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Seventh Circuit Court of Appeals affirmed the District Court's grant of Summary Judgment in James v. Hyatt Regency Chicago reminding employers they are under no obligation under the FMLA to restore an employee to his or her position if the employee is unable to perform the essential functions of the job.

So here are the facts—Carris James was employed at Hyatt Regency as a steward for over 22 years. Although James was born with very poor vision, he was able to perform his job functions by wearing correctable eyeglasses and using magnifying glasses. Hyatt also accommodated him by increasing the print size of his work assignments and schedules. As a steward, James was responsible for maintaining the cleanliness of Hyatt's food service areas and ballrooms and transporting food items and equipment. Most of James' job responsibilities required he bend over, lift heavy objects, or both.

Well, in March or April of 2007, James' eye trouble got even worse! He was punched in the face while away from work. James developed retinal detachment in his left eye, so he had corrective surgery on April 20, 2007. When Hyatt learned James was away from work due to a medical issue, the human resources official sent the necessary FMLA paperwork to James. James provided the requested documents on April 25, 2007, and Hyatt retroactively dated his leave back to April 19th, his first day away from work. Although James had exhausted his FMLA leave on July 13, 2007, as a member of the Local Union he was entitled to job protection for up to one year from his original absence—April 19, 2008.

Things got confusing when James began submitting doctors' certifications regarding his ability to return to work. See if you can follow this...

Are you confused yet? Well, Hyatt was!

Hyatt attempted to contact James in September and December of 2007 regarding the conflicting doctors' certifications and to obtain further clarification regarding the lifting and bending restrictions, but James provided no further clarification. On January 15, 2008, Hyatt sought further clarification directly from Dr. Scott. Dr. Scott provided a certification on January 28, 2008, stating James could return to work, but would not be able to complete any task that required vision better than 20/200. Hyatt met with James shortly thereafter, and he returned to work in the same position, shift and seniority level on February 17, 2008.
 

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 On February 28, 2013, the Office of Federal Contract Compliance Programs (OFCCP) rescinded two Bush-era enforcement guidance documents on pay discrimination from 2006—the “Compensation Standards” and “Voluntary Guidelines.” This is consistent with OFCCP’s stated focus on pay discrimination since the beginning of the Obama administration.

OFCCP’s Director, Patricia Shiu, issued a press release and authored a blog article, stating that OFCCP intended to align its analysis of pay discrimination with the principles used to enforce Title VII. She stated that OFCCP intended to no longer limit its pay discrimination focus to equal pay in the same job but to expand its focus to more tacit practices like discrimination in assigning sales territories or departments or in promotion or bonus, overtime, or commission opportunities. She also signaled that OFCCP would no longer take a “narrowly defined, cookie-cutter approach” to evaluating contractor pay practices but that pay analysis would be tailored to the individual contractor, industry, types of jobs, and pay practices.

It is important to note that prior guidelines were rescinded immediately, and new procedures are in place for all compliance evaluations going forward. Employers using the 2%/$2,000 rule, screening by job title, are no longer safe using this simple rule of thumb, which was rescinded as part of the prior guidance.

OFCCP will now use a flexible, fact-based approach, similar to what courts use for Title VII and not restrict itself to any formula or framework. Briefly, the new approach will involve:

• OFCCP investigators working with government statisticians and attorneys to determine the appropriate analytical methods for use in each investigation;
• Analyzing comparative compensation data using both large and small groups to determine if discrimination has occurred;
• Reviewing and testing of all factors (such as experience, tenure in position, performance ratings, etc.) provided by the contractor as an explanation for employee compensation disparities to determine if they are relevant to compensation and whether they were consistently applied;
• Not requiring statistical analysis to prove pay discrimination in all cases; and
• Not requiring anecdotal evidence (statements by workers about pay discrimination) to prove systemic pay discrimination.

“Compensation discrimination” will not be limited to base pay, but could include other earnings (e.g., bonuses, overtime, and commissions) and benefits, job assignments, training and advancement opportunities, differences in opportunities for increased compensation, or other unexplained differences.

During a desk audit, OFCCP will:

• Gather summary data for pay comparison (average compensation by sex and race by pay grade or job group);
• Assess quantitative factors, such as:
  • The size of overall average pay differences based on race or sex,
  • The number of job groups/pay grades where average pay differences exceed an unstated certain threshold, and
  • The number of employees negatively affected within job groups/pay grades;
• Assess qualitative factors, such as:
  • Compliance history (prior violations),
  • OFCCP or EEOC complaints,
  • Anecdotal evidence,
  • Potential violations found during the audit involving other employment practices, and 
  • Inaccurate or incomplete initial data submitted;
• Gather individual data after gathering summary data or at the same time as the summary data;
• Review policies and practices;
• Interview HR personnel and employees; and
• Examine payroll and human resource information systems.

If satisfied with a preliminary analysis of summary data, OFCCP may (but is not required to) stop its analysis and not conduct individual or more in depth review. The analytical methods to be used include pooled regression analysis (large groups) or non-pooled regression analysis (small groups), using a 2-standard deviation standard, and cohort analysis, comparing similarly-situated individuals.

Information on this new directive is available here.

While OFCCP states that the new approach is intended to make the process more clear, the information released thus far does not provide a new “OFCCP-sanctioned” roadmap for contractors to follow in conducting their yearly compensation analysis as part of their affirmative action plan preparation or in preparing for a desk audit. OFCCP has indicated that it will be releasing further guidance documents and conducting webinars on this topic in the near future. We will update this blog post as more information is provided by OFCCP.

