Federal Judge Dismisses EEOC Complaint Claiming "No Dreadlocks" Policy Discriminates Based on Race

Previously we told you that the U.S. Equal Employment Opportunity Commission (EEOC) was suing an Alabama insurance company for allegedly discriminating against African American job applicants because the company's grooming policy prohibited dreadlocks. Last week, an Alabama federal judge dismissed the EEOC's intentional race discrimination claim that was brought against Catastrophe Management Solutions (CMS).

As you may recall, CMS made a conditional offer of employment to an African-American applicant provided that the applicant cut off her dreadlocks. CMS had a policy that stated "All personnel are expected to be dressed and groomed in a manner that projects a professional and businesslike image while adhering to company and industry standards and/or guidelines . . . hairstyles should reflect a business/professional image. No excessive hairstyles or unusual colors are acceptable…." When the applicant refused to cut her dreadlocks, CMS withdrew the offer. The EEOC alleged that CMS's policy violated Title VII of the Civil Rights Act of 1964 because the policy was racially discriminatory and that CMS refused to hire the applicant because she was black.

Judge Charles R. Butler, Jr. concluded that the EEOC failed to allege sufficient facts to support a plausible claim of intentional discrimination, finding that one's grooming habits are not immutable characteristics (such as sex or race) and are thus not protected by Title VII. The EEOC argued that the definition of race should encompass both physical and cultural characteristics. Judge Butler rejected this argument and cited numerous cases finding that hairstyles like dreadlocks and cornrows are not immutable characteristics unique to a particular race or group and are thus not protected by Title VII. Per Judge Butler, "A hairstyle, even one more closely associated with a particular ethnic group, is a mutable characteristic." However, Judge Butler made it clear that if the EEOC alleged that the policy was applied in a discriminatory manner (if for example the policy was only applied to African American applicants and employees), the EEOC could move forward with its claim. Employers with grooming policies should remember it is important that they enforce them equally and consistently across the board.

Recall that the applicant here never claimed she was wearing her dreadlocks because it was consistent with her religious beliefs. Had she made the claim, CMS likely would have had to allow the applicant to keep her dreadlocks because employers must reasonably accommodate an employee's religious beliefs and practices unless the accommodation would be an undue hardship for the employer's business operations.

Employee hairstyles continue to be a hot topic. For example, the United States Army recently released new regulations banning a number of hairstyles, prompting claims of race discrimination and the ire of many enlisted members. Stay tuned as the Alabama case is not the first "dreadlocks" case we have seen and it is likely not the last.

Pregnancy Accommodation Laws Abound

You may recall that we reported that United States Senator Bob Casey (D-PA) introduced the Pregnant Workers Fairness Act, which would adopt the reasonable accommodation framework of the Americans with Disabilities Act for pregnant workers and supplement the Pregnancy Discrimination Act.  Although the Pregnant Workers Fairness Act appears to have stalled in Washington (for now), other pregnancy accommodation laws are popping up.  Both New Jersey and the City of Philadelphia have recently passed such legislation.

On January 21, 2014, the New Jersey Pregnant Worker Fairness Act became law. The Act applies to essentially all employers in New Jersey. The Act provides additional protections for women working in New Jersey who may be affected by pregnancy, childbirth or related medical conditions. The Act adds pregnancy to the traits protected by the New Jersey Law Against Discrimination.

In addition, the Act requires employers to make reasonable accommodations for pregnant employees when it knows or should know that such accommodations are necessary, unless the proposed accommodation would cause an “undue hardship.’’  Potential accommodations may include restroom breaks, permission to carry a water bottle, periodic rest, assistance with manual labor, job restructuring, modified work schedules, or a temporary transfer to work that is less physically demanding or hazardous.

On January 31, 2014 the City of Philadelphia amended its Fair Practices Ordinance: Protections Against Unlawful Discrimination, to require that employers provide reasonable workplace accommodations for employees who have "needs related to pregnancy, childbirth or a related medical condition."   As with the New Jersey law, the amended Ordinance prohibits employment discrimination on the basis of pregnancy, childbirth and related medical conditions.  

The amended Ordinance also provides that an employer must provide reasonable accommodations that may be necessary due to to pregnancy, childbirth or a related medical condition.   The Ordinance states that a reasonable accommodation is an accommodation that will allow the employee to perform the essential functions of her job, unless the accommodation would pose an undue hardship.  Such accommodations could include restroom breaks, periodic rest for those who stand for long periods of time, assistance with manual labor, a leave of absence, reassignment and job restructuring.  

Please note that the amended Ordinance also requires that employers in Philadelphia post a notice in conspicuous places, notifying employees of these rights.

Please make sure that you are aware of any state or local laws regarding the accommodation of issues related to pregnancy and childbirth in the areas in which you operate.  Also be on the look out for any additional workplace posting requirements that may be required.   

Serving Alcohol at Your Holiday Party

We here at the McNees Wallace & Nurick Labor and Employment Law Group have been busy preparing for the holiday season. Just last week we were able to celebrate with family and friends at our annual holiday party.

While holiday parties can be great fun, hosting a holiday party or placing holiday decorations in or around the office can raise a whole host of legal concerns including religious discrimination or harassment claims, sexual harassment claims, or workers compensation concerns. Michael R. Kelley, Esq., Chair of McNees Wallace & Nurick LLC's Insurance Recovery & Counseling Group has written in the past about serving alcohol at holiday parties and we wanted to take a few moments to remind you about the potential legal ramifications of serving alcohol at your holiday party.

Let's say that you are having a holiday party (with alcohol served) at your home, or you are a business owner and have a voluntary "company" party for your employees. If someone becomes "visibly intoxicated" at your party, are you as the host of the party liable if the visibly intoxicated guest leaves your party and injures himself or someone else? Does your homeowners or commercial liability policy cover you for defense costs and for a settlement or judgment if you get sued? What about worker's comp coverage for your employees?

In Pennsylvania, the courts have ruled that the Dram Shop Act (which covers alcohol-related liabilities) limits liability for serving intoxicated persons to only those who serve for money, unless the servee is under 21. So, social and business hosts that are not in the business of providing alcohol for money can definitely be civilly liable for serving persons under 21 years of age. However, social and business hosts are generally not liable under the Dram Shop Act for serving alcohol to those 21 and older. But, courts leave open the possibility of a common law action for negligence if a social or business host serves a visibly intoxicated person and knows or should know that the person will be driving, or engaging in some other dangerous activity.

The answer to the insurance coverage question depends on your specific coverages. In some cases, unless you specifically purchased liquor liability coverage, your homeowners and commercial liability policies will not cover you if you are sued under either the Dram Shop Act or the common law. Check your insurance policy. If "liquor liability" is a specific exclusion, you are not covered. If the policy is silent on this, you are covered. This is an area of coverage that has evolved over time, so make sure to check your policy. We recommend having insurance for liquor liability claims if you plan to spike the egg-nog this holiday season.

If an employee becomes intoxicated and is subsequently injured after attending a "voluntary" company party, there is a question as to whether your worker's compensation policy will cover it. If the party is truly voluntary, the claim may not be covered. If, despite being "voluntary," employees are expected to attend the party and it is seen by employees as having an impact on their employment status, worker's comp coverage likely will cover the injuries. Based on experience, courts look to find worker's comp coverage in these scenarios and only deny coverage if employees clearly were not required to attend and attendance had no bearing on employment status.

So, what is a good social or business host to do? Make sure that your guests don't have too much to drink this holiday season, and, if they do, make sure that they have a safe ride home. It's not only good sense, it's good insurance sense too. Also, make sure you have liquor liability coverage on your homeowners or commercial liability policy – just in case.

From everybody in the Labor & Employment Group, we wish you a happy and healthy holiday season!

EEOC Sues Insurance Company over Hair Policy

This post was contributed by Lee Tankle, a new associate in McNees Wallace & Nurick LLC's Labor and Employment Law Group

An Alabama insurance company is being sued by the U.S. Equal Employment Opportunity Commission (EEOC) for allegedly discriminating against black job applicants. The EEOC alleges that the insurance company's grooming policy prohibiting dreadlocks is discriminatory toward African Americans. 

In May 2010, Chastity Jones applied for a position and participated in a group interview with a Mobile, Alabama insurance claims company. Ms. Jones, an African-American, wore her blond hair in neat curls called "curllocks." Ms. Jones was offered a position as a customer service representative but later that day when she met with Human Resources to discuss her training schedule, the HR representative informed Ms. Jones that the company banned dreadlocks and she would need to cut them off in order to obtain employment. When Ms. Jones refused to cut her hair, her job offer was rescinded.

The EEOC argues that the insurance company's policies discriminate against African Americans based on physical and cultural characteristics in violation of Title VII of the Civil Rights Act of 1964. According to an EEOC attorney, the "litigation is not about policies that require employees to maintain their hair in a professional, neat, clean or conservative manner" but "focuses on the racial bias that may occur when specific hair constructs and styles are singled out for different treatment because they do not conform to normative standards for other races."

According to the District Director for the EEOC's Birmingham Office, "[h]air grooming decisions and policies (and their implementation) have to take into consideration differing racial traits, and cannot penalize blacks for grooming their hair in a manner that does not meet normative standards for other races." Some courts have suggested that employer policies banning "afro" hairstyles could be a race-based distinction in violation of Title VII.

This is not the first time the EEOC has brought suit over dreadlocks. In 2011, a Virginia-based transportation company paid $30,000 to settle an EEOC religious discrimination suit. The EEOC claimed the company violated Title VII when it refused to hire a Rastafarian because he wore his hair in dreadlocks. According to the EEOC, the applicant held the sincere religious belief that as a Rastafarian he could not and should not cut his hair in honor of Jah, the name given to the highest power in the Rastafarian faith.

Employers should remember that unless it would be an undue hardship for the employer's operation of a business, an employer must reasonably accommodate an employee's religious practices and beliefs. This could include allowing the wearing of certain head coverings like the Jewish yarmulke or Muslim headscarf or certain hairstyles or facial hair like Rastafarian dreadlocks or Sikh uncut hair and beard.

It is unclear what, if any, impact the federal government shut down will have on this matter. Please contact any of the McNees Labor & Employment attorneys if you have concerns that your grooming policies may be the target of a future discrimination allegations.

EEOC Issues Guidance on Potential Application of Title VII and ADA to Employees Who Have Experienced Domestic Violence, Sexual Assault, or Stalking

This post was contributed by Tony D. Dick, an Associate in McNees Wallace and Nurick LLC's Labor and Employment Group in Columbus, Ohio.

The Equal Employment Opportunity Commission (EEOC) recently issued a “Questions and Answers” sheet emphasizing that although Title VII and the Americans with Disabilities Act (ADA) do not expressly prohibit employers from discriminating against the victims of domestic violence, sexual assault, or stalking, these laws may create liability for employers in certain circumstances. For instance, employers may be liable under Title VII for treating such victims less favorably based on sex or sex stereotypes or for permitting sexual harassment against these individuals. Likewise, denying a reasonable accommodation to an employee with a violence-related disability or permitting different treatment of an employee with a disability stemming from an incident of domestic violence or sexual assault may violate the ADA. The document provides a number of illustrative examples of these potential pitfalls facing employers:



Title VII – Disparate Treatment Based on Sex

  • An employer terminates an employee after learning she has been subjected to domestic violence, saying he fears the potential “drama battered women bring to the workplace.”
  • An employer allows a male employee to use unpaid leave for a court appearance in the criminal prosecution of an assault, but does not allow a similarly-situated female employee to use equivalent leave to testify in the criminal prosecution of domestic violence she experiences. The employer says the assault by a stranger is a “real crime,” whereas domestic violence is “just a marital problem” and “women think everything is domestic violence.”

Title VII – Sexual Harassment

  • An employee's co-worker sits uncomfortably close to her in meetings, and has made suggestive comments. He waits for her in the dark outside the women's bathroom and in the parking lot outside of work, and blocks her passage in the hallway in a threatening manner. He also repeatedly telephones her after hours, sends personal e-mails, and shows up outside her apartment building at night. She reports these incidents to management and complains that she feels unsafe and afraid working nearby him. In response, management transfers him to another area of the building, but he continues to subject her to sexual advances and stalking. She notifies management but no further action is taken.

