Workplace Class Action Blog

The Clock Has Struck 12 On The EEOC Fiscal Year-End Countdown – Surprising Revelations For FY 2016

Posted in EEOC Litigation

clockBy Matthew J. Gagnon, Christopher J. DeGroff, and Gerald L. Maatman, Jr.

With the end of another EEOC fiscal year employers look with anticipation to what the year-end trends can tell us about the sometimes elusive EEOC litigation agenda. In years past, the EEOC has engaged in a “filing frenzy,” with dozens of lawsuits filed in the waning days of the fiscal year. Although there was an uptick in filings this year, the EEOC’s FY 2016 went out with a whimper and not a roar.

We have prepared the following chart, which shows the total monthly filings for FY 2013-2016, which highlights the EEOC’s historical year-end filings compared to the somewhat tepid activity that we saw this year.

cases filed by month

As with prior years, we anticipate that the EEOC may continue to file cases well into the night in the courthouses of the Western states, so the final tally may not be known for another 48 hours. But at the time of publication, the raw numbers show that the EEOC filed 136 lawsuits in FY 2016 (99 merits lawsuits and 37 subpoena enforcement actions). This is significantly less than prior years. (See here, here, here, and here.) The reason for this significant drop in lawsuits most likely can be attributed to the EEOC’s limited budget coupled to an already bloated litigation inventory. The fact that this is an election year with all of the possible changes that may represent could also be impacting the EEOC’s willingness to commit to additional litigation so close to November.

FY 2016 was originally planned to be the final year of the EEOC’s 2013-2016 Strategic Enforcement Plan (“SEP”). The EEOC developed the SEP in 2012 in order to set its priorities and goals for enforcement activity through 2016. Last year, the EEOC received permission from the Office of Management and Budget to delay the release of a new SEP until 2018 so that the Commission could align its strategic planning with other agencies. Although the SEP has now been extended through 2018, this year still marks the final planned year, and provides a useful moment in time to look back and take stock of where the agency has driven its enforcement program over the past four years.

Cases Filed By EEOC District Offices

Location is always a key factor for defending against EEOC litigation. Year after year, certain EEOC district offices distinguish themselves by the number of cases that they file. The map below shows the number of filings by each district office in FY 2016.

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Filings by district office in FY 2016 were pretty much on par with prior years with one glaring exception. Year over year, Chicago has been the consistent leader in terms of total cases filed. Last year alone, the Chicago office filed 27 lawsuits. This year, the Chicago office filed only 7, a shockingly low number for that office. The other traditional filing leaders stayed consistent with prior years, and some even ticked up a bit in FY 2016. The Philadelphia office filed 22 lawsuits in FY 2016, up from 19 last year. The Charlotte office filed 16 lawsuits this year, compared with 13 last year. The Phoenix office filed 17 lawsuits in FY 2016, the same as last year. The bar chart below compares the number of filings from each office for FY 2013 – FY 2016.

By office

What Do The FY 2016 Filings Say About The EEOC’s Priorities?

Each fiscal year we analyze the EEOC’s filings to determine substantive trends. The following chart shows the number of claims categorized by statute, along with a further division of the largest category – Title VII – by discrimination theory.

As with prior years, Title VII cases were the majority of cases filed, making up 41% of all filings (as compared with 55% in FY 2015 and 57% in FY 2014). This is not particularly surprising given the number of protected groups covered by the statute. ADA cases also made up a significant percentage of the EEOC’s filings, totaling 41% this year. Together, complaints alleging discrimination under those two statues made up 82% of all cases filed in FY 2016. Age cases represented a relatively small 5% of the overall cases.

By statuteIn late August, the EEOC issued its final revision to the Enforcement Guidance on Retaliation and Related Issues (which we discuss here), replacing the 18 year old Section 8, “Retaliation” portion of the Compliance Manual last updated in 1998. This revision touches upon all of the statutes which the Commission enforces, and covers the legal analysis used to define evidence that supports retaliation claims as well as retaliation remedies, legal access for persons with disabilities under the ADA, and even a play-by-play of employer/employee interactions that might prompt retaliation.

 

Considering the EEOC’s renewed focus on this area, we analyzed the FY 2016 retaliation cases to test which discrimination claims are most often paired with a retaliation claim. The following chart shows which types of discrimination were paired with retaliation allegations in FY 2016:

retaliationSex + retaliation cases make up the largest percentage of these claims at 46%, followed by race discrimination at 27%, pay discrimination at 13%, age discrimination at 7%, and disability discrimination at 7%. Pregnancy discrimination, national origin discrimination, religious discrimination, and genetic discrimination all had zero claims of retaliation.

In addition to the revised retaliation guidelines, the EEOC also revised its Employer Information Report (EEO-1) yesterday to require employers to submit information regarding employee pay range and hours worked. The Commission asserts that the purpose of collecting this pay data along with race, ethnicity, sex, and job category would be to “assess complaints of discrimination, focus agency investigations, and identify existing pay disparities that may warrant further examination.” It is, by most accounts, an ominous development for the future of EEOC litigation.

The EEOC also issued its final rules on employer wellness programs as they relate to the ADA and GINA, which clarify the implications of those rules and their interactions with employer wellness programs. We reported on this development here. Harassment was also a hot button issue for the Commission in FY 2016, with a particular focus on Muslims and people of Middle Eastern origin. Among other things, the EEOC issued a call-to-action for employers to ‘reboot’ harassment prevention efforts (which we discuss here).

Insight & Implications For Employers: Conclusions

As with prior years, this year’s analysis reveals that the EEOC’s activities continue to be guided by the 2012 SEP. For the past four years, we have reported on the many ways that the SEP has guided and shaped the EEOC’s enforcement initiatives – and with that, the landscape of labor and employment law. FY 2016 was the last year that was planned to be covered by the 2012 SEP. As we enter FY 2017, it is unclear whether we will see more of the same, or if we will see the EEOC branching out to new priorities and initiatives that may line up with its vision for the 2018 SEP and the future of EEOC litigation.

We will continue to analyze the data and filings from FY 2016 to extract additional insight about the EEOC’s litigation priorities, and what employers should watch out for in FY 2017 and beyond. We look forward to distilling those observations into our annual analysis of trends and developments affecting EEOC litigation. We hope that you are looking forward to that publication as much as we are, and that you continue to find it a useful reference and guide to developments in EEOC litigation. Please stay tuned, loyal blog readers!

Readers can also find this post on our EEOC Countdown blog here.

Discrimination Class Certified Based On Union’s Job Referral Policies Despite Third-Parties’ Discretion In Hiring

Posted in Class Certification

th2H4JI06DBy: Gerald L. Maatman, Jr. and John S. Marrese

Seyfarth Synopsis:  African American pipefitters filed a class action against their labor union based on its allegedly discriminatory system for referring jobs to union members.  Despite the fact that third-party employers retained sole discretion in deciding whether to hire a union referral, the U.S. District Court for the Northern District of Illinois found that such discretion, and the individual hiring determinations resulting therefrom, did not destroy commonality for the claims of the class members.  The Court based its conclusion on the notion that the union’s job referral system was “the first allegedly discriminatory step that tainted the entire job assignment and hiring process.”  The ruling is an important one for employers on discrimination liability for policies delegating decision-making authority to local managers or third parties.

