Discrimination & Harassment

As explained in Part 1 of this four-part series, we are exploring some of the more recent state law developments addressing sexual harassment in the workplace. Since the #MeToo movement began over a year ago, there have been various reactions from employees, employers and state legislatures. Employees have reacted by filing more internal and external complaints.  In fact, in early October the Equal Employment Opportunity Commission (EEOC) released its fiscal year 2018 statistics regarding workplace harassment. The data showed that charges filed with the EEOC alleging sexual harassment increased by more than 12 percent from fiscal year 2017. In addition, the EEOC reported that it recovered nearly $70 million for victims of sexual harassment in fiscal year 2018, an increase of $22.5 million from fiscal year 2017. You can find more information on the EEOC’s report here.

Employers have reacted to the #MeToo movement by updating policies, conducting more trainings, and holding employees accountable.  While the United States Congress has not yet responded with specific legislation, many states have taken action to address sexual harassment and sexual misconduct in the workplace.

As a result, employers operating in multiple states must be aware of the various approaches taken by states and ensure compliance obligations are met.  Most employers have already taken action to address differing state law requirements such as how and when to pay employees, availability and use of paid leave, and the legality and enforcement of restrictive covenants.  Going forward, employers need to add sexual harassment compliance to the state-by-state compliance list.

The states take a varied approach to addressing this issue through legal regulations and requirements.  We anticipate that more state laws are on the way.  In Part 1 of this series we explored the recent flurry of legislation enacted in the State of California. In Part 2 we look at the recent developments under Delaware law.

DELAWARE

On August 29, 2018, Delaware passed a law that includes mandatory distribution to employees of a state-created information sheet on sexual harassment. Employers with four or more employees in the state of Delaware will be required to distribute the information sheet to new employees at the commencement of employment and all existing employees by July 1, 2019 at the very latest. The sexual harassment information sheet can be found here.

In addition, much like California’s training requirements, Delaware requires employers with at least 50 employees in the state of Delaware to provide interactive sexual harassment training and education. However, unlike California’s training requirements, the new Delaware law requires that both non-supervisory and supervisory employees receive the training.

Employers covered by the new law must provide interactive sexual harassment training to employees that includes the following components:

  • Addresses the illegality of sexual harassment;
  • Defines sexual harassment with the use of examples;
  • Describes the legal remedies and complaint process available to employees;
  • Provides directions to employees on how to contact the Delaware Department of Labor; and
  • Instructs employees that retaliation is prohibited.

The training must be conducted for new employees within one year of the commencement of their employment. Current employees must receive the mandatory training by January 1, 2020.

New supervisors must receive additional interactive training within one year of the commencement of their employment in a supervisory role and existing supervisors must receive training by January 1, 2020. The additional training for supervisors must also include: (1) specific responsibilities of a supervisor regarding the prevention and correction of sexual harassment; and (2) the legal prohibition against retaliation.

For employers who provide – or have already provided – training that meets the requirements of the law prior to January 1, 2019, are not required to conduct additional training until January 1, 2020. After January 1, 2020, both the employee and supervisor training programs must be repeated every two years.

Stay tuned for Part 3 of our journey through the patchwork approach of other recent state law developments in response to the #MeToo movement. In the meantime, if you or your organization have any questions regarding compliance with state laws in the area of sexual harassment, please contact any member of our Labor and Employment Practice Group.

There have been a variety of responses to the #MeToo movement since it began a little over a year ago. Employees have responded by filing more internal and external complaints.  In fact, in early October the Equal Employment Opportunity Commission (EEOC) released its fiscal year 2018 statistics regarding workplace harassment.  Among other things, the data showed that charges filed with the EEOC alleging sexual harassment increased by more than 12 percent from fiscal year 2017.  In addition, the EEOC reported that it recovered nearly $70 million for victims of sexual harassment in fiscal year 2018, an increase of $22.5 million from fiscal year 2017.  You can find more information on the EEOC’s report here.

Employers have responded to the #MeToo movement by updating policies, conducting more trainings, and holding employees accountable.  While the United States Congress has not yet responded with specific legislation, many states have taken action to address sexual harassment and sexual misconduct in the workplace.

