are unemployed at the time of applying for an open position with an employer.Continue Reading...
Third Circuit Enforces EEOC Subpoena Seeking Test-Maker's Files on Employee Selection Tests Used by Employer
Once again, highlighting the potential risk to employers of using employee selection tests to filter applicants, the Third Circuit recently enforced an Equal Employment Opportunity Commission (“EEOC”) subpoena directed to test-maker Kronos, Inc., in a disability discrimination case. EEOC v. Kronos Incorporated, Civ. Act. No. 11-2834 (September 14, 2012, Third Circuit). The involved employer acknowledged that the Customer Service Assessment test created and administered by Kronos had factored into the decision to deny employment to the applicant.Continue Reading...
In an April 20, 2012 decision, the Equal Employment Opportunity Commission (“EEOC”) solidified its intended protection of transgender employees under Title VII of the Civil Rights Act of 1964. The EEOC made it clear that an employer that discriminates against an employee or applicant on the basis of that person’s gender identity violates Title VII’s sex discrimination prohibitions. Because transgender people lack protection from adverse employment decisions in 34 states, this EEOC decision is a watershed moment for the transgender community. It also highlights the broad range of protected categories that could subject employers to more liability for discrimination.Continue Reading...
The UK Court of Appeal has ruled, in the case of NHS Manchester v Fecitt & Others, that an employer cannot be vicariously liable for acts of victimisation by its employees against whistleblowers. The Court also clarified the correct test for determining whether a worker has suffered a detriment on the ground of making a protected disclosure (ie. whistleblowing). The Court decided that to avoid liability under the whistleblowing legislation, the employer must show that the employee’s protected disclosure did not materially influence (i.e. more than trivially influence) the employer’s treatment of that employee.
The whistleblowing legislation provides protection in two ways. First, dismissal of an employee is automatically unfair if the principal reason for dismissal is that they have made a protected disclosure. Second, workers have a right not to be subjected to a detriment by their employer on the ground that they have made a protected disclosure. This case concerned the second of these protections.Continue Reading...
In one of the largest class actions in history, involving more than 1.5 million current and former Wal-Mart employees, the U.S. Supreme Court held that the case could not proceed as a class action because, in part, the plaintiffs had failed to show that there were issues of law or fact common to the class, as there was no evidence that Wal-Mart operated under a general policy of discrimination. Wal-Mart, Inc. v. Dukes, No. 10-277 (June 20, 2011).
Justice Scalia's majority opinion noted that the plaintiffs "wish to sue about literally millions of employment decisions at once. Without some glue holding the alleged reasons for all those decisions together, it will be impossible to say that examination of all the class members’ claims for relief will produce a common answer to the crucial question why was I disfavored." The Court noted that "[t]he only corporate policy that the plaintiffs’ evidence convincingly establishes is Wal-Mart’s 'policy' of allowing discretion by local supervisors over employment matters. On its face, of course, that is just the opposite of a uniform employment practice that would provide the commonality needed for a class action; it is a policy against having uniform employment practices. It is also a very common and presumptively reasonable way of doing business—one that we have said 'should itself raise no inference of discriminatory conduct.'" In sum, the Court agreed with Chief Judge Kozinski's dissent in the Ninth Circuit that the class members “held a multitude of different jobs, at different levels of Wal-Mart’s hierarchy, for variable lengths of time, in 3,400 stores, sprinkled across 50 states, with a kaleidoscope of supervisors (male and female), subject to a variety of regional policies that all differed. . . . Some thrived while others did poorly. They have little in common but their sex and this lawsuit.”
The United States Supreme Court has unanimously held that an employee may bring Title VII retaliation claims where he or she is subject to an adverse employment action, because someone else “closely related” to the employee engaged in protected activity, such as filing a charge of discrimination or opposing discrimination.
In Thompson v. North American Stainless, LP (No. 09-291, Jan. 24, 2011), Eric Thompson and his fiancée, Miriam Regalado, were both employed by North American Stainless. Three weeks after receiving notice that Regalado had filed a charge of discrimination with the Equal Employment Opportunity Commission (“EEOC”), the company fired Thompson for alleged performance-based problems. Thompson filed his own EEOC charge and later sued the company, claiming that he had been fired in retaliation for his fiancée’s EEOC charge. The district court granted the employer’s motion for summary judgment. A panel of judges from the Sixth Circuit initially reversed, but after a rehearing en banc, the full circuit affirmed, holding that Thompson was not protected by the anti-retaliation provisions of Title VII because he did not personally engage in protected activity on his own behalf or on behalf of his fiancée.
The Supreme Court reversed the Sixth Circuit’s decision. Finding that the anti-retaliation provisions of Title VII must be construed broadly to encompass any employer action that might dissuade a reasonable worker from making or supporting a charge of discrimination, the Court said it was “obvious that a reasonable worker might be dissuaded from engaging in protected activity if she knew that her fiancé would be fired.”
Although the Court refused to identify a fixed class of relationships for which third-party reprisals are unlawful, it noted that firing a close family member will almost always rise to that level, “while a milder reprisal on a mere acquaintance will almost never do so.”
The Court also rejected the employer’s argument that Thompson was not, in the words of Title VII, a “person aggrieved” under that law. The Court applied the “zone of interests” test, which allows suit by any plaintiff “with an interest ‘arguably [sought] to be protected by the statutes.’” The Court concluded that Thompson fell within the zone of interest protected by Title VII because that statute is intended to protect employees, such as Thompson, from unlawful acts by their employers.