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In Porter et al. v. Pipefitters Ass’n Local Union 597, No. 12-CV-9844 (N.D. Ill. Sept. 20, 2016), a group of African American pipefitters filed a class action against their labor union, alleging racial discrimination in the union’s job referral system.  Under the system, while third-party employers retained sole discretion in the ultimate decision to hire a union referral, union members were supposed to obtain employment based on race-neutral factors like length of time spent waiting for a job and having the requisite skills.  However, Plaintiffs alleged that the union’s policies enabled employers to circumvent the system and hire union members directly, which resulted in white members disproportionately obtaining employment over African American members.

In granting Plaintiffs’ motion and certifying a class, Judge Sara Ellis of the U.S. District Court for the Northern District of Illinois rejected the union’s argument that individual issues relating to the hiring decisions of third-party employers precluded a finding of commonality.  The union’s referral system, which enabled employers to circumvent race-neutral criteria for hiring, was “the first allegedly discriminatory step that tainted the entire job assignment and hiring process” and “allowed and endorsed” discrimination.  Plaintiffs could prove the discriminatory nature of the policy across the class with statistical evidence.

The ruling is significant in that it limits the impact of Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011), wherein the U.S. Supreme Court found that an employer’s policy of giving discretion to local managers in employment decisions destroyed commonality among employees’ discrimination claims.

Case Background

In Porter, Plaintiffs filed a class action lawsuit against their union based on its allegedly discriminatory system for referring jobs with third-party employers to Union members.  Id. at 1.  Plaintiffs alleged that the Union’s policies enabled employers to bypass the race-neutral referral system negotiated and hire Union members directly.  According to Plaintiffs, this resulted in African American members receiving fewer work hours than their white counterparts.  Id.

The Union’s job referral system had a history of discriminating against African Americans.  In 1990, a jury found that rather than operate, as negotiated, a system by which members received jobs on a first-come, first-serve basis, the Union actually operated a word-of-mouth referral system disproportionately favoring whites.  Id. at 2-3.  Based on the jury’s finding, the Court issued a consent decree requiring the Union to assign jobs from an out-of-work list on a first-on, first-off basis.  Id. at 3-4.  However, employers retained sole discretion in deciding whether to hire referrals.  Id. at 4.  In addition, written exceptions to the system allowed employers to circumvent the out-of-work list and continue to hire Union members directly.  Id.  In 1996, the court terminated the consent decree.  Id. at 5.  Evidence showed that, by 2004, less than 20% of jobs were filled from the out-of-work list.  Id.

In 2004-2005, the Union negotiated a new job referral system whereby members could either find employment directly with an employer or find employment through the out-of-work list.  Id.  While the Union implemented quotas to ensure appropriate levels of hiring from the out-of-work list, evidence showed those quotas were not met.  Id. at 5-6.

Based on the above, Plaintiffs alleged discrimination in violation of Title VII of the Civil Rights Act of 1964 and 42 U.S.C. § 1981 as well as breach of the union’s duty of fair representation under the Labor Management Relations Act of 1947.  Id. at 1. Plaintiffs moved to certify a class of current and former African American members of the Union who had faced and continued to face such violations.  Id.

The Decision

Judge Ellis certified a class of current and former African American members of the union pursuant to Rule 23(b)(3) to recover money damages.  The Court withheld ruling on certification of a class under Rule 23(b)(2) for injunctive relief.

The Court’s Analysis Under Rule 23(a)

The Court’s analysis under Rule 23(a) focused on Plaintiffs’ showing of “commonality,” which required Plaintiffs to identify an issue central to all class members’ claims that the Court could decide “in one stroke” for the entire class.  Id. at 12 (internal quotations and citations omitted).  The Court explained that challenging the existence of a discriminatory policy may provide commonality, depending on the degree of discretion involved in the policy’s application.  Id. at 12-13  Relying in particular on the U.S. Supreme Court opinion in Wal-Mart along with recent Seventh Circuit precedent, the Court opined that commonality is absent where the policy is “highly discretionary and plaintiffs do not identify a common way in which defendants exercise that discretion.”  Id. at 13.  However, if plaintiffs show that a defendant enforces the policy at the corporate level and the policy affects class members in a common manner, some discretion by employees or third parties in actually applying the policy will not necessarily defeat commonality.  Id. at 13.

Based on those principles, the Court ruled that Plaintiffs had shown commonality based on the existence of the union’s job referral system, which “allowed,” “endorsed,” and “exacerbated” discrimination against African American pipefitters.  Id. at 14-15.  The Court rejected the union’s contention that the independent hiring decisions of third-party employers destroyed commonality.  Indeed, such discretion did “not matter because Plaintiffs challenge [the union]’s overarching policies, which influenced the entire job assignment and hiring process.” Id. at 15 (citation omitted).  Such policies were “the first allegedly discriminatory step that tainted the entire job assignment and hiring process.”  Id.

In addition, the Court found that Plaintiffs had easily satisfied the remaining requirements of numerosity, typicality, and adequacy of representation under Rule 23(a).  Id. at 11-12, 17-19.

The Court’s Analysis Under Rule 23(b)

Having found Plaintiffs satisfied Rule 23(a), the Court addressed whether Plaintiffs had satisfied Rule 23(b)(2) for certification of an injunctive relief class and Rule 23(b)(3) for monetary relief.

The Court explained that Rule 23(b)(2) allows certification of an injunctive relief class where the defendant “has acted or refused to act on grounds that apply generally to the class” such that the Court can appropriately  fashion relief for the class as a whole.  Id. at 20 (quoting Fed. R. Civ. P. 23(b)(2)).  Injunctive relief is not appropriate if a court must make individual determinations to fashion relief for individual class members.  Id.  Plaintiffs’ proposed injunctive relief — a ban on the current job referral system and implementation of a new system — “appear[ed] proper.”  Id.  However, because Plaintiffs did not appear to be current members of the Union and, thus, would not suffer the Union’s policies going forward, they had no basis to request injunctive relief.  Id. at 20-21.  Accordingly, the Court reserved ruling on certification under 23(b)(2) to allow Plaintiffs to show that they were current Union members or to substitute someone who is a current member.  Id. at 22.

The Court next addressed whether Plaintiffs satisfied the “predominance” and “superiority” requirements under Rule 23(b)(3). In particular, class certification is proper if “questions of law or fact common to class members predominate over any questions affecting only individual members, and . . . a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.”  Id. (quoting Fed. R. Civ. P. 23(b)(3)).

The Court determined that Plaintiffs can satisfy Rule 23(b)(3)’s predominance requirement by showing that “common questions [among class members] represent a significant aspect of a case” and can be proved by common evidence.  Id. at 22-23. Plaintiffs argued that they could demonstrate the discriminatory impact of the job referral system on all class members by using statistical evidence adduced by its expert.  Id. at 23.  The union argued that predominance did not exist because: (a) Plaintiffs’ statistical evidence was “unrepresentative, inaccurate, [and would only] undermine” Plaintiffs’ claims; and (b) the union did not have a uniform policy because third-party employers made hiring decisions.  Id.  The Court agreed with Plaintiffs, finding that the Union’s arguments only underscored the predominance of common issues because, even if the Union was correct, the claims of the entire class would fail together.  Id. at 24.