As a result, employers operating in multiple states must be aware of the various approaches taken by states and ensure compliance obligations are met.  Most employers have already taken action to address differing state law requirements such as how and when to pay employees, availability and use of paid leave, and the legality and enforcement of restrictive covenants.  This year, employers will need to add sexual harassment compliance to the state-by-state compliance list.

The states take a varied approach to addressing this issue through legal regulations and requirements.  We anticipate that more state laws are on the way.  In this four-part series, we explore some of the more recent state law developments addressing sexual harassment in the workplace.  We will start our exploration with the State of California.

CALIFORNIA

Limitations on Settlements of Sex-Based Harassment and Discrimination Claims

On September 30, 2018, a new law was enacted that prohibits the inclusion of language in settlement agreements that prevent the disclosure of factual information related to:

  • Acts of sexual assault;
  • Acts of sexual harassment as defined under Section 51.9 if the California Civil Code;
  • Acts of workplace harassment and discrimination based on sex;
  • Failure to prevent acts of workplace sexual harassment or sex discrimination; and
  • Retaliation against a person for reporting harassment or discrimination based on sex.

The new law applies to any settlement agreement entered into on or after January 1, 2019 settling a claim filed in a civil or administrative action. If a settlement agreement contains a provision prohibiting disclosure of the information listed above, the provision will be considered void as a matter of law and against public policy.

As a result of this new law, employers with operations in California should consider the impact on potential settlement of sex-based harassment and discrimination claims. The new prohibitions on certain confidentiality provisions of a settlement may create a greater risk for damage to the employer’s reputation even after settling a sex-based claim with an employee or former-employee.

Increased Sexual Harassment Training Requirements

Since 2005, California employers with at least 50 employees have been required to provide two hours of sexual harassment prevention training to all supervisory employees once every two years. On September 30, 2018, legislation was approved that will require California employers with at least five employees to provide sexual harassment training and education to all employees (both supervisory and non-supervisory).  This new law requires employers to provide at least two hours of sexual harassment prevention training and education to all supervisory employees and at least one hour of such training to all non-supervisory employees by January 1, 2020.  Thereafter, the training and education must be provided once every two years.

As a reminder, the sexual harassment training required since 2005, must address all of the following:

  • The definition of sexual harassment under the California Fair Employment and Housing Act and Title VII of the federal Civil Rights Act of 1964;
  • The statutes and case-law prohibiting and preventing sexual harassment;
  • The types of conduct that can be sexual harassment;
  • The remedies available for victims of sexual harassment;
  • Strategies to prevent sexual harassment;
  • Supervisors’ obligation to report harassment;
  • Practical examples of harassment;
  • The limited confidentiality of the complaint process;
  • Resources for victims of sexual harassment, including to whom they should report it;
  • How employers must correct harassing behavior;
  • What to do if a supervisor is personally accused of harassment;
  • The elements of an effective anti-harassment policy and how to use it;
  • “Abusive conduct” under California Government Code section 12950.1, subdivision (g)(2).

This training must be provided in a classroom setting, through interactive E-learning, or through a live webinar. E-learning training must provide instructions on how to contact a trainer who can answer questions within two business days. All training must include questions that assess learning, skill-building activities to assess understanding and application of content, and hypothetical scenarios about harassment with discussion questions.

Additional information on the requirements related to California’s mandatory sexual harassment training can be found here.

Stay tuned for Part 2 of our journey through the patchwork approach of other recent state law developments in response to the #MeToo movement.

Perhaps the most significant EEO issue percolating through the federal court system right now is whether Title VII’s prohibition against sex discrimination encompasses discrimination on the basis of sexual orientation and gender identity.  There is now disagreement among federal appellate courts on this issue and the U.S. Supreme Court will likely decide the question at some point.  In the interim, the Equal Employment Opportunity Commission has taken the position that Title VII does prohibit discrimination on the basis of sexual orientation and gender identity.  In addition, several federal courts sitting in Pennsylvania have agreed with the EEOC’s position. See EEOC v. Scott Medical Center (W.D.Pa. 2016).