(More specifically, the two guidance documents rescinded were: (1) Interpreting Nondiscrimination Requirements of Executive Order 11246 With Respect to Systemic Compensation Discrimination (“Compensation Standards”), 71 FR 35124, and (2) Voluntary Guidelines for Self-Evaluation of Compensation Practices for Compliance with Nondiscrimination Requirements of Executive Order 11246 (“Voluntary Guidelines”), 71 FR 35114.)

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This blog post was co-authored by Margaret M. (Peggy) Koesel and Tracey L. Turnbull.

A company may discard data, documents or records in the ordinary course of its business. But routine destruction of information that may be relevant to a government investigation or a lawsuit must be suspended and information must be saved as soon as possible after a party has notice that it must preserve evidence. A recent case from the district court for the Southern District of Ohio looks at the events that triggered a bank’s duty to save particular data considered relevant by its opponent and the consequences of its failure to stop the routine purging of that data on a timely basis.

In E.E.O.C. v. JP Morgan Chase, No. 2:09-cv-00864, the Equal Employment Opportunity Commission claimed that a bank treated a class of female mortgage consultants differently than their male counterparts by, among other things, directing more lucrative calls in the call queue to male employees based on the skills it assigned to each individual mortgage consultant. In an effort to establish this theory, the Commission asked the bank to produce “skill login data” for a five-year time period, claiming that a statistical analysis of that data would show discrimination.

After a disagreement over the scope of the data to be produced, the court ordered the bank to produce data from July 2006 to December 2009. But the bank had failed to preserve some of that data, allowing it to be purged as part of its routine destruction of any data of that kind that was over three years old. The bank’s destruction of ten months of the data led the Commission to request sanctions.

The court first focused on the pre-lawsuit events that triggered the bank’s duty to preserve the data because sanctioning the bank for destroying the data before it had notice it was required to save it would not be appropriate. The court pointed to a number of pre-lawsuit notices from the Commission that the bank should have known triggered its duty to suspend the bank’s automatic purging process, long before the Commission filed a class action lawsuit. These events included a notice from the Commission that it was investigating class allegations, a request for information from the Commission concerning allegedly unfair call distribution, and a class-wide cause determination, all of which the bank received before it started its automatic purge of the relevant data. The district court also found it “curious” the bank recognized that it should save the email of the female mortgage consultants while the charge of discrimination was pending, yet it took no steps to safeguard the login data at the same time. That failure ultimately allowed data from July 2006 to September 2007 to be automatically destroyed.

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Gaglioti v. Levin Group, Inc. (6th Cir. Dec. 13, 2012), serves as a good reminder to employers to pin down their reasoning for terminating an employee at the start, and stick to it. In addition, all reasons for terminating an employee should be included in the termination meeting with the employee, or at the very least, at the EEOC charge stage, even if it might bruise the employee's ego. Any change or supplementation to the original reason can make put the entire termination decision seem made up and send the employer to trial. It is also imperative that employers know what their policies say.

In 2008, Levin Group hired Joseph Gaglioti as a staff accountant. Gaglioti was hired with full benefits, though the company claimed Gaglioti was hired as a temporary employee and his work limited to immediate projects. As part of his hire paperwork, Gaglioti filled out a medical insurance form and disclosed his wife's significant medical problems. The next year, Gaglioti filled out a new medical history form in connection with Levin Group's medical insurance plan renewal like all full time, benefit-eligible employees, and again, disclosed his wife's medical condition. While Gaglioti claimed he gave the form to the Comptroller's assistant, the Comptroller and the President claimed they never saw it. The next month, Gaglioti was informed he was being terminated. The reason given to him —and confirmed in an email — was that he was a temporary employee, and there was no work for him. During litigation, the President would supplement this and testify that Gaglioti's work was poor, and that he had decided to terminate Gaglioti in "early 2009". Notably, the record devoid and any evidence indicating that Gaglioti's performance had ever been an issue.

Gaglioti sued Levin Group for age and disability discrimination under state and federal law. He also sued for ERISA interference, but that claim will not be discussed here. The district court granted summary judgment for the employer on all claims and dismissed the suit.

Gaglioti's Age Discrimination Claims

The Sixth Circuit did not entirely agree with the district court. The court analyzed both claims under the McDonnell Douglas tri-partite burden shifting framework. With respect to his age discrimination claim, the court found that Gaglioti met his prima facie burden, which required that he show he was over the age of 40, discharged, qualified for the position, and replaced by or that his discharge permitted the retention of, a person outside the protected age class. Plaintiff easily met the first three elements. The more contentious element was the fourth as the evidence revealed that after Gaglioti's termination, Levin Group retain two younger staff accountants in a permanent role. This was sufficient for Gaglioti to meet his burden on the fourth element and move the case forward.

Turning to the employer's burden of persuasion, i.e., to identify a non-discriminatory reason for terminating Gaglioti, Levin Group offered three reasons: (1) Gaglioti's position was always intended to be temporary, and Gaglioti was terminated when his temporary assignment was completed; (2) there was no work for Gaglioti to do, meaning his termination was essentially a downsizing; and (3) that Gaglioti's performance was sub-standard.

To prove pretext, Gaglioti took issue with the all three reasons given by Levin Group. First, Gaglioti argued that each of Levin Group's three reasons were, at one point, asserted as the Company's sole reason for terminating him. His theory was that the Company had changed its reasons for firing him during the course of the litigation. The evidence demonstrated that at Gaglioti's termination, the sole reason given to him for his termination was the temporary nature of his position. At the EEOC stage, however, Levin Group claimed Gaglioti was terminated because there was no future need for Gaglioti's services — there was no mention of any performance issues. At the summary judgment stage during litigation, however, the Company argued that it was the combination of poor performance and temporary employment that caused it to terminate Plaintiff. The court found that the "moving-target nature of Levin Group's explanation ..., while perhaps casting a pall of suspicion over it actions" was not, by itself, enough to create an issue of fact because the Company's story was one that was "supplemented" rather than changed.