The Court also found that Plaintiffs had shown the “superiority” of a class action under the circumstances because it “would be more efficient than proceeding with hundreds of individual suits” challenging the same job referral system.  Id. at 24.  As such, the Court certified a class of current and former African American Union members to seek monetary relief under Rule 23(b)(3).

Implication For Employers

Jude Ellis’ decision is decidedly friendly for Plaintiffs. Based on the ruling in Porter, even after Wal-Mart Stores, Inc. v. Dukes, an employer may be held liable for the discretionary decisions of local managers or third parties if those decisions are discriminatory and the product of an employer’s policy which “allowed” or “exacerbated” the discrimination.  Such a policy can provide the “glue” to hold together a class action where the independent decisions of local managers or third parties would otherwise destroy it.  While the facts in Porter — namely, that a predecessor of the challenged policy had been found discriminatory by a jury — may limit its impact, employers would be wise to monitor policies giving lower level employees decision-making authority to ensure such policies are not allowing or contributing to a pattern of discrimination.

Employers’ Guide To The 1st Presidential Debate

Posted in Class Action Litigation

imagesBy Gerald L. Maatman, Jr.

Seyfarth Synopsis: For a multitude of reasons, the stakes are exceedingly high for employers in the upcoming Presidential election. Legal compliance strategies and effective control of workplace litigation risks inevitably will be impacted by which party controls of the White House and the regulatory and enforcement machinery of agencies such the Department of Labor and the EEOC. This blog post discusses our “take-aways” for employers based on the first debate between Mr. Trump and Mrs. Clinton on September 26, 2016.

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So what did the 1st debate teach us about the views of the two major presidential candidates on issues of interest to employers? Aside from their verbal volleys, sparing (and interruptions), and counter-punches, the candidates’ statements during the first debate underscored the stark differences between Mrs. Clinton and Mr. Trump and how their respective policies and programs are apt to differ for employers from 2016 to 2020.

Donald Trump’s Positions

In his opening answer to the question on steps to achieve prosperity, Mr. Trump repeatedly criticized Mrs. Clinton as wanting to “increase regulations on businesses,” while Mr. Trump claimed he would decrease regulations to enable business to expand, create jobs, and invest in workers.

As a result, on employment discrimination issues, we expect Mr. Trump would “roll back” the aggressive agendas of the Department of Labor, OSHA, and the EEOC under the rubric that their regulatory schemes and/or enforcement litigation programs are “anti-business.” But peeling back the onion skin on that overarching philosophy reveals a mixed set of issues. Most will recall that at the Republican Convention in August, Mr. Trump became the first Republican Presidential nominee to openly support LGBT rights. As a result, his Administration may well push for expansion of employment rights where no Republican White House has gone before.

The first debate did not shed light on whether Mr. Trump favors raising the minimum wage or overhauling the exemptions in the Fair Labor Standards Act due to take effect on December 1, 2016. Presumably, he opposes these measures.

Insofar as commentators and voters can tell, Mr. Trump opposes the North American Free Trade Agreement, which was brokered during the first Clinton Administration. In his opening remarks in the debate, he called it the “worse trade deal in the history of the world.” Mr. Trump’s views on immigration are well known (“the Wall”…). He favors making E-Verify a national requirement, raising the prevailing wage for workers under the H-1B visa program (to make American workers more competitive with their H-1B counterparts), and requiring that employers hire (or, at least, try to hire) Americans before seeking to hire foreign nationals. At a basic level, his positions on immigration do not appear to be directly related to employment/labor relations per se, but aimed at preventing foreign workers from competing with Americans for jobs.

Hillary Clinton’s Positions

Mrs. Clinton used the first question of the debate – on steps to achieve prosperity – to outline her vision on some key labor and employment issues. In her first answer of the evening, she advocated “raising the minimum wage,” “securing equal pay for woman,” “instituting paid family leave,” and “expanding child care benefits.”

Hence, on most labor and employment issues, Mrs. Clinton would essentially continue the priorities of the Obama Administration. While her policies would be akin to a “third term of the Obama Administration,” Mrs. Clinton might push them even further.

On equal employment opportunity issues, we expect Mrs. Clinton to continue the current Administration’s expansive interpretation of Title VII to include LGBT individuals, regardless of whether Congress actually amends Title VII.

Achieving equal pay for women has been a central issue in Mrs. Clinton’s  campaign all along. She echoed that several times during the first hour of the debate. For this reason, she is expected to champion pay transparency and enactment of a measure like the Paycheck Fairness Act (a bill she co-sponsored as a senator), which would make it easier for plaintiffs to bring equal pay actions, either individually or as class actions, to “close the pay gap” between men and women. One by-product of such a scheme would be increased incentives for bringing class action litigation on pay issues, or agency-initiated enforcement litigation by the EEOC, DOL, and OFCCP.

Further, Mrs. Clinton supports amending the Family & Medical Leave Act to provide paid leave – and not just the present law affording unpaid leave – for workers to care for a new child or a sick family member or to recover from illness or injury. Mrs. Clinton also is expected to lead the fight against “wage theft,” and raising the minimum wage to $12 an hour (and supports state and local governments establishing even higher minimums). And on the labor front, Mrs. Clinton undoubtedly would align herself with keeping unions strong and viable. As her campaign website proclaims, “When unions are strong, America is strong,” and promises to restore collective bargaining rights for unions and “defend against partisan attacks on workers’ rights.”

In sum, both the DOL and the EEOC are expected to be emboldened by an Administration headed by Mrs. Clinton.

“It’s The Supreme Court….”

An important take-away for employers is the difference in the candidates’ views as to who might be appropriate for nomination to the U.S. Supreme Court. The first debate did not touch on this specific issue; while it is expected that later debates will do so, the candidates’ answers in the first debate foreshadowed their differences on the composition of the Supreme Court. As employers know, the ultimate disposition of workplace laws and how employment-related litigation impacts employers is influenced in large part by how the Supreme Court decides employment law issues.

And change is coming to the Supreme Court and likely will pivot on the election results. Mr. Trump has released several lists of judges he has identified as worthy of nomination to the Supreme Court. While Mrs. Clinton has yet to issue any such list, one scenario gaining traction (at least in some quarters – perhaps far-fetched, but who knows …) is that she might be inclined to nominate Barack Obama to fill a seat on the Supreme Court (and he would become the first ex-President to take a seat on the Supreme Court since 1921, when President Harding appointed former President William Howard Taft to the Supreme Court).

In terms of the stakes, and to take one example, in the coming Supreme Court term employers can expect a key battle over the legality of class action waivers in workplace arbitration agreements and whether the NLRB’s attack on those aspects of arbitration agreements “has legs” under the National Labor Relations Act. Petitions for certiorari are currently pending in three different cases on this issue (Ernst & Young LLP v. Morris, No. 16-300, Epic Sys. Corp. v. Lewis, No. 16-285, and NLRB v. Murphy Oil USA, Inc., No. 16-307). The passing of Justice Scalia, Congress’ disinclination to start hearings on Judge Garland’s nomination in the election season, and the ultimate realignment of the Supreme Court after the election – based on which party has control of the White House and can nominate a new Justice – may well “tip the balance” in terms of this issue for employers.

