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. 

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.
 

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

Yes, that is right, the Patient Protection and Affordable Care Act (H.R. 3590) (pdf), signed into law on March 23, 2010, amended the Fair Labor Standards Act (FLSA) to require employers to provide reasonable unpaid breaks to nursing mothers. Previously, the FLSA did not require that employers provide breaks, but now employers must provide reasonable, unpaid break time and a private space for mothers to express breast milk.

This requirement applies to all employers covered by the FLSA; however, there is an exception for small employers. Small employers are those covered by the FLSA, but with less than 50 employees. These employers need not comply with the new requirements if doing so would impose an undue hardship.

The breaks must be provided for nursing mothers for up to one year after a child’s birth. While it appears that employers need not provide such breaks for exempt "white collar" employees under the FLSA, employers that do provide such breaks must be sure not to lose the exemption for such employees by improperly docking such employees’ salary.

In addition to providing "reasonable break time," covered employers must also provide space, "other than a restroom, that is shielded from view and free from intrusion from coworkers and the public." Employers should begin to proactively identify possible private locations for nursing mothers.

The reasonable unpaid break provision of the Patient Protection and Affordable Care Act (the Act) was effective immediately, and it is anticipated that the Department of Labor will issue regulations in the future to provide additional guidance on the Act’s requirements. Pennsylvania employers should modify policies and ensure that supervisors and managers are aware of the reasonable break time provision of the Act. In addition, employers should stay tuned for further guidance from the Department of Labor.

The Act contains many provisions that will impact employers, but the breaks for nursing mothers provision was a surprise for many of us. In fact, employers have been inundated with new laws and regulations over the past year. The requirements of the Act, and other critical legal updates, will be covered in depth at the McNees Wallace & Nurick LLC 20th Annual Labor and Employment Seminar on May 21, 2010 in Hershey, Pennsylvania. For more information and to register for the Seminar, click here (pdf).

On March 30, 2010, President Obama signed the Health Care and Education Reconciliation Act of 2010 (H.R. 4872) (pdf) into law, supplementing the Patient Protection and Affordable Care Act (H.R. 3590) (pdf). McNees attorneys have written a whitepaper on the areas of these Acts that apply directly to employers, summarizing each provision and grouped by their effective date. To read the full whitepaper, click here.

The core goal of health care reform was to provide health insurance coverage to 32 million Americans who are currently uninsured. The legislation attempts to achieve this goal through a variety of approaches, including tax credits, penalizing employers that don’t offer affordable coverage and individuals who fail to obtain coverage, creation of “health insurance exchanges,” expansion of Medicare Part D coverage and taxing high cost insurance plans.

The most sweeping changes brought by the Act do not take effect until 2014 and 2018, and existing health plans may be “grandfathered” or exempt from certain requirements. However, a number of important provisions take effect in 2010 and 2011 for all health plans.

The reform package is extremely broad in scope, and it will take time for employers to develop appropriate plans for compliance. As an initial step, employers should work with their insurance providers and brokers, third-party administrators, counsel and accountants to determine which of the 2010 requirements apply to them and the appropriate compliance steps.

It is also important to note that many provisions in the new law do not apply to plans maintained through a collective bargaining agreement until the agreement expires. Employers that are currently negotiating a collective bargaining agreement, or that will be doing so in the near future, must be clear regarding the impact of health care reform on their current and future agreements.

Although the Act is rife with new taxes and administrative burdens on plans, there are also a few “sweeteners” that employers should consider taking advantage of (e.g. Small Employer Tax Credit, Simplified Cafeteria Plan, Retiree Reinsurance, etc.). For a more detailed summary of these provisions including effective dates, click here. Additional guidance will be coming from Washington as compliance deadlines approach and we will continue to keep you informed.

If you have any specific questions regarding the Act’s impact on your health plans, contact any of the attorneys in the McNees Wallace and Nurick LLC Labor and Employment Group or Employee Benefits Group for assistance.   In addition, McNess attorneys will be presenting a breakout session entitled "Whats New in Employee Benefits?  Healthcare Reform is Just the Beginning…" at the McNess Wallace and Nurick LLC 20th Annual Labor and Employment Law Seminar on May 21, 2010.  To download a PDF of the Seminar invitation click here. 
 

On March 18, 2010, President Barack Obama signed into law the Hiring Incentives to Restore Employment ("HIRE") Act (H.R. 2847).  The HIRE Act amends the Internal Revenue Code ("IRC") to provide certain tax incentives for employers to hire unemployed workers.  Specifically, the HIRE Act creates two new tax benefits for eligible employers: a payroll tax exemption for certain new hires, and a tax credit for retaining the qualified new hires. 

First, the HIRE Act provides eligible employers with a payroll tax exemption for qualified employees hired between February 3, 2010, and January 11, 2011.  This tax benefit is an exemption from having to pay the employer’s 6.2% share of social security tax on the wages paid to the qualified employee from March 19, 2010, through December 31, 2010.  Employers may claim this tax exemption on their quarterly tax returns, starting with the second quarter of 2010. 

Second, the HIRE Act also provides eligible employers with a business tax credit for each qualified employee that is retained for at least one year, or 52 consecutive weeks.  The employer may claim a credit of up to 6.2% of the wages paid to the retained employee over the one-year period, or a maximum of $1,000 per qualified employee, on its 2011 tax return. 

Continue Reading HIRE Act Provides Employers with Tax Incentives for Hiring and Retaining Qualified Employees

This post was contributed by Jennifer E. Will, Esq., a Partner in McNees Wallace & Nurick LLC’s Labor and Employment Practice Group. 

As social media continues to affect your business, there are a few more steps that you should be taking to protect your assets. The Federal Trade Commission has revised and posted its "Guides Concerning the Use of Endorsements and Testimonials in Advertising (.pdf)."

What does this mean for employers? You could be held liable for false or unsubstantiated statements about your Company’s services or products that are made by your employees on blogs or social networking sites.

Duty to Disclose? Employees who endorse their employer’s products have a duty to disclose the employment relationship at the time of the endorsement or testimonial . . . even when it is posted on a site that is NOT maintained by the employer.

Time for a Check-Up? Your current Internet Postings and/or Electronic Resources Policy should be reviewed to ensure that it puts employees on notice of their duty to disclose the employment relationship. Also, your policies should already contain guidance to employees regarding privacy rights, monitoring and the improper use/disclosure of proprietary and confidential information. 

Employers should take time now to review and update their policies.
 

On March 3, 2010, President Obama signed the Temporary Extension Act of 2010 (.pdf) into law. The Act provides for the continuation of the extended unemployment compensation benefit program and the availability of the COBRA premium subsidy, which expired February 28, 2010. The COBRA premium assistance program was extended to allow those involuntarily terminated through March 31, 2010 to receive the 65 percent premium subsidy. More information regarding the COBRA premium subsidy was posted on our blog on January 6, 2010.

The Act also clarifies that if an individual has a COBRA qualifying event due to a reduction in hours, and is later involuntarily terminated, then the involuntary termination must be treated as a qualifying event and the employee must receive a new, appropriate COBRA notification.

Finally, the Act clarifies certain interpretative guidance, and indicates that certain portions of the Act are retroactive.

Employers and Plan Administrators should be sure to incorporate these changes into their COBRA notification procedures and COBRA notices.  

Congress is also said to be considering a bill that would extend the COBRA premium subsidy program further. 
 

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

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

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

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

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

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

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

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

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

Continue Reading EEOC Issues Proposed Regulations Defining Employers’ Affirmative Defense Under ADEA

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.