What did the employer in was its failure to pay attention to its own policies. Levin Group's employee manual defined "temporary employee" as one that did not get benefits, but Gaglioti did. With this, the court found that the evidence contradicted Levin Group's claim that Gaglioti was a temporary employee, and noted that this, "coupled with the prima facie evidence" that the employer retained two younger employees after Gaglioti was terminated, could lead a reasonable jury to conclude that this "'temporary employee' justification was crafted post hoc by [the Comptroller and the President] to cover an improper reason for firing him."

Other inconsistencies with Levin Group's story were also no help. For example, Levin Group argued that there was no work for Gaglioti to do, but the accounting department was larger when Gaglioti was terminated than when he was hired. And let's not forget, Levin Group hired two younger people on a full-time basis after it terminated Gaglioti. Then there's the issue of Gaglioti's performance ... of which there was zero documentation and no mention of any performance issues until after litigation ensued. The court noted that while the fact that the employer did not raise the issue of Gaglioti's performance until well into litigation "may not be enough to show a changing rationale, it would allow the jury to view the performance argument as a litigation strategy, as opposed to the real reason for the action." The court reasoned that this was "potentially enough for a jury to discount this argument." It also did not help that the Comptroller testified that Gaglioti's work performance "didn’t have anything to do with why he was fired" since inconsistent reasons given by key decision-makers can provide evidence of pretext. With this, the Sixth Circuit reversed the trial court and remanded the case on Gaglioti's age discrimination claims.

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The Equal Opportunity Commission has issued a new fact sheet titled: Application of Title VII and the ADA to Applicants or Employees Who Experience Domestic or Dating Violence, Sexual Assault, or Stalking, which explains how employment decisions related to employees who are victims of domestic violence, sexual violence, or stalking might violate Title VII or the ADA. Because these laws do not expressly prohibit discrimination against those who experience domestic violence, sexual assault, or stalking, the potential discrimination and retaliation against these individuals may be overlooked, the Commission explained. The Fact Sheet does not establish new employee protections; rather, it is a reminder to employers that actions they take with respect to employees who are victims of such conduct can create liability.

The Commission illustrates its point by providing numerous examples of workplace situations involving applicants and employees who experience domestic or dating violence, sexual assault, or stalking in disparate treatment, disparate impact and retaliation cases that would trigger liability. Some of the examples provided in the Fact Sheet include:

Title VII

• An employer who terminates an employee after learning she has been subjected to domestic violence, because he fears the potential “drama battered women bring to the workplace.”
• A male applicant does not get a job after the decision maker who, believing only women can be true victims of domestic violence because men should be able to protect themselves, refuses to hire the male when he learned the applicant filed for a restraining order.
• A supervisor learns a subordinate has recently been subject to domestic abuse, and is now living in a shelter. Viewing her as vulnerable, he makes sexual advances, and when she refuses he terminates her.

ADA

• Discrimination. An employer learns an applicant was a witness in a rape prosecution and received counseling for depression. The employer decides not to hire the applicant based on a concern that she may require future time off for continuing symptoms or further treatment of depression.
• Discrimination. An employee has facial scarring from skin grafts, which were necessary after the employee was burned in an attack by a former domestic partner. When the employee returns to work after a lengthy hospitalization, co-workers subject the employee to frequent abusive comments about the skin graft scars, and the employee's manager fails to take any action to stop the harassment.
• Failure to Accommodate. 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. The employer denies the request because it “applies leave and attendance policies the same way to all employees.”

In addition to these examples, the EEOC reminds employers of the need to maintain the confidentiality of any medical information that it acquires from the employee and the unlawfulness of retaliating against any employee who asserts his or her rights under the ADA. All in all, the EEOC's guidance breaks no new ground, but provides a good reminder to employers. The examples provided actually are instructive regardless of whether the employee's victimization is domestic or sexual in nature.

Takeways:

1. Update Training Materials. Employers should update their training materials to include the EEOC's examples, or similar ones.
2. Recognize the Potential for Liability. Employers should recognize that situations involving applicants or employees who have been subjected to domestic violence, sexual violence, or stalking trigger their legal obligations and provide these applicants and employees legal protections.
3. Protections Under Other Federal and State Laws. Employers should also be aware that other federal laws, like the Family and Medical Leave Act, and state laws may be apply to employees who are victims of domestic violence, sexual violence, or stalking. For example, Ohio employers should be aware that the following laws apply:

Crime Victims: Employers may not discharge, discipline or retaliate against crime victims, victims' families or victims' representatives for participating in preparations for criminal or delinquency proceedings (at the prosecutor's request) or for attendance at criminal or delinquency proceedings (pursuant to subpoenas), if attendance is necessary to protect victims' interests. O.R.C. § 2930.18.

Witnesses: Employer are also prohibited from discharging (or threatening to do so), punishing or penalizing employees because of time lost from regular employment due to attendance at criminal proceedings pursuant to subpoena. O.R.C. § 2945.451.
 

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In 1999, in Cleveland v. Policy Mgmt. Sys. Corp., the U.S. Supreme Court held that in order to avoid summary judgment in a disability discrimination case brought under the ADA, a plaintiff must provide a "sufficient" explanation regarding any conflicting statements made in a Social Security disability application.  According to the Supreme Court, that explanation must be "sufficient to warrant a reasonable juror's concluding that, assuming the truth of, or the plaintiff's good-faith belief in, the earlier statement, the plaintiff could nonetheless 'perform the essential functions' of her job, with or without 'reasonable accommodation.'"