Implications For Employers: Employers should put on their seat belts.  Two more Presidential debates are coming down the track, and the ebb and flow of the campaign is apt to twist and turn until election day on November 8, 2016.

Just What The Doctor Ordered: Court Denies The EEOC’s Motion For Summary Judgment In ADA Suit Regarding Employer’s Wellness Program

Posted in EEOC Litigation

thPBYES7VQBy Gerald L. Maatman, Jr. and Alex W. Karasik

Seyfarth Synopsis: After the EEOC brought an action under the Americans With Disabilities Act against an employer who implemented a wellness program requiring employees to take a health assessment to participate, the Court granted the employer’s motion for summary judgment and denied the EEOC’s motion for summary judgment after finding that the program was voluntary. As such, the ruling is a bench-slap to the Commission in terms of its position on challenging wellness programs.

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After an employer in Wisconsin implemented a wellness program that required employees to take a health risk assessment if they wanted to participate, the EEOC brought an action under the Americans With Disabilities Act (“ADA”), which generally prohibits employers from requiring employees to undergo medical examinations.  In EEOC v. Orion Energy Systems, Inc., No. 14-CV-1019 (E.D. Wis. Sept. 19, 2016), Judge William C. Griesbach of the U.S. District Court for the Eastern District of Wisconsin granted in part employer Orion Energy Systems, Inc.’s (“Orion”) motion for summary judgment and denied the EEOC’s motion for summary judgment.

This ruling illustrates that for employers who implement wellness programs that require employees to take a health assessment if they wish to participate, those medical examinations do not violate the ADA as long as the program is voluntary.

Case Background

In 2008, Orion switched from a fully insured health plan to a self-insured health plan.  In 2009, Orion implemented a multi-faceted wellness program.  Relevant here, employees would have to either complete a health risk assessment (“HRA”) at the beginning of the insurance year or pay the entire monthly premium equivalent amount.  Employees who completed the HRA paid no premium equivalent, but still had to pay their own deductibles, co-pays and out-of-pocket expenses.  The HRA consists of a health history questionnaire and biometric screen involving a blood pressure check, body measurements, and blood analysis. Orion did not receive any personally-identifiable information as a result of the HRA, as the information was compiled by outside entities who then transmitted it to Orion in an anonymous format.  The anonymous, aggregated data allowed Orion to see the percentage of participants in its plan who had particular health risks such as high cholesterol, identify common health issues, and offer employees educational tools to improve their health.

In the spring of 2009, only one Orion employee chose to opt-out of the program.  Orion management spoke with the employee regarding negative comments the employee made to co-workers about the amount of the premium being charged by Orion.  The employee claimed she was told during this meeting to keep her opinions about the new wellness program to herself, while Orion claimed that such negativity was not welcome in the workplace, and that if the employee had concerns, she needed to speak with someone in management.  The employee later sent an e-mail criticizing the tactics of Orion’s former CEO.  Shortly thereafter, the employee was terminated.

The EEOC brought suit against Orion alleging it violated the ADA by requiring employees who elect to enroll in Orion’s self-insured health insurance plan to either complete the HRA or pay 100 percent of their monthly premium amount.  The EEOC also alleged that Orion violated the ADA’s anti-retaliation provisions, 42 U.S.C. § 12203(a) and (b), by instructing the employee not to discuss her concerns about the legality of this requirement with co-workers and by terminating her employment shortly after she voiced opposition to Orion’s wellness program.  Orion contended that its requirement that employees who elect to receive health insurance from Orion either participate in the wellness program or pay the full premium amount was lawful under the ADA’s insurance “safe harbor” provision, which allows self-insured organizations to administer benefits plans, or alternatively, that its wellness program is voluntary under 42 U.S.C. § 12112(d)(4)(B).  Both parties moved for summary judgment.

The Decision

The Court granted in-part Orion’s motion for summary judgment and denied the EEOC’s motion for summary judgment.  Initially, the Court explained that Section 12112(d)(4)(A) of the ADA “shall not require a medical examination and shall not make inquiries of an employee as to whether such employee is an individual with a disability . . . unless such examination or inquiry is shown to be job-related and consistent with business necessity,” but that Section 12112(d)(4)(B) permits employers to conduct “voluntary medical examinations . . . which are part of an employee health program available to employees at that work site.”  Id. at 6-7.  The EEOC argued that the HRA was not “voluntary” given that Orion shifted 100 percent of the health benefit premium to employees who opted out.  Orion argued its wellness initiative did not violate the ADA for three reasons: (1) the ADA’s safe harbor relating to insurance applied to the challenged aspects of the wellness program; (2) Orion did not “make inquiries” since it received only anonymous, aggregated results from the HRA; and (3) the wellness program was voluntary because Orion’s employees had a choice regarding whether to participate and sufficient time to make that choice.

Regarding the safe harbor provision, the Court rejected Orion’s argument and found that the safe harbor provision did not apply to Orion’s wellness program.  Citing Congressional intent, the Court noted that the safe harbor provision was a limited exception that was created to protect the basic business operations of insurance companies, and that generally, wellness programs are unrelated to basic underwriting and risk classification.  Id. at 15 (citations omitted).  Applied here, the Court found that the wellness program was not used to underwrite, classify, or administer risk.  Id.  The Court explained that “[i]f an employee refused to complete the HRA and participate in the wellness plan, she could still be a member of Orion’s insurance plan, provided she pay the full premium amount. In short, Orion’s wellness program was wholly independent from its insurance plan.”  Id. at 16.

Next, the Court addressed Orion’s argument that even if its wellness initiative was not immune under the safe harbor provision, Orion’s program was still voluntary.  Id. at 17.  The EEOC argued that the wellness program was involuntary because shifting 100 percent of the premium cost to an employee who opted out of a program was so substantial that Orion’s offer to pay the health benefit premium in exchange for the employee’s participation in the program is more than a mere incentive.  The Court rejected the EEOC’s argument, noting that, “even a strong incentive is still no more than an incentive; it is not compulsion,” and that, “Orion’s wellness initiative is voluntary in the sense that it is optional.”  Id. at 18.  Accordingly, the Court found that Orion was entitled to summary judgment and rejected the EEOC’s claim that the wellness program, including the HRA, violated § 12112(d)(4)(A).

Finally, in regards to the EEOC’s retaliation and interference claims, Orion argued that the employee was not engaged in any protected activity by complaining about aspects of the program that were lawful.  The Court rejected Orion’s argument, noting it was “undisputed that [the employee] expressed concern about the confidentiality of her medical information under the new wellness initiative. As that is a legitimate concern under the ADA, i.e., something the ADA actually does govern, her expression may have been protected.”  Id. at 20.  Accordingly, the Court denied Orion’s motion for summary judgment as to the retaliation and interference claims.

Implications For Employers

Employer’s implementing wellness programs absolutely need to pay attention to decisions such as this one.  So long as participation in the program and any accompanying health assessment are truly voluntary, employers can utilize such wellness programs without violating the ADA.  Nonetheless, employers must be cautious in making sure their programs are truly voluntary or else face this risk of EEOC litigation.

Readers can also find this post on our EEOC Countdown blog here.

