Pennsylvania Labor and Employment Blog : Pennsylvania Labor and Employment Lawyer & Attorney : McNees Wallace & Nurick Law Firm : Human Resources, Workplace and Business Law : Harrisburg, Lancaster, Allentown, Lehigh

Oftentimes, it seems like the requirements of the law conflict with long held workplace beliefs, and in some cases common sense. One staple of workplace dogma is the notion that employees should always bring issues to supervisors first, so that issues can be addressed, and hopefully resolved, at the lowest possible level. According to the law, however, when it comes to discriminatory harassment, supervisors should be left out of the loop.

A recent case, Gorzynski v. JetBlue Airways Corp.(PDF), illustrates this point. In JetBlue, the Company had a policy that allowed employees to bring complaints to their immediate supervisor, Human Resources, or any member of management. The plaintiff, a former employee at the time she filed her suit under Title VII, alleged that her former supervisor had created a hostile work environment by, among other things, making sexual comments, grabbing her and other women, and tickling women. While she was employed, the Plaintiff only complained about this alleged harassment to the supervisor.

The Company argued that reporting the harassment only to the supervisor, the same person engaging in the alleged misconduct was not reasonable, and therefore, the Company was entitled to rely on the Faragher/Ellerth affirmative defense to discriminatory harassment claims. The Faragher/Ellerth defense is a defense against liability that is available to employers in certain circumstances if two conditions are met. First, the employer must take reasonable measures to prevent and quickly correct any harassing conduct; and second, the employee must unreasonably fail to take advantage of the preventative or corrective measures available. The trial court agreed with the Company that the former employee's failure to report the alleged harassment to another point of contact was unreasonable, and dismissed her harassment claim.

The Second Circuit Court of Appeals, however, rejected the Company's argument. The Court of Appeals stated that the former employee's allegations made out an actionable hostile work environment claim based on sex, and went on to hold that employees do not have to shop around for someone to address their complaints. Instead, whether an employee reasonably took advantage of the employer's complaint reporting procedure will be decided on a case-by-case basis. The Court of Appeals determined that in this case, a jury could find that the former employee's actions were not unreasonable because she was following the Company policy by reporting the conduct to her supervisor.

There were some additional facts in this case that were detrimental to the Company's argument. However, it still provides a reminder that insufficient harassment policies will prevent employers from asserting the Faragher/Ellerth affirmative defense, which is a means for having harassment claims dismissed. The Gorzynski decision makes it more difficult to get harassment claims dismissed early, because the Faragher/Ellerth defense will now be judged on a case-by-case basis, at least in the Second Circuit.

Even though this decision is not controlling in Pennsylvania courts, Pennsylvania employers should take time to review their discriminatory harassment policies, including sexual harassment policies, and ensure that supervisors are not designated as a reporting point of contact. Instead, reporting points of contacts should be limited to Human Resource staff and upper management personnel, and employees should be directed to utilize alternative points of contact if one point of contact is the alleged harasser.
 

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On February 18, 2010, the Equal Employment Opportunity Commission (EEOC) published a Notice of Proposed Rulemaking (NPRM) addressing the meaning of the “reasonable factors other than age” defense under the Age Discrimination in Employment Act (ADEA). The ADEA prohibits employers from discriminating against employees or job applicants based upon their age, but protects only those employees or applicants who are 40 years or older. In addition, the ADEA provides employers with statutory defenses, which include provisions for a “bona fide occupational qualification" defense and a “reasonable factors other than age” defense.

The “reasonable factors other than age” (RFOA) defense precludes liability for actions otherwise prohibited under the ADEA so long as the employment decision is based upon reasonable factors other than age. The EEOC's NPRM takes into consideration two relatively recent United States Supreme Court cases, Smith v. City of Jackson and Meacham v. Knolls Atomic Power Laboratories, which each evaluated disparate impact claims under the ADEA. Disparate impact claims involve the allegation that an employer’s practice, although neutral on its face, has a discriminatory impact on a protected class – under the ADEA, workers aged 40 years or more. 