Last week, in EEOC v. Greater Baltimore Medical Center, Inc., the Fourth Circuit federal appeals court rejected the EEOC's position that Cleveland does not apply in enforcement actions brought by the EEOC on behalf of an individual claimant.  While acknowledging that the EEOC has a governmental interest in an enforcement action that is not merely derivative of the individual claimant's interest, the court concluded that "this does not mean that a claimant's statements to other government agencies are somehow less relevant to an enforcement action on behalf of the claimant than they are for an action pursued by the claimant himself."

In concluding that the EEOC and the claimant in GBMC did not meet this burden, the Court noted multiple comments from the claimant indicating his total inability to work and his failure to notify the Social Security Administration of his agreement to notify it if his condition improved to the point where he would be able to return to work.  While noting that it "did not condone" and was "deeply concerned" about the employer's failure to reinstate the individual claimant when the medical evidence demonstrated he was capable of working, the court granted the employer's motion for summary judgment stating that it was constrained to do so based on the plain language of the ADA and relevant case law.

GBMC found that reliance on the Cleveland decision was a great litigation strategy to avoid potential ADA liability, but there may be another lesson for employers to take from the GBMC case prior to litigation.  When an employee is seeking reinstatement from a lengthy leave of absence, employers should make sure they know whether the employee has applied for benefits that may be inconsistent with the request to return to work.  Doing so will help inform any reasonable accommodation process and will help employers ensure that they do not return employees to work who may not be able to work safely.  

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The Equal Employment Opportunity Commission (EEOC) decided on April 20, 2012 that discrimination against an employee on the basis that they are transgender was the equivalent of sex discrimination under Title VII of the Civil Rights Act of 1964. Macy v. Holder, EEOC Case No. 0120120821. Title VII protects employees against discrimination on the basis of a several protected classes, including sex. While many states and municipalities include transgender and sexual orientation as protected classes, Title VII has not been interpreted to protect these individuals on this basis alone. Individuals must show that the discrimination was based on their sex, which is often shown by arguing that stereotypes about genders played a role in the decision making.

The claimant in this case, Mia Macy, was a police detective in the federal Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF). Macy, then male, applied for a transfer within ATF. During the background check for the transfer, Macy informed the investigator that he was transitioning to a female. Five days after ATF learned this information, Macy was informed that the position was no longer available due to budgetary restrictions. Macy later learned that someone else had been hired for the position. Macy was later told that the other individual was hired because the individual was further along in the background check process. Macy believed that the other individual was chosen because of discrimination against Macy as a transgender person.

Macy filed a complaint with the EEOC alleging discrimination on the basis of “gender identity, change of sex, and/or transgender status.” ATF argued that this was not a recognizable claim under Title VII. Macy appealed to the EEOC for a determination. Initially, Macy also claimed sex discrimination on the basis of stereotyping, but that claim later was withdrawn. Courts have long-held that sex stereotyping—that an individual does not conform to the stereotypes for the male or female gender—is actionable.

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On April 25, 2012, the EEOC issued a new Enforcement Guidance memorandum focusing on potential race and national origin discrimination arising out of employer use of criminal background checks in making employment decisions. The Guidance discusses disparate treatment and disparate impact analysis under Title VII and concludes that the use of criminal background information may result in a violation of Title VII under either theory of discrimination. Specifically, the Guidance notes that a disparate treatment violation may occur when an employer treats criminal history information differently based on an applicant's or employee's race or national origin. Or, an employer's neutral policy (e.g., excluding applicants from employment based on certain criminal conduct) that disproportionately impacts individuals based on their race or national origin would violate Title VII if the policy is not job related and consistent with business necessity.

The Guidance addresses the differences between arrest and conviction records. With respect to arrest records, the Guidance states that the fact of an arrest does not establish that criminal conduct has occurred, and an exclusion based on an arrest, in itself, is not job related and consistent with business necessity. However, an employer may make an employment decision based on the conduct underlying an arrest if the conduct makes the individual unfit for the position in question. By contrast, a conviction record will usually serve as sufficient evidence that a person engaged in particular conduct, but according to the EEOC, under certain circumstances, there may be reasons for an employer not to rely on the conviction record alone when making an employment decision.

The Guidance spends the most time discussing the potential disparate impact arising out of criminal background checks. According to the Guidance, national data generally supports a finding that criminal record exclusions have a disparate impact based on race and national origin. As a result, the EEOC will scrutinize a criminal record exclusions. This does not mean that employers cannot demonstrate that the particular exclusion it utilizes will automatically be found to have a disparate impact based on race or national origin. Instead, the EEOC will assess relevant evidence in determining whether a disparate impact exists. For instance, the EEOC will look at applicant flow information, workforce data, criminal history background check data, demographic availability statistics and incarceration/conviction and other similar data for the relevant labor market. Therefore, the employer may demonstrate the lack of any disparate impact by showing that local statistics show that African Americans and/or Hispanics are not arrested or convicted at disproportionately higher rates in the geographic area from which it does its hiring.

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Employers frequently require a high school diploma as a condition of employment. Employers not only look to hire individuals who possess basic skills in reading, writing and math, but also believe that having a high school diploma demonstrates a level of maturity and perseverance.

That requirement seems reasonable -- except when it "screens out" individuals based on their protected status. For instance, the EEOC has long taken the position, upheld by the courts, that high school diploma requirements have an adverse impact on minorities and therefore can be used only when a high school diploma can be shown to be job related and consistent with business necessity.

On November 17, 2011, the EEOC posted an informal discussion letter on its website indicating that high school diploma requirements likewise may have a disparate impact on individuals with disabilities. According to the EEOC, some individuals with learning disabilities have difficulty passing end-of-course assessments and cannot obtain a high school diploma; therefore, they cannot obtain jobs which require the applicant have a high school diploma.