Title VII - Retaliation

  • An employee files a complaint with her employer's human resources department alleging that she was raped by a prominent company manager while on a business trip. In response, other company managers reassign her to less favorable projects, stop including her in meetings, and tell co-workers not to speak with her.

ADA – Disparate Treatment Based on Disability

  • An employer searches an applicant's name online and learns that she was a complaining witness in a rape prosecution and received counseling for depression. The employer decides not to hire her based on a concern that she may require future time off for continuing symptoms or further treatment of depression.

ADA – Failure to Accommodate Disability

  • An employee who has no accrued sick leave and whose employer is not covered by the FMLA requests a schedule change or unpaid leave to get treatment for depression and anxiety following a sexual assault by an intruder in her home. The employer denies the request because it "applies leave and attendance policies the same way to all employees."
  • In the aftermath of stalking by an ex-boyfriend who works in the same building, an employee develops major depression that her doctor states is exacerbated by continuing to work in the same location as the ex-boyfriend. As a reasonable accommodation for her disability, the employee requests reassignment to an available vacant position for which she is qualified at a different location operated by the employer. The employer denies the request, citing its "no transfer" policy.

Additional examples are provided in the document. It is worth the read. Employers should make their supervisors and managers aware of these potential issues so that they can identify them and take appropriate action when they arise.

EEOC Guidance Highlights the Risks of Using Criminal History Checks in Hiring

This post was contributed by Eric N. Athey, Esq., a Member in McNees Wallace & Nurick LLC's Labor and Employment Practice Group in Lancaster, Pennsylvania.

According to the Equal Employment Opportunity Commission ("EEOC" or "Commission"), if current incarceration rates continue, 1 in 3 African-American men and 1 in 6 Hispanic men will be incarcerated during their lifetimes. The rate for white men is only 1 in 17. Given this disparity in incarceration rates, the EEOC has long been concerned that employer policies restricting hiring based on prior criminal convictions may unfairly deprive minorities of employment opportunities. In Enforcement Guidance issued on April 25, 2012, the EEOC outlined its approach for determining whether an employer's criminal history screening policies violate Title VII on the grounds of either "disparate treatment" or "disparate impact."

Disparate Treatment. Obviously, employers cannot hold applicants to tougher screening standards on the basis of their race or national origin. An employer that considers an applicant's prior criminal history during the hiring process must do so on a consistent, non-discriminatory basis. A disappointed minority applicant with a criminal history may be able to prove he was subject to unlawful discrimination by showing inconsistencies in the hiring process, derogatory statements regarding a particular class or evidence suggesting that certain protected classes are held to a stricter screening standard than other groups.

Disparate Impact. Under Title VII, employers may also be liable for hiring policies that are consistently enforced if the policy disproportionately screens out a particular protected class and the employer cannot show that the policy is job-related for the position and consistent with business necessity. The EEOC's recent Guidance notes that an employer may be liable for the "disparate impact" of a hiring policy even if the employer has a racially balanced workforce. In order to establish that a hiring policy that relies on criminal history information is job-related for the position and consistent with business necessity, the employer will need to show that it operates "to effectively link specific criminal conduct, and its dangers, with the risks inherent in the duties of a particular position." The EEOC notes two ways an employer can establish this: 1) by validating the criminal conduct screen for the position under the Uniform Guidelines on Employee Selection Procedures; or 2) developing a "targeted screen" which considers a number of factors, including the nature of the crime, the time elapsed and the nature of the job and then conducting an individualized assessment for the people excluded. In other words, if a screening policy has a disparate impact on certain protected classes, an employer must be able to show that the policy is nevertheless reasonable and necessary.

Other Laws. Title VII is only the tip of the iceberg when it comes to laws governing the use of criminal background checks in hiring.

Employers who use these checks also need to be aware of their responsibilities under the Fair Credit Reporting Act and the Pennsylvania Criminal History Information Act. In addition, some industries (e.g. banking, insurance, public schools) are subject to specific legislation prohibiting the hiring of individuals with certain types of prior convictions. Finally, there is a growing number of municipalities, including Philadelphia, that have passed "ban the box" ordinances that specifically prohibit employers from even asking about prior convictions until late in the hiring process.

What's an Employer to do? Several things are clear from the recent EEOC guidance. First, employers should not adopt blanket rules prohibiting the hiring of anyone with a prior conviction. Secondly, if screening procedures are not statistically validated, then the employer should develop a "targeted screen" that is "narrowly tailored" and that considers multiple criteria when determining whether a prior conviction renders an applicant unsuitable for a position – these include: the nature, severity and age of the offense, the nature of the job, the number of offenses, subsequent employment and rehabilitation efforts. Third, consideration of arrests that do not lead to convictions generally should not be considered.

Given the recent attention that criminal history screening has garnered from the EEOC and various municipalities, it is likely that employers will see increasing challenges from applicants who are rejected due to prior convictions. If you have any questions regarding the EEOC Guidance or this article, please contact a member of the McNees Labor and Employment Law Practice Group.

Is there a way to safely use social media in the interview process?

Thanks to recent headlines about the increase in employers demanding social media passwords of employees and job applicants, employers have gotten a quick lesson on the increased the risks of this practice, especially if the employer neglects to have the proper policies and procedures in place.

For organizations who still insist on reviewing social media data to determine whether an applicant would be a good fit in their organization, they can start by appointing a social media screener not involved in the decision-making process. Also, the employer should implement a policy and procedure to identify who will be involved in the decision, what data will be collected, when it will be collected and from what sites, and how the data will be communicated to the hiring manager.

This video is also posted on www.JDSupra.com.

Follow Up: A Reminder Regarding the Importance of Supervisor Training

This post was contributed by Kelly Horein, a Summer Associate with McNees Wallace and Nurick LLC. Ms. Horein will begin her third year of law school at Boston University School of Law in the fall, and she expects to earn her J.D. in May 2012.

Two weeks ago we discussed the importance of providing discrimination and harassment training to supervisors and managers. To follow up on that post, we thought it would be a good idea to provide a brief overview of the key aspects of an effective supervisor training program.

As we previously mentioned, the Equal Employment Opportunity Commission (EEOC) has clearly stated that it is important to train all supervisors and managers, and not just those charged with receiving and investigating complaints. In addition, we suggest that employers provide training to all new supervisors, provide annual training sessions, and provide additional training sessions when changes are made to harassment policies. It is also important to document when training sessions are conducted, who attends those sessions, and the content of each session.

An effective training session should cover key topics, designed to help supervisors prevent harassment and remedy harassment that does occur, and these key points include:

  • educating supervisors regarding what conduct is inappropriate;
  • ensuring supervisors understand that they are required to report complaints of harassment or incidents they observe;
  • ensuring supervisors understand that employees are permitted to make both informal and formal complaints of harassment, and that all such complaints must be investigated;
  • describing the multiple channels through which employees can make complaints;
  • detailing the complaint investigation and resolution process; and
  • ensuring supervisors understand that retaliation is strictly prohibited.

A quality training session will be designed to educate supervisors and managers on appropriate workplace behavior and to help them avoid engaging in discriminatory conduct. Supervisors must be trained to appropriately respond to complaints and to report incidents of harassment. Supervisors should also be aware of the consequences for failing to do so. As you can see, merely reiterating the content of a policy during a training session does not constitute effective supervisory training. Some states, such as California, even have specific requirements for supervisor training, including the minimum duration and frequency of such training.

Employers can also benefit from regularly training supervisors in a broader range of human resources issues, including hiring and interviewing techniques, discipline and performance management, employee privacy, Family and Medical Leave Act requirements, wage and hour issues, and maintaining a safe workplace.

McNees Wallace & Nurick's Labor and Employment Group can help employers develop effective training programs.  McNees can also provide a list of suggested supervisory training topics, suggested re-training time lines and course materials. You can contact a McNees attorney by clicking here.

The Use of Social Media in Hiring Decisions: Tempting Fruit from a Poisonous Tree

This post was contributed by Christopher Gibson, a Summer Associate with McNees Wallace and Nurick LLC.  Mr. Gibson will begin his third year of law school at Wake Forest in the fall, and he expects to earn his J.D. in May 2012

With unemployment in the United States hovering around 9.2%, human resources offices across the country are being bombarded with job applications like never before. The overworked employees of these often understaffed offices are charged with wading through a figurative sea of applications, all while dealing with the increasingly zany behavior of some applicants. According to CBS News, "[o]ne man sent a shoe to his prospective employer with a note that read, 'I want to get my foot in the door.' " Another "handed out personalized coffee cups, so no one would forget his name." In this high stress environment, some human resources professionals might see using social media as a quick and easy way of separating the wheat from the chaff – narrowing the field of possible applicants significantly in a short amount of time. But before signing into Facebook or pulling up your favorite search engine, keep in mind the immortal words of Clint Eastwood in Dirty Harry: "You feelin' lucky?"

Every human resources staff member knows that, especially when interviewing a potential new employee, some topics are strictly off limits. Asking one of these "off limits" questions can put your company at serious risk of being sued for discrimination. The trouble is, by resorting to the use of social media, this kind of "off limits" information can be collected from a potential employee even before his or her interview.

Imagine for a moment that you are the director of human resources for a mid-sized paper supply company. You receive around fifty resumes in response to a job posting to fill the position of "Assistant to the Regional Manager." One applicant – Alex Jackson – catches your eye as one of the top applicants for the job. According to Alex's resume, Alex has been working in the paper industry for around six years and has a bachelor's degree in management from a New York Ivy League school. Alex has been published in several trade magazines, is active in the community and has excellent references.

You decide to pull Alex's Facebook profile just to get a better feel for the applicant; what's the worst that could happen, right?

As you expected, what you find is fairly innocuous – Alex is a 42 year old Caucasian female who is very active in the Catholic church. She has recently married and has a one year old son. Two of her recent wall posts read, "Going out to happy hour for the fourth night in a row! Can't stop, won't stop!" and "Please pray for my mother as she recovers from her most recent bout with cancer." Eventually, your organization decides to go in another direction and Alex is not interviewed or hired for the job.

So again, what's the worst that could happen?

By reviewing the social media site, while getting almost no information relevant to the applicant, you have unwittingly exposed your organization to many different discrimination claims. Had you never pulled up Alex's Facebook profile, you would have never discovered information about her that would clearly be "off limits" in an interview.

Now, however, Alex will have a much higher likelihood of success if she decides to sue your company for discrimination. She could sue your company under Title VII of the Civil Rights Act of 1964 (based on race, religion, and gender), the Americans with Disabilities Act (based on her possible alcoholism), the Age Discrimination in Employment Act (based on her age), and the Genetic Information Non-Discrimination Act of 2008 (based on her family medical history). Again, had you abstained from using social media in your hiring process, you would have never known any "off limits" information about Alex and, consequently, she would have no case!

It is true that social media can be a great way to determine if an applicant is a good "fit" for your organization. However, like the potentially deadly fugu fish that is eaten as a delicacy in Japan, the use of social media in hiring should only be enjoyed when prepared properly. If your firm currently uses social media in its hiring process or plans to do so in the future, McNees Wallace & Nurick's Labor and Employment Group can provide guidance on developing appropriate policies and procedures to help your organization use social media in a manner that will help overcome claims of discrimination.

UPDATE: Supreme Court Decertifies Class In Dukes v. Wal-Mart

This post was contributed by Brett E. Younkin, Esq., an Associate and a member of McNees Wallace & Nurick LLC's Labor and Employment Practice Group in Columbus, Ohio. On May 17, 2011, Brett reported that the United States Supreme Court was considering an important decision regarding class action suits.