Specifically, and with the Supreme Court’s Smith and Meacham holdings in mind, the EEOC proposes to revise the federal regulations to illustrate that under the RFOA defense, the evaluation of an employer’s practice “turns on the facts and circumstances of each particular situation and whether the employer acted prudently in light of those facts.” Thus, the EEOC’s proposed approach attempts to balance employers’ rights to make reasonable business decisions with the ADEA’s goal of protecting older workers from facially neutral employment practices that disparately impact their employment. In addition, the proposed amendments provide guidance as to the factors that will be considered in evaluating an employer's facially neutral practice under the ADEA.

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During his recent State of the Union Address, President Barack Obama confirmed the news that some employers feared. During his address, President Obama stated that the Civil Rights Division (CRD) of the Department of Justice (DOJ) will begin aggressively pursuing employment discrimination claims. The President's statement reiterated the CRD's December 2009 message to Congress that they will be increasing prosecution and litigation efforts in this area.

In December 2009, Thomas E. Perez, assistant attorney general for civil rights, announced the CRD's intention to file more class action "pattern or practice" discrimination suits against state and local governments. Class action suits involve large groups of plaintiffs, and the term "pattern or practice" refers to alleged widespread discrimination, typically when dealing with decisions involving new hires or promotions. In a typical case, the CRD will allege that an employment practice, such as a test or physical ability requirement, unlawfully discriminates against a certain protected class of individuals because fewer members of that class are selected. This makes public employers who hire large numbers of employees each year, for example prison guards or police officers, susceptible to discrimination claims based on latent defects in their selection methods or tests.

In addition to seeking a variety of remedial damages in these cases, such as priority hiring and reforming an organization's hiring and promotion procedures, the CRD also will pursue monetary damages. Mr. Perez also announced his intention to pursue other types of claims against employers, such as those arising Uniformed Services Employment and Reemployment Rights Act (USERRA), which protects reemployment rights of employees serving in the military. Mr. Perez also mentioned Project Civic Access, which seeks to enforce compliance with the public accommodation provisions of the Americans with Disabilities Act by sending investigators to evaluate state and local government facilities. The heightened focus on enforcement efforts already has begun to increase investigation, prosecution and litigation in each of these areas.

The CRD's renewed focus on vigorous enforcement and prosecution of cases, without any testimony regarding an actual increase in the number of violations, is consistent with the renewed focus on enforcement within the Department of Labor, the Equal Employment Opportunity Commission, and other federal agencies under the Obama Administration. State and local governments that come under investigation by the Department of Justice, the CRD, or any other federal government agency should seek legal counsel early in the process to ensure the investigation proceeds in a lawful manner and the potential damages available, if any, are limited.
 

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As a public employer, your actions are considered the actions of the government or the “state.” This dual persona brings with it additional obligations and challenges that private employers do not face. Some of these obligations include the requirement to provide due process rights to employees, and the challenges include a seemingly endless variety of lawsuits that your employees may bring against you. Lawsuits unique to public sector employers include unreasonable search and seizure challenges, including e-mail and text message based challenges, free speech challenges, and alleged violations of the Establishment Clause of the First Amendment.

The Establishment Clause prohibits the government from endorsing any particular religion and, in fact, endorsing religion at all. In a recent case involving the Establishment Clause, Milwaukee Deputy Sheriffs' Association v. Clarke, the 7th Circuit Court of Appeals found that a county sheriff violated the Establishment Clause by having a Christian organization deliver a faith-based presentation to employees at mandatory meetings. The court concluded that the Sheriff, by introducing the Christian group and allowing them to speak at mandatory employee meetings, either endorsed the group or at the very least, gave the appearance of endorsing the group. This endorsement constituted a violation of the Establishment Clause, and the Sheriff’s Department was ordered to cease and desist from further violations and was also required to pay over $38,000 in fees and costs.

While it may seem like an easy decision for most savvy Human Resource practitioners to avoid supporting one religion over another in the workplace, this is something that still occurs outside of the watchful eye of HR. It is true that Milwaukee Deputy Sheriffs' Association is an extreme case, but it is still a good reminder that as a public employer, you must avoid showing preference toward one religion over another. Because this message does not always trickle down to all supervisors and managers, the facts of this case serve as a good reminder to briefly discuss at your next executive staff meeting or supervisor and manager training session.
 