The EEOC considered the possible impact of high school diploma requirements under the ADA and provided the following advice to employers:

[I]f an employer adopts a high school diploma requirement for a job, and that requirement “screens out” an individual who is unable to graduate because of a learning disability that meets the ADA’s definition of “disability,” the employer may not apply the standard unless it can demonstrate that the diploma requirement is job related and consistent with business necessity. The employer will not be able to make this showing, for example, if the functions in question can easily be performed by someone who does not have a diploma.

Even if the diploma requirement is job related and consistent with business necessity, the employer may still have to determine whether a particular applicant whose learning disability prevents him from meeting it can perform the essential functions of the job, with or without a reasonable accommodation.

It may do so, for example, by considering relevant work history and/or by allowing the applicant to demonstrate an ability to do the job’s essential functions during the application process. If the individual can perform the job’s essential functions, with or without a reasonable accommodation, despite the inability to meet the standard, the employer may not use the high school diploma requirement to exclude the applicant.

The EEOC informal discussion letters are not binding as law and certainly are not binding on courts. There is room for good faith argument about whether the EEOC has properly applied the disparate impact theory of discrimination to this issue. Nevertheless, the discussion letter does indicate how the EEOC will likely rule in a charge on these facts. Therefore, employers are wise to evaluate whether a high school diploma really is necessary to perform the essential functions of any job for which it is being required. Even in those situations where the high school diploma requirement can be justified, employers will still need to consider in any case where a person is being excluded for not having a diploma and information is brought to light that a disability may be the reason whether a reasonable accommodation can be provided that would permit otherwise qualified individuals with disabilities to perform those essential functions.

Of course employers should continue to be cautious about the use of high school diploma and similar educational screening tools in light of the possibility of race discrimination claims.
 

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We previously have reported on the EEOC's increasingly aggressive agenda to expand the scope of its charge investigations by subpoenaing employer documents that far exceed any potential need. Fortunately, many federal courts have rejected these fishing expeditions. EEOC v. Loyola University Medical Center presents another good example.

In Loyola, the charging party filed a disability discrimination charge with the EEOC when she was asked to submit to a psychological evaluation as part of a fitness for duty examination ("FDE") that she was required to undergo in order to return to work from a medical leave. As part of its investigation, the EEOC issued a Request for Information ("RFI") from Loyola, which included:

1. a list of employees who were ordered by certain supervisors to take FDE's since January 2008,
2. the results of the evaluations and the types of testing performed on those individuals, and
3. the reasons each listed employee was required to submit to the FDEs.

Loyola promptly responded to the request and stated that only one employee had been required to submit to an FDE by the specified supervisors. However, Loyola, citing various federal and state privacy laws, refused to disclose the name of the individual, the results of the test, or the circumstances surrounding the request for the test.

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If you don't know the answer to this question with absolute certainty, you had better go back and check your policy. In Cracker Barrel v. Cincinnati Insurance Company, a Tennessee federal court concluded that the employer's EPLI policy provided neither coverage nor even a defense to a Title VII action brought against it by the EEOC. Why? The policy in question defined a "covered claim" as "a civil, administrative, or arbitration proceeding commenced by the service of a complaint or charge, which is brought by any past, present or prospective employees." The court read this provision literally and concluded that because the EEOC was not an employee, the complaint brought by it on behalf of the company's employees was not a covered claim.

Regardless of the correctness of this decision, employers need to review their EPLI policies to see how they define a covered claim. If it is not clear that the policy covers both claims brought by and claims brought on behalf of employees, then it makes sense to go back to the insurance broker to obtain clarification from the carrier on whether the latter type of claim falls within the definition. Because claims brought by the EEOC and other governmental agencies can be among the most expensive to defend, it is important for employers to know whether they are getting what they think they are paying for.

Hat tip to Michael Fox at employerslawyer@blogspot.com.
 

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In a decision issued in July, the Sixth Circuit addressed the standard for a claim under the "associational" provisions of the Americans with Disabilities Act and affirmed summary judgment on plaintiff's claim that his employment was terminated due to his wife's disability.

The plaintiff was the highest ranking manager for Air Wisconsin at the Kalamazoo Airport. His wife suffered from various conditions, including a rare and debilitating auto immune disorder that required expensive treatment.

Plaintiff was terminated for poor performance based on failure to report security violations, supervise employees properly and stay within budget. In filing suit, he claimed that the termination was due to consideration of his wife's disability, which he alleged impacted his work performance and caused him to be inattentive at work.

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Last month, we reported on a Seventh Circuit case demonstrating the broad scope of the EEOC's investigative and supervisory powers. In that case, EEOC v. Konica Minolta Business Solutions U.S.A., Inc., the court upheld an EEOC subpoena seeking to obtain the production of hiring data from the employer in response to a charge alleging racial discrimination with respect to terms and conditions of employment and eventually discharge. Today, we report on a case that demonstrates that the EEOC's investigative and subpoena powers are not limitless.

In EEOC v. UPMC, Carol Gailey, the charging party, was terminated by The Heritage Shadyside on June 22, 2008, for exceeding her maximum available leave of absence. Heritage Shadyside is a wholly-owned subsidiary of UPMC Senior Communities, Inc., which in turn is a wholly-owned subsidiary of UPMC. Heritage Place employs 170 people while UPMC employs over 48,000 people. Ms. Gailey filed a charge with the EEOC alleging disability discrimination. In response, Heritage Shadyside filed a position statement and attached several UPMC policies, including the leave of absence policy, which provided the basis for termination. The EEOC then sent a request for information to UPMC – not Heritage Shadyside – requesting the identities of employees at "all facilities in the Pittsburgh region" who had been terminated pursuant to the UPMC leave and disability policies for the period July 1, 2008 "to the present." UPMC objected to the scope of the EEOC's request and the EEOC issued a subpoena for this information.