Though this ruling does not establish a bright-line test for third-party retaliation claims, employers must take notice. When deciding to take an adverse action against an employee, an employer must take care not only when the employee has engaged in protected activity himself or herself, but also where he or she is closely associated with someone else who has.
On March 15, 2011, the U.S. Department of Justice’s amended Final Rule substantially revising and expanding the regulations implementing the Americans with Disabilities Act will become effective. Compliance, however, is not mandated until March 15, 2012. Among other substantive changes, the amended regulations adopt the 2010 ADA Standards for Accessible Design, which implement new accessibility guidelines for government facilities and commercial places of public accommodation. In addition, the amended regulations address numerous accessibility issues, including selling and issuing tickets to individuals with disabilities; accommodating service animals, wheelchairs and other power-driven mobility devices; providing auxiliary communication aids; and making reservations in places of lodging.Continue Reading...
The United States Bankruptcy Code prohibits an employer from taking adverse action against an existing employee because of a bankruptcy filing.
In December, the United States Court of Appeals for the Third Circuit refused to extend that same protection to applicants for employment. In Rea v. Federated Investors, the court ruled that the phrase "discrimination with respect to employment" in section 525(b) of the Bankruptcy Code was not broad enough to encompass discrimination in the denial of employment, and concluded that an employer may refuse to hire a job applicant based on a prior bankruptcy filing. Thus, the court upheld the dismissal of the plaintiff's case on a motion to dismiss for failure to state a claim.
Despite this ruling, employers should be wary of using prior bankruptcy filings, and more generally credit reports, when making employment decisions, as several U.S. states have laws strictly limiting the use of such information. Also, the EEOC recently filed a nationwide hiring discrimination lawsuit asserting that an employer's use of job applicants' credit histories discriminated against applicants on the basis of race under the disparate impact theory of employment discrimination under Title VII. EEOC v. Kaplan Higher Education, Inc., No. 1:10-cv-02882 (N.D. Ohio), filed December 21, 2010. In the past, the EEOC expressed its position that unless a credit history is strongly related to the position at issue (e.g., a position in which the employee is charged with handling cash), use of credit histories may be discriminatory, resulting in liability, even if the discrimination was unintentional.
Thus, employers should review their hiring policies to the extent they use credit checks, and should consult with employment counsel as necessary.
New EEOC Rules Require U.S. Employers To Revise Procedures for Acquiring and Using Medical Information
On January 10, 2011, employers will become subject to new regulations issued by the U.S. Equal Employment Opportunity Commission (“EEOC”) that interpret the Genetic Information Nondiscrimination Act of 2008 (“GINA”). Employers must now comply with GINA’s tough restrictions on the acquisition, use, and disclosure of genetic information about applicants, employees, former employees, and all such individuals’ family members. In particular, employers must take affirmative steps to avoid receiving genetic information about applicants, employees, or any of their family members.
The following addresses some key questions about how the new EEOC regulations will affect employers.Continue Reading...
California Supreme Court Says Discriminatory Remarks by Non-Decisionmakers May Be Used to Show Liability
The California Supreme Court's recent decision in Reid v. Google, Inc. underscores an employer's need to take reasonable steps to eliminate all inappropriate comments from the workplace at every level of the organization. Under Reid, even casual comments made by non-decisionmakers may be used to support claims of discrimination. It is recommended that employers train – and retrain – employees at all levels on proper workplace conduct.
Please click here to read the full alert.
Financial Regulators Set Out to Get Their Man: Federally Mandated Bounties and Anti-Retaliation Provisions Designed to Regulate the Financial Services Industry
As stated in our previous blog posting, President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank” or the “Act”) into law on July 21, 2010, with the objective of ushering in a new era of financial regulation and transparency. The Act’s range encompasses not only the usual group of financial services employers, but it extends to mortgage brokers and insurance adjusters as well. Portions of the Act, including those discussed below, went into effect immediately. However, portions of the Act have left more questions than answers as to what long-term impacts the legislation will have on the financial industry.
A few of the Act’s highlights include bounty provisions, additional changes to the Securities Exchange Act of 1934 and changes to amend SOX’s anti-retaliation provisions in a number of ways. A brief list of actions that employers can take is also noted.
To read the full alert, please click here.
Dodd-Frank Wall Street Reform Act Requires Federal Financial Agencies To Address Diversity and Fair Inclusion of Minorities and Women
The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law on July 21, 2010, created some of the most sweeping changes to the financial industry since the Great Depression. Section 342 of the Dodd-Frank Act requires federal financial agencies to create an Office of Minority and Women Inclusion (“OMWI”), which is responsible for “all matters of the agency relating to diversity in management, employment, and business activities.” This provision could significantly impact the diversity practices of federal financial agencies, agency contractors, and other entities that do business with these agencies.Continue Reading...
Reed Smith is proud to have been named one of the top employment and labor firms in the United States by Legal 500, a leading legal industry publication. The firm was highly ranked for both Labor and Employment Litigation and Labor Management Relations. Legal 500 cited in particular Reed Smith’s national reputation for experience in the areas of wage and hour and employee benefits class action defense, as well as our strong reputation for advising employers on traditional labor-law matters in diverse industries on a multi-state, regional and national basis.
Chambers USA also ranked the firm’s labor and employment practice in Pennsylvania and California as being industry leaders. In addition, seven of our U.S. attorneys were highly ranked by Chambers USA for their practices.
To learn more about the firm’s Legal 500 rankings, please click here.
To learn more about the firm’s rankings, Chambers USA, rankings or the methodology behind the rankings, please click here.