Jumping For Joint Employer: The EEOC Files Amicus Brief Supporting Broadened Definition Of Joint Employer In High-Profile NLRB Litigation

Posted in EEOC Litigation

th7Y6M6GN7By Gerald L. Maatman, Jr., Christina M. Janice and Alex W. Karasik

Seyfarth Synopsis: Following the NLRB’s expansion of the definition of “joint employer” in the high-profile Browning-Ferris case and the employer’s subsequent appeal to the D.C. Circuit, the EEOC filed an amicus brief supporting the broadening of both agencies’ tests for determination of joint employer status. This is a signal to employers of future agency positions on the expansion of Title VII liability.

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With government agencies and plaintiffs’ counsel alike seeking giant paydays from employers with the deepest pockets, governmental expansion of “joint employer” status is a critical development in employment law.  In the 2015 landmark decision in Browning-Ferris Industries of California (“Browning-Ferris”), 362 NLRB No. 186 (Aug. 27, 2015), which was the subject of Seyfarth Shaw’s Client Alert here, the NLRB significantly lowered the bar for establishing joint employer status.  Under Browning-Ferris, the NLRB may find an unrelated entity to be an “employer” for purposes of the National Labor Relations Act based on a number of possible factors, including the existence of unexercised authority over terms and conditions of employment, or by the “indirect” exercise of that authority through agents.  Following Browning-Ferris’s appeal to the U.S. Court of Appeals for the District of Columbia Circuit, the EEOC recently filed its amicus brief supporting the NLRB’s expanded view of joint employer status. . . and articulating an expanded view of its own.

The EEOC’s filing is an important roadmap for employers to understand and anticipate how the EEOC will expand its own investigations and claims involving complex relationships in such contexts as staffing agencies, franchises, contractors, and corporate enterprises comprised of affiliated entities.

Case Background

Upon the petition of the International Brotherhood of Teamsters, Local 350, to represent employees of Leadpoint, the Teamsters sought to have Browning-Ferris, which contracted for temporary labor from Leadpoint, to be found to be a joint employer for purposes of the petition.  At that time, the prevailing standard for determining whether a putative employer was whether the putative employer “meaningfully affect[ed]  matters relating to the employment relationship, such as hiring, firing, discipline, supervision and direction.”  Laerco Transportation, 269 NLRB 324, 325 (1984).  This standard required a putative employer to have immediate and direct control over terms and conditions of employment.  Under this standard, a regional director of the NLRB originally found that Browning-Ferris was not a joint employer with its contractor.  EEOC at 2-3.

Upon review of that decision and with the support of the EEOC as amicus, the NLRB abandoned its standard and reverted to an earlier, broader standard articulated in NLRB v. Browning-Ferris Industries, 691 F.2d 1117 (3d Cir. 1982).  Id.  This earlier standard provides that “two or more entities are joint employers of a single work force if they are both employers within the meaning of the common law, and if they share or codetermine those matters governing the essential terms and conditions of employment.”  Id. at 2.  Further, the NLRB “will no longer require that a joint employer not only possess the authority to control employees’ terms and conditions of employment, but also exercise that authority.”  Id. at 3.  In this respect, the NLRB stated it would apply an “inclusive approach” to defining “essential terms and conditions of employment,” including the setting wages and hours; dictating the number of workers to be supplied; controlling scheduling, seniority, and overtime; assigning work; and determining the manner and method of work performance.  Id.

Despite acknowledging the dissent’s argument that its new standard, which allows for unexercised or indirectly exercised authority or control, lacks certainty or predictability, the NLRB reasoned that joint employer issues are nonetheless best examined and resolved in the context of specific factual circumstances.  Id. at 3-4.  Accordingly, applying the new, broadened standard to the facts of this case, the NLRB reversed the regional director and found that Browning-Ferris was a joint employer with its contractor.  Id. at 4.  Following Browning-Ferris’s appeal, the EEOC filed its amicus brief in support of the NLRB.

The EEOC’s Amicus Brief

Predictably, the EEOC supports the broadened, more ambiguous standard now adopted by the NLRB.  This broadened standard more closely resembles the EEOC’s own expansive interpretation of “joint employer” status in its Compliance Manual here and Guidance here, neither of which have the force of law or are universally followed by federal courts taking up EEOC claims involving joint employer liability.

For instance, in the context of staffing companies, EEOC’s Guidance provides that a client of a staffing company may be a joint employer if the client “exercises significant supervisory control over the worker.” The Guidance further qualifies:

Clients of contract firms and other types of staffing firms also qualify as employers of the workers assigned to them if the clients have sufficient control over the workers….   For example, the client is an employer of the worker if it supplies the work space, equipment, and supplies, and if it has the right to control the details of the work to be performed, to make or    change assignments, and to terminate the relationship. . . .

EEOC Enforcement Guidance: Application of EEO Laws to Contingent Workers Placed by Temporary Employment Agencies and Other Staffing Firms (Dec. 3, 1997), 1997 WL 3315961, at *5-6 (emphasis added).

The standard articulated by the NLRB and supported by the EEOC potentially inoculate the “joint employer” determinations by these agencies as fact-driven and interpretive – particularly on such vague and speculative notions as unexercised or indirect control.  Nevertheless, the EEOC supports the elusive new standard by asserting three arguments.  First, the EEOC argues that its own test, like that of the NLRB, appropriately looks at the totality of the circumstances.  EEOC at 8.  Noting that its approach is “intentionally flexible” and “consistent with common law,” the EEOC explains that it does not consider one factor to be decisive, but rather all of the circumstances in the worker’s relationship with each business involved should be considered to determine who is an employer.  Id. at 9-11 (citations omitted).

Second, the EEOC argues that its standard correctly allows courts to consider an entity’s right to control and indirect control of the terms and conditions of employment.  Specifically, the EEOC contends that an entity’s right to control the terms and conditions of employment, whether or not it exercises that right, is relevant to joint employer status.  Id. at 12.  Because the right to control terms and conditions of employment is one factor among many the EEOC considers relevant to joint employer status, the EEOC concludes that the NLRB’s newly articulated standard recognizing right to control as a relevant consideration, is correct.  Id. at 13.

With respect to indirect control, the EEOC similarly explains that it “has long considered indirect control to be relevant to joint employer status.”  Id.  After explaining that “[a] putative joint employer exercises indirect control of the terms and conditions of employment by acting through an intermediary,” the EEOC identifies several of its own determinations in which it has applied this logic.  Id. at 14.  The EEOC cites to no court decisions, however, in support of its expansive position.

Finally, the EEOC asserts that contrary to Browning-Ferris’s argument, a broad, fact-specific inquiry is neither vague nor unworkable.  Id. at 15.  The EEOC posits that “[g]iven the complexity and variety of the situations implicating joint employer status, the NLRB correctly declined to rank the elements of its test in order of importance.  Id. 

Although the EEOC concedes that “[t]he EEOC’s flexible joint-employer test, like the NLRB’s, carries more uncertainty than the NLRB’s now-discarded rule, which looked only at authority exercised directly and immediately,”  id. at 16, the EEOC boldly contends that “[u]ncertainty, however, is no basis for rejecting a rule that is consistent with statutory language, common law, and legislative purpose.”  Id.