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Last Friday, the Seventh Circuit Court of Appeals issued a decision in EEOC v. Konica Minolta Business Solutions U.S.A., Inc. that will embolden the EEOC's aggressive use of its investigatory powers to require production of evidence in a single employee charge that could support a more systemic investigation.

In Konica, a salesperson filed a discrimination charge with the EEOC alleging that, although he had been hired only eight months previous, he was subjected to different terms and conditions of employment and then ultimately discharged due to his race. During the course of its investigation into the charge, the EEOC learned through information produced by Konica that relatively few African Americans were employed at the facility where the charging party worked or at other locations in the Chicago area. In addition, the information provided by Konica suggested to the EEOC that the majority of the African American sales persons at the charging party's facility were on the same sales team. As a result, the EEOC requested and ultimately subpoenaed Konica records relating to its hiring practices for sales personnel at all of Konica's Chicago-area facilities. Konica asked the EEOC to revoke the subpoena and, when the EEOC refused, notified the EEOC that it was refusing to comply. Konica argued that the hiring data was irrelevant to the charge, which was directed at terms and conditions of employment and termination. The EEOC then filed an application with the federal court for an order enforcing the subpoena.

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Yesterday, the EEOC released its Final Rule implementing the American with Disabilities Act Amendments Act, which we discussed back in September 2008 and which was signed by President George W. Bush on September 25, 2008. The Final Rule, which runs 202 pages long, includes many revisions. But the most significant revisions as discussed in the EEOC's Fact Sheet are:

• The definition of disability should be interpreted broadly in favor of broad coverage of individuals, in direct contradiction to several Supreme Court decisions that had, according to Congress, too narrowly interpreted the definition of "disability;"
• The determination of whether an individual is disabled should not require an extensive analysis;
• The adoption of "rules of construction" that are to be used when determining whether an individual is "substantially limited" in performing a major life activity. Specifically, "substantially limits":
  • Does not mean an impairment that prevents or severely or significantly restricts a major life activity;
  • Is to be construed broadly;
  • Must be assessed on an individualized basis;
  • Must be assessed without regard to the ameliorative effects of mitigating measures, such as medication or hearing aids (with the notable exception of "ordinary eyeglasses or contact lenses" which may be considered); and
  • May include an impairment that is episodic or in remission if it would substantially limit a major life activity when active.
• A refocusing of the analysis of whether an individual was "regarded as" disabled form what the employer may have believed about the nature of the individual's impairment to how a person has been treated because of a physical or mental impairment (that is not transitory or minor); and
• The clarification that an individual must have an actual disability or a record of disability to qualify for a reasonable accommodation.

The express purpose of the ADAAA is to make it easier for an individual seeking protection under the ADA to establish that he or she has a disability within the meaning of the ADA. This purpose was not lost on employees and applicants. As we previously noted, the ADAAA resulted in an immediate increase in disability discrimination charges. We expect this trend to continue.

This makes it all the more important that employers engage in good faith in the interactive process to determine whether a reasonable accommodation exists for applicants or employees with alleged disabilities. The interactive process will often result in the discovery of workable accommodations, but perhaps more importantly it also frequently results in employees and applicants feeling satisfied that no reasonable accommodation actually exists. This satisfaction alone can significantly contribute to an individual's decision not to file a charge of discrimination.
 

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There has been a lot of discussion lately about the EEOC's decision to sue Kaplan Higher Education Corporation on the grounds that its policy of using credit histories as part of its applicant screening process had a discriminatory impact on minorities. Also, as noted at the end of last year in the Delaware Employment Law Blog, Illinois just became the fourth state to prohibit employers from disqualifying candidates based on credit history and, as of last summer, 15 other states had similar legislation pending. Ohio's bill, which was introduced in 2009, never gained any traction. Though I continue to believe that an outright ban on employer credit history checks is overbroad, the Federal Trade Commission's Interim Report to Congress issued earlier this week provides another reason why employers should exercise considerable caution in doing such checks. 

The FTC's Interim Report demonstrates that the accuracy of credit history reports remains an open question. The FTC is in the process of a study that will have 1,000 random consumers review their credit reports with an "expert who will help identify potential errors on their reports. Participants will be encouraged to dispute errors that could affect their credit standing, and credit reports with alleged errors will be sent to Fair Isaac Corporation (FICO) for rescoring. The study will estimate the proportion of consumers who would find one or more material errors in their credit reports, and it will reveal the main types of errors, their frequency, and their impact on a consumer’s credit standing. Overall, the study will categorize errors by type and seriousness in terms of potential consumer harm."

It looks like we have quite a wait ahead of us before any conclusions are reached on the general accuracy of credit reports. According to the FTC, the data collection phase of the study will not be finished until October 2011, and the Commission’s next interim report to Congress, which is intended to provide a full analysis of the collected data, is not due until December 2012. In the meantime, both the EEOC's new aggressive approach to credit history checks and the rise of legislation outside of Ohio suggests that employers consider whether there is a business necessity for seeking credit history on employment candidates.

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According to statistics released by the Equal Employment Opportunity Commission (“EEOC”) earlier this week, the Agency received over 7% more charges in 2010 than it did the previous year—99,922 as compared to 93,277.  Indeed, the number of charges filed were up in every category.  The FY 2010 enforcement and litigation statistics, which include trend data, are available online here.

Such statistics are not surprising in light of the large number of layoffs that occurred in 2010, coupled with the difficulties terminated employees had in finding new employment in a down economy.  What is more interesting, however, is that, for the first time since the EEOC became operational in 1965, race was not the most prevalent category of alleged discrimination. Rather, retaliation under all statutes (36,258) surpassed race (35,890) as the most frequent basis for filed charges. This should serve as a clear reminder to employers that they must be particularly careful in dealing with employees who have filed charges or made internal complaints and understand that retaliation is prohibited even if the underlying charge or complaint lacks merit.