Lessons for Employers in a Social Media World
Recently, in Stengart v. Loving Care Agency, the New Jersey Supreme Court held that an employee had a reasonable expectation of privacy in her Internet-based emails to her lawyer, despite the fact that she sent such emails from a company-owned laptop and was on notice of the employer’s written policy that emails may not be considered “private or personal.” The opinion is significant not only in recognizing a privacy interest for employees’ communications to their attorneys using company-owned-and-monitored networks, but also in providing important guidelines for employers drafting or updating their policies on use of email and the Internet. In addition, Stengart issues a warning to both in-house and outside counsel involved in the forensic review of employees’ computer-based data and communications.Continue Reading...
Pennsylvania Human Relations Commission Extends Deadline for Comment Submissions Regarding its Proposed Criminal History Information Policy Guidance
The Pennsylvania Human Relations Commission (“PHRC”) has extended the comment period to March 2, 2010 for its proposed “Policy Guidance” that would create the presumption of disparate impact discrimination when an employer uses criminal history information of African-American or Hispanic applicants/employees as the basis for any adverse employment-related decision. Employers in highly regulated industries may want to submit comments either individually or through an advocacy group within their industry.
The extension of the deadline appears to have come in response to urging by those in highly regulated industries for additional time to inform the Commission of the numerous laws, regulations and other authority requiring that such employers exclude from certain occupations individuals convicted of specific criminal offenses. In addition to the information in our first Alert regarding this Policy Guidance and the potential areas for comment, please read on for suggestions to employers when submitting comments. A copy of the proposed Policy Guidance can be found on the PHRC’s website, and includes instructions for submitting comments. (Note: At the time of this posting, the proposed Policy Guidance submission information had not been updated to reflect the extended deadline for comments).Continue Reading...
Pennsylvania Human Relations Commission Proposes Policy Guidance That Would Presume Employers Engage in Disparate Impact Discrimination When They Use Criminal History Information
The Pennsylvania Human Relations Commission (“PHRC”) has proposed “Policy Guidance” stating that it intends to treat an employer's rejection of an African-American or Hispanic applicant because of his or her criminal record as presumptive evidence that the employer is discriminating against the applicant in violation of the Pennsylvania Human Relations Act (“PHRA”).
The proposed Policy Guidance potentially presents significant new hurdles for Pennsylvania employers as they attempt to strike the correct balance between instituting security-minded and non-discriminatory hiring practices. This is particularly critical in fields that are highly regulated by federal, state and administrative bodies. Employers in regulated industries are already bound by a myriad of statutory, regulatory and court authority that includes prohibitions against employing individuals convicted of specific offenses in certain occupations.
The PHRC is seeking public comments regarding the proposed Policy Guidance by January 26, 2010, so that it can consider them before deciding whether to adopt the final Policy Guidance on February 22, 2010. A copy of the proposed Policy Guidance can be found on the PHRC’s website, and includes instructions for submitting comments. Please read on for further information regarding the potential issues the proposed Policy Guidance raises for Pennsylvania employers, and suggestions of points to include if you choose to submit comments to the PHRC.Continue Reading...
President Obama has signed the Department of Defense Appropriations Act for Fiscal Year 2010 (H.R. 3326). Section 8116 of that Act significantly restricts the ability of defense contractors and subcontractors to enter into or enforce agreements that require employees or independent contractors to arbitrate certain claims.
In particular, section 8116 provides that no funds appropriated under the Act may be spent on any federal contract in excess of $1 million that is awarded 60 or more days after the effective date of the Act, unless the contractor agrees not to:
(1) enter into any agreement with any of its employees or independent contractors that requires, as a condition of employment, that the employee or independent contractor agree to resolve through arbitration any claim under title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention; or
(2) take any action to enforce any provision of an existing agreement with an employee or independent contractor that mandates that the employee or independent contractor resolve through arbitration any claim under title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention.
Section 8116 also provides that no funds appropriated by the Act may be spent on any federal contract in excess of $1 million that is awarded 180 or more days after the effective date of the Act, unless the contractor certifies that each of its subcontractors that has a subcontract worth more than $1 million has agreed not to enter into or seek to enforce any provision of any agreement described above with respect to any employee or independent contractor who is or will be performing work related to the subcontract.
The Secretary of Defense may waive the application of these provisions to a particular contractor or subcontractor for the purposes of a particular contract or subcontract if the Secretary or the Deputy Secretary personally determines, with a specific explanation, that the waiver is necessary to avoid harm to national security interests of the United States, and that the term of the contract or subcontract is not longer than necessary to avoid such harm.
Congress is considering more sweeping restrictions on arbitration that would apply to every employer. The Arbitration Fairness Act (H.R. 1020, S. 931), which now has 106 cosponsors in the House and 11 cosponsors in the Senate, would prohibit the enforcement of all pre-dispute agreements to arbitrate employment disputes (other than in collective bargaining agreements), civil rights disputes, consumer disputes, or franchise disputes, and would require courts, rather than arbitrators, to decide the validity or enforceability of any such agreement.
U.S. employers with 15 or more employees must post workplace notices to inform applicants and employees about their rights under federal anti-discrimination laws. The Equal Employment Opportunity Commission (EEOC) has recently published an updated version of its required “Equal Employment Opportunity is The Law” poster, updated to refer to the employment provisions of the Genetic Information Nondiscrimination Act (GINA) that will go into effect November 21, 2009, as well as changes resulting from the ADA Amendments Act of 2008 that took effect in January.
