Posted on December 29, 2009 by James A. Burns, Jr.

New Law Restricts Employment Arbitration for Defense Contractors and Subcontractors

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.

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Posted on April 27, 2009 by James A. Burns, Jr.

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.

Facts

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.

The Court’s Decision

The Act provides that an employer is responsible for sexual harassment “by nonemployees or nonmanagerial or nonsupervisory employees only if the employer becomes aware of the conduct and fails to take reasonable corrective measures.” The court read that to mean that an employer is strictly liable for all sexual harassment by its supervisors, even those who have no authority to affect the terms and conditions of the victim’s employment. It rejected the employer’s argument that it should follow the lead of courts holding that under federal law an employer is not liable for supervisory harassment which involves no tangible job action against the victim if the employer “exercised reasonable care to prevent and correct promptly” any harassment, and the employee “unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.” Burlington Industries, Inc. v. Ellerth, 524 U.S. 742, 765 (1998). The court held that it was bound by the specific language in the Illinois statute, not by federal court decisions interpreting a different law. Because Yanor was neither a “nonemployee” nor a “nonmanagerial or nonsupervisory employee,” the court ruled that the sheriff’s department was liable for his harassment regardless of whether it knew about his conduct or sought to correct it.

The court rejected the argument that strict liability places an unreasonable burden on Illinois employers. First, it noted that an employee still bore the burden of proving sexual harassment, including, for “hostile environment” harassment, that the harasser engaged in “unwelcome sexual advances or requests for sexual favors or any conduct of a sexual nature,” which had “the purpose or effect of substantially interfering with an individual’s work performance or creating an intimidating, hostile or offensive working environment.” Second, the court said that because employers empower their supervisors to act as their “public face,” “are in the best position to train supervisors and make them aware of the law prohibiting sexual harassment,” and can be presumed to have notice of sexual harassment by their supervisors, it was fair to hold employers strictly liable for supervisory harassment. Finally, the court held that as remedial legislation, the Act should be construed liberally to prevent sexual harassment, and that its reading of the Act “ensure that victims have full incentive to report” such conduct without fear of retaliation.

What The Case Means

This decision leaves no doubt that every Illinois employer is automatically responsible for all sexual harassment by its supervisors, whether or not the supervisor has any authority over the victim. Even if the supervisor takes no tangible job action or threatens or promises to do so, even if the employee never reports the harassment to anyone, and even if the employer takes prompt corrective action as soon as it learns about the conduct, the employer will still be liable for the supervisor’s harassment. Whenever any supervisor engages in sexual harassment, therefore, his or her employer may be required to make the complainant whole for any loss of job or position, including all lost wages and benefits, and pay the victim’s compensatory damages, costs, and attorney’s fees. Since 2008, moreover, all cases under the Act can be heard by juries rather than administrative law judges, making harassment cases particularly risky.

It is thus more important than ever that Illinois employers take every possible step to ensure that none of their supervisors engage in any conduct that might be considered sexual harassment. Management should make certain that each and every supervisor receives effective training on proper workplace behavior, understanding clearly what behavior is off-limits. And even though such steps may not provide a legal defense, policies and practices that encourage employees to report any possible harassment without fear of retaliation will not only make for a more civil workplace, but will allow many problems to be resolved before employees feel the need to contact a third party such as a federal or state agency or plaintiff’s attorney.
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Posted on January 27, 2009 by James A. Burns, Jr.

U.S. Supreme Court Protects Employees Who Participate In Internal Harassment Investigations

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.

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