You may have heard the cheers emanating from Bentonville, Arkansas (the location of Wal-Mart's corporate headquarters), and the corporate headquarters of other large employers following the United States Supreme Court’s announcement of its decision in Wal-Mart, Inc. v. Dukes, __U.S. ___ (2011) (PDF). On June 20, 2011, the Court decertified the class-action status of the 1.6 million current and former female employees in their decade-old suit against the world’s largest private employer. Betty Dukes and her two co-plaintiffs had alleged a nationwide pattern of discriminatory pay and promotion practices by the company, despite its published policy of non-discrimination. However, the Court unanimously disagreed and overruled the Ninth Circuit Court of Appeals, which had allowed the case to proceed as a class action. The decision created what may be viewed as a higher burden of proof for establishing class action status.

While the Court was unanimous in deciding that this particular class should be decertified, only five of the justices joined in the entire ruling. In the majority opinion authored by Justice Scalia, the Court found that commonality was the key to certifying a class under Federal Rule of Civil Procedure 23 – “claims must depend on a common contention . . . which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” To attempt to resolve “literally millions of employment decisions at once” would not result in a unified answer for why a particular employee was disfavored. “Without some glue holding together the alleged reason for those [discriminatory] decisions, it will be impossible to say that examination of all the class members’ claims will produce a common answer to the crucial discrimination question.” The Court noted that the dissent from the lower court was correct in that the plaintiffs had “little in common but their sex and this lawsuit.”

Additionally, the opinion strongly rejected the plaintiffs' expert witness testimony because, among other things, a litany of the expert’s peers had denounced his approach, analysis, and conclusions. The Court also concluded that while anecdotal evidence may be relevant, a hundred stories out of millions of employment decisions throughout 3,400 stores did not prove a pattern of discrimination.

What does this decision mean for employers? It certainly will have an impact in the litigation context if an employer finds itself in the unfortunate position of facing a class action lawsuit. In addition, the Court's decision affirmed the use of anecdotes as evidence of discrimination and, therefore, inappropriate comments made by corporate leaders may be used as evidence of a corporate-wide discriminatory practice. As a result, employers are well advised to include corporate executives in refresher training regarding discrimination and harassment.

The dissent, authored by Justice Ginsburg, agreed with the outcome of the case, but argued for a different approach to evaluating class status. Justice Ginsburg argued that the majority inappropriately muddled two distinct aspects of the class-certification process under the single banner of commonality. Instead of focusing on what distinguishes class members from one another, according to the dissent, the analysis should focus on whether there are sufficient facts to unite them.

The Court, including the dissenters, did agree that putting potentially valid claims for monetary relief at risk for the sake of achieving class status was improper. The creation of the class would have unfairly disadvantaged Wal-Mart, who would have been prevented from offering affirmative defenses if the Court of Appeal’s suggested approach of using a random sample of employment decisions been used to present the case to the jury. The Rules of Civil Procedure explicitly forbids abridging or modifying any substantive right, including the use of affirmative defenses, and therefore, because such defenses must be presented on a case-by-case basis, the certification of the class would have been inappropriate.

Dukes v. Wal-Mart: Supreme Court Justices Debate Merits of Class Certification Discriminatory Pay & Promotion Claims

This post was contributed by Brett E. Younkin, Esq., an Associate and a member of McNees Wallace & Nurick LLC's Labor and Employment Practice Group in Columbus, Ohio.

The receipt of a federal lawsuit is generally viewed as a bad day for any employer; seeing that a plaintiff is seeking class action status on behalf of hundreds or thousands of current and past employees is enough to turn a bad day into an unenviable nightmare. Such was the situation when Wal-Mart, one of the country’s largest employers, was notified that a female manager, Betty Dukes, was suing the company on behalf of all female managers alleging a pattern and practice of discriminatory pay and promotion practices. Ms. Dukes alleged that despite the company’s non-discrimination policy, the Arkansas-based employer paid their female managers at lower rates than their male counterparts on a nationwide scale and women were promoted less often than men.

Recently, the issue of certifying the class of female employees became the focal point of what many view to have been one of the liveliest oral arguments before the United States Supreme Court in years. During each side’s hour-long presentation, it seems that the Justices spoke almost as much as the attorneys, often-times overlapping each other’s questions and even interrupting a colleague’s question in an attempt to make their own point. However, the result of the heated debate is far from clear. Will Wal-Mart be faced with a multi-million dollar class action for discriminatory practices or will it be just another single-litigant against one of the world’s largest retail empires?

Class certification is governed by Rule 23 of the Federal Rules of Civil Procedure and generally requires (1) that there to be too many potential members to identify and join each of them; (2) a common question of law or fact; (3) a commonality of claims or defenses; and (4) that the representative parties will adequately protect the interests of the entire class. It’s generally agreed that the potential plaintiffs here would meet most of these requirements. However, the focus of the discussion before the Court was whether the proposed class of female managers truly shared common legal and factual issues. One key question from Justice Kennedy has led many to speculate that Ms. Dukes and her potential class members have a fatal flaw in their argument.

During the plaintiffs' presentation, Justice Kennedy asked the rather straight-forward question: “What is the unlawful policy that Wal-Mart has adopted?” The response was that the store managers have “unchecked discretion” in the decision-making process and have used that power to create a culture of discrimination throughout the corporation. The problem with this response is that it contradicts the position that Wal-Mart’s headquarters enforces a consistent, nationwide policy, which is a key aspect of the plaintiffs' case and may be necessary to establish corporate-wide liability.

The plaintiffs' attorney tried to argue both sides of an opposing view – that there is a top-down corporate culture to discriminate against females, and that the actual decision-makers in the individual stores themselves have too much power and discretion. It was on this point where Justice Scalia accused the plaintiffs' counsel of trying to “whipsaw” the Court stating that the power given to store managers is too subjective while there is a corporate culture to guide those same managers to discriminate against women. While the commonality issue appeared to weigh in Wal-Mart's favor, how the court will decide the case is unclear at this time. A decision is expected sometime this summer, and we will be sure to provide an update when it is issued.

EEOC Issues Final Regulations Implementing the ADAAA

On March 24, 2011, the Equal Employment Opportunity Commission (EEOC) issued the final version of the regulations (pdf) implementing the Americans with Disabilities Act Amendments Act (ADAAA).  The final regulations were modified as compared to the EEOC's initial proposed regulations, and the changes to the regulations made will likely be welcomed by employers.  For more information from the EEOC on the ADAAA please click here.

Even with the changes, the regulations make clear that the ADAAA broadened the definition of disability under the Americans with Disabilities Act (ADA).  Under the ADAAA that far more impairments will now meet the definition of disability.  Importantly however, the regulations state that whether or not an individual has a disability will still be determined on a case-by-case basis. 

The ADAAA and the regulations attempt to shift the focus in ADA claims from whether or not an individual has a disability to whether or not prohibited discrimination has occurred.  As a practical matter for employers, this approach will shift the focus to the interactive process and the information exchanged during that process. 

Third Circuit Rules that Private Employers May Discriminate Against Applicants on Basis of Prior Bankruptcy

This post was contributed by Eric N. Athey, Esq., a Member in McNees Wallace & Nurick LLC's Labor and Employment Law Practice Group.

Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Uniformed Services Employment and Reemployment Rights Act, and the Age Discrimination in Employment Act are widely known as the primary federal laws governing employment discrimination. Many employers are surprised to learn that the U.S. Bankruptcy Code also contains employment discrimination provisions. Section of 525 of the Code prohibits certain types of employment discrimination against individuals who have claimed bankruptcy. However, this obscure provision is rarely the subject of lawsuits and, consequently, there is little guidance from federal courts as to its meaning. In Rea v. Federated Investors, the U.S. Court of Appeals for the Third Circuit considered the fundamental question of whether Section 525 prohibits a private sector employer from discriminating against a job applicant in the hiring process on the basis of his prior bankruptcy.

Mr. Rea applied for employment with Federated Investors in 2009 through a placement firm and, after a successful interview, was informed that he would not be hired due to a 2002 bankruptcy. Rea filed suit in federal court claiming that Federated discriminated against him in violation of Section 525 of the Bankruptcy Code.

Section 525(a) of the Code states that it is unlawful for any "governmental unit…[to]…deny employment to, terminate the employment of, or discriminate with respect to employment against, a person that is or has been a debtor under [the Code]" solely because the individual has been a debtor under the Code, has been insolvent or has not paid a debt that is dischargeable under the Code. Clearly, a government employer could not have refused Mr. Rea employment solely on the basis of his prior bankruptcy without violating Section 525(a). However, as a private sector employer, Federated was governed by Section 525(b) of the Code.

Section 525(b) of the Code, unlike subsection (a), makes no mention of "denying employment to" an individual who has declared bankruptcy. Section 525(b) reads: "No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under [the Code]" solely because the individual has been a debtor under the Code, has been insolvent or has not paid a debt that is dischargeable under the Code. The issue presented in the Rea case was whether 525(b) could be interpreted to prohibit private employers from discriminating against job applicants on the basis of prior bankruptcies.

Mr. Rea argued that Section 525(b)'s prohibition against "discriminat[ion] with respect to employment against" individuals who have filed for bankruptcy should be interpreted to protect job applicants. However, the Third Circuit noted that "where Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely…" Since Section 525(a) specifically includes "denying employment to" individuals as unlawful discrimination – and 525(b) does not - the Court concluded that private sector employers are not prohibited from discriminating against applicants on the basis of prior bankruptcies.

This recent decision may come as particularly welcome news for employers in the financial services industries who may be reluctant to employ individuals with multiple prior bankruptcies. Although the Rea decision certainly gives private sector employers greater flexibility in the hiring process, it is important to remember that terminating or discriminating against a current employee solely on the basis of a prior bankruptcy remains unlawful.

United States Supreme Court Approves "Cat's Paw" Theory of Liability

On March 1, 2011, the United States Supreme Court again increased employers' exposure to employment discrimination claims. In Staub v. Proctor Hospital, 562 U.S. ___ (2011) (pdf), the unanimous Court concluded that employers may be held liable for unlawful discrimination if a lower level supervisor influences an adverse employment decision, even if the decision is ultimately made by an independent manager. The theory that an employer may be liable when it relies on facts supplied by a biased supervisor when making an adverse employment decision is known as the "cat's paw" theory.

Staub claimed that Proctor Hospital's Human Resources (HR) Manager relied on facts supplied by Staub's supervisors, who were acting with anti-military animus in violation of the Uniform Services Employment and Reemployment Rights Act (USERRA), when the HR Manager terminated him. Staub admitted that the HR Manager did not have anti-military animus, but claimed that the facts provided by his supervisors were false, and that his supervisors provided the false facts because the supervisors wanted him fired because of his military Reserve obligations.

The focus of the Court's decision was whether the supervisors' anti-military animus was "a motivating factor in the employer's action," in violation of the USERRA. Importantly, and unfortunately for employers, the Court pointed out that the "motivating factor" language from the USERRA is also found in Title VII of the Civil Rights Act. Therefore, it is clear that the "cat's paw" theory is viable under Title VII.

The Court found that the actions of the supervisors, and the independent actions of the HR Manager, could be aggregated to produce a discriminatory employment action. Because the supervisors were agents of the Hospital, their actions could be imputed to the Hospital. If supervisors are motivated by unlawful discrimination, intend to cause the adverse action, and the intended action actually occurs, then the employer will be liable because the supervisors were acting on behalf of the employer. The decision leaves open the question of whether or not an employer may be held liable if an employment decision is influenced by non-supervisory coworkers.

The Court's "cat's paw" theory requires a showing that: (1) a supervisor; (2) acting within the scope of his or her employment; (3) performed an act that was motivated by discrimination; (4) which was intended by the supervisor to cause an adverse employment action; and (5) the act was a proximate cause of the adverse employment action. If such a showing is made, then the employer may be liable for discrimination.

The cat's paw theory seems strikingly expansive, because the proximate cause element of the theory could expose employers to liability in extremely attenuated circumstances. Therefore, employers must take action now to brace for claims involving the cat's paw theory. First, employers should ensure that their discrimination and harassment policies and procedures are up-to-date, and that they contain adequate reporting mechanisms. All employees must be made aware of the available discrimination reporting procedures.  In addition, these procedures should not require that employees first make reports of discrimination to their immediate supervisors. Please click here to view our prior post on this issue.