Further, after acknowledging Browning-Ferris’s argument that the uncertain nature of the new standard will make it difficult for organizations to anticipate whether they will be deemed joint employers, and deprives employers of their right to due process, the EEOC asserts in conclusory fashion that the joint employer test itself does not violate due process.  Id. at 17.  Quoting Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 327 (1992), the EEOC concludes that the Supreme Court effectively rejected Browning-Ferris’s argument when it stated the application of “the traditional agency law criteria . . . generally turns on factual variables within an employer’s knowledge.”  Id.

Implications For Employers

In its recent “Enforcement Guidance on Retaliation and Related Issues” publication, which we blogged about here, the EEOC made it well-known that it maintains a watchful eye on the NLRB’s interpretations of protected activity.  The EEOC’s amicus brief stands as another in a recent spate of advocacy pieces seeking to advance the EEOC’s own expansive view of joint employer status in the context of federal antidiscrimination laws.  Here, the EEOC is looking to secure a circuit court opinion legitimizing a broad definition of joint employer that it then can use to pursue multiple alleged employers in discrimination claims.  Accordingly, businesses contracting labor should scrutinize their workforce relationships carefully for indicia of potential for indirect as well as direct control over the terms and conditions of employment of the workforce.  We will continue to update our readers as events unfold in this critical litigation.

Readers can also find this post on our EEOC Countdown blog here.

Eleventh Circuit Declines EEOC’s Invitation To Expand Race To Include Personal Expression Or Cultural Characteristics

Posted in EEOC Litigation

thZ9W9PNHGBy Michael L. DeMarino and John S. Marrese

Seyfarth Synopsis After a black woman’s employment offer was rescinded because she refused to cut off her dreadlocks in violation of a company grooming policy, the EEOC sued under Title VII for discrimination on the basis of race.  The U.S. Court of Appeals for the Eleventh Circuit affirmed the dismissal of the claim because the EEOC failed to allege that the company discriminated against the woman because of an immutable characteristic of race, like skin color or hair texture. The ruling is an important one for employers on race discrimination issues and dress/grooming codes.

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In E.E.O.C. v. Catastrophe Mgmt. Solutions, No. 14-13482 (11th Cir. Sept. 15, 2016), the EEOC filed a complaint in the U.S. District Court for the Southern District of Alabama on behalf of a black woman whose offer of employment was rescinded when she refused to cut off her dreadlocks in violation of her employer’s grooming policy.  The district court dismissed the EEOC’s complaint for failure to plead a claim and denied the EEOC’s motion for leave to amend on the basis that amendment would be futile. On appeal, the Eleventh Circuit affirmed the district court’s dismissal, holding that Title VII only prohibits discrimination based on immutable characteristics of race, such as skin color or hair texture—not based on individual expression or cultural practices tied to race, like the wearing of dreadlocks.

This ruling illustrates that courts will continue to uphold corporate policies implemented to achieve legitimate business interests—like maintaining employees’ professional appearance and hygiene—where they do not discriminate based on natural race-based traits that a person does not choose or cannot change. Employers, however, should be mindful that a race-neutral policy may still give rise to a lawsuit where that policy disproportionately impacts persons of a particular race.

Case Background

Chasity Jones (“Jones”), a black woman, wore her hair in short dreadlocks to an interview for a customer service position with a claims processing company (the “Company”).  Id. at 3.  After interviewing, the Company’s human resources manager told Jones and a room full of other applicants that they had been hired.  Id. at 4.  Afterward, when speaking privately with Jones, the manager asked Jones “whether she had her hair in dreadlocks.”  Id.  Jones said yes, and the manager told her that the Company could not hire Jones “‘with the dreadlocks.’”  Id.  Jones replied that she would not cut her hair and the manager told her that the Company could not hire her.  Id. at 5.

At the time, the Company had a grooming policy that applied to persons of any race.  It stated: “All personnel are expected to be dressed and groomed in a manner that projects a professional and businesslike image while adhering to company and industry standards and/or guidelines. . . . [H]airstyle should reflect a business/professional image.  No excessive hairstyles or unusual colors are acceptable[.]”  Id.

The EEOC filed suit on Jones’s behalf against the Company in the U.S. District Court for the Southern District of Alabama.  Id. at 2.  The EEOC alleged that, by rescinding Jones’s employment offer because she refused to cut off her dreadlocks, the Company had intentionally discriminated on the basis of race in violation of Title VII of the Civil Rights Act of 1964 (“Title VII”).  Id.  The district court, however, dismissed the EEOC’s claim because it did not plausibly allege intentional racial discrimination by the Company.  Id. 

The district court also denied the EEOC‘s request for leave to file an amended complaint. The EEOC’s proposed amended complaint alleged that the Company’s grooming policy, which bans dreadlocks,  intentionally discriminates on the basis of race because dreadlocks are “physiologically and culturally associated with people of African descent.”  Id. at 8. The district court, however, held that that Title VII only prohibits discrimination based on “immutable”—or unchangeable—traits, like race, skin color, and national origin—and dreadlocks did not fall into that category.  Id.

The Decision

On appeal, the U.S. Court of Appeals for the Eleventh Circuit affirmed the district court’s dismissal and rejected the EEOC’s argument that Title VII prohibits discrimination based on individual expression or cultural practices tied to race. Id.

After explaining that this appeal required it to consider what “race” encompasses under Title VII, the Eleventh Circuit noted that neither Title VII nor the EEOC’s regulations define the term.  Id. at 15.  The Eleventh Circuit interpreted the term by reviewing definitions around the time Title VII was enacted, only to conclude that the “quest for the ordinary understanding of ‘race’ in the 1960s does not have a clear winner.” Id. at 19. Ultimately, the Eleventh Circuit found support for its holding “elsewhere.”  Id.

In particular, the Eleventh Circuit looked to two cases that explored mutable versus immutable characteristics of race.  One rejected a sex discrimination claim by a male job applicant denied employment for long hair.   Id. at 20-21.  Another rejected a national origin discrimination claim by a Mexican-American employee fired for violating the company’s English language-only policy by speaking Spanish at work.  Id. at 21-23.  The male applicant chose to grow his hair long and could have cut it and the Mexican-American employee chose to speak Spanish at work and could have waited to speak it outside of working hours.  The court acknowledged that drawing distinctions between mutable and immutable characteristics of race can be difficult, “but it is a line that courts have [nonetheless] drawn.” Id. at 24. By way of further example, the Eleventh Circuit cited one case forbidding discrimination based on the wearing of a natural Afro but another permitting a ban against an all-braided hairstyle.  Id. at 24.

Based on the foregoing decisions, the Eleventh Circuit concluded that personal expression or cultural practice closely associated with race — like wearing dreadlocks — are not immutable characteristics under Title VII.  Also relevant to the Eleventh Circuit’s decision was that the EEOC pursued only a “disparate treatment” theory of liability. This theory required the EEOC to allege that the Company intentionally discriminated against Jones because of her race.  Id. at 10.  The EEOC conceded that it had not pursued a “disparate impact” theory of liability, which would have allowed it to allege merely that the Company’s practice negatively impacted black person s— whether or not the Company intentionally utilized the practice to do so.  Id.