Amidst all the recent focus on how federal courts are interpreting Title VII, little attention has been paid to whether the Pennsylvania Human Relations Act (PHRA) extends protection to the LGBTQ community.  In guidance issued on August 2, 2018, the Pennsylvania Human Relations Commission (PHRC) made its position on the issue clear.  The PHRC’s “Guidance on Discrimination  on the Basis of Sex Under the Pennsylvania Human Relations Act” states that the “prohibitions contained in the PHRA and related case law against discrimination on the basis of sex…prohibit discrimination on the basis of sex assigned at birth, sexual orientation, transgender identity, gender transition, gender identity, and gender expression.”  The Guidance further states that the Commission will accept sex discrimination complaints based on this expanded definition of the term.  The PHRC does not address some of the more thorny related questions, such as whether employer health plans must cover gender transition surgery as a matter of state law.

Notably, the PHRC Guidance further states that respondents (e.g. employers) who believe the PHRA violates their free exercise of religion “are free to avail themselves of the protections found within the Religious Freedom Protection Act (RFPA).”  The Guidance outlines how a respondent should go about raising an objection under the RFPA.  Some may remember that the RFPA was the statutory basis for the Supreme Court to limit the scope of the Affordable Care Act’s “contraception mandate.”

In light of the PHRC’s recent guidance, employers should carefully consider whether it’s time to revise their policies governing harassment and equal employment opportunity.  In addition, it may be advisable to revamp harassment prevention training programs to specifically address LGBTQ concerns.  If you have any questions regarding the PHRC’s Guidance, please don’t hesitate to contact any member of our Labor and Employment Practice Group.

On June 6, 2018, Governor Wolf signed Executive Order 2018-18-03, which is designed to combat the gender pay gap in Pennsylvania. The Executive Order directs all state agencies under the governor’s jurisdiction to:

  • no longer inquire about a job applicant’s current compensation or compensation history at any stage during the hiring process;
  • base salaries on job responsibilities, position pay range, and the applicant’s knowledge, skills, competencies, experience, compensation requests, or other bona fide factor other than sex, except where compensation is based on:
      • a collective bargaining agreement;
      • a seniority system;
      • a system of merit pay increases;
      • a system which measures earnings by quantity or quality of production, sales goals, and incentives
  • clearly identify the appropriate pay range on job postings.

The Executive Order does expressly state that applicants are not prohibited from volunteering information about their current compensation level or salary history in negotiating a salary. However, no agency can request that an applicant disclose current salary or salary history information.

So why the need for the Executive Order? Some argue that by asking an applicant to reveal their current salary or salary history, employers are perpetuating pay inequality between men and women. The reasoning is that because women have been paid less than men historically, asking applicants their salary history and then basing salary determinations on prior pay information further continues the cycle of pay inequality.

While the Executive Order is only applicable to Commonwealth agencies under the Governor’s jurisdiction, it may signal a push to address the gender pay gap throughout Pennsylvania.

Please feel free to contact any member of the McNees Wallace & Nurick Labor and Employment Practice if you have any questions regarding this article.

The Sixth Circuit Court of Appeals has held that discrimination against transgender/LBGTQ employees is discrimination on the basis of sex that violates Title VII of the Civil Rights Act of 1964.  Equal Employment Opportunity Commission v. R.G. & G.R. Harris Funeral Homes, Inc.  Moreover, the court held that the employer could not use the Religious Freedom Restoration Act (RFRA) as a defense to justify such discrimination.

The Plaintiff began work as a funeral director and presented as a male (birth sex).  Eventually, Plaintiff informed the funeral home that she had a gender identity disorder and would transition to female.  Plaintiff was fired when she informed the funeral home she was no longer going to present as a male and would transition and dress as a female.  The funeral home contended that continued employment would harm its business clients and violated the funeral home’s owner’s Christian beliefs.

The federal Equal Employment Opportunity Commission (EEOC) filed suit under Title VII alleging unlawful discrimination on the basis of sex.  The funeral home owner defended the termination under the RFRA.  The RFRA prohibits enforcement of a religiously neutral law that substantially burdens religious exercise, unless the law is the least restrictive way to further a compelling government interest.

