As the election season continues to heat up, Congress is considering a large number of bills that would impose significant new burdens on how employers deal with employees. Even if these bills do not become law this year—either because their sponsors cannot muster the necessary number of votes, or because President Bush wields his veto pen—they provide a preview of what employers might expect to see next year, depending on the results of the 2008 election.
As early as this month, the Senate is expected to take up the Fair Pay Restoration Act (S. 1843), which mirrors the Lilly Ledbetter Fair Pay Act (H.R. 2831) passed by the House of Representatives last summer. Both bills would overturn the Supreme Court’s 2007 decision in the Ledbetter case, holding that an employee must challenge an alleged discriminatory pay practice within 180 or 300 days after the employer first made the pay decision at issue, rather than treating each paycheck as a new act of discrimination. An employer thus would be treated as having discriminated “each time wages, benefits, or other compensation is paid,” even if the alleged discriminatory pay practice reflected in the paycheck had occurred years earlier. The Senate bill has 42 cosponsors, including Sens. Obama (D-Ill.) and Clinton (D-N.Y.), but the Bush Administration has threatened a veto.
After more than 10 years of unsuccessful efforts, Congress, with strong bipartisan support, now appears poised to ban genetic discrimination in employment. The Genetic Information Non-Discrimination Act (H.R. 4392, S. 358) would 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. It would also preclude group health plans and issuers of health insurance from discriminating against individuals based on genetic information, and would prohibit insurers from requiring genetic tests. In April 2007, the House passed the bill by an overwhelming margin. Although it has wide support in the Senate, Sen. Coburn (R-Okla.) currently has a “hold” on the bill based on the desire to provide employers with a right to collect genetic information if doing so is a business necessity. President Bush has supported such legislation in the past, but agrees with Sen. Coburn’s concerns.
Sexual Orientation Discrimination
Last November, the House passed the Employment Non-Discrimination Act (H.R. 3685), which would outlaw discrimination based on the real or perceived sexual orientation of an applicant or employee. To garner additional support, Rep. Frank (D-Mass.), who introduced the bill, removed a prohibition regarding discrimination based on “gender identity,” which was defined as including an individual’s gender-related appearance or mannerisms. To address other concerns, the bill permits employers to treat unmarried couples differently than married couples with respect to employee benefits, exempts certain religious employers, outlaws quotas, and permits unintentional discrimination such as facially neutral policies or practices that have a disproportionate adverse impact based on sexual orientation. Although the bill passed the House by a margin of more than 50 votes, and the Senate fell only one vote short of passing similar legislation in 1996, no action is expected in the Senate this year because of the upcoming elections. President Bush has threatened a veto, citing concerns that the law would restrict the free exercise of religion.
Civil Rights Act of 2008
In January, Sen. Kennedy (D-Mass.) and Rep. Lewis (D-Ga.) introduced the Civil Rights Act of 2008 (S. 2554, H.R. 5129), which would impose far-reaching changes on a host of employment laws. Although no hearings on the bills are currently scheduled, Sens. Clinton and Obama are both cosponsoring the Senate bill.
Among other things, the Act would:
- Prohibit the enforcement of agreements to arbitrate employment disputes arising under federal law, unless such an agreement is reached after a dispute arises or is part of a collective bargaining agreement. A similar prohibition was also included in the Arbitration Fairness Act (S. 1782), introduced by Sen. Feingold (D-Wisc.) last July and the subject of Senate Judiciary Committee hearings in December.
- Make it a violation of the Fair Labor Standards Act (“FLSA”) to discriminate or retaliate against an employee because he or she has asked about, discussed, or disclosed his or her own wages or the wages of any other employee, or because the employee has filed a claim or participated in an investigation, hearing, or proceeding under the FLSA.
- Remove the caps on compensatory and punitive damages under Title VII of the Civil Rights Act of 1964 and the ADA, which now range from $50,000 to $300,000.
- Amend the FLSA and Equal Pay Act to allow plaintiffs to recover compensatory and punitive damages, in addition to back pay and liquidated damages.
- Make it much easier for plaintiffs to bring class actions under the Equal Pay Act, by treating such cases as subject to the “opt-out” procedures under Rule 23 of the Federal Rules of Civil Procedure, rather than the “opt-in” procedures that now apply to federal overtime claims.
- Amend the Age Discrimination in Employment Act to outlaw an employment policy or practice that has a disparate impact based on age, unless the employer can prove that it is based on reasonable factors other than age that are job-related and consistent with business necessity. This part of the Act would overturn the Supreme Court’s holding in Smith v. City of Jackson, 544 U.S. 228 (2005).