Implication For Employers

The Eleventh Circuit’s decision saves employers from having to guess at what cultural practices are associated with a particular race.  Employers may implement policies to achieve legitimate business interests— like maintaining professionalism in their employees’ appearance and hygiene — as long as those policies do not discriminate based on natural race-based traits that a person does not choose or cannot change.

But given that courts must draw fine lines in deciding what constitutes an unchangeable racial characteristic in cases alleging race-based discrimination, employers should be careful to ensure that prohibited conduct does not fall close to the line.  Moreover, employers should monitor the impact of their policies to ensure that prohibited conduct does not disproportionately affect persons of a protected class.

Readers can also find this post on our EEOC Countdown blog here.

The EEOC Issues New Enforcement Guidance On Retaliation

Posted in EEOC Litigation

th7Y6M6GN7By Gerald L. Maatman, Jr., Mark Casciari, and Christina M. Janice

Seyfarth Synopsis: For the first time since 1998, the EEOC has updated its enforcement guidance on retaliation claims brought under the various anti-discrimination laws the Commission is charged with enforcing.  Observing that retaliation is now the single largest category of claims presented in its charges, the EEOC’s new enforcement guidance advocates expansive interpretations of law to broaden retaliation protections for federal and private sector applicants and employees, creating new burdens on employers who decide to attempt to comply with this new EEOC directive.

Making good on its stated objective to transform itself from a “nationwide law firm” to a “national law enforcement agency,”[1] the EEOC on August 29, 2016 issued its new Enforcement Guidance on Retaliation and Related Issues along with a Small Business Fact Sheet.  After a period of public comment on its Proposed Enforcement Guidance on Retaliation, see here, the EEOC has now asserted even stronger, more expansive positions than it first proposed on defining actionable retaliation under Title VII of the Civil Rights Act of 1964 (Title VII), the Age Discrimination in Employment Act (ADEA), Title V of the Americans With Disabilities Act (ADA), Section 501 of the Rehabilitation Act (Section 501), the Equal Pay Act (EPA), and Title II of the Genetic Information Nondiscrimination Act (GINA).  While the Guidance itself does not have the force of law, it provides employers with a valuable roadmap of the EEOC’s agenda both in pursuing workplace retaliation claims and in attempting to make law in the courts.

The EEOC now clearly positions itself as interpreting anti-discrimination laws and federal decisions as it sees fit to serve its enforcement objectives: “This document sets for the Commission’s interpretation of the law of retaliation and related issues. . . . Where the lower courts have not consistently applied the law or the EEOC’s interpretation of the law differs in some respect, the guidance sets forth the EEOC’s considered position and explains its analysis.” (Emphasis added.)  Rather than enforce existing law as interpreted by courts throughout the country, the EEOC supports its nationwide objective to expand employee protections by relying on court decisions favoring its approach, while at the same time rejecting court decisions that do not.

What Is Retaliation?

The Guidance says that the preconditions to a retaliation claim include: 1) protected activity being either “participation in an EEO process” or “opposition to discrimination”; 2) materially adverse action taken by the employer; and 3) a requisite level of causal connection between the protected activity and materially adverse action.  The EEOC considers these three elements to be fluid concepts, to be read and enforced expansively.

The Guidance also focuses on the concept of “anticipatory retaliation” or “pre-emptive retaliation” articulated by the Seventh and Tenth Circuits, that retaliation occurs “…when an employer takes a materially adverse action because an individual has engaged in, or may engage in, activity in furtherance of the EEO laws the Commission enforces” (emphasis added, citing Beckel v. Wal-Mart Assocs., Inc., 301 F.3d 621, 624 (7th Cir. 2002); Sauers v. Salt Lake Cty., 1 F.3d 1122, 1128 (10th Cir. 1993)). Employers concerned about the EEOC’s scrutiny now must be vigilant to document or otherwise be able to prove that all aspects of performance management – including, but not limited to, evaluations, warnings, reprimands, hiring, promotions, compensation, terminations and references – is conducted without regard to whether an applicant or employee may be about to participate in an EEO process or oppose discrimination.

What Is Protected Activity?

Participation In An EEO Process.  The Guidance restates the EEOC’s longstanding position that participation in an EEO process is protected whether or not an individual has a reasonable, good faith belief that the allegations are or could become unlawful. Conceding that the Supreme Court has not addressed this question, the EEOC nonetheless rejects decisions by the Seventh and Eighth Circuits that hold that the anti-retaliation protections of Title VII do not extend to individuals making false claims to the EEOC. (See Gilooly v. Mo. Dep’t of Health & Senior Servs., 421 F.3d 734, 240 (8th Cir. 2005); Mattson v. Caterpillar, Inc., 359 F.3d 885, 891 (7th Cir. 2004)).

Opposition To Discrimination.  The Guidance provides that “opposition to discrimination” must be “reasonable” in manner to receive protection. The Guidance then qualifies this position by observing that that there is overlap between what constitutes “participation in an EEO process” and “opposition to discrimination.”  Relying on Sixth Circuit case law the Guidance provides, self-servingly, that the EEOC is afforded great discretion to determine what constitutes protected activity. Employers should be on the lookout that the reasonableness of behaviors alleged to be in opposition to discrimination may be eroded as a defense to retaliation claims.

The Guidance also states that the EEOC rejects and will challenge what some courts have dubbed the “manager rule”; namely, that managers must step outside their management roles and take a position adverse to the employer in order to engage in the protected activity of opposition to discrimination.

What Is A Materially Adverse Action?

With respect to the requirement that an individual suffer a materially adverse action at the hands of an employer, the EEOC continues to broaden the actions that in its view constitute “materially adverse actions” as to include one-off incidents, warnings, dissuasive activities that do not directly affect employment, and activities outside of the workplace that may dissuade an applicant, employee or former employee from engaging in protected activity.  Further, actions purportedly taken against close family members and fiancés on account of an applicant, employee or former employee engaging in protected activity also will be challenged as retaliatory.

What Is Causation?

While the Guidance acknowledges that the Supreme Court has held that the standard for proof of retaliation under Title VII is that “but for” the a retaliatory motive, the employer would not have taken the adverse action, the Guidance introduces the “motivating factor” standard for federal sector Title VII and ADEA retaliation cases, prohibiting retaliation if it is a mere motivating factor behind an adverse action.  The Guidance provides that suspicious timing, incriminating oral or written statements, evidence of how comparable individuals were treated differently, and inconsistent or shifting explanations of the adverse action all can support a finding of retaliation, while the employer’s ignorance of the protected activity or having a legitimate, non-discriminatory reason for the adverse action may support a finding that no unlawful retaliation has occurred.

Related Issues – Requests For Accommodation

The Guidance discusses that, in addition to retaliation, the Americans With Disabilities Act prohibits interference with an applicant, employee or former employee’s rights under the ADA, including assisting another in the exercise of their rights under the ADA.  The Guidance suggests that the EEOC will aggressively challenge conduct allegedly interfering with requests for accommodation for disability under the ADA, as well as requests for religious accommodation under Title VII.

Implications For Employers

While the Guidance states that “[e]mployers remain free to discipline or terminate employees for legitimate, non-discriminatory, non-retaliatory reasons, notwithstanding any prior protected activity,” employers have no cause for reassurance from the EEOC.  The Guidance signals that the EEOC is broadening its interpretation of retaliation to include protection for activity that has not yet occurred, possible protection for “opposition” activities that may not be reasonable, and protection to the applicant and  employee who may engage in protective activity in the future.