All employers should replace their existing federal EEO poster with the new version, or add a new supplementary poster, also available from the EEOC. Links to the new poster and the supplement, as well as instructions on how to order multiple printed copies from an EEOC clearinghouse, can be found at the EEOC's website. The EEOC says that Spanish, Chinese, and Arabic versions of the posters will become available before GINA takes effect.
In one of its most significant employment discrimination decisions in years, the U.S. Supreme Court held this week that if an employer discovers that a test it has given to employees would screen out a statistically significant number of women or minorities, the employer cannot scrap the test based on a fear that it will be sued for discrimination by those who did not pass the test, unless it can show a “strong basis in evidence” that it would actually lose such a suit. Throwing out the test results without such a showing, the Court held, would unlawfully discriminate against those who did well on the test based on their race or sex. Ricci v. DeStefano, Nos. 07-1428 and 08-328 (June 29, 2009).
The City of New Haven, Connecticut (the “City”), used a written test to help decide which firefighters would be eligible for certain promotions. The results showed that the test had a statistically significant adverse effect on African-Americans. Not only was the passing rate for black firefighters only about half of what it was for whites, but also none of the employees with top scores – the only ones eligible for promotion under City rules – was black. Concerned that using the test would lead black employees to file, and probably win, a suit alleging that the test had a discriminatory “disparate impact” based on race, the City decided not to use the test. In what likely appeared to the City as a case of “damned if you do, damned if you don’t,” it was then sued by 18 firefighters (17 whites and one Hispanic) who had passed the test, alleging that the City had discriminated against them, based on race, by refusing to use the test and thus denying them a chance at promotions.Continue Reading...
On June 18, 2009, the United States Supreme Court issued its opinion in Gross v. FBL Financial Serv., Inc., No. 08-441, giving a significant victory to employers facing claims under the Age Discrimination in Employment Act (“ADEA”).
Jack Gross, an employee of FBL Financial Services, Inc. (“FBL”), claimed that he was demoted because of his age, in violation of the ADEA. The jury ruled in Gross’s favor after being instructed by the judge that FBL was liable if age was “a motivating factor” in its demotion decision. In other words, the jury was told that if age played any part in that decision, FBL had violated the ADEA.
In an opinion by Justice Clarence Thomas, the Supreme Court held that the trial judge had misstated the standard for liability under the ADEA. Specifically, the Court held that the plaintiff in an ADEA suit must prove that age was the determinative, or “but-for,” cause of the adverse employment decision, not merely that it was “a motivating factor.” In other words, a plaintiff must demonstrate that, if it were not for his or her age, the adverse employment decision would not have been made.
Gross means that a plaintiff’s burden of proof under the ADEA is now higher than it is under Title VII of the Civil Rights Act of 1964, which prohibits discrimination in employment on the basis of race, sex, color, religion or national origin. In Title VII cases, a plaintiff must prove only that a protected characteristic was “a motivating factor” for the adverse employment decision, not that is was determinative.
While Gross provides a substantial win for employers, the victory may be short-lived. In the past, Congress has shown little hesitation in amending employment laws that it believes have been misinterpreted by the Supreme Court. Examples include the Civil Rights Act of 1991, which overruled a Supreme Court decision by amending Title VII to, among other things, substantially increase the difficulty of proving the employer’s affirmative defenses; and the Lilly Ledbetter Fair Pay Act of 2009, which overruled a Supreme Court opinion by amending several laws to provide greater protection for employees complaining of pay disparities. Given the current political composition of Congress, there is a substantial possibility that the House and Senate will overrule Gross by amending the ADEA to conform it to Title VII, so that it requires plaintiffs to prove only that age was a motivating factor in an employer’s decision. Until that happens, however, Gross will make it easier for employers to defend age discrimination claims.
A copy of the Gross opinion can be found on Cornell University Law School’s Legal Information Institute website.
For more information, please contact the author of this Client Alert, or the Reed Smith attorney with whom you regularly work.
Illinois Employers Strictly Liable for Sexual Harassment by All Supervisors, Even Those With No Authority Over Victims
The Illinois Supreme Court has held that under that state’s Human Rights Act (the “Act”), an employer is strictly liable for sexual harassment by any of its supervisors, even if the harasser does not supervise the victim. Sangamon County Sheriff’s Department v. Illinois Human Rights Commission, Nos. 105517 and 105518 consolid. (Apr. 16, 2009). In other words, an employer is automatically responsible if any of its supervisors sexually harasses any of its employees, regardless of whether the supervisor has any direct or indirect authority over the employee.
A sheriff’s department records clerk complained that a supervisor named Yanor, who did not supervise her, pressed himself on her and kissed her, and asked her a month later if she would go with him to a motel for the night. Two months after that, the clerk received a letter on official stationery of the state public health department which said that she might have been recently exposed to a communicable or sexually transmitted disease according to a confidential source who tested positive. Frantic, the clerk reported the letter to a friend in management at the sheriff’s department. The department investigated and determined that Yanor had written and sent the fraudulent letter. After Yanor explained that he had meant the letter as a joke, the employer suspended him for four days without pay and urged the clerk not to take the matter any further.
Despite that request, the clerk filed a complaint with the Illinois Human Rights Commission, alleging in part that the sheriff’s department had sexually harassed her in violation of the Act. The Commission agreed, finding that Yanor had engaged in a series of acts “that cumulatively constituted a hostile work environment,” and because he was a supervisor, the department was liable for his conduct.Continue Reading...