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On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009 (ARRA), which expanded health care insurance benefits under the Consolidated Omnibus Budget Reconciliation Act (COBRA). The ARRA granted individuals involuntarily terminated from employment between September 1, 2008 and December 31, 2009, a subsidy to cover 65 percent of their monthly COBRA premiums for up to nine months. The subsidy is available for individuals with an annual income of less than $125,000 (single) or $250,000 (joint filers). Individuals earning between $125,000 ($250,000 joint) and $145,000 ($290,000 joint) are eligible for "phased-in" assistance.

Under the ARRA, plan administrators are not only responsible for providing notice of the subsidy to eligible individuals, they must also pay the cost of the subsidy up front. The plan administrator may then file IRS Form 941 to claim a payroll tax credit in the amount of subsidies paid. In other words, employers must front 65 percent of eligible individuals' COBRA premiums in exchange for a credit against their payroll taxes.

UPDATE! On December 19, 2009, President Obama signed the 2010 Department of Defense Appropriations Act (Act), which extends the COBRA premium subsidy provisions and places additional notification requirements on plan administrators. The Act provides eligible individuals with an additional six months of subsidized coverage, extending the availability of the COBRA premium subsidy from nine to 15 months. The Act also allows individuals involuntarily terminated on or before February 28, 2010 to receive the subsidy, extending the original eligibility deadline of December 31, 2009, by two months. Employees involuntarily terminated in January and February 2010 will now be eligible for the subsidy.

Furthermore, if an individual was eligible for the COBRA premium assistance under the original ARRA, and that eligibility already expired, then that individual may receive the continued premium subsidy retroactively. In order to take advantage of the retroactive coverage, the individual must pay 35 percent of the premium by February 17, 2010, or within 30 days of receipt of the extension notice described below, whichever is later. If eligible individuals already have paid the full COBRA premium, then the plan administrator must either refund the over payments or credit future premium payments.

The Act also contains additional notification requirements that require plan administrators to provide eligible individuals with information regarding the extended subsidy.

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Recently, the District Court for the Western District of Pennsylvania delivered some potentially bad news to Pennsylvania employers. In Truman v. DeWolff, Boberg & Associates, Inc., the Court held that an employee may be entitled to overtime payments for time worked in foreign countries under the Pennsylvania Minimum Wage Act and the Pennsylvania Wage Payment and Collection Law. The plaintiff, Michael Truman, worked for D.B.A., Inc. for a little over a year, and during that time worked in both England and in Canada. Truman sought overtime pay for overtime hours he worked in excess of 40 hours per week in both England and Canada.

At the summary judgment stage, the Truman admitted that he was not entitled to overtime payments under the Fair Labor Standards Act (FLSA) which specifically exempts work in foreign countries from overtime pay entitlements. However, Truman argued that under the Pennsylvania Minimum Wage Act he was entitled to such overtime payments because the Pennsylvania Minimum Wage Act provided for benefits exceeding those under the FLSA. The Court stated that unlike the FLSA, there was no specific exemption for working in foreign countries under the Pennsylvania Minimum Wage Act. The Court also noted that the Eastern District of Pennsylvania previously held that work in other states by Pennsylvania-based employees was covered by Pennsylvania Law. The Court concluded that there is nothing within the Pennsylvania Minimum Wage Act that restricts the benefits of the Act to work performed within the United States.

The Court also noted that the FLSA allows for state laws to provide greater protection than allowed under the FLSA, and therefore, there was no preemption issue in this case. The Court noted that there was no implied foreign work exemption under the Pennsylvania Minimum Wage Act, and therefore, for Pennsylvania residents working for Pennsylvania-based employers, there is no exemption from overtime pay requirements for work in foreign countries. The Court said that the analysis under the FLSA and the Pennsylvania laws is only identical if the language of the FLSA and state laws is identical. In this case, the analysis was different because the language was not identical, and therefore, the Court allowed the Plaintiff to move forward on his claim that he was entitled to overtime pay for hours worked in a foreign country under Pennsylvania law.

This decision has the potential to be costly for some Pennsylvania employers. How the courts will define who is a Pennsylvania resident and who is a Pennsylvania based employee for purposes of the Pennsylvania Minimum Wage Law and the Pennsylvania Wage Collection Act is unclear. These, and other issues, will need to be defined by the Courts in the future. In the meantime, employers are well advised to review their compensation practices in light of this decision.

