EEOC Releases Proposed Rule Affecting RFOA Defense

Posted on February 22, 2010 by Brian Hall

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.

 

In what it describes as an effort to provide a more objective standard for determining whether an RFOA exists and clarify the scope of the defense, the EEOC seeks to revise paragraph 1625.7(b) of the existing regulations addressing the RFOA defense. Although the standard remains lower than Title VII’s business necessity defense, 1625.7(b)(1) makes it clear that the RFOA is not to be viewed under a “rational-basis” standard. Employers will be required to show that the challenged practice was reasonably designed to further or achieve a legitimate business purpose and was reasonably administered to achieve that purpose.

 

The EEOC proposes a “prudent employer” standard to determine whether or not an employer relied upon reasonable factors in making the challenged employment decision and included a list of non-exhaustive factors to consider, including: 

  1. the commonality of the business practice used by the employer;
  2. the manner in which the practice was administered;
  3. the employer’s awareness of a possible age-adverse impact before making their decision;
  4. steps taken by the employer to “accurately and fairly” assess the impact of their decision upon older persons as well as steps taken to mitigate unnecessary harm to older workers;
  5. the existence of a lesser discriminatory alternative;
  6. the extent to which the employer or supervisors engaged in age-based stereotyping; and
  7. the extent to which employers gave supervisors guidance or training about how to avoid discrimination. 

While no single factor would be dispositive of reasonableness under the EEOC’s proposed rule, the EEOC suggests that an employer is more likely to succeed on the RFOA defense if the bulk of these factors weigh in the employer’s favor. 

 

For the RFOA defense to apply, the EEOC makes clear in its proposed rule that the challenged practice in fact must be based on a non-age factor. Recognizing that the courts have held that objectively measurable factors such as salary and seniority are non-age factors even though they sometimes correlate with age, the EEOC’s rule instead focuses on the unchecked use of subjective criteria that can often be based on age-based stereotypes about older workers’ flexibility, willingness to learn or technological skills.

Therefore, the proposed regulations set forth a non-exhaustive list of factors to help employers determine whether an employment practice is based on a non-age factor, including:

  1. the extent to which the employer gave supervisors unchecked discretion to assess employees subjectively;
  2. the extent to which supervisors were asked to evaluate employees based on factors known to be subject to age-based stereotypes; and
  3. the extent to which supervisors were given guidance or training about how to apply the factors and avoid discrimination.

The EEOC is accepting public comment until April 19, 2010. The agency will consider the public comments received and will make appropriate changes based on those comments. A proposed final rule covering this and the March 2008 proposed rules will then be coordinated with other federal agencies and reviewed by the Office of Management and Budget before becoming effective.
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EEOC Report On Charge Statistics Provides Lessons For Employers

Posted on January 7, 2010 by Brian Hall

 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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EEOC Issues Technical Guidance on ADA-Compliant Employer Preparedness for the H1N1 Flu Virus

Posted on May 11, 2009 by Brian Hall

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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United States Supreme Court Holds That Collective Bargaining Agreements May Require Union Members to Arbitrate Discrimination Claims

Posted on April 6, 2009 by Peg Koesel

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.

 

Later, in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991), the Court held that an individual’s agreement to arbitrate his ADEA claim was enforceable because the arbitration provision in that agreement clearly and unmistakably included arbitration of statutory claims.   

The plaintiffs-employees in 14 Penn Plaza, three of the building’s night watchmen, were members of Local 32BJ of the Service Employees International Union. As members of the union, they were subject to a collective bargaining agreement that expressly made claims under Title VII, the ADEA, and the ADA subject to binding arbitration under the contract’s grievance and dispute resolution procedures. 

 

14 Penn Plaza LLC owned the building where the night watchman worked. In August 2003, the night watchmen’s direct employer, a service and cleaning contractor, engaged another contractor to provide security guards to staff the building lobby and entrances and reassigned the night watchman to jobs as night porters and light-duty cleaners. The union and 14 Penn Plaza agreed to this change.

 

The union then filed grievances on behalf of the night watchmen contending that the company failed to equitably rotate overtime, that the reassignment violated seniority rules, and that by reassigning them, the building owner violated the contract’s ban on age discrimination. The union requested that the grievances be arbitrated under the contract. After the first hearing, the union withdrew the age discrimination claim from arbitration but continued to arbitrate the remaining claims. 

 

While arbitration on their remaining claims continued, the night watchmen filed a charge of discrimination with the EEOC. After the EEOC issued a dismissal and notice of the right to sue, the night watchmen filed suit alleging that their reassignment violated the ADEA and other state and local laws barring age discrimination. 