U.S. Supreme Court Holds That Union Contracts Can Require Employees To Arbitrate Discrimination Claims
The Supreme Court has ruled that employees represented by a union cannot sue for age discrimination when their union and employer have agreed that any such claims should go to arbitration rather than court. In a 5-4 split, the Court held that so long as the collective bargaining agreement (“CBA”) between an employer and a union “clearly and unmistakably” includes discrimination claims among those disputes that must be arbitrated, union members subject to the CBA must pursue such claims before an arbitrator rather than a judge or jury. 14 Penn Plaza LLC v. Pyett, No. 07-581 (Apr. 1, 2009).
The CBA in this case prohibited discrimination based on “race, creed, color, age, disability, national origin, sex, union membership, or any other characteristic protected by law,” including claims made under several federal laws listed by name, among them the Age Discrimination in Employment Act (“ADEA”). The contract said all such claims were subject to the CBA’s grievance and arbitration procedures “as the sole and exclusive remedy for violations.”
After the employer reassigned several union employees to other positions, they asked their union to file a grievance claiming that the reassignments violated that clause by discriminating against them because of their age, as well as running afoul of seniority and overtime provisions in the CBA. The union did so, but withdrew the age discrimination portion of the grievance before the arbitration was complete. The employees then filed an ADEA claim in federal court, but their employer moved to dismiss the suit based on the CBA provision requiring such claims to be arbitrated. The lower courts sided with the employees, holding that under a 1974 Supreme Court case, Alexander v. Gardner-Denver Co., a CBA could not effectively waive employees’ right to bring statutory discrimination claims in court. Although the lower courts recognized that the Supreme Court had since enforced an agreement to arbitrate ADEA claims in Gilmer v. Interstate/Johnson Lane Corp.(1991), they distinguished that case on the grounds that it had involved an individual agreement by an employee rather than a collective agreement by a union.
The Supreme Court’s Decision
The Supreme Court reversed the lower courts, holding that a CBA provision that clearly and unmistakably requires union members to arbitrate ADEA claims is enforceable as a matter of federal law. It first held that an employer and the union representing its employees are free to negotiate whatever lawful terms they believe appropriate to govern the employees’ terms and conditions of employment, and that under federal labor law such agreements should generally be upheld. The Court found that, as it had held in Gilmer, nothing in the ADEA precluded the arbitration of age discrimination claims so long as the relevant agreement clearly requires employees to arbitrate rather than litigate.
The Court rejected the employees’ argument that agreements to arbitrate statutory claims are suspect when found in CBAs instead of individual employee contracts, finding that the ADEA makes no such distinction. The Court distinguished its decision in Gardner-Denver as involving a CBA that covered only contractual disputes, not statutory claims. Here, where the CBA expressly covered statutory claims, and in light of Gilmer and other more recent cases favoring arbitration of such claims, the Court held that Gardner-Denver did not affect its conclusion.
The Court also dismissed the concern that a union and its members might have a conflict of interest over the union’s decision whether or not to pursue arbitration of a discrimination claim on behalf of certain employees. Writing for the majority, Justice Thomas said that the ADEA did not reflect any such concern, and that it was best left to Congress to decide how to resolve any such possible conflict. The Court also noted that if employees believed their union had improperly refused to pursue a discrimination claim in arbitration, they could always sue the union for breaching its duty to fairly represent all of its members or for itself having violated the ADEA. Finally, the Court held that it would not decide whether a CBA provision that allowed a union to block any arbitration of discrimination claims by refusing to act on the employees’ behalf amounted to an unenforceable waiver of the employees’ substantive rights. The Court noted that the parties disagreed over whether the union, after it stopped pursuing the age discrimination claim in arbitration, had offered to allow the employees to do so themselves, and that the parties had not briefed that issue.
This decision gives employers the opportunity to avoid lawsuits and jury trials in discrimination cases by including provisions in their CBAs like that upheld by the Court, just as many employers have done through arbitration agreements with individual non-union employees since Gilmer was decided. But the decision leaves open many important questions that may limit its scope:
- Many if not most CBAs allow only the union, not individual employees, to invoke the grievance and arbitration procedure. In such cases, if a union decided not to take a discrimination claim to arbitration, it seems likely that the courts would allow the employees to pursue their claims in court lest they be left with no way to enforce their rights.
- Unions may be reluctant to add language to their CBAs like that in Pyett, fearing that if they do so, and then fail to pursue a discrimination claim through arbitration, the employee may sue the union for violating its duty of fair representation or discriminating against the employee.
- Congress may accept the Court’s invitation to address the issue. The Arbitration Fairness Act of 2009 (H.R. 1020), recently introduced in the House of Representatives, would ban all predispute agreements that require arbitrating any employment dispute, thus overturning Gilmer. Although the current version of the bill exempts CBAs from its scope, that provision will surely be revised to ensure that Pyett is reversed as well. If Congress passes such legislation, Pyett may prove to be a Pyrrhic victory for employers.
On January 1, 2009, the ADA Amendments Act of 2008 (the “ADAAA”) took effect, bringing with it what many expect to be sweeping reforms to the landscape of federal disability discrimination law. This Act, which was widely lauded by both members of the House of Representatives and the Senate, was signed into law by President Bush on September 25, 2008. Employers who are not fully familiar with the changes the ADAAA brings must quickly learn the nuances of the new law – and the impact it has on the meaning of a “disabled employee” – as it will likely open the flood gates for a new wave of employees seeking reasonable accommodations and the number of discrimination lawsuits. There is good news, however, for employers and attorneys in New Jersey, as these amendments essentially conform the ADA to the “handicap” protections mandated by New Jersey Law Against Discrimination (“LAD”) and interpretative New Jersey Supreme Court decisions.
Click here to read the full article.