The district court held that Plaintiff was discriminated against based upon sex stereotypes, but held the EEOC could not enforce a Title VII claim because it would burden the employer’s exercise of religion in violation of the RFRA.  The court granted summary judgment to the funeral home.

The Sixth Circuit reversed and held that Title VII prohibits discrimination on the basis of LGBTQ status.  Perhaps more importantly, the court held that the funeral home was not entitled to a RFRA defense on the ground that continuing Stephens’ employment would not, as a matter of law, burden the employer’s exercise of religion and, even if it did, the EEOC had established that enforcing Title VII is the least restrictive means of furthering the EEOC’s compelling interest in combating and eradicating sex discrimination.

In the months since the Harvey Weinstein scandal, there have been countless efforts to raise awareness of workplace sexual harassment.  Actresses donned black dresses at the Golden Globe Awards earlier this month to promote #MeToo and the related Time’s Up initiative.  Last weekend, the music industry’s elite carried white roses at the Grammy Awards to show solidarity for the movement.  These efforts, however, are not limited to celebrities.  Many other initiatives have sprung up in response to workplace sexual harassment issues – including those in our federal and state legislatures.

The most notable legislative development to date was tucked into the federal Tax Cuts and Jobs Act, which President Trump signed into law at the end of December.  The Act adds a provision to the Internal Revenue Code prohibiting tax deductions for payments or settlements “related to sexual harassment or sexual abuse”, and for attorneys’ fees related to such payments or settlements, if the payment is subject to a non-disclosure agreement.  Essentially, it is intended to discourage the use of non-disclosure provisions in settlements of sexual harassment or abuse claims by forcing employers to choose between the tax deduction and confidentiality.  It applies to amounts paid or incurred after December 22, 2017.

The good news is that the provision appears to be limited to settlements involving actual allegations of sexual harassment or abuse, rather than to every settlement involving a general release of claims.  The bad news is that the provision leaves many questions unanswered, including the key question: What constitutes a payment “related to sexual harassment or abuse”?  We anticipate that regulations implementing the Act will address this and other ambiguities in the provision.  Until then, however, employers are well-advised to consult with their financial and legal advisors regarding the applicability of this provision to their individual circumstances.

Employers also should be aware of other legislative initiatives targeting the use of non-disclosure agreements.  An increasing number of states have introduced legislation to prohibit the use of non-disclosure agreements in sexual harassment claims entirely.  In November 2017, Pennsylvania Senator Judy Schwank (D) introduced Senate Bill 999 that would ban non-disclosure provisions in any contract or settlement relating to “sexual misconduct”.  Among other things, the bill would prohibit an agreement not to disclose the name of a person suspected of sexual harassment.  It remains to be seen whether, or in what form, Senate Bill 999 may be passed into law.

In the meantime, beyond staying abreast of the latest legal developments, you might be asking yourself, What can my company do to raise awareness of – and effectively address – issues of sexual harassment (and other types of discriminatory harassment) in the workplace?  Click here to learn more about how you can educate your workforce, update and strengthen your policies and procedures, and effectively investigate reported concerns of harassment in your workplace.  We also will cover lingering questions about sexual harassment issues in the workplace and conducting workplace investigations at McNees’ 28th Annual Labor & Employment Law Seminar on May 11, 2018.  Stay tuned to our blog for details, or contact any member of McNees’ Labor & Employment practice group for more information.

Last November, we explained the decision in the case of U.S. Equal Employment Opportunity Commission v. Scott Medical Health Center, P.C., from the U.S. District Court for the Western District of Pennsylvania.  There, the court concluded that Title VII of the Civil Rights Act of 1964 prohibits discrimination and harassment based on sexual orientation.  Our previous post on this case can be found here.

To recap, the Equal Employment Opportunity Commission’s (“EEOC”) filed the lawsuit on behalf of a gay, male former employee of Scott Medical, alleging that his supervisor subjected him to anti-gay epithets and a hostile work environment based on his sexual orientation.  The court refused to dismiss the case because, in the words of U.S. District Judge Cathy Bissoon, “discrimination on the basis of sexual orientation is a subset of sexual stereotyping and thus covered by Title VII’s prohibitions on discrimination ‘because of sex’.”