Also, if and when an employee reports discrimination, the employer must conduct a thorough investigation and take appropriate action. Employers considering terminating an employee should also conduct a thorough investigation and should attempt to establish the relevant facts independently if possible.  This is true particularly if there have been allegations of discrimination raised against the employee's supervisor before or during the termination process.

Third Circuit Holds Ledbetter Fair Pay Act Does Not Save Untimely Failure-to-Promote Claims

A recent decision by the Third Circuit Court of Appeals allows employers to breathe a sigh of relief. In Noel v. Boeing Co. (pdf), the court concluded that an otherwise untimely discrimination claim, alleging that the employer discriminated against an employee by failing to promote the employee, is not rendered timely by the Ledbetter Fair Pay Act (the "Act") (pdf). The court's decision limits the reach the Act, and it is now clear that claims involving discrete acts of discrimination are not covered by the Act.

The decision involved discrimination claims under Title VII of the Civil Rights Act brought by Emmanuel Noel, an African-American employee at Boeing's Ridley Park, Pennsylvania facility. Basically, Noel claimed that Boeing failed to award him off site job assignments, which allowed for higher pay and per diem payments, and failed to promote him to a higher pay grade around September 2003. At that time, two white employees were promoted to a higher pay grade. In March 2005, Noel filed a complaint with the Equal Employment Opportunity Commission (EEOC), and eventually filed a lawsuit in June 2006. Noel's suit alleged multiple counts of race and national origin-based employment discrimination and retaliation, but the trial court held for Boeing on all counts. Noel appealed only the trial court's finding that his failure to promote claim was untimely.

Under Title VII, an employee in Pennsylvania must file a complaint with the EEOC within 300 days of the alleged discriminatory act or it will be deemed untimely. Noel's complaint was filed with the EEOC in March 2005, well beyond the 300 day filing period following the alleged discriminatory promotion decision in September 2003. For this reason, the trial court dismissed his failure to promote claim. On appeal, Noel argued that the Act saved his otherwise untimely failure to promote claim.

The Act, passed by Congress in 2009, was in response to the Supreme Court's decision in Ledbetter v. Goodyear Tire & Rubber, Co., Inc. On January 29, 2009, we posted information regarding the Act and the Court's Ledbetter decision. The Act extended the time line for filing complaints of discrimination and states that "in pay discrimination matters an unlawful employment practice occurs each time an individual is affected by application of a discriminatory compensation decision." As a practical matter, this means that each time an employee receives a pay check that contains the effects of a discriminatory pay decision, the 300 day countdown for filing a complaint of discrimination with the EEOC is restarted.

Noel argued that the Act's paycheck rule made his claim timely because each time he received his pay check he felt the effects of the 2003 failure to promote decision. The Third Circuit disagreed. The court found that in order for an untimely claim to be saved by the Act, the claim must involve pay discrimination and the plaintiff must point to some discriminatory compensation decision or practice.

The court first held that Noel did not allege a pay discrimination claim because he did not allege that he received less pay for doing equal work. The court noted that the white employees were promoted, and as a result, they were not doing the same work as Noel. The court concluded that this was not a pay discrimination claim, which alleges lower pay for equal work.

The court then went on to address whether a failure to promote claim is a discriminatory compensation decision under the Act. The court concluded that in accordance with the plain language of the Act, only decisions involving compensation are covered, and discrete employment decisions, such as promotion decisions, are not within the scope of the Act. A failure to promote claim is not a discriminatory compensation decision, and therefore Noel's untimely failure to promote claim was not saved by the Act.

The court also found support for its decision in Justice Ginsburg's blistering dissent in the Ledbetter decision, which many believe prompted Congress to pass the Act. In her dissent, Justice Ginsburg distinguished discriminatory compensation decisions, which may go undetected by employees for years, and discrete actions which are immediately felt by employees. Justice Ginsburg specifically referenced failure to promote decisions as discrete acts.

The court held that the Act was only intended to save untimely discriminatory pay decisions, and not all employment decisions. The court's rationale and decision should apply to other discrete employment actions, such as demotions and terminations. This is a good sign for employers, who under the Act may face liability for discriminatory pay decisions years or even decades after those decisions are made.

U.S. Supreme Court Issues Unanimous Opinion Allowing African-American Firefighters To Sue City Of Chicago Asserting Racial Discrimination Disparate Impact Claims

This post was contributed by Bruce D. Bagley, Esq., a Member in McNees Wallace & Nurick LLC's Labor and Employment Practice Group.

It's not often that all nine members of the U.S. Supreme Court agree on the disposition of an employment law matter, but that's what happened in Lewis v. City of Chicago, issued on May 24, 2010 (No. 08-974) (pdf)

The City of Chicago gave a written test in 1995 to 26,000 applicants for firefighter positions. In January 1996, the City notified the applicants of their test results, and depending on their scores, applicants were designated well-qualified (scoring 89 or above), qualified (scoring between 65 and 88), or not qualified (scoring below 65). They were further informed that only the well-qualified were likely to be hired but that the list of those who were merely qualified would be retained in case the well-qualified list was exhausted as positions were filled.

On March 31, 1997, Crawford Smith, a Black applicant who had scored in the qualified range and had not been hired, filed an EEOC Charge along with five other similarly situated applicants. They alleged that the City's practice of hiring only applicants who scored over 89 had a disparate impact on Black applicants. Under Title VII of the Civil Rights Act, an employment practice that causes a disparate impact on the basis of race, color, religion, sex, or national origin is unlawful, unless the employer can demonstrate that the challenged practice is job-related for the position in question. 42 U.S.C. §2000e-2(k)(1)(A). Smith argued that since he was deemed qualified there was no job-related reason to limit hiring to those who scored over 89.

The EEOC issued a right-to-sue notice and the applicants filed suit in federal district court. The City filed a motion for summary judgment, contending that the applicants had waited too long to file with the EEOC. There is a 300 day limitations period under Title VII for filing with EEOC, and in this case the Charge was filed more than a year after the applicants had received their test results. But, the City hired applicants from the well-qualified pool during the 300 day period prior to the filing of the Charge, and continued to periodically hire from the pool as additional fire fighters were needed.

At the district court level, Crawford and the other applicants prevailed. The court denied the City's summary judgment motion, finding that the City's "ongoing reliance" on the 1995 test results constituted a continuing violation under Title VII. On appeal, the Court of Appeals for the Seventh Circuit reversed the district court, holding that "the hiring only of applicants classified 'well-qualified' was the automatic consequence of the test scores rather than the product of a fresh act of discrimination." The Court of Appeals found that the applicants should have filed their Charge with EEOC within 300 days of receiving the test results.

The Supreme Court strongly disagreed with the Seventh Circuit Appeals Court. Even if a plaintiff does not file a timely charge challenging the adoption of a practice, the Court stated, the plaintiff may nevertheless assert a disparate impact claim in a timely charge challenging the employer's application of that practice. Writing for the unanimous Court, Justice Scalia was unmoved by arguments from the City and its amici (or "friends of the court") that employers could now face disparate impact suits for practices they have used regularly for years, noting "…it is not our task to assess the consequences of each approach and adopt the one that produces the least mischief. Our charge is to give effect to the law Congress enacted."

It is fair to say that few observers would have predicted such a unanimous holding in this matter by the Court. Could the Court have been influenced by Congress' enactment of the Lilly Ledbetter Fair Pay Act, reversing the Court's 2007 decision in Ledbetter v. Goodyear Tire and Rubber (pdf)? In Ledbetter the Court had held a gender-based discrimination claim was not timely filed where the employee claimed her wage disparity with male co-workers resulted from personnel decisions made years earlier.

In any event, employers must now devote even greater attention to determining whether seemingly benign practices such as relying on higher test scores may disproportionately impact members of a protected class. Years can go by but each time the employer applies that practice employees will have a fresh 300 day period in which discrimination allegations can be raised. 

Big Brother, Big Implications: Creating an Employee Monitoring Policy Without Creating Additional Legal Liability

This post was contributed by Samuel N. Lillard, Of Counsel, and Anthony D. Dick, an Associate, members of McNees Wallace & Nurick LLC's Labor and Employment Practice Group in Columbus, Ohio.

According to recent estimates, upwards of 90 percent of employers monitor employee workplace activity in some way or another. The appeal is obvious. When done properly, monitoring can help companies increase productivity and efficiency, protect assets and proprietary information, and identify and hopefully prevent harassing conduct, libel, employee theft, vandalism, hacking, and other inappropriate behavior. But when companies overstep permissible boundaries, their monitoring efforts can have severe legal and financial consequences. There are a substantial number of cases, including several recent decisions, where companies have learned the hard way that their right to monitor employees’ work activities has limits.

For example, in Hernandez v. Hillsides, Inc., 47 Cal.4th 272 (2009) (pdf), the employer, in a legitimate effort to determine who may have been viewing pornography on a work computer late at night, placed surveillance cameras in certain employees’ offices without the employees’ knowledge. Instead of catching the offender, the employer captured images of employees changing their clothes for post-work workouts, female employees viewing their pregnancy scars, and other private activities. In ruling against the employer, the California Supreme Court held that although employees’ right to privacy in work offices is not absolute, they have “a reasonable expectation of privacy under widely held social norms that the employer would not install video equipment capable of monitoring and recording their activities – personal and work-related – behind closed doors without their knowledge or consent.”

In a recent New Jersey case, Pietrylo v. Hillstone Restaurant Group, 2009 WL 3128420 (D.N.J. 2009) and Pietrylo v. Hillstone Restaurant Group, 2008 WL 6085437 (D.N.J. 2008), two restaurant servers created a password protected MySpace page where they and certain fellow co-workers could go to vent about the trials and tribulations of working in a restaurant. A supervisor learned of the MySpace page and pressured an employee with access to give him the password. Once on the site, the supervisor found messages that included sexual remarks about members of management and customers and references to violence and illegal drugs. The two servers who created the page were terminated and subsequently sued under stored communications laws that limit which individuals may access stored electronic communications. The trial court denied summary judgment to the employer holding that the restaurant’s employee monitoring authority did not include private online communications on a social network outside of work. The two employees subsequently won a small jury verdict.

The U.S. Supreme Court is set to decide a public sector employee monitoring case in its current session. In City of Ontario v. Quon, 529 F.3d 892 (9th Cir. 2008), cert. granted Dec. 14, 2009 (pdf), City of Ontario SWAT officers were given police-department-owned pagers that allowed them to send text messages. They were told in a meeting that the text messages would be treated like e-mails under the City’s employee monitoring policy and that the City would have the right to review such messages at any time to determine whether the pagers were being used for personal purposes. Despite the representations made in the meeting, officers received mixed messages from supervisors and other staff members as to whether the City would actually ever review the messages. Sgt. Jeff Quon, an officer who was issued a pager, used it on numerous occasions to send sexually explicit text messages to his wife and mistress. At some point, the City of Ontario requested Quon’s transcripts from the wireless provider without his permission and read the personal messages. Quon sued claiming the City violated his Fourth Amendment right against unreasonable searches. The lower court ruled in favor of the City. The appellate court reversed. The Supreme Court recently heard oral arguments and a decision is expected in the coming months.

These cases should serve as a warning to employers. While there are no hard and fast rules to ensure that your business does not find itself involved in litigation concerning workplace surveillance and employee privacy issues, adhering to a few basic principals can help minimize the potential liability.

1. Put it in Writing. Courts are much more likely to rule in favor of the company in any employee privacy suit when there is a clearly articulated written policy in place. At a minimum, it should state under what circumstances, if any, an employee should have a reasonable expectation of privacy and list all the mediums and ways in which the company may monitor employees (i.e. video surveillance, telephone monitoring, e-mail monitoring, Internet monitoring, GPS tracking of company vehicles and employees, etc.)

2. Clearly Communicate the Policy to Employees. A written employee monitoring policy is of little value if employees are not aware it exists. The policy should be incorporated into the Employee Handbook and distributed on a semi-annual or annual basis. Any time the policy is changed or updated, the new policy should immediately be distributed to employees. Each time the policy is distributed, it is a good idea to have each employee sign an acknowledgment that they have read and understand the policy.