 

14 Penn Plaza asked the district court to compel the night watchmen to arbitrate their claims, but the district court denied the motion. The Second Circuit Court of Appeals agreed because under Second Circuit precedent “even a clear and unmistakable union-negotiated waiver of the right to litigate” certain statutory claims is unenforceable.

 

Writing for the majority at the Supreme Court, Justice Thomas pointed out that fashioning a dispute resolution mechanism to require arbitration of employment-discrimination claims is no different than other decisions made by the parties in designing the grievance process; it is a term or condition of employment that is a mandatory subject of bargaining. “As in any contractual negotiation, a union may agree to the inclusion of an arbitration provision in a collective-bargaining agreement in return for other concessions from the employers. Courts generally may not interfere with this bargained-for exchange.”

 

The Court further explained that an agreement to arbitrate an ADEA claim is not a waiver of a “substantive right” as that term is used in the ADEA. Although an individual employee must knowingly and voluntarily waive a right or claim under the ADEA, an agreement to arbitrate ADEA claims is not a waiver of a “substantive right” as that term is used in the ADEA. If the waiver provision of the ADEA “included the prospective waiver of the right to bring an ADEA claim in court, even a waiver signed by an individual would be invalid.”

 

Although the 14 Penn Plaza decision presents employers with an opportunity for quicker and more cost-effective resolution of discrimination claims, it left open the question of what happens when the union withdraws from or refuses to proceed with an individual’s statutory claims. As Justice Souter noted in his dissent, “the majority opinion may have little effect, for it explicitly reserves the question whether a CBA’s waiver of a judicial forum is enforceable when the union controls access to and presentation of employee’s claims in arbitration, . . . which is ‘usually the case.’” 
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EEOC Experiences Sharp Rise In Discrimination Charges: How to Lessen Your Risk of Being Part of This Trend

Posted on March 12, 2009 by Mike Underwood

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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EEOC Issues Proposed Rules to Implement Title II of GINA

Posted on March 4, 2009 by Jenny Swinerton

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. 

The proposed regulations provide additional guidance regarding some of the terms used in the Act. For example, the regulations define “employee” to cover not just current employees but also applicants and former employees. The proposed regulations defined “genetic information” as information from genetic tests, the genetic tests of family members, family medical history, and genetic information of a fetus carried by an individuals or an individual’s family member receiving assistive reproductive services. The proposed regulations also clarify that drug and alcohol tests are not “genetic tests.”

GINA provides six exceptions to the statutory sections prohibiting employers from acquiring genetic information. The proposed regulation addresses each of the exceptions, which are:

(1)   where the employer inadvertently obtains genetic information (sometimes referred to as the “water cooler” exception);

(2)   where the employer offers qualifying health or genetic services, including such services offered as part of a voluntary wellness program;

(3)   where the employer requests family medical history to comply with the certification provisions of the Family and Medical Leave Act (FMLA) or state or local family and medical leave laws;

(4)   where the employer acquires genetic information from documents that are commercially and publicly available, including print and Internet publications, except that an employer may not research medical databases or court records for the purpose of obtaining genetic information about an individual;

(5)   where the employer acquires genetic information for use in the genetic monitoring of the biological effects of toxic substances in the workplace, provided that the employer complies with monitoring restrictions provided in the proposed regulation; and

(6)   where an employer that conducts DNA analysis for law enforcement purposes requires genetic information of its employees, apprentices, or trainees for quality control purposes to detect sample contamination.

In the proposed rule, the EEOC specifically seeks comments on three of these exceptions: (1) what constitutes “voluntary” with respect to the employer-provided wellness program exception; (2) what should be included in the “commercially and publicly available” exception, particularly with respect to blogs and social networking sites; and (3) how the law enforcement exception should be applied.

The proposed regulations also reiterate the statutory prohibition against retaliation where an individual opposes any act made unlawful by GINA, files a charge of discrimination, or gives testimony in connection with a charge. In addition, the proposed regulations make clear that employers may not “limit, segregate, or classify” employees because of genetic information.

Finally, Title II of GINA limits an employer’s ability to obtain genetic information after making a job offer. Thus, even though the Americans with Disabilities Act currently permits an employer to obtain family medical history of all employees to whom it has offered a particular job, such action will be prohibited upon GINA’s effective date.
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Supreme Court declines to hear retiree benefits case

Posted on March 26, 2008 by Jamie LaPlante

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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