On September 25, 2017, the court entered a default judgment against Scott Medical on the issue of liability.  The court found that the company had committed an intentional violation of Title VII.  This finding was based on the fact that Scott Medical’s Chief Executive Officer was aware of the supervisor’s harassing actions and refused to take any action to stop the conduct or correct the hostile work environment.

On November 16, 2017, after a trial on issue of damages, Judge Bissoon ordered Scott Medical to pay the employee $5,500.43 in back pay and prejudgment interest.  More importantly, she also ordered Scott Medical to pay the statutory maximum amount of $50,000 as compensatory and punitive damages.  If not for the statutory cap on such damages, Judge Bissoon opined that “punitive damages in the amount of $75,000 would be warranted by the evidence” in this case.

Notably, the supporting evidence cited by the court included the fact that Scott Medical failed to train the harassing supervisor on its anti-harassment policy.  In fact, Scott Medical could not identify anyone who would have provided such training to any of its supervisors.  Similarly, the former employee testified that he never received a copy of the Company’s anti-harassment policy and was never trained about harassment in the workplace.

There are several clear takeaways from this case.  First, as we explained here, regular and effective anti-harassment training is an essential part of preventing harassment in any organization.  This case provides 55,000 reasons to ensure that such training is provided to supervisors and managers, as well as all other employees.

The second takeaway is to revisit your organization’s Equal Employment Opportunity and Anti-Harassment policies, and consider adding sexual orientation as a protected trait.  As you update your policies, keep in mind the importance of responding promptly and appropriately when complaints are raised about harassment – including harassment based on sexual orientation.  It also may be a good time to update your anti-harassment training to specifically address issues of discrimination and harassment based on sexual orientation.

There also may be more to come with the Scott Medical case.  Now that a final judgment has been entered, an appeal to the Third Circuit Court of Appeals may be forthcoming.  If the case is appealed, the Third Circuit likely will be forced to reconsider several prior decisions in which it found that sexual orientation was not protected under Title VII.  We will continue to provide updates as developments in this area occur.

LGBTQ workplace rights is perhaps the most rapidly evolving area in employment law.  On October 4, 2017, United States Attorney General Jeff Sessions formally weighed in on the topic.  He issued a memorandum to all federal prosecutors declaring that Title VII of the Civil Rights Act of 1964 does not prohibit employment discrimination based on transgender status.  According to the memo, “Title VII’s prohibition on sex discrimination encompasses discrimination between men and women but does not encompass discrimination based on gender identity per se, including transgender status.”

So, does the Attorney General’s memo mean that employers can freely discriminate on the basis of gender identity?  Not exactly.  A number of federal courts have held that employment bias based on an individual’s transgender status is a form of unlawful sex discrimination under Title VII (the United States Courts of Appeals for the First, Sixth, and Eleventh Circuits have all issued such rulings, as have several federal district courts).  Attorney General Sessions’ memo certainly does not preempt these rulings.  Additionally, the Equal Employment Opportunity Commission has issued enforcement guidance stating that the Commission also views gender identity as a protected trait under the Law.

Employers must also be aware of state laws on the issue.  Currently, 19 states’ anti-discrimination laws bar employment discrimination based on gender identity for at least some workers.  Pennsylvania is among those states.  Governor Tom Wolf has signed two executive orders relevant to the subject:  one prohibiting discrimination against state employees based on their sexual orientation, gender identity, or HIV status; the other banning state contractors from discriminating against their LGBTQ employees.  The Pennsylvania Human Relations Commission has also indicated that it will investigate all complaints of gender identity discrimination in the workplace as a form of unlawful sex bias, including complaints against private sector employers.

While the law regarding transgender individuals’ employment rights remains in flux, employers are well-advised to address the issue with sensitivity and diligence.  Treating transgender employees the same as their similarly situated, non-transgender co-workers remains the best way for all employers to avoid liability for gender identity discrimination.

Most employers take proactive steps to prevent and eliminate workplace harassment. Until recently, courts recognized and rewarded the proactive approach.  Businesses in Pennsylvania, New Jersey and Delaware could avoid liability for hostile work environment claims if they rooted out the problem before it became “severe and pervasive.”