- Treat as a prevailing party entitled to recover attorneys’ fees a plaintiff who shows that its pursuit of a non-frivolous claim was the catalyst for the other party to make a voluntary or unilateral change in its position in settlement that provided any significant part of the relief sought by the plaintiff.
- Require back pay or other monetary relief to be available to a current or former employee under federal employment laws even though the employee or employer failed to comply with immigration law. This part of the Act would overturn Hoffman Plastic Compounds, Inc. v. NLRB, 535 U.S. 137 (2002), which held that an undocumented alien never legally authorized to work in this country could not recover back pay under the National Labor Relations Act.
- Amend the Equal Pay Act to allow the “bona fide factor other than sex” defense only if an employer shows that the factor was job-related and furthered legitimate business purposes.
- Give prevailing plaintiffs the right to recover their expert witness fees whenever several laws, including the FLSA, now give them the right to recover attorneys’ fees.
The Americans with Disabilities Act (“ADA”) prohibits discrimination based on a disability, which it defines as a physical or mental impairment that substantially limits an individual’s ability to engage in a major life activity; having a record of such an impairment; or being regarded as having such an impairment. Last July, House Majority Leader Hoyer (D-Md.) and Sen. Harkin (D-Iowa) introduced the ADA Restoration Act (H.R. 2195, S. 1881), which would remove the requirement that an individual’s impairment substantially limit his or her ability to engage in a major life activity; merely having the impairment would be enough. In addition, the Act would require courts, in deciding whether an individual has a disability, to ignore the effect of any mitigating measures (such as medication or devices) as well as whether the impairment is episodic, latent, or in remission. Finally, it would prohibit taking action against an individual because he or she is using any mitigating measures such as medication to deal with a disability. Although the House bill has more than 240 cosponsors and Rep. Hoyer hopes to bring it to the floor this spring, it has not yet been marked up by the relevant House committees and no action is yet scheduled in the Senate. The Justice Department’s Office of Legislative Affairs strongly opposes the bill.
Introduced by Rep. McCarthy (D-N.Y.) more than a year ago with bipartisan support, the Workplace Religious Freedom Act (H.R. 1431) would significantly expand employers’ duty to reasonably accommodate employee religious practices that conflict with work requirements. The law makes clear that Title VII protects any employee or applicant who can, with or without reasonable accommodation, perform the essential functions of the position unless the accommodation would impose undue hardship on the employer. It would exclude from any job’s essential functions “practices relating to clothing, practices relating to taking time off, or other practices that may have a temporary or tangential impact on the ability to perform job functions.” Although it is relatively easy under current law for an employer to show that an accommodation of an employee’s religious practices would impose undue hardship, the Act would raise the bar much higher, requiring employers to prove that any rejected accommodation would impose a “significant difficulty or expense,” taking into account such factors as the cost of the accommodation and the overall financial resources and size of the employer. Finally, the Act would require employers to initiate a bona fide effort to provide reasonable accommodation of a religious practice known to conflict with work requirements, rather than waiting for the employee to request an accommodation.
Legislation has been introduced in both the Senate and the House seeking to correct what sponsors see as misclassification of independent contractors as employees. Last September, Sen. Obama introduced the Independent Contractor Proper Classification Act (S. 2044), which would allow workers treated as independent contractors to petition the Internal Revenue Service for a determination as to whether they are being properly classified for employment tax purposes. The Act would prohibit retaliation for filing such a petition, and would require employers that had misclassified such a worker to pay the petitioner’s expenses incurred in filing the petition, including attorneys’ fees and expert witness fees. The law would also require employers to notify each individual retained as an independent contractor about the employment law protections not afforded to independent contractors, and the individual’s right to petition the IRS for a determination about his or her status. The Treasury Department would be required to notify the Department of Labor of all misclassifications. Along the same lines, just last week, Rep. McDermott (D-Wash.) introduced the Taxpayer Responsibility, Accountability and Consistency Act (H.R. 5804), which would permit workers to file similar petitions. The House bill would also increase the penalties an employer faces for misinforming the IRS that employees are independent contractors, and would eliminate an employer’s ability to avoid tax liability by showing that such misclassification was reasonable.
Employers should remain alert to see how the proposed legislation described above, as well as other important bills such as the Employee Free Choice Act and other amendments to the National Labor Relations Act sought by organized labor, fare in Congress before and after the 2008 election.