This article was originally published in the February 2009 issue of New Jersey Lawyer Magazine, a publication of the New Jersey State Bar Association, and is reprinted here with permission.
Acting swiftly on one of his campaign promises, President Obama today signed the Lilly Ledbetter Fair Pay Act (S. 181). The new law will increase the number of pay discrimination claims, make them much more difficult to defend, and force employers to retain records relating to compensation decisions far longer than they have in the past. In addition, the Act creates a strong incentive for management to review any current disparities in pay or benefits between two employees who hold similar jobs, to be confident that such differences were and are based on legitimate factors rather than a discriminatory decision that may have occurred years ago.
Federal discrimination laws generally require employees to file charges of discrimination with the Equal Employment Opportunity Commission (“EEOC”) within 180 or 300 days after the alleged discrimination occurs. That deadline allows such claims to be resolved relatively quickly, while the evidence is fresh and witnesses are available. In Ledbetter v. Goodyear Tire & Rubber Co. (2007), the U.S. Supreme Court, emphasizing the importance of the deadline, held that the period for challenging pay discrimination starts to run when an employer first makes the allegedly discriminatory decision, not each and every time that the employee later feels the effect of such a decision by receiving a paycheck.
The Ledbetter Act overturns that approach. The period for filing a charge now starts to run not only when an allegedly discriminatory compensation decision or practice is first adopted, but also each time that an individual becomes subject to or affected by application of such a decision or practice, “including each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or practice.” The new law, which takes effect today and retroactively applies to any claim filed since the Ledbetter case was decided, amends Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, and the Rehabilitation Act of 1973, and thus applies to compensation discrimination based on sex, race, national origin, color, religion, age, and disability.
The new law creates substantial challenges for employers, in that they will now be forced to reconstruct and defend compensation decisions made years ago by persons likely to have forgotten what happened – even assuming that such witnesses are still alive and can be found. For that reason, employers now have a strong incentive to document any and all decisions that may affect compensation – such as why they paid a new employee more than an existing one, or why a supervisor gave one employee a better review than another – and to retain all such records much longer than is legally required. Finally, employers may want to evaluate any current disparities in pay and compensation between employees who hold the same job in order to be able to defend such differences as legitimate.
Congress is soon expected to place even greater emphasis on pay discrimination by passing the Paycheck Fairness Act, which was approved by the House of Representatives earlier this month but has not yet been voted on in the Senate. That law would allow plaintiffs bringing Equal Pay Act claims to recover unlimited compensatory and punitive damages, make it far easier for them to bring class actions, and prohibit employers from taking action against most employees because they have asked about, discussed, or disclosed any employee’s wages.
In another victory for employees, the U.S. Supreme Court has ruled unanimously that employees who answer questions in an employer’s internal investigation of possible harassment or discrimination are protected from retaliation for doing so, even though they did not come forward to complain. Crawford v. Metropolitan Gov’t of Nashville and Davidson County, Tennessee, No. 06-1595 (Jan. 26, 2009).
The case involved a school system’s internal investigation of a sexual harassment complaint brought against an employee relations director, in which the employer interviewed several of the complaining employee’s co-workers. In answering the employer’s questions, one of those co-workers, Vicky Crawford, mentioned that the director had engaged in what the Court described as “gross clowning” and “sexually obnoxious” behavior toward her. The employer reprimanded the director, but later fired Crawford for alleged embezzlement. Crawford sued under that part of Title VII of the Civil Rights Act of 1964 which prohibits retaliating against employees because they have “opposed” discrimination, claiming that her termination was motivated by her statements during the investigation. The employer argued that although the law protects employees who oppose discrimination by bringing complaints, an employee who merely answers questions has not “opposed” anything. The Sixth Circuit Court of Appeals sided with the employer.
In reversing the lower court, the Supreme Court described that distinction as “freakish.” The Court rejected as speculative the employer’s argument that transforming every witness in an internal investigation into a potential retaliation plaintiff would deter employers from conducting thorough investigations. Citing its earlier cases, the Court held that employers would continue to have “a strong inducement to ferret out and put a stop to” discrimination in order to avoid liability. Allowing employees to be punished for answering questions in internal probes, the Court said, would render such investigations virtually useless by making employees afraid to participate, making it more likely that unlawful discrimination and harassment would continue.
The Court thus reemphasized that management has a powerful incentive to promptly investigate possible harassment or discrimination. In doing so, however, employers may wish to take greater care in deciding who to interview. For instance, unless it is reasonable to expect that such an employee may have relevant knowledge, an employer may want to think twice about interviewing someone whose job is in jeopardy, out of concern that if the employee is terminated soon after being interviewed, he or she will have a ready-made retaliation claim. At the same time, if an employer passes over employees who may shed light on what happened, it runs the risk that a judge or jury will find that it failed to take adequate steps in ferreting out a problem. It is thus more important than ever for employers to carefully plan their investigations, including which employees should be interviewed.
Just a few days after starting its new session, Congress has moved to substantially expand employees’ rights and remedies in pay discrimination cases. On Jan. 9, 2009, the U.S. House of Representatives passed the Lilly Ledbetter Fair Pay Act (H.R. 11) and the Paycheck Fairness Act (H.R. 12), largely along party lines, and then combined them into a single piece of legislation (H.R. 11). Identical bills have been introduced in the Senate, and a vote there is expected later this month. Taken together, the bills would make it easier for plaintiffs to establish pay discrimination, significantly expand the number and size of class actions in such cases, and expose employers to unlimited compensatory and punitive damages even if they never intended to discriminate. President-elect Obama supports the legislation.Continue Reading...