3. Know Your State’s Laws. While federal law contains relatively few restrictions on employee monitoring, state law may vary. For example, in some states employee notification is required if an employer is utilizing electronic surveillance. Similarly, in some states, employees must give consent to be monitored by video surveillance. Determine exactly what the law is in your state and whether it is more restrictive than federal law.

4. Be Consistent! Even-handed enforcement of the policy is essential. A perception that a certain individual or group is being targeted in enforcing an employee monitoring policy can quickly lead to a claim for discrimination.

While employee monitoring is commonplace and can be a useful tool in increasing employee efficiency and protecting company assets, employers should be aware of the potential pitfalls in implementing and enforcing an employee monitoring policy. A well thought out and carefully crafted employee monitoring policy could be invaluable to protecting a business’s valuable assets while minimizing any potential legal liability. Most savvy business owners will contact a trusted and knowledgeable attorney if they are contemplating implementing such a policy.

Civil Rights Division Announces Plan to Target Public Employers

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.

Pennsylvania Supreme Court Rules that Small Employers may not be Liable for Employment Discrimination

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.

Supreme Court Rejects choice of Lawsuits Defense

A governmental employer cannot throw out a employment promotion test because it thinks that the test results have a disparate impact against a minority group unless there is a "strong basis in evidence" to believe it will be liable for discrimination unless it rejects the test results. Fear of litigation alone cannot justify an employer’s decision that is based on race even if the employer will be sued regardless of which group it favors.

In Ricci v. DeStefano, the City of New Haven, Connecticut used a validated test to select firefighters for promotion. However, the results the promotion examination to fill vacant lieutenant and captain positions showed that white candidates had scored higher than other minority candidates. Strong public opposition to use of the test followed. Confronted with arguments both for and against certifying the test results—and threats of a lawsuit either way—the City threw out the results based on the statistical racial disparity.

White and Hispanic firefighters who scored well on the exams but were denied a chance at promotions by the City’s refusal to certify the test results, sued the City, alleging that discarding the test results discriminated against them based on their race in violation of Title VII. The City responded that had it certified the test results, it could have faced Title VII liability for adopting a practice having a disparate impact on minority firefighters.

The District Court granted summary judgment for the City, and the Second Circuit affirmed. The Supreme Court reversed holding that City discriminated against the White and Hispanic firefighters who passed the test because there was not a strong basis in evidence to throw out the test scores in response to their disparate impact. The City conducted hearings on the test results and determined that there was a statistical adverse impact on minority employees. This showed that there was at least a prima facie case of disparate impact. However, this fear of litigation alone cannot justify the City’s reliance on race to the detriment of individuals who passed the examinations and qualified for promotions. To reject the test, the City needed to go further and show that the exams at issue were not job related and consistent with business necessity, or if there existed an equally valid, less discriminatory alternative that served the City’s needs. Based on the record the parties developed through discovery, there was no substantial basis in evidence that the test was deficient in either respect.

Under Title VII, before an employer can engage in intentional discrimination for the asserted purpose of avoiding or remedying an unintentional, disparate impact, the employer must have a strong basis in evidence to believe it will be subject to disparate-impact liability if it fails to take the race-conscious, discriminatory action. The Court’s analysis held that the City’s actions would violate Title VII’s disparate-treatment prohibition absent some valid defense. All the evidence demonstrates that the City rejected the test results because the higher scoring candidates were white. Without some other justification, this express, race-based decision-making is prohibited. The question, therefore, is whether the purpose to avoid disparate-impact liability excuses what otherwise would be prohibited disparate-treatment discrimination.

The Court held that certain government actions to remedy past racial discrimination—actions that are themselves based on race—are constitutional only where there is a “strong basis in evidence” that the remedial actions were necessary. The same interests are at work in the interplay between Title VII’s disparate-treatment and disparate-impact provisions. However, the Court gave little other guidance on how employers may use tests in the hiring and promotion processes.

Supreme Court Age Discrimination Decision in "Mixed-Motive" Cases Invites Legislative Reversal

The United States Supreme Court decision in Gross v. FBL Financial Services, Inc. creates a rift between the treatment of so called "mixed-motive" cases under the ADEA and Title VII. Under Title VII, an employee may allege that he suffered an adverse employment action because of both permissible and impermissible considerations—i.e., a “mixed-motives” case. If a Title VII plaintiff shows that discrimination was a “motivating” or a “ substantial” factor in the employer’s action, the burden of persuasion shifts to the employer to show that it would have taken the same action regardless of that impermissible consideration.

The Supreme Court declined to apply the mixed-motive burden shifting to ADEA cases holding that a plaintiff bringing an ADEA disparate-treatment claim must prove, by a preponderance of the evidence, that age was the “but-for” cause of the challenged adverse employment action. The burden of persuasion does not shift to the employer to show that it would have taken the action regardless of age, even when a plaintiff has produced some evidence that age was one motivating factor in that decision.

Congress amended Title VII to explicitly authorize discrimination claims where an improper consideration was “a motivating factor” for the adverse action, see 42 U. S. C. §§2000e–2(m) and 2000e–5(g)(2)(B),while leaving the ADEA language unchanged. The Supreme Court viewed this omission as a congressional policy statement and declined to recognize the so called "mixed motive" analysis in ADEA claims. However the Courts' opinion invites Congress to fix the discrepancy by legislatively negating the Court's decision much like it did in with both the ADA Amendments Act and the Ledbetter Fair Pay Act:

Unlike Title VII, the ADEA’s text does not provide that a plaintiff may establish discrimination by showing that age was simply a motivating factor. Moreover, Congress neglected to add such a provision to the ADEA when it amended Title VII to add §§2000e–2(m) and 2000e–5(g)(2)(B), even though it contemporaneously amended the ADEA in several ways, see Civil Rights Act of 1991, §115, 105 Stat. 1079; id., §302, at 1088.

Expect Congress to harmonize the treatment of Title VII and ADEA claims so that the mixed motive analysis applies to both. Congress should really fix the differentiation between age discrimination cases and other discrimination claims. For some reason unknown to me, Congress placed protections from age discrimination in the Fair Labor Standards Act (governing topics like minimum wage and overtime) rather than just adding "age" to the list of Title VII's protected classifications. As a result, federal age discrimination claims have different rights, procedures, and damages.

Employment Law implications of Obesity and BMI after the ADA Amendments Act

The ADA Amendments Act re-wrote the definition of disability so that it will likely include obesity-related health conditions and perhaps obesity itself as a protected disability. Before the ADA Amendments, being overweight and even obese was not generally considered a "disability". For example in EEOC v. Watkins Motor Lines, Inc., a court determined that non-physiological morbid obesity was not a protected disability.

The EEOC is considering regulations regarding the equal employment provisions of the ADAAA.  In December 2008, the EEOC commissioners deadlocked along party lines on whether to approve former Chair Naomi Earp’s proposed regulations. According to the EEOC’s agenda, a notice of proposed rulemaking will be issued by August of this year.  I predict that obesity will become a protected disability requiring employers to reasonably accommodate the condition.  I also expect that the correlation between BMI and obesity will be challenged by agruing that disqualifying an employee based on a high BMI consistitutes "regarded as" disability discrimination.

The ADA changes have important implications for businesses including employment discrimination claims, health plan design, and wellness program administration. There are several issues that merit discussion when examining obesity such as following. 

What is Body Mass Index (BMI)? BMI has become the unofficial scientific measure for assessing obesity. BMI is a function of height and weight (BMI calculator). The Center for Disease Control classifies a person who has a BMI of less than 18.5 as underweight; normal is 18.5-24.9; overweight is 25-29.9; obese is over 30; and extremely obese is over 40.

What is the BMI analysis telling us about our weight? A Report by the Trust for America's Health recently disclosed statistics about obesity trends. In the Report, Pennsylvania had the 24th highest rate of adult obesity with 25.7 percent of its population having a BMI over 30. The Report correlated obesity figures with other factors like Diabetes and Hypertension rates. It also noted levels of admitted physical activity (or inactivity). Twenty-Four percent of Pennsylvanians admit no physical activity.

How good is BMI as a measure of obesity? Martica Heaner points out the limitations of BMI in her posts BMI Blues and Is Body Mass Index a Bad Measure?:

The BMI works well for research purposes, but doesn’t necessarily translate precisely to the individual. Unfortunately, it tends to convey that people that exercise regularly, for example, are overweight, when they are not actually overfat. A fit person tends to have more muscle, so their body weight is a reflection of body fat as well as muscle and other lean tissue.

Since the problem with being overfat is that health risks are increased, a BMI in the overweight range is probably not a negative indicator for a fit person. Regular exercise, low body fat and increased muscle mass are all factors that tend to outweigh any health risks suggested by a higher BMI.

Is there correlation between high BMI and bad health? According to the CDC, the BMI ranges were established based on the health consequences associated with obesity as determined by different BMIs. Some, like Paul Campos in his book, The Obesity Myth, challenge this conclusion. However, the correlation between high BMI and bad health is quickly becoming an assumption.

Other than being incorrectly labeled "overweight" or "obese", why should we care whether BMI is a accurate health status predictor? BMI is fast becoming the legal standard for determining whether someone is "obese" and therefore a "health risk". Those with high BMIs can face increase cost and eligibility barriers for certain employee benefits.

Individual insurance policies for life, disability and medical insurance almost universally use underwriting procedures that take into account BMI as a basis for determining insurability and premium. A survey by the Texas Office of Public Insurance Counsel found that insurance company individual health plan underwriting guidelines used BMI as a basis to deny coverage, charge a higher premium, and offer less coverage. The California Insurance Commission has made comments alerting consumers about BMI as a basis for insurance denial.

Some group health plans are community rated and not subject to medical underwriting. These plans calculate premium based on the expected claims of the community not the individual employer group. Other group health insurance programs can be subject to medical underwriting in which BMI analysis and other factors will be used to price the coverage for the group. An employer with a compliment of employees with potential for high claims (including high BMI) will face higher premiums or denial. Likewise, self-insured medical plans that utilize stop loss coverage may undergo medical underwriting where BMI will be factored into the rate for reinsurance.

Group health plan wellness program incentives may be keyed to BMI targets for premium discounts and other incentives. The availability of incentives to those with high BMI is subject to limitations including situations when it is "unreasonably difficult" or "medically inadvisable" for a participant to attempt to achieve the BMI standard.

Lessons Learned from the almost Pandemic: 2009 Novel Influenza A H1N1 a/k/a Swine Flu

The swine flu is thankfully less severe than anticipated and certainly not the "pandemic" that was feared and even predicted. The Centers for Disease Control and Prevention reports at least 5,469 cases of swine flu in the United States with Pennsylvania accounting for 55 cases. Six deaths are linked to the outbreak.   The CDC continues to warn that, "we are not out of the woods."

Managing communications about a potential pandemic is a "no win" situation for government agencies. The risks of over and under communicating are evident when one compares the approaches of the Mexican and U.S. governments. Commentators are already analyzing the swine flu "overreaction overreaction" and its impact on the next potentially real pandemic.

The communication and response from the Human Resource department can create the same credibility gap that governments face. Human Resource Professionals should book mark some of the resources that emerged from this go round some of which we identified in our prior post as well as the EEOC's Guidance "ADA-Compliant Employer Preparedness for the H1N1 Flu Virus." 

Employers should view the pandemic false alarm as an opportunity to plan for all manner of business "disasters." The following are some addition areas of planning  and development of an action plan include the following:

Arbitration of Discrimination Claims upheld by U.S. Supreme Court

The United States Supreme Court upheld a provision in a collective-bargaining agreement that clearly and unmistakably requires union members to arbitrate ADEA claims is enforceable as a matter of federal law. Accordingly, there is no legal basis for the Court to strike down an arbitration clause in a collective bargaining agreement, which was freely negotiated by a union and company, and which clearly and unmistakably requires employees to arbitrate the age-discrimination claims. However, the Court declined to rule on specific factual issued related to whether the waiver of discrimination claims under the contract by employees' in this case was clear and unmistakable. It also would not rule on whether the contract waived substantive rights protected by federal law which could not be vindicated in an arbitration. These issues were not properly before the Court.