Courts had long held that a single slur, even if highly offensive, was not pervasive and therefore could not trigger employer liability.  The United States District Court for the Middle District of Pennsylvania upheld that standard in Castleberry v. STI Group, a 2015 case involving African American workers who were subjected to a racial slur and threatened with termination in a single incident.  The District Court dismissed the claim.

On appeal, the Third Circuit overturned the District’s ruling.  In doing so, the Court noted that the “plaintiffs alleged that their supervisor used a racially charged slur in front of them and their non-African-American co-workers…Within the same breath, the use of this word was accompanied by threats of termination (which ultimately occurred).”  Under these facts, the Third Circuit held that a single, isolated slur constitutes severe conduct that could create a hostile work environment.

Castleberry is now the law of the land for all Pennsylvania employers (and those in New Jersey and Delaware) who are subject to federal anti-discrimination laws. And it is certainly bad news for employers.  The ruling makes it much easier for a hostile work environment plaintiff to survive summary judgment, leading to increased defense costs and greater potential for a costly verdict.

In light of the Third Circuit’s holding, employers would be wise to take inventory of its anti-discrimination and anti-harassment policies to ensure that they are up to date and prohibit all occurrences of discriminatory harassment. Supervisors and managers should also be made aware that even a single, isolated racial slur can now lead to liability.

We will continue to monitor Third Circuit cases that develop under Castleberry and any updates will be reported here on our blog.

Workplace rights for LGBT individuals has been a rapidly developing area of the law.  A little over two years ago, former President Obama signed an executive order prohibiting federal contractors from discriminating against employees on the basis of their sexual orientation or gender identity.  The Office of Federal Contract Compliance Programs followed suit by issuing regulations protecting the rights of LGBT workers employed by federal contractors and subcontractors.  Then, the Equal Employment Opportunity Commission published guidance suggesting that the Agency considers sexual orientation and gender identity to be protected by Title VII of the Civil Rights Act of 1964.  Despite these developments, no federal appellate court had ever ruled that Title VII protects workers from discrimination on the basis of sexual orientation.  That changed earlier this week.

In a groundbreaking 8-3 decision, the U.S. Court of Appeals for the Seventh Circuit (having jurisdiction in Illinois, Indiana, and Wisconsin), ruled that sexual orientation is a protected trait under Title VII and that employers may not discriminate against employees on that basis.  The case, Hively v. Ivy Tech Community College of Indiana, involved an openly lesbian professor who had worked for the college as an adjunct staff member for over fourteen years.  She applied for six different full-time jobs during her tenure and was rejected for each of them.  Then, the college failed to renew her adjunct contract in 2014.  She filed a Charge of Discrimination with the EEOC alleging that she was discriminated against on the basis of her sexual orientation.

The district court dismissed her case on the basis that sexual orientation was not recognized as a protected trait under Title VII.  On appeal, the Seventh Circuit reversed.  It held that sexual orientation was a protected characteristic because, in essence, actions taken on the basis of sexual orientation are a “subset of actions taken on the basis of sex,” which is protected by Title VII.  The Court reasoned that sexual orientation discrimination claims are “no different from the claims brought by women who were rejected for jobs in traditionally male workplaces, such as fire departments, construction, and policing. The employers in those cases were setting the boundaries of what jobs or behaviors they found acceptable for a woman (or in some cases, for a man).”

The Seventh Circuit’s ruling is not binding precedent on Pennsylvania employers.  However, as we reported last year, at least one federal district court in the Commonwealth considers sexual orientation to be a protected trait under Title VII.

The Seventh Circuit’s ruling may ultimately prove to have a much broader impact.  The Hively decision now means that circuit courts are officially split on the issue of whether Title VII protections include sexual orientation (last month, the Eleventh Circuit held that sexual orientation and gender identity are not protected under the statute).  When federal circuit courts provide conflicting rulings on the same legal question, the Supreme Court of the United States is more likely to issue its own ruling on the subject in order to ensure consistent application of the law.

We will continue to monitor any future developments on the subject.  As always, we’ll report any updates right here.