New Jersey Appellate Division Adopts 'Cat's Paw' Theory of Discrimination and Also Expands 'Single Comment' Hostile Environment Claims
In a typical harassment/discrimination claim, a plaintiff alleges that inappropriate or discriminatory conduct rendered his or her work environment hostile and, in many cases, that he or she also suffered an adverse employment action (e.g., discharge) caused by the discriminatory workplace. For many years, employers were often successful in obtaining the dismissal of such claims where it could be shown that, at the time of the adverse employment action, the decision-maker had no knowledge of the plaintiff’s protected class or the hostile environment. In essence, the decision-maker could not possibly have discriminated on the basis of something of which he or she was never aware. Hostile work environment claims based solely on a single alleged comment were also prone to dismissal. In a recent case, however, the New Jersey Appellate Division drew upon new federal decisions to change the legal landscape for employers. This change is expected to make it easier for plaintiffs to avoid pretrial dismissal of their suits, and to present their discrimination and harassment claims to a jury.
In an unpublished decision, Kwiatkowski v. Merrill Lynch, the New Jersey Appellate Division adopted the “subordinate bias” theory that several federal courts have applied in Title VII cases when reviewing the dismissal of a discrimination claim. Often described as the “cat’s paw” or “rubber stamp” theory of liability, the subordinate bias theory holds that an employer may be found liable for a facially nondiscriminatory employment action if the decision-maker may have been influenced—even unknowingly—by a biased subordinate employee. In such a case, the biased subordinate provides an illegal taint to the decision-maker’s action by selectively reporting, or even fabricating, information in his communications with her. Thus, the employer can still be held liable even though the decision-maker herself was unbiased, or not even aware that the plaintiff was in a protected class, or had previously complained of discrimination or harassment. In the Kwiatkowski case, the Appellate Division reversed an award of summary judgment to the employer, based upon the federal decisions applying the “subordinate bias” theory.Continue Reading...
The U.S. Supreme Court begins its 2008-09 term with several cases related to labor and employment, raising issues that include the protection afforded employees who participate in sexual harassment investigations, management’s right to require union employees to arbitrate discrimination claims rather than raise them in court, and whether employers calculating pension benefits must credit employees for the time they missed work for pregnancy leaves taken before pregnancy discrimination was outlawed. These cases are summarized below.Continue Reading...
Yesterday, September 25, 2008, President Bush signed the ADA Amendments Act of 2008 (“ADAAA”), which will expand the protections afforded by the Americans with Disabilities Act (“ADA”). The ADAAA passed the Senate by unanimous consent on September 11 and was approved by a voice vote in the House of Representatives less than a week later. Its significant changes to the ADA will take effect January 1, 2009.
The ADA prohibits discrimination against a qualified individual with a “disability,” defined as a physical or mental impairment that substantially limits one or more of the individual’s major life activities. The ADAAA is designed to reverse several rulings by the United States Supreme Court that the law describes as having improperly restricted ADA coverage by narrowly interpreting the term “disability.” In one such case, the Court held that when deciding whether an individual is protected by the ADA, courts need to take into account mitigating measures that might ameliorate the effects of the condition, such as medication or other treatment. In other cases, the Court strictly enforced the requirement that an impairment substantially limit a “major life activity” to be a covered disability, and narrowly construed what sort of activities would be considered “major life activities” for purposes of the ADA.Continue Reading...
Adding to a series of recent employment law cases decided by the United States Supreme Court, the Court issued three more opinions affecting employment law on June 19, 2008: two interpreting the Age Discrimination in Employment Act of 1967 (“ADEA”) and one concerning the Employee Retirement Income Security Act of 1974 (“ERISA”).
In Kentucky Retirement Systems v. EEOC, 554 U.S. ___ (2008), a 5-4 decision, the Supreme Court held that “differential treatment based on pension status, where pension status…itself turns, in part, on age” does not violate the ADEA. Specifically, Kentucky’s state retirement plan (the “Plan”) for employees in “hazardous positions” provided that an employee could obtain “normal” retirement benefits in two ways: (1) after 20 years of service; or (2) after 5 years of service provided the employee had attained the age of 55. If an employee became disabled prior to satisfying either avenue, however, the Plan would “impute” the number of years necessary to meet either the years of service or age requirement, whichever was less. The amount of benefits a retiree received depended upon the number of years of service (either actual or imputed).
The EEOC challenged the Plan on behalf of an employee who retired after becoming disabled at age 61. As the employee was already eligible for “normal” retirement benefits (having achieved 18 years of service and age 55), the Plan did not “impute” any additional years of service to him. The EEOC claimed that the Plan discriminated on the basis of age because had the employee become disabled before reaching age 55, he would have been credited with additional years of service and, therefore, received increased benefits. In rejecting the EEOC’s argument, the Supreme Court explained: “[w]here an employer adopts a pension plan that includes age as a factor, and that employer then treats employees differently based on pension status, a plaintiff, to state a disparate treatment claim under the ADEA, must adduce sufficient evidence to show that the differential treatment was ‘actually motivated’ by age, not pension status.” Because the EEOC had failed to produce such evidence, the Supreme Court found no violation of the ADEA.Continue Reading...
The U.S. Supreme Court today held that 42 U.S.C. § 1981 (Section 1981), a law enacted just after the Civil War, which prohibits race discrimination in the making and enforcement of contracts, also protects persons who are subject to retaliation because they have complained about such discrimination – even though Section 1981 never mentions retaliation. The Court relied in large part on two of its earlier cases that had interpreted a similar law against discrimination to encompass retaliation claims. It also noted that its decision did not change the law, because every federal appellate court to have addressed the issue had held that Section 1981 prohibits retaliation. CBOCS West, Inc. v. Humphries, No. 06-1431 (May 27, 2008).