The decision in 14 Penn Plaza LLC v. Pyett has important implications for unionized employers who face employment discrimination charges and lawsuits. These claims may be forced into the arbitration forum and out of court depending on the language in the contract. The scope of the arbitration clause including any limitations will be an important focus of future litigation.

Time to Re-evaluate Employment Practice Liability Insurance

Employment Practices Liability Insurance (EPLI) can provide valuable protection; particularly,  given the predicted rise in employment related legal claims and enhanced government enforcement initiatives. Furthermore, EPLI remains a relative bargain in the continued “soft” insurance market and employers should consider adding or increasing insurance coverage to protect against employment claims. EPLI insurance is somewhat quirky and the following are some considerations when evaluating policies:

1.         Coverage: EPLI policies usually cover claims of wrongful discharge, workplace harassment and discrimination. Many offer a more comprehensive list of covered acts, including negligent hiring/supervision/evaluations, invasion of privacy, defamation and intentional infliction of emotional distress. Coverage typically applies to claims made by full time employees so as to exclude those by part-timers, temporary, seasonal and independent contractors. In comparing policies, look for one that has the most expansive coverage. 

2.         Exclusions: EPLI policies exclude many claims based on the statute that creates the legal right or the activity that gives rise to the claim. Exclusions apply to the Fair Labor Standards Acts; the National Labor Relations Act; the Worker Adjustment and Retraining Notification Act (WARN); the Consolidated Omnibus Budget Reconciliation Act (COBRA); the Employee Retirement Income Security Act (ERISA); the Occupational Safety and Health Act (OSHA); the costs associated with providing "reasonable accommodation" under the Americans with Disabilities Act (ADA); as well as claims arising out of downsizing, layoffs, workforce restructurings, plant closures or strikes. Punitive damages are always excluded. Carefully evaluate the excluded claims in light of your business practices. In the case of multi-state operations, be aware that some state laws create substantial employment rights that must also be evaluated under the policy language.

3.         Policy Limits and Deductibles: Policy limits and deductibles usually apply on a per claim and aggregate basis. For example, coverage may be limited to $250,000 for each separate claim with an overall aggregate cap of $1 million for all claims. Employers must formulate their insurance goals in setting the appropriate deductibles and limits. Some employers view EPLI insurance as catastrophic coverage and are willing to accept a high deductible that allows them to handle smaller claims themselves. However, other employers are looking for more blanket coverage.

4.         Defense Costs, Selection of Counsel and Settlement: Defense costs are usually included within the EPLI policy’s limits, which has good and bad points. Many times, the legal expense is the largest cost to an employer in dealing with merit less claims. However, including defense costs means that every dollar an employer spends defending a claim reduces the amount available for settlement or to pay a judgment. Since the existence of insurance coverage must be disclosed as part of discovery in most law suits, a plaintiff’s attorney will factor insurance coverage into his or her case evaluation. The defense cost feature may influence plaintiffs’ counsel to try to settle early, rather than force an employer to incur litigation costs that will only erode the insurance dollars available for potential settlement. Employment claims often have significant employee relations ramifications making settlement a particularly important issue. Insurers view employment claims the same as any other insurance matter by evaluating only the potential for liability and the amount of damages. The employer and insurer may be at odds over settling a case. EPLI policies address this stalemate by either giving the insurer the right to settle without the employer’s approval or, more frequently, giving an employer control over settlement, but adding a “hammer clause”. These clauses are designed to limit the insurer’s potential exposure if the policyholder passes up an opportunity to settle a claim recommended by the insurer. Hammer clauses provide that if there is an offer to settle a claim that the policyholder refuses accept, then the insurer will not be liable for a subsequent settlement or judgment in excess of a rejected settlement amount.  

5.         Policy Types and Insurance Company Notification: EPLI policies are typically written on a “claims made” basis meaning that the claim must be incurred during the coverage period and reported to the insurer during an extended reporting period. Employers who have already experience significant layoffs prior to the effective date of coverage will not have claims arising from those actions covered by new insurance; however, if an employer increases coverage, it may be able negotiate a retroactivity for the larger policy limits. Since employment actions may take years to turn into a claims, an employer may be left with no coverage if the policy is dropped or tail coverage isn’t purchased. Untimely notice to an insurance carrier can void coverage for and employment claim.

Employment Discrimination Litigation will Increase in 2009 and Beyond

Business downsizing, a poor job market, and increased government enforcement will dramatically increase employment discrimination lawsuits for the foreseeable future. We got a glimpse of this trend with the Equal Employment Opportunity Commission (EEOC) release of 2009 charge statistics noting a record number of discrimination claims filed last year. The EEOC report shows that 95,000 charges were filed, up 15%. The agency also reports financial recoveries of $376 million for victims of discrimination.

Charge activity for 2009 should rise exponentially. The economy shed 2.4 million jobs in the last 4 months mostly due to permanent layoffs. Job prospects are bleak with current unemployment at 8.1 %, the highest level in 25 years. The Obama Administration's budget increases spending on Department of Labor enforcement activities.

Employees have up to 300 days to bring a discrimination charge with the EEOC so many of the potential claims from recent layoffs haven't yet been filed. An employee's proclivity to sue an employer for discrimination is related in part to economics. In a good economy, employees find new jobs quickly and don't look back. While unemployed, economic and emotional factors may motivate employees to pursue litigation. Recent news reports describe the plight of many workers facing job loss and financial ruin.

Employers limited in use of Genetic Information

The Genetic Information Nondiscrimination Act of 2008 (GINA) was enacted to curtail the use of genetic history in employment-related areas. GINA includes two titles. Title I, which amends portions of the Employee Retirement Income Security Act (ERISA), the Public Health Service Act, and the Internal Revenue Code, addresses the use of genetic information in health insurance. Title II prohibits the use of genetic information in employment, prohibits the intentional acquisition of genetic information about applicants and employees, and imposes strict confidentiality requirements.

The law is effective November 21, 2009. The EEOC has begun its regulatory and information process with the issuance of EEOC's Questions & Answers on GINA and Proposed Regulations.

Ledbetter now Law: Employers must Focus on Compliance

President Obama signed into law the Ledbetter Fair Pay Act nullifying the U.S. Supreme Court decision in Ledbetter v. Goodyear Tire & Rubber Company. Previous posts on the content and effect of the law are as follows:

Ledbetter Fair Pay Act passed by Senate and awaiting Obama Signature

Bad News: Ledbetter Fair Pay Act and Paycheck Fairness Act Pass the House.

Record Retention Nightmare Created by Ledbetter Fair Pay Act

An employer's first concern should be the revival of claims otherwise thought extinguished under the Ledbetter decision. The law is retroactive to overrule the Supreme Court standard for assessing the timeliness of wage discrimination claims. A wage-based discrimination claim in Pennsylvania can now be filed within 300 days of the last paycheck affected by the discriminatory pay action.

An employer's next focus should be on creating a pay and evaluation system that preserves evidence supporting the nondiscriminatory basis of the decisions. The system must capture both witnesses' recollections and records associated with the decisions for all similarly situated employees.

The difficulty in defending these "old" claims lies in documenting both the decision made relative to the employee bringing the claim and the treatment of comparable employees. The legal analysis of a discrimination claim involves a comparison of the compensation paid to a member of a protected class as compared with those outside the protected class. If a compensation disparity is shown, the employer must demonstrate a legitimate nondiscriminatory reason for the difference in compensation. Once demonstrated by the employer, the employee may show that the employers reason is a pretext for discrimination. Much of this analysis will change if the Paycheck Fairness Act also becomes law.

The EEOC has a road make for its analysis of compensation discrimination claims under its Compliance Manual. The types of evidence the EEOC collects and evaluates in assessing a claim includes the following:

  • Initially the EEOC determines if a wage differential exists by evaluating documents including the following:
    • Organization charts and other documents which reflect the relative position of the charging party in comparison to other employees, including written detailed job descriptions;
    • Written descriptions of the respondent's system for compensating employees -- including collective bargaining agreements; entry level wage rates or salaries; any policies or practices with regard to periodic increases, merit and other bonus compensation plans; and the respondent's reasons for its pay practices; and
    • Job evaluation studies, reports, or other analyses made by or for the employer with respect to its method of compensation and pay rates.
  • If a compensation differential(s) exists, the employer should be asked to produce a non-discriminatory reason for the differential. If a an employer leaves the pay disparity unexplained, or provides an explanation that is "too vague, is internally inconsistent, or is facially not credible," the investigator should find "cause." If the employer does provide a nondiscriminatory reason, an inquiry should be made into whether it satisfactorily explains the pay differential.
  • The EEOC requests information explaining the pay decisions of comparable or similarly situated employees. The EEOC may also request pay information for similarly situated employees to evaluate a disparate impact case based on a statistical analysis of compensation decisions and treatment.


Ledbetter Fair Pay Act passed by Senate and awaiting Obama Signature

The Senate passed the Lilly Ledbetter Fair Pay Act of 2009 by a vote of 61 to 36 with both Pennsylvania Senators supporting the legislation.   President Obama has previously stated he will sign the law.

The Ledbetter Fair Pay Act redefines the "accrual" of a compensation discrimination claim as follows:

For purposes of this section, an unlawful employment practice occurs, with respect to discrimination in compensation in violation of this title, when a discriminatory compensation decision or other practice is adopted, when an individual becomes subject to a discriminatory compensation decision or other practice, or when an individual is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or other practice.

Violations of the law entitle employees to recover compensatory and punitive damages including recovery of back pay for up to two years preceding the filing of the charge, where the unlawful employment practices that have occurred during the charge filing period are similar or related to unlawful employment practices with regard to discrimination in compensation that occurred outside the time for filing a charge.

The law is retroactive to the May 28, 2007 (the date of the Supreme Court's Ledbetter decision) effectively reviving all claims that are pending or after that date.

Forces employers to modify their pay practices and evaluation procedures including the following:

  • Better justify and document their compensation decisions.
  • Review promotion procedures which may fall under the law because of the attendant compensation adjustment.
  • Create an institutional memory that captures the basis for compensation and promotion decisions.
  • Design a record retention system that allows for the defense of claims.

Next on the Senate Agenda will likely be the Paycheck Fairness Act (S. 182).

Thanks to the Connecticut Employment Law Blog for insights.

Record Retention Nightmare Created by Ledbetter Fair Pay Act

Ledbetter Fair Pay Act (H.R. 2831/ S. 1843) is on the fast track with full support of the Obama Administration. LFPA overturns the Supreme Court’s decision in Ledbetter v. Goodyear Tire and Rubber Co. effectively eliminating the 180 or 300-day statute of limitations for filing a wage-related discrimination claim. The Bill allows family members and others affected by discrimination to file claims and reinstitutes the Paycheck Accrual Rule for determining when a claim arises. It also allows claims based on paychecks and annuity payments which would permit retirees to bring claims.

Ms. Leddbetter's discriminatory pay claims originated from pay raises allegedly denied her based on supervisor's discriminatory evaluations of her performance conducted over a period between 1979 and 1998. The U.S. Supreme Court held that the pay setting was a discrete act triggering the180 day limitations period for filing a discrimination claim, therefore a timely discrimination claim must be based on acts of discrimination occurring within the 180 day period. Leddbetter argued that“[E]ach paycheck that offers a woman less pay than a similarly situated man because of her sex is a separate violation of Title VII with its own limitations period, regardless of whether the paycheck simply implements a prior discriminatory decision made outside the limitations period”.