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In Prowel v. Wise Business Forms, Inc., the Third Circuit reversed a district court's granting of summary judgment in favor of an employer on a claim of gender stereotyping discrimination. The claim was brought by an admittedly homosexual employee who alleged he was subject to gender discrimination, retaliation and religious discrimination based on his effeminate actions and mannerisms. The Third Circuit acknowledged that Title VII does not protect employees from discrimination based upon their sexual preference, but may allow claims for gender stereotyping. The Third Circuit noted that a “gender stereotyping” claim was first recognized by the Supreme Court as a viable cause of action in Price Waterhouse v. Hopkins, 490 U.S. 228 (1989).

In reversing summary judgment, the Third Circuit held that

"…every case of sexual orientation discrimination cannot translate into a triable case of gender stereotyping discrimination, which would contradict Congress’s decision not to make sexual orientation discrimination cognizable under Title VII. Nevertheless, [an employer] cannot persuasively argue that because [an employee] is homosexual, he is precluded from bringing a gender stereotyping claim. There is no basis in the statutory or case law to support the notion that an effeminate heterosexual man can bring a gender stereotyping claim while an effeminate homosexual man may not. As long as the employee — regardless of his or her sexual orientation — marshals sufficient evidence such that a reasonable jury could conclude that harassment or discrimination occurred “because of sex,” the case is not appropriate for summary judgment."

The Court's decision raises obvious issues for employers in dealing with sexual harassment and sex discrimination claims. Employers cannot automatically assume the sexual orientation claims will be dismissed by a court as unprotected under Title VII. The allegations of discrimination must be evaluated in light of gender stereotypes.

In Prowel, the employee alleged the following facts in support of his claim:

"Prowel identifies himself as an effeminate man and believes that his mannerisms caused him not to “fit in” with the other men at Wise. Prowel described the “genuine stereotypical male” at the plant as follows:

[B]lue jeans, t-shirt, blue collar worker, very rough around the edges. Most of the guys there hunted. Most of the guys there fished. If they drank, they drank beer, they didn’t drink gin and tonic. Just you know, all into football, sports, all that kind of stuff, everything I wasn’t.

In stark contrast to the other men at Wise, Prowel testified that he had a high voice and did not curse; was very well-groomed; wore what others would consider dressy clothes; was neat; filed his nails instead of ripping them off with a utility knife; crossed his legs and had a tendency to shake his foot “the way a woman would sit”; walked and carried himself in an effeminate manner; drove a clean car; had a rainbow decal on the trunk of his car; talked about things like art, music, interior design, and decor; and pushed the buttons on the nale encoder with 'pizzazz.'"

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In Weaver v. Harpster, the Pennsylvania Supreme Court ruled that small employers (three or fewer employees) may  not liable for acts of employment discrimination. Under the Pennsylvania Human Relations Act (PHRA), employers with four or more employees are prohibited from discriminating against their employees on the basis of sex.  At common law, an employer may terminate an at-will employee for any reason unless that reason violates a clear mandate of public policy emanating from either the Pennsylvania Constitution or statutory pronouncements. In this case, the Court  addressed the intersection of the PHRA and the public policy exception to at-will employment, namely, whether an employer with fewer than four employees, although not subject to the PHRA's prohibition against sexual discrimination, nevertheless is prohibited from discriminating against an employee on the basis of sex. Because the PHRA reflects the unambiguous policy determination by the legislature that employers with fewer than four employees will not be liable for sex discrimination in Pennsylvania, the Court concluded that a common law claim for wrongful discharge, resulting from sex discrimination, will not lie against those employers.

The Court's seven justice majority continued its support for the employment at-will presumption by declining to recognize an additional public policy exception based on Pennsylvania's statutes or Constitutional protections. The  two justice dissent would have found a public policy exception to the at-will employment presumption based on both the PHRA and Pennsylvania Constitution. Small employers should keep in mind that they escape coverage of the PHRA, but may be covered by local ordinances prohibiting employment discrimination.

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Pennsylvania's Mini-COBRA law became effective July 10, 2009. The law provides COBRA-like medical insurance continuation to employees who work for smaller business not covered by the federal law. The Department of Insurance clarified some of the coverage issues and provided a model notice for covered businesses to provide to employees. Employees who elect Mini-COBRA may also be eligible for a 65% premium assistance provided by the federal stimulus legislations. Fortunately, small business will not need to "front" the premium assistance payment because Pennsylvania's Mini-COBRA law places the obligation on the insurer.

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