Employer Law Report : Employment and Labor Relations Lawyer & Attorney : Porter Wright's Employer Law Report : Employment Litigation, Non-Compete, Trade Secrets

On June 29, 2009, the Supreme Court addressed a provocative question about the current state of workplace diversity in the United States. In the controversial Ricci v. DeStefano decision, the Court determined by a vote of 5-4 that only in very narrow circumstances can public employers engage in disparate-treatment discrimination to avoid violating the disparate impact provision of Title VII of the Civil Rights Act. In order to make a race-conscious preventative decision, an employer must have a strong basis in evidence that a given selection method was deficient and that discarding that method’s results is necessary to avoid creating a disparate racial impact.

Title VII protects employees from two types of discrimination based upon race, color, religion, sex, and national origin: intentional acts of discrimination (disparate treatment), and facially neutral policies and practices that have a disproportionate adverse effect on minorities (disparate impact).   If an employee makes a prima facie showing of disparate impact discrimination, the burden then shifts to the employer to prove that the practice in question is job related and consistent with business necessity. Even if the employer meets this burden, a plaintiff may still succeed by showing that the employer refuses to adopt an available alternative employment practice that has a lesser disparate impact and serves the employer’s legitimate needs. Ricci posed the question of under what circumstances an employer may take race-conscious action to avoid disparate-impact liability given this statutory scheme.

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One month ago, we discussed a bill introduced in the Ohio General Assembly to prohibit discrimination on the basis of sexual orientation and gender identity and expression. Representative Barney Frank (D-Mass.) recently introduced a similar bill in Congress to prohibit employment discrimination on the basis of sexual orientation and gender identity, The Employment Non-Discrimination Act of 2009, H.R. 2981. This bill, which has been referred to committee, defines “gender identity” as “the gender-related identity, appearance, or mannerisms or other gender-related characteristics of an individual, with or without regard to the individual’s designated sex at birth.” This language is similar to the proposed definition of “gender identity and expression” under the Ohio bill. This proposed bill, like the Ohio proposal, also includes broad protection of “actual or perceived” sexual orientation. The language in the proposed federal statute limits potential claims under the Act to disparate treatment and retaliation actions only, expressly excluding disparate impact claims. The procedures and remedies for violations of the Act are the same as those provided under Title VII. The proposed federal statute, like the proposed Ohio statute, expressly excludes religious organizations that are exempt from Title VII’s religious discrimination provisions.

The proposed federal statute, in contrast to the Ohio proposal, directly addresses grooming standards and restroom, shower, and changing facility usage. Under the federal proposal, employers may deny, on the basis of gender identity, employees access to changing areas or showers where being seen unclothed is “unavoidable”—if the employer provides “reasonable access” to adequate facilities “not inconsistent with the employee’s gender identity” determined at the time of employment or when the employee notifies the employer that he/she is undergoing/has undergone gender transition. The federal proposal also allows for reasonable dress and grooming standards—provided the employer allows employees who are undergoing, or who have undergone, gender transition to adhere to the standards for the gender to which the employee transitioned or is transitioning. 

We’ll provide updates as additional information becomes available.

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So-called “mixed motive” cases, where there is evidence of unlawful bias but also evidence of a legitimate, nondiscriminatory reason for an employment action, have generated a great deal of debate over the applicable burden of proof. In 1989, a divided U.S. Supreme Court held in Price Waterhouse v. Hopkins that, once a plaintiff has proven that unlawful animus was “a motivating factor” in an employment decision, the burden of proof shifts to the defendant to prove that it would have taken the same action even absent the unlawful animus. This approach was essentially ratified by Congress when it approved certain amendments to Title VII in enacting the Civil Rights Act of 1991. But, because Price Waterhouse applied to a claim under Title VII, and federal age discrimination claims fall under the Age Discrimination in Employment Act (ADEA), which was not similarly amended by the Civil Rights Act of 1991, the burden of proof applicable to mixed-motive ADEA cases has remained in dispute.

On June 18, 2009, the U.S. Supreme Court resolved this dispute in Gross v. FBL Financial Services, holding that the burden of proof for an ADEA claim remains with the plaintiff at all times, even in a mixed-motive case. The Court’s 5-4 decision relied heavily on the differences in statutory framework between the ADEA and Title VII in distinguishing the result in Price Waterhouse. The majority opinion, written by Justice Thomas, pointed out that the ADEA required the plaintiff to prove that he was demoted “because of” his age and that there is no statutory basis to shift the burden of proof to the defendant simply because the plaintiff produced some evidence that age was one motivating factor in the decision. The plaintiff still retained the burden of proof to demonstrate that he would not have been demoted “but for” his age.

 
With Congress all too willing these days to enact legislation overturning employment law decisions of the Supreme Court that displease it, it will interesting to see how long the holding in Gross stands. 

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As we reported earlier, there is a split in the federal courts of appeals regarding whether the National Labor Relations Board (NLRB) has authority to issue binding opinions while it is operating with only two members. Since that post, another federal circuit has weighed in on the issue.

The NLRB is the federal agency charged with governing relations between private employers and unions and administering the National Labor Relations Act (NLRA). Ordinarily, the NLRB has five members and frequently delegates power to issue rulings and opinions to three-member panels. In order for the NLRB itself to act, it must have a three-member quorum. In late December 2007, the NLRB had one vacancy and two members whose terms were nearing expiration. Congress and the President clashed on the nomination of replacement NLRB members, and filling the vacancies became unlikely (and still has not occurred). Just before the expiration of the two members’ terms, the four-member NLRB delegated all of its power to a three-member panel, which included the two members whose terms were not set to expire. After the two departing members’ terms expired, the two remaining members of the three-member panel continued to issue opinions, relying on statutory language in the NLRA allowing a three-member panel to proceed as a quorum in the absence of one of its members. 