Section 1981, which the Court earlier held prohibits discrimination based on ethnicity as well as race, offers plaintiffs three key advantages over the more well-known federal fair employment practice law, Title VII of the Civil Rights Act of 1964. First, although Title VII precludes plaintiffs from suing until they have first filed a charge of discrimination with the Equal Employment Opportunity Commission (“EEOC”) and waited for that agency to issue a right-to-sue notice, Section 1981 plaintiffs may sue without exhausting any administrative process. Second, while Title VII has a fairly short statute of limitations, requiring plaintiffs to file an EEOC charge within 180 or 300 days after an act of alleged discrimination or retaliation has occurred, Section 1981 gives plaintiffs four years after such an act has occurred in which to sue. Third, although Title VII allows employees to recover all lost wages and benefits, it limits how much a successful employee can collect for emotional distress and punitive damages, with the cap for such other damages ranging from $50,000 to $300,000, depending on the employer’s size. Section 1981, on the other hand, allows a plaintiff to recover unlimited compensatory and punitive damages.
In light of these differences, employers may expect current or former employees who believe themselves to have been subject to retaliation based on complaints about alleged race discrimination to sue under Section 1981 instead of or in addition to Title VII.
By overwhelming margins, the House and Senate have passed legislation that will prohibit discrimination in employment and medical insurance based on genetic information and tests. The White House has made clear that President Bush will sign the bill.
The Genetic Information Nondiscrimination Act (“GINA” or the “Act”) will prohibit employers, employment agencies and labor unions from discriminating against applicants or employees based on information about genetic tests of, or the receipt of genetic counseling or other services by, an individual or his or her family members. GINA will also preclude group health plans and issuers of health insurance from discriminating against individuals based on genetic information, and will bar insurers from requiring genetic tests.
Employers, Employment Agencies and Labor Unions
GINA makes it unlawful for an employer, employment agency or labor union to discriminate against any applicant or employee based on “genetic information,” which the Act defines as information about the genetic tests of such an individual or any of his or her family members; information about the manifestation of a disease or disorder in any such family members; or information about a request for or receipt of a genetic test, genetic counseling, or genetic education by the individual or any of his or her family members. The Act also prohibits requesting, requiring or purchasing genetic information with respect to an employee or family member. Employers are nonetheless permitted to request or require that an employee provide a family medical history in compliance with the certification provisions of the Family and Medical Leave Act (“FMLA”) or comparable state laws, or where the employer’s request or requirement is “inadvertent.” Another exception permits requesting or requiring information used for legally mandated genetic monitoring of the biological effects of toxic substances in the workplace, but only if the monitoring complies with federal and state regulations, and the employee expressly consents and is given the results.
Like medical information under the Americans with Disabilities Act, genetic information must be treated as confidential, maintained on separate forms, and stored in separate medical files. If a covered entity receives a court order directing it to provide genetic information, it cannot do so unless the disclosure is specifically authorized by the order and the employee either knew about the order before it was secured, or is told about the order and any genetic information to be produced before production takes place. Employers may also disclose such information in connection with the employee’s compliance with the certification provisions of the FMLA or comparable state laws.
Other provisions of the Act, including its prohibition against retaliation and the range of available remedies, mirror those found in Title VII of the Civil Rights Act of 1964. Prevailing plaintiffs may thus recover lost wages and benefits; compensatory and punitive damages of up to $300,000, costs and attorneys’ fees; and equitable relief such as reinstatement. To allay business concerns, however, GINA does not permit employees to bring “disparate impact” claims asserting that a facially neutral policy or practice has a discriminatory adverse effect based on a protected characteristic.
Group Health Plans and Insurers
Under the Act, group health plans and insurers cannot discriminate against an individual with regard to premiums based on genetic information, nor can they require an individual to undergo a genetic test (except in certain limited circumstances for research purposes). The Act also bars group health plans and insurers from requesting, requiring or purchasing genetic information about an individual, or using for underwriting purposes any genetic information that they acquire.
GINA’s full impact on employers that provide group health plans is not yet clear, as the agencies charged with administering the new law have been given one year from the date the Act takes effect to issue regulations. Nevertheless, employers that provide fully insured group health plans will most likely be able to rely on their insurers to satisfy at least some requirements of the Act. In addition, GINA requires the Department of Health and Human Services (“HHS”) to amend regulations issued under the Health Insurance Portability and Accountability Act (“HIPAA”) to include genetic information within the definition of protected health information. This should allow insurers and group health plans to use genetic information for payment, treatment and health care operations, and thereby ensure that the Act does not bring the day-to-day administration of a group health plan to a halt.
Once GINA takes effect, however, employers will need to pay close attention to ensuring that their group health plans comply with its requirements, because penalties for a violation are steep. Under the Act, the Secretary of Labor may impose a penalty of up to $100 per day per participant or beneficiary to whom a failure relates. The Act also allows an excise tax to be imposed under Section 4980D of the Internal Revenue Code. While employers will be able to correct errors and be excused from unintentional, unknowing mistakes, employers that fail to take action to ensure compliance could be hit hard.
To provide enough time for those covered by the Act to prepare for its restrictions and for the agencies charged with issuing regulations to do so, GINA will not take effect until next year. Those parts of the Act that cover group heath plans and health insurers will take effect 12 months after the bill is signed, while the employment discrimination provisions will take effect six months after that.