The effect of the argument is to call into question decisions of supervisors made almost 20 years before the employer received notice of the alleged discrimination. Leddbetter counters that she had no way of knowing about her discriminatory treatment because of the confidentiality of the performance reviews and salary adjustments

In its Ledbetter decision, the Supreme Court enunciated a classic application of the statute of limitations governing the time period for bringing legal claims:

Statutes of limitations, which "are found and approved in all systems of enlightened jurisprudence, represent a pervasive legislative judgment that it is unjust to fail to put the adversary on notice to defend within a specified period of time, and that "the right to be free of stale claims in time comes to prevail over the right to prosecute them. These enactments are statutes of repose; and although affording plaintiffs what the legislature deems a reasonable time to present their claims, they protect defendants and the courts from having to deal with cases in which the search for truth may be seriously impaired by the loss of evidence, whether by death or disappearance of witnesses, fading memories, disappearance of documents, or otherwise. (emphasis added). 

The implication's are huge for employers in terms of faulty memories, missing witnesses, and mountains of documents. Defense of decades old discrimination claims will necessitate the retention of more documents for longer time periods. The expense associated with storage and production of documents (whether paper or electronic) may be staggering. Imagine a Request for Production of Documents or subpoena that demands access to 20 or 30 years of employer records associated with the evaluations and salary adjustments for an employee (or retiree) claiming pay discrimination. Add in all of the employee's peer comparators who were similarly situated over the same time period for a truly nightmarish perspective. Now the rationale for the statute of limitations becomes clearer.

"Excessive Subjectivity" and Discrimination - A New EEOC Sex Discrimination Lawsuit

On September 23, 2008, the EEOC filed a lawsuit in the United States District Court for the Western District of New York against Sterling Jewelers Inc., the largest specialty retail jeweler in the United States. The EEOC's Complaint alleges that Sterling "pays its female retail sales employees less than male employees performing substantially equal work and denies female employees promotional opportunities for which they are qualified." The lawsuit seeks relief on behalf of a class of potentially thousands of current and former female employees of Sterling throughout the U.S. Sterling owns and operates the Kay Jewelers and Jared The Galleria of Jewelry stores and various regional retail jewelry establishments.

In both the Complaint and press release issued by the EEOC on September 24, 2008 to announce the lawsuit, the EEOC claims that Sterling's system for making promotion and compensation decisions is "excessively subjective" and has resulted in both disparate treatment and disparate impact sex discrimination. The "excessive subjectivity" claim is the primary allegation of unlawful discrimination in the complaint.


The use of subjective criteria in employment decisions often is unavoidable. Simply put, purely objective criteria is not always available or appropriate for hiring, compensation, promotion, and discharge decisions. "Excessive" subjectivity, however, can give rise to allegations of discriminatory treatment and systematic bias. Employers and their counsel often struggle to balance the desire to use all appropriate criteria when making employment decisions, including both objective and subjective criteria, with the knowledge that "excessive subjectivity" in the decision-making can create perceptions of bias and increase the potential for discrimination claims. 


Of course, determining what is "excessive subjectivity," as opposed to typical subjectivity common in many employment decisions, can be difficult. This problem is more significant for larger employers that lack a centralized structure for employment decision-making. An employer with more independent decision-makers has a greater chance for "excessive subjectivity," especially if the employer has not promulgated clear guidelines or requirements for the decision-making process.


The EEOC has made clear that it views "excessive subjectivity" in compensation and promotion systems as a high priority enforcement issue for the agency. The Sterling case, with its nationwide scope and focus on this issue, emphasizes the EEOC's commitment. Employers and their counsel should be aware of this issue and review their hiring, compensation, and promotion procedures to determine whether changes could produce a better structured, less subjective system.

ADA Amendments expand Disability Coverage

President Bush will sign legislation amending the Americans with Disabilities Act, which overwhelmingly passed through Congress. The ADA Amendments Act is designed to convey Congressional intent that “the primary object of attention in cases brought under the ADA should be whether entities covered under the ADA have complied with their obligations, and to convey that the question of whether an individual’s impairment is a disability under the ADA should not demand extensive analysis.”

The goal of expanding the coverage of the ADA is achieved by changing the definition of “disability” to:

  • Prohibit the consideration of measures that reduce or mitigate the impact of impairment—such as medication, prosthetics and assistive technology—in determining whether an individual has a disability under the law.
  • Cover workers whose employers discriminate against them based on a perception that the worker is impaired, regardless of whether the worker has a disability.
  • Clarify that the law provides broad coverage to protect anyone who faces discrimination on the basis of a disability.

Congress expressly reversed several Supreme Court decisions that restricted the scope of the ADA. Congress rejected the standard that ameliorative effects of mitigating measures must be considered in determining whether a person is disabled found in Sutton v. United Air Lines, Inc. Congress also rebuked the Court in its restrictive interpretation of “disability” by rejecting the terms “substantially limits ” and “significantly restricted” because the terms as outlined in Toyota Motor Mfg, Kentucky, Inc. v. Williams are too narrow.


The ADA amendments will  refocus disability discrimination lawsuits downplaying the examination of whether an employee meets the definition of disability.  Daniel Schwartz of the Connecticut Employment Law Blog discusses the practical impacts.

EEOC Guidance Addresses Employee Performance and Conduct Issues Under the ADA

On September 3, 2008, the EEOC issued "a comprehensive question-and-answer guide addressing how the Americans with Disabilities Act (ADA) applies to a wide variety of performance and conduct issues."  The guidance contains a brief introductory section that includes some general legal requirements and definitions and then sets forth 30 questions and answers on various ADA-related subjects, including performance, conduct, and attendance issues, dress codes, drug and alcohol use, and confidentiality. Included within the EEOC's answers are numerous points of generally applicable "practical guidance."

The EEOC's new guide does not have the legal effect of federal regulations or change the ADA's existing accommodation and discrimination requirements. It does, however, contain a useful resource on an often difficult and complicated issue, namely what to do when an employee's performance or conduct problems may be, or are, caused by a disability. Among the guidance provided by the EEOC are the following:


Job Performance


  • An employee with a disability may be required to meet the same production standards, whether quantitative or qualitative, as a non-disabled employee in the same job. Lowering or changing a production standard because an employee cannot meet it due to a disability is not considered a reasonable accommodation.  However, a reasonable accommodation may be required to assist an employee in meeting a specific production standard.
  • An employer should evaluate the job performance of an employee with a disability the same way it evaluates any other employee’s performance.
  • If an employer gives a lower performance rating to an employee, and the employee responds by revealing she has a disability that is causing the performance problem, the employer still may give the lower rating. If the employee states that her disability is the cause of the performance problem, the employer should follow up by making clear what level of performance is required and asking why the employee believes the disability is affecting performance. If the employee does not ask for an accommodation, the employer may ask whether there is an accommodation that may help raise the employee’s performance level.
  • Ideally, employees will request reasonable accommodation before performance problems arise, or at least before they become too serious. Although the ADA does not require employees to ask for an accommodation at a specific time, the timing of a request for reasonable accommodation is important, because an employer does not have to rescind discipline (including a termination) or an evaluation warranted by poor performance.

Conduct Problems


  • If an employee’s disability does not cause the misconduct, an employer may hold the individual to the same conduct standards that it applies to all other employees. In most instances, an employee’s disability will not be relevant to any conduct violations.
  • If an employee’s disability causes a violation of a conduct rule, the employer may discipline the individual, if the conduct rule is job-related and consistent with business necessity and other employees are held to the same standard. The ADA does not protect employees from the consequences of violating conduct requirements, even where the conduct is caused by the disability.


  • An employer may have to modify its attendance policies for employees with a disability as a reasonable accommodation, absent undue hardship.
  • Although employers may have to grant extended medical leave as a reasonaable accommodiation, they have no obligation to provide leave of indefinite duration.  Granting indefinite leave, like frequent and unpredictable request for leave, can impose an undue hardship on an employer's operations.

Business Websites Face Americans with Disabilities Act Accommodations Claims

Target Corp. has agreed to pay $6 million in damages to plaintiffs in California unable to use its online site as part of a class action settlement with the National Federation of the Blind. The issue centers on the Americans with Disabilities Act’s requirements that retailers and other public places to make accommodations for people with disabilities. Target had argued that the ADA covered only physical spaces. The California court held that the ADA covers an online retailer’s website. Websites can be made more accessible through screen-reading software that converts text into speech for visually impaired access. The court certified the case as a class action before it settled.

The case has important implications for retailers who may now face class action lawsuits. Employers that rely on a web-based application and recruiting processes should also examine their websites for compliance with the ADA’s employment provisions which require accessibility and accommodation in the hiring process.   A recent OFCCP Directive sets forth the agency's policy on review of employer websites where applications are solicited:

Effective immediately, all compliance evaluations shall include a review of the contractor's online application systems to ensure that the contractor is providing equal opportunity to qualified individuals with disabilities and disabled veterans. The review should include whether the contractor is providing reasonable accommodation, when requested, unless such accommodation would cause an undue hardship. In this directive, the term "online system" shall include, but not be limited to, all electronic or web-based systems that the contractor uses in all of its personnel activities.

Benchmarking against the Federal Government's EEO Performance

The EEOC released its Annual Report on the Federal Workforce for Fiscal Year 2007 (period October 2006 to September 2007).  For those employers who may be benchmarking against the federal government, it seems to me that the government performs at a level that the EEOC would never accept from other employers. Here is a sampling of report’s findings:

·         The federal government employs almost 2.6 million workers of which 56.8% are men and 43.2% are women.

·         The federal workforce’s demographic composition is 7.8% Hispanic or Latino; 65.8% White; 18.4% Black or African American; 6% Asian; 0.2% Native Hawaiian/other Pacific Islander, 1.7% American Indian/Alaskan Native; and 0.2% reported 2 or more races.

·         Hispanic or Latinos, Whites, women and persons of Two or More Races remained below their overall availability in the national civilian labor force, as reported in the 2000 census (CLF).  Black or African Americans, Asians, Native Hawaiian/Other Pacific Islanders, American Indian/Alaska Natives and men remained above their overall availability in the CLF.

·         Federal employees and applicants filed 16,363 complaints alleging discrimination.

·         Unlawful discrimination was found in 2.8% of the 7,673 cases that were closed on the merits.

·         85% of federal agencies provided their EEO staff with required training.

·         58% of federal agencies have an Anti-Harassment Policy.

The good news is that the government is evaluating its EEO performance and publishing the results.

Discrimination Claims can cut to the Core of an Organization's Values

 Many organizations take great pride in their employment practices striving to keep them free from employment discrimination. For such companies, a discrimination charge or lawsuit strikes at the very core of the organization’s values.  For example, AARP was recently sued for age discrimination by an employee who alleges she was passed over for promotions, laid off, and never recalled despite openings. The irony of such claims plays well in the media, but shouldn’t derail the organization’s efforts if properly managed.

Organizations need to develop an approach to address high profile public relations matters in advance. The approach should coordinate internal and external communications among company officials, PR firms and attorneys and could include the following:

·         Immediate press release or comment to the media. You may only get one chance to blunt the media impact of a discrimination claim so having something more to say than “no comment”. Lawyers fear public comments about pending litigation because of the lack of control and the potential that statement may be used to impeach the company official who made them. Comments need not address the merits of the claims, but can reaffirm the organizations commitment to its core values. However, comments to the media should be handled by authorized employees and there should be a clear employment policy prohibiting other managers from speaking to the media about official company positions.

·         Internal communications to employees. Employees are sometimes forgotten in the rush to deal with external communications. Information about lawsuits should not be left to the rumor mill. Employers may be limited in what they can say about the facts, particularly if the litigant is still employed. However, at the very least, internal communications should include the fact of the suit, a denial of wrongdoing, and a reaffirmation of EEO policies.

·         Use of non-public forums for dispute resolution. The EEOC, state discrimination agencies and the courts have alternated dispute resolution mechanisms including mediation. ADR can be an effective, less costly and more private forum of resolving discrimination claims.

Obviously, public disclosure of a discrimination claim can hurt a company’s image. Managing internal and external communications with advanced planning can mitigate the adverse impact.

Revisiting Baseline Qualifications For Certain Positions: How Objective Qualifications, When Used Properly, Can Save The Day In Defending A Discrimination Claim

In Makky v. Chertoff, the Third Circuit Court of Appeals recently addressed the importance of objective job qualifications in evaluating the merits of a discrimination claim. Employers that establish clear baseline standards for position through their job descriptions, advertisements and other records are better able to defend discrimination claims by showing that the applicant or employee does not meet minimum qualifications for the position.