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The Ohio workers' compensation successor-in-interest rules frequently catch even the most seasoned corporate M&A attorney off guard. Most M&A attorneys reasonably expect that a straight asset purchase will not result in the assumption of any workers' compensation liability in Ohio. As it relates to companies that pay premiums directly into the Ohio state workers' compensation fund, that expectation more often than not will turn out to be wrong. In short, Ohio's courts have long held that the workers' compensation statute authorizes the BWC to find successorship whenever "any employer transfers a business in whole or in part or otherwise reorganizes the business."

Frequently deferring to BWC determinations that successorship justifies a transfer of the seller's experience to the purchaser, the courts simply have defined a successor in interest as a "transferee of a business in whole or in part." This broad definition generally has resulted in the asset purchaser being held to have succeeded to the experience rating of the selling company even when the asset purchase agreement expressly states that the purchaser assumes none of the liabilities of the selling company. (Indeed, it has even resulted in a finding of successorship when a company retained another company's employees as it took over a lease of that company.)

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In April 2008, I reported that a divided three-judge panel of the Sixth Circuit in Thompson v. North American Stainless LP held that an employee may sue for retaliatory acts against him by his employer in response to protected activity by a related employee—a close friend or family member. This decision was in contrast to the decisions of the Third, Fifth, and Eighth Circuits rejecting associational retaliation claims. After rehearing en banc by the Sixth Circuit (by the entire court), the Court joined its sister circuits in rejecting a cause of action for associational retaliation in a narrowly-divided opinion.

In Thompson, a woman filed a sex discrimination charge with the EEOC. Three weeks later, the employer terminated the woman’s fiancé, who it also employed. The fiancé filed his own EEOC charge and, eventually, a lawsuit, and alleged that his termination amounted to retaliation for his fiancé’s EEOC charge. In response, the employer argued, among other things, that there is no cause of action under Title VII for retaliation against associated third-parties. The trial court agreed and dismissed the case. The plaintiff appealed, and a divided three-judge panel of the Sixth Circuit reversed and held that Title VII provides a cause of action for retaliation in response to a related employee’s protected activity. The court defined this new cause of action stating, “Title VII prohibit[s] employers from taking retaliatory action against employees not directly involved in protected activity but who are so closely related to or associated with those who are directly involved, that it is clear that the protected activity motivated the employer’s action.” (Emphasis added.) In so holding, the panel closely examined the Supreme Court’s definition of “retaliation”—that which would “dissuade[] a reasonable worker from making or supporting a charge of discrimination.” (Quoting the U.S. Supreme Court’s decision in Burlington Northern and Santa Fe Railway Co. v. White, 126 S.Ct. 2405 (2006).) 

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Last week, a United States District Court Judge for the Eastern District of Pennsylvania issued one of the few decisions thus far to analyze the reach of the Lilly Ledbetter Fair Pay Act.  In Rowland v. CertainTeed Corp., 2009 U.S. Dist. LEXIS 43706, Judge Schiller held that the Ledbetter Act’s extension of the statutory time period for claiming pay discrimination does not apply to a failure-to-promote case. In so holding, Judge Schiller reasoned that Congress limited the Ledbetter Act to claims of “discrimination in compensation.” 

Under the Ledbetter Act, an unlawful employment practice occurs “when a discriminatory compensation decision or other practice is adopted, when a person becomes subject to a discriminatory compensation decision or other practice, or when a person 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.” 29 U.S.C. § 626(d)(3) (2009). This legislation followed the Supreme Court’s decision in Ledbetter v. Goodyear, which limited Ledbetter’s claim to adverse actions taken within 300 days of filing the EEOC Charge.  

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The Ohio Supreme Court held yesterday that a discharged employee is barred from pursuing an action for age discrimination under R.C. § 4112.99 when the discharge has been arbitrated and was found to be for just cause. More specifically, the Court concluded that R.C. § 4112.14(C), which prohibits age discrimination lawsuits if an arbitrator upheld a discharge for just cause, applies to age discrimination claims brought under § 4112.99. So if a Plaintiff files a lawsuit under § 4112.99, even though this provision does not mention arbitration proceedings, the state age discrimination claim may still be prohibited by § 4112.14(C). Meyer v. UPS, Inc., 2009-Ohio-2463. 

In Meyer, the plaintiff, Robert Meyer, was fired from his employment with UPS. The grievance filed by Mr. Meyer over his discharge was denied, and his discharge was upheld by a panel of union members and company management. Mr. Meyer filed a complaint in state court alleging workers compensation retaliation and amended the complaint to add state claims for age discrimination. Under Ohio law, a plaintiff may choose between several age discrimination statutes, including § 4112.02(N), § 4112.14, or § 4112.99. These statutes provide different damages to a plaintiff and arguably are covered by different statutes of limitations. Section 4112.14 is the only one that refers to arbitration. In this case, Mr. Meyer chose to file his claim under § 4112.99.
 

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The Courts and the Obama Administration continue to struggle over the proper role of E-Verify, particularly the proposed rule mandating E-Verify for Federal contractors. The Government has agreed with the litigants challenging the rule to delay implementation of the proposed rule until September 8, 2009, with strong hints that it will be delayed further as that date approaches. The proposed rule will not apply to any government contracts before the effective date.

For a more comprehensive review of the proposed rule and E-Verify generally, please review our article: E-Verify: Coming Soon to a Theater Near You.

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