It is also noteworthy that, in the first year of its enforcement, the EEOC received 201 charges under the Genetic Information Nondiscrimination Act (“GINA”).  As employees become more familiar with the provisions of this Act, it is likely that the number of charges under it will increase considerably in years ahead.

There are signs that the economy will rebound in 2011, which would be a welcome relief to all who have felt its impact.  Of course, whether that actually occurs or not remains to be seen.  In the meantime, employers should be vigilant in making sure their employment decisions are nondiscriminatory because there is an increased likelihood in difficult economic times that these decisions will be challenged.

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Last Wednesday, the EEOC held a public meeting at which it took testimony to address the perceived ills associated with the use of applicant credit histories in making hiring or other employment decisions. With unemployment at such high levels across the country, employer credit checks have come under greater scrutiny. Back in August, Illinois enacted the Employee Credit Privacy Act, which prohibits, with limited exception, an employer from using a person’s credit history in making employment decisions. 

As we reported last year, Ohio's legislature considered a credit check ban as well, but that bill went nowhere. The EEOC's press release can be accessed here and the panelist statements can be accessed here.

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In response to two U.S. Supreme Court decisions, the U.S. Equal Employment Opportunity Commission (EEOC) has released for public comment a proposed rule construing the “reasonable factor other than age” (RFOA) defense under the Age Discrimination in Employment Act (ADEA). 

In Smith v. City of Jackson and Meacham v. Knolls Atomic Power Company, the Supreme Court held that the RFOA defense acts as a complete bar to disparate impact liability where an employer demonstrates that its facially neutral policy or practice, which had a disparate impact on older workers, was based on a reasonable factor other than the plaintiff’s age. Although the RFOA defense operates similarly to Title VII’s business necessity defense, this defense under the ADEA has traditionally been more “employer-friendly” because it preserves an employer’s right to make reasonable business decisions while protecting older workers from facially neutral employment criteria that arbitrarily limit their employment opportunities without requiring a showing of business necessity.

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 Yesterday, the EEOC released its charge statistics report for its 2009 fiscal year, which ended on September 30, 2009. Not surprisingly, during an economically difficult period, the statistics show a near record number of charges filed -- 93,277 -- which is second only to the 2008 fiscal year when 95,402 charges were filed.

As usual, sex and race discrimination charges led the pack, but they also showed a slight decline from the previous fiscal year. Somewhat surprisingly, during a period that saw extensive reductions-in-force, age discrimination charges were significantly down. On the other hand, disability discrimination and retaliation charges showed the sharpest increase, both numerically and statistically.

The increase in disability discrimination charges likely can be tied directly to the enactment of the Americans with Disabilities Act Amendments Act (ADAAA) which makes it significantly easier for applicants and employees to establish that they have a protected disability. Employers can reduce the likelihood of being targeted for a disability discrimination charge by recognizing this new reality and engaging in good faith in the interactive process to determine whether a reasonable accommodation exists for applicants or employees with alleged disabilities. Frequently, the give and take of the interactive process if conducted in good faith will either result in finding an accommodation that both sides can live with or demonstrating to the applicant or employee's satisfaction that no reasonable accommodations actually exist. Remember, the ADA, even as amended by the ADAAA, still does not require the employer to provide applicants or employees with the accommodation they want -- only a reasonable one.

With respect to retaliation charges, as we have preached in previous posts both here and here, employers must be careful to treat employees who have filed discrimination charges or lawsuits as they would treat any other employee -- no better, no worse. In fact, the U.S. Supreme Court's decision in Crawford v. Metro. Gov’t of Nashville and Davidson County early in the 2009 term held that the retaliation protection provided by Title VII extend to employees who speak out about discrimination during the employer’s investigation into another employee’s internal complaint of discrimination. The Crawford decision, therefore, underscores employers' need to protect themselves from potential retaliation cases in this context as well by following up on any employees who claim "me too" in the course of internal discrimination investigations.

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We have been receiving more and more questions from human resources professionals asking how the ADA might impact their preparation for a potential pandemic flu. Now the EEOC has issued technical guidance on the topic, focused primarily on employers’ rights to make medical inquiries and require medical examinations of applicants and employees.  With respect to applicants, the EEOC notes that the ADA operates normally to preclude all disability-related questions and medical exams until after a conditional offer has been made.  With respect to current employees, who can be required to respond to medical inquiries or undergo medical exams only if they are job-related and consistent with business necessity, however, the EEOC recommended a model survey of employees that could be issued to all employees in preparation for a pandemic. The model survey is reprinted below:

ADA-Compliant Pre-Pandemic Employee Survey:

Directions:   Answer “yes” to the whole question without specifying the reason or reasons that apply to you.  Simply check “yes” or “no” at the bottom.

In the event of a pandemic, would you be unable to come to work because of any of the following reasons:
 

    If schools or day-care centers were closed, you would need to care for a child; 

    If other services were unavailable, you would need to care for other dependents;

    If public transport were sporadic or unavailable, you would be unable to travel to work,  and/or:

      If you or a member of your household fall into one of the categories identified by CDC as being at high risk for serious complications from the pandemic influenza virus, you would be advised by public health authorities not to come to work (e.g., pregnant women; persons with compromised immune systems due to cancer, HIV, history of organ transplant or other medical conditions; persons less than 65 years of age with underlying chronic conditions; or persons over 65).

Answer:   YES __________   NO __________
 

The EEOC’s guidance also clarifies its position that employers may enforce rules requiring employees to behave in a hygienically appropriate manner to avoid the spread of the flu, to wear personal protective gear such as face masks, and to require employees to work from home.
 