The Makky case involved the termination of employment of Dr. Wagih Makky who was employed by the United States government in the Federal Aviation Administration and Transportation Safety Administration for fifteen years. In his various positions, Dr. Makky was required to obtain security clearance. A descendant of Egypt, Makky was the only Muslim and only person of Arab descent in his division. Makky's security clearance was suspended due to safety concerns, including his dual citizenship with Egypt, foreign relatives and associates, foreign countries visited, and alleged misuse of his government computer. Makky was placed on paid administrative and subsequently terminated when the TSA issued its final denial of security clearance. Although Makky appealed the determination through the government's processes, the determination was upheld.

Makky filed a lawsuit including a claim for employment discrimination under Title VII of the Civil Rights Act. Makky's Title VII claim was premised on a mixed motive theory of discrimination which recognizes that an employment decision can at times be based on both (1) a legitimate non-discriminatory reason and (2) discriminatory animus. Here, Makky argued that while he was suspended without pay and terminated because he did not pass the security clearance, the TSA's actions were also motivated by discriminatory animus based on his national origin because the agency did not offer him other positions or keep him on paid leave. Although the Court recognized that the analysis is factually sensitive , it held that when a plaintiff does not possess the objective baseline qualifications to do his or her job, the discrimination claim will fail on its face because he or she cannot establish a prima facie case of discrimination. Applying the holding to the facts at hand, the Court found that Makky's inability to retain a security clearance rendered him expressly unqualified for the TSA position. Analogizing Makky's situation to a more mainstream occupation, the Court explained, "if the hospital employing a person who has been performing surgery learns that the employee falsified his or her qualifications and never went to medical school, that employee could not establish a prima facie mixed-motive case irrespective of allegations of racial or ethnic discrimination."

So what can an H.R. specialist take away from Makky? When a position requires a baseline objective qualification, like a license or degree, make sure it is expressly stated in all hiring materials including: (1) job advertisements; (2) position descriptions; and (3) application materials. Notably, if the degree or license it is merely the company's "preference" for someone in the position, it is important to consider whether making the "preference" appear as a "qualification" may lead to problems in the future. For example, suppose that Company X states that a sales position requires a Bachelor's Degree. When Company X interviews its two top choices, however, the female candidate who possess a Bachelor's Degree has the personality of dry toast, while the male candidate who has waitered all his life and does not have a Bachelor's Degree has a dynamic sales personality and will surely do well with Company X. If Company X believes that the male applicant is better suited for the position than the female applicant, should the Bachelor's Degree have been a required qualification in the first place? Probably not. Accordingly, it is important to have a process in place to review your company's job advertisements and position descriptions before posting for openings. While certain baseline objective qualifications can often be beneficial in refuting a prima facie discrimination claim, turning a mere "preference" into a "qualification" can have the opposite result because it may be used as evidence of a discriminatory motive.

HR GENERALIST RESOURCES: EEOC Issues New Compliance Assistance on Religious Discrimination and Accommodation

On July 22, 2008, the EEOC issued a new section of its Compliance Manual addressing the subject of religious discrimination. The section "provides guidance and instructions for investigating and analyzing charges alleging discrimination based on religion." The new section does not change a Pennsylvania employer's legal obligations, imposed by Title VII of the Civil Rights Act of 1964 ("Title VII") and the Pennsylvania Human Relations Act ("PHRA"), as amended, with respect to religious discrimination and accommodation. It does, however, provide a handy reference tool for many religious discrimination issues and offer some insight into the EEOC's current thinking on this often difficult subject. 

As a protected trait under both Title VII and the PHRA, religion may form the basis of disparate treatment, harassment, retaliation, and failure to accommodate claims by applicants and employees. The EEOC's new section is divided into five sections reflecting the different types of possible religion discrimination claims:

  • Coverage issues, including the definition of "religion" and "sincerely held," the religious organization exception, and the ministerial exception.
  • Disparate treatment analysis of employment decisions based on religion, including recruitment, hiring, promotion, discipline, and compensation, as well as differential treatment with respect to religious expression; customer preference; security requirements; and bona fide occupational qualifications.
  • Harassment analysis, including religious belief or practice as a condition of employment or advancement, hostile work environment, and employer liability issues.
  • Reasonable accommodation analysis, including notice of the conflict between religion and work, scope of the accommodation requirement and undue hardship defense, and common methods of accommodation.
  • Related forms of discrimination, including discrimination based on national origin, race, or color, as well as retaliation.

In addition to the standard harassment, disparate treatment, and retaliation requirements, the EEOC continues to recognize and enforce the following employer obligations:

  • Reasonable Accommodation. Once on notice, an employer must reasonably accommodate an employee whose sincerely held religious belief, practice, or observance conflicts with a work requirement, unless providing the accommodation would create an undue hardship. A reasonable religious accommodation can be any adjustment to the work environment or requirement that will allow the employee to practice his religion. Examples of such accommodations may include allowing flexible scheduling, voluntary substitutions or swaps, job reassignments and lateral transfers, and modification of grooming requirements and other workplace practices and rules.
  • Undue Hardship. An employer need not accommodate an employee's religious beliefs and/or practices if doing so would impose an undue hardship on the employers' legitimate business interests. The undue hardship defense to providing religious accommodation requires a showing that the proposed accommodation in a particular case poses a “more than de minimis” cost or burden. This standard is far lower than that required for an undue hardship under the ADA, which is defined in that statute as “significant difficulty or expense."
  • Religious Expression and Participation. Employers must permit employees to engage in religious expression, unless the religious expression would impose an undue hardship on the employer. Generally, an employer may not place more restrictions on religious expression than on other forms of expression that have a comparable effect on workplace efficiency. Likewise, employees cannot be forced to participate, or not participate, in a religious activity as a condition of employment.

In addition to a description of the applicable legal requirements, the EEOC's new Compliance Manual section on religious discrimination also contains questions-and-answers and "best practices" information designed to assist employers with their compliance obligations. 

The issuance of this new compliance assistance demonstrates that the EEOC remains focused on religious discrimination and accommodation issues. For this reason and numerous others, employers also should be aware of and compliant with these requirements.

OFCCP Audits Focus on Systemic Discrimination

The OFCCP reports a record $51.7 million recovered for 22,251 workers. Of the recovery, 98% was collected for cases of systemic discrimination in the application process because of unlawful employment policy or practice according to a published account. Much of the monetary recovery came from the 14 cases of systemic discrimination referred to litigation with the DOL’s lawyers.

Government contractors are selected for audit in several ways including the use of a mathematical model that predicts the likelihood of a finding of systemic discrimination. The model analyzes data from five years of OFCCP compliance evaluations to formally identify and characterize relationships between reported EEO-1 workforce profiles and findings of discrimination. The OFCCP publishes compliance lists for one year audit cycles beginning in October of each year.

We have been involved in many of these style OFCCP audits and the approach is the same. The audit is triggered by an anomaly in a business' EO Survey which shows a statistical disparity in either hires or terminations. For example, the percentage of minority applicants differs by more than 80% from the percentage of minorities hired (the four-fifths rule). The investigation into the disparity in the hiring process follows the road map set out in the OFCCP's Compliance Manual as follows:

  • Summarizing the hiring process by obtaining an employer's summary
  • Establishing the minimum objective criteria for the position.
  • Evaluating the Pass/Fail Points for disparate impact (i.e., when does an applicant move to the next step of the process).
  • Evaluating both the objective and subjective criteria for uniform application to all applicants and for business relatedness.
  • Evaluating specific safeguards as to the application of selection criteria including how well each is documented for each applicant.
  • Measuring statistical disparity by Impact Ratio Analysis (IRA) of each step and criteria.

There are many problems with the OFCCP's investigatory process, a few of which are described as follows:

1.    The OFCCP loathes subjective hiring criteria. I had a client who required that its customer service candidates be "personable and friendly". The OFCCP started out with the position that this was not a "job-related" criteria. When that didn't fly with its own legal department, the OFCCP interviewed every hiring manager and asked them to define how it applied the "personable and friendly criteria". When the hiring manager responses weren't exactly the same, the OFCCP found adverse impact because the hiring procedures weren't uniformly applied to all applicants.

2.    The OFCCP's standard for adequate record keeping of each hiring decision is extremely high and it finds that inadequate records are a form of systemic discrimination.

3.    Finding adverse impact based on the four-fifths rule is a joke in terms of its lack of statistical significance. The rule has its origin in the EEOC's Uniform Guidelines on Employee Selection Procedures. However, knowing that the OFCCP uses this flawed measure makes it all the more important to use this measuring stick when self-assessing your employment practices.

Once the OFCCP makes a finding of a prima facie case of pattern and practice discrimination, it will presume that all members of the class are victims of discrimination and assess liability against the contractor.   The employer can only argue about who is eligible for an award and how much. This is where an employer must decide to dig in its heals and litigate or settle.

A settlement with the OFCCP for systemic discrimination in the hiring process will include back pay plus interest and job offers to the affected class, internal mandated and OFCCP approved training, follow up reporting to the OFCCP and publicity in the form of an OFCCP Press Release.

Employee's Abortion As Basis For Discrimination Claim

A company’s termination of a female worker's employment for missing work in violation of an attendance policy is illegal discrimination if the termination decision is sufficiently related to the woman’s exercise of her right to an abortion. On May 30, 2008, the Third Circuit Court of Appeals issued its decision in Jane Doe v. C.A.R.S. Protection Plus, Inc., and held that:

Clearly, the plain language of the [Pregnancy Discrimination Act], together with the legislative history, and the EEOC guidelines, support a conclusion that an employer may not discriminate against a woman employee because she has exercised her right to have an abortion. We now hold that the [PDA’s] term “related medical conditions” includes an abortion.

The Third Circuit reversed a district court's decision, which granted summary judgment in favor of a company that operated a business insuring used cars. The Third Circuit found that there were issues of fact that must be resolved by a jury, not a judge. 

The decision also noted the following items unique to a pregnancy discrimination case:

  • There are three elements to a prima facie case of pregnancy discrimination to be proven by an employee:
    • She is or was pregnant and her employer knew she was pregnant
    • She was qualified for her job;
    • She suffered an adverse employment action; and
    • A nexus exists between the pregnancy and the adverse employment action that suggests unlawful discrimination.

The legal analysis for pregnancy discrimination claims follows the rubric set forth for Title VII discrimination claims. Set forth below is a brief overview of the analysis as discussed in Jane Doe v. C.A.R.S. Protection Plus, Inc.

Employee's Prima Facie Case:

  • A nexus can be demonstrated by showing that the pregnant employee was treated less favorably that similarly situated non-pregnant employees. Anemployer's more favorable treatment of temporarily disabled non-pregnant workers raises an inference of discrimination.
  • A discriminatory motive can be demonstrated by remarks by a company decision maker critical of pregnancy or abortion and by the temporal proximity between the abortion and the employee’s separation from employment.

Employer's Burden of Production:

  • An employer may defend a discrimination claim by producinga legitimate nondiscriminatory business reason for an employee’s termination. For example, in Jane Doe v. C.A.R.S. Protection Plus, Inc., the employer’s justification for the employee's termination was job abandonment for failing to call in under its absenteeism policy. 

Employee's Burden to Prove Pretext:

  • The employee must then show the justification is a mere pretext for discrimination by evidence that either casts doubt upon the employer’s reason as fabricated or shows that discrimination was the employer’s true motivation. The evidence of record in Jane Doe v. C.A.R.S. Protection Plus, Inc., created a material issue of fact regarding whether C.A.R.S.'s legitimate nondiscriminatory reason was pretextual.

Social views aside, it appears that in the Third Circuit an abortion is now a recognized activity, covered under the PDA, for which an employee cannot be treated differently in the terms and conditions of her employment. Irrespective of an employer's social views, employers must now recognize the differing treatment of employees who have undergone an abortion presents the possibility for claims under the PDA, and most likely the Pennsylvania Human Relations Act.