In a separate release cryptically titled “Employment Discrimination and the 2009 H1N1 Flu Virus (Swine Flu),” the EEOC reminds us that Title VII “prohibits employment discrimination on the basis of national origin, for example, discrimination against Mexicans.” The “guidance” states nothing else as it relates to Title VII. Presumably, the EEOC wants to remind employers not to direct any employment actions at workers of Mexican descent out of a fear or concern that they may be more likely to carry the H1N1 flu virus.

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On April 1, 2009, in a 5-4 decision, the United States Supreme Court clarified an issue of confusion among lower courts when it held that “a collective-bargaining agreement that clearly and unmistakably requires a union member to arbitrate ADEA claims is enforceable as a matter of federal law.” 

The case, 14 Penn Plaza, LLC v. Pyett, No. 07-581, 556 U.S. ___ (2009), is a marked departure from established precedent in some jurisdictions and welcome news for employers who often prefer to present their cases to an arbitrator, rather than a jury. 

Until 14 Penn Plaza, the Supreme Court’s direction regarding the enforceability of a provision in a collective bargaining agreement that required a union member to arbitrate a statutory discrimination claim was not clear. In an earlier decision discussing whether an employee could be compelled to arbitrate a statutory discrimination claim, Alexander v. Gardner-Denver, 415 U.S. 36 (1974), the Court found that the provision at issue did not expressly require arbitration of a member’s statutory rights, so the employee could not be precluded from bringing statutory claims in a judicial forum.

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In a press release issued yesterday, the Equal Employment Opportunity Commission (EEOC) reports that, in its fiscal year 2008 (October 1, 2007 – September 30, 2008), there was a 15 percent increase in the number of employment discrimination charges filed against employers. The 95,402 charges filed are more than the number of charges filed in any other one-year period in the history of the agency. The greatest percentage increase was in age discrimination charges, up 28.7 percent from the previous year. Sex discrimination charges were up 14 percent, and race charges were up 11.2 percent. There was a smaller percentage increase in disability charges (9.7 percent), but with the recently-passed amendments to the Americans with Disabilities Act, employers will likely see a significant increase in disability charges in fiscal year 2009. 

The steep increase in discrimination charges was no doubt fueled, in part, by job losses in the beginning stages of the economic recession. The continued down-turn of the economy in the last quarter of 2008 and early months of 2009 makes it almost certain that the number of discrimination charges will continue to increase.

So what does all of this mean for you as an employer? To begin, it is far more likely that employers will be sued or will face discrimination charges as employees are laid off or face other adverse employment actions. An economic reduction-in-force will, very possibly, generate charges or lawsuits. All too often, employers do not exercise the care needed with the decision-making leading up to a reduction-in-force. Careful attention to the process and documentation in the early stages, however, can make legal challenges less likely to occur and can make those that are filed more easy to defend. 

As we’ve discussed before, employers should develop and document a sequential approach from the very earliest stages of the decision-making leading up to a reduction-in-force. Key steps in that approach include:

• Reorganizing or eliminating job duties; 
• Selecting the employees best-qualified to perform remaining job duties;
• Establishing criteria for termination or lay-off decisions that are based on legitimate business reasons;
• Documenting the selection criteria, procedure, and decisions;
• Conducting a statistical review to identify any disproportionate impact on protected class employees and, if a disproportionate impact is shown, carefully reviewing decisions to assure that they are supported by legitimate business considerations.

After these steps have been taken, the company should consider payment of severance to and securing signed release agreements from those who are terminated. It is a mistake, though, to presume that all terminated employees offered severance will sign release agreements and therefore give short shrift to the initial decision-making and documentation steps. All it takes is one terminated employee who refuses to sign a release and, instead, files a charge or a lawsuit to negate the savings of the reduction-in-force through the cost of defense, settlement, or an adverse judgment.

Even if your company is not currently in a reduction-in-force mode, careful attention to all employment decisions is essential to reduce the risk of discrimination charges. Things like frank and candid communication in performance reviews and active involvement by human resource personnel in all adverse employment actions can make it far easier to defend later decisions to terminate in a reduction-in-force. 

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On March 2, 2009, the Equal Employment Opportunity Commission (EEOC) issued proposed rules to implement Title II of the Genetic Information Nondiscrimination Act (GINA).

GINA, which was signed into law on May 21, 2008, prohibits health insurers and employers from discriminating on the basis of genetic information. The EEOC is responsible for developing implementing regulations by May 21, 2009 for Title II, which applies to private and government employers. (See former blog post on May 21, 2008 entitled “Dream of GINA Now a Reality”). Generally, Title II prohibits employers from discharging, refusing to hire, or otherwise taking adverse employment action against applicants or employees based on their genetic information. It also prohibits employers from intentionally acquiring genetic information about applicants and employees. Title II of the Act will become effective on November 21, 2009. 

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This is an update to my prior post on January 2, 2008 regarding retiree healthcare benefits.

A legal battle dating back to 2000 regarding retiree benefits came to a close recently.  In 2000, the Third Circuit ruled that treating Medicare-eligible retirees differently than younger retirees violated the Age Discrimination in Employment Act (ADEA).  This prompted the EEOC to issue an exemption to the ADEA allowing employers to reduce or eliminate retiree healthcare benefits for Medicare-eligible retirees, while providing higher levels of benefits for those retirees who are not Medicare-eligible.  The American Association of Retired Persons (AARP) challenged the EEOC's authority to issue this rule.  The district court and Third Circuit rejected AARP's challenge. 

Recently, the U.S. Supreme Court, as anticipated, declined to hear AARP's appeal on this issue.  This means that, absent Congressional action amending the ADEA, employers can now provide retiree healthcare benefits and coordinate those benefits with Medicare without fear of violating the ADEA.

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