[1] We previously blogged about the EEOC’s change in focus here.

Readers can also find this post on our EEOC Countdown blog here.

Eleventh Circuit Affirms Dissolution Of Class Action Consent Decree Due To Plaintiffs’ Inaction

Posted in Class Action Litigation

firefighter-920032_960_720By Gerald L. Maatman, Jr. and Alex W. Karasik

Seyfarth Synopsis:  After the City of Jacksonville stopped following a class action consent decree that required it to hire a proportionate number of black and white firefighters, the U.S. Court of Appeal for the Eleventh Circuit affirmed the district court’s denial of the motion and dissolution of the consent decree on the grounds that the plaintiffs waiting fifteen years to bring their show cause motion.

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Following a class action lawsuit filed on behalf of all past, present and future black firefighters in in the City of Jacksonville, Florida (“the City”) in 1971, the U.S. District Court for the Middle District of Florida entered a consent decree that required the City to hire a proportionate number of black and white firefighters.  The consent decree was modified in 1982 and effective until 1992, when the City unilaterally and without legal authorization stopped following the decree.  Fifteen years later, in 2007, the plaintiffs brought a motion to show cause as to why the City should not be held in contempt for violation of the 1982 consent decree.  The district court denied the plaintiffs’ motion on grounds of laches, and dissolved the consent decree.  On appeal, in Coffey, et al. v. Braddy, et al., No. 15-11112 (11th Cir. Aug. 23, 2016), the Eleventh Circuit affirmed the district court’s order denying the plaintiffs’ motion to show cause and dissolving the consent decree.

This ruling illustrates that if an employer abandons its obligations under a consent decree, legal inaction by plaintiffs over a long period of time could potentially render the consent decree dissolved.

Case Background

In 1982, the district court modified a 1971 consent decree requiring the City of Jacksonville to hire in its fire department “an equal number of blacks and whites until the ratio of black fire fighters to white fire fighters reflects the ratio of black citizens to white citizens in the City of Jacksonville.”  Id. at 2.  The City complied for ten years until it unilaterally and without the district court’s approval stopped following the decree in 1992.  Id.  In 2007, fifteen years after the City had stopped complying with the consent decree, the plaintiffs brought a motion to show cause as to why the City should not be held in contempt for violation of the 1982 consent decree.

The district court denied the plaintiffs’ motion on grounds of laches and dissolved the decree.  Id. at 2-3.  Further, the district court explained that if the plaintiffs had sued in 1992 or the years immediately following, “the City would have had a lot of explaining to do.”  Id. at 10.  Citing incomplete memories, the fact that several key City personnel had passed away or moved, the spottiness of the paper trail, ambiguities in the documents that were in the record, and the fact that the City had been operating under a different hiring procedure since 1999, the district court concluded that the “plaintiffs[’] waiting until fifteen years later is simply too prejudicial to the City.”  Id.

In addition, the district court granted the City’s motion to dissolve the consent decree.  Id.  The district court refused to reinstate the consent decree as written because its racial quotas were not constitutional under the modern standard for affirmative action, and because adapting the 1982 decree to the new hiring practices that began in 1999 “could be problematic.”  Id.  The district court also cited a different successor lawsuit in support of its decision to decline to modify the consent decree.

The Decision

On appeal, the Eleventh Circuit affirmed the district court’s order denying the plaintiffs’ motion to show cause and dissolving the consent decree.  In support of its holding that the district court did not abuse its discretion in holding that laches barred the plaintiffs’ motion, the Eleventh Circuit noted that the plaintiffs’ fifteen-year delay in bringing their motion to show cause was not excusable and unduly prejudiced the City’s ability to defend itself.   Id. at 11.  The Eleventh Circuit instructed that to assert a successful defense of laches, a defendant must show a delay in asserting a right or claim, that the delay was not excusable, and that there was undue prejudice to the party against whom the claim is asserted.  Id.

The Eleventh Circuit held that the district court did not abuse its discretion in finding that the plaintiffs’ inexcusable delay unduly prejudiced the City’s ability to defend itself, because unclear memories and incomplete documents made it impossible to determine whether the City was, in fact, in contempt when it ended compliance in 1992.  The Court opined that due to “undeniable ambiguities in the record, the district court was well within its discretion in holding that the City was unduly prejudiced by the delay because the passage of time has made it impossible to make the required findings to determine whether or not the City was in contempt of the decree.”  Id. at 15.  The Court rejected the plaintiffs argument that the City was at fault for failing to maintain records that would show that the terms of the decree had been met, noting that plaintiffs  produced no evidence that the City destroyed the records in bad faith, and that “[u]ltimately, the fact that records were lost or destroyed in the interim fifteen years is more a product of the plaintiffs’ delay than of the City’s malfeasance.”  Id. at 17.

Finally, the Eleventh Circuit held that the district court’s dissolving of the consent decree (as opposed to leaving the decree in place or modifying the decree) was not an abuse of discretion.  The Court found that “the district court correctly reasoned that the consent decree as written could not be reinstated, because, as the Supreme Court has explained, ‘[a] consent decree must of course be modified if, as it later turns out, one or more of the obligations placed upon the parties has become impermissible under federal law.’”  Id. at 20 (quoting Rufo v. Inmates of Suffolk Cty. Jail, 502 U.S. 367, 388 (1992)).  Finally, the Court found that it was in the public’s interest to allow a currently pending lawsuit regarding the same issue to address the situation.  Id.

Accordingly, because the plaintiffs’ fifteen-year delay prejudiced the City’s ability to defend itself and because a new lawsuit had taken up the cause of fighting racial discrimination in the City’s firefighting department, the Eleventh Circuit held that neither the district court’s application of laches nor its dissolution of the 1982 consent decree was an abuse of discretion.  Therefore, the Court affirmed the district court’s dissolution of the consent decree.

Implication For Employers

Employers should not view this ruling as a license to abandon their obligations under a consent decree that resolves a workplace class action.  Rather, this ruling serves as a wake-up call to plaintiffs who obtain consent decrees against employers for discriminatory practices, and thereafter sleep on the rights they expended resources to obtain.  Should an employer choose to abandon its duties under a consent decree, and the plaintiffs thereafter fail to address this abandonment for an extended period of time, employers can use this ruling to argue how such inactivity by the allegedly aggrieved plaintiffs nullifies the employer’s obligation to abide by the dated consent decree.

More Mach Mining: Court Denies The EEOC’s Motion For Reconsideration Of Discovery Order

Posted in EEOC Litigation

thVSDVQKXMBy Gerald L. Maatman, Jr. and Alex W. Karasik

Seyfarth Synopsis: In the remand of the high profile Mach Mining litigation that was before the Supreme Court in 2015, a district court denied the EEOC’s motion for reconsideration of a discovery order pertaining to the scope of the EEOC’s investigation, and denied the EEOC’s motion to amend its complaint to add as defendants seven entities who did not receive actual notice or an opportunity to conciliate.

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After the remand of the Mach Mining litigation from the U.S. Supreme Court, this hallmark case regarding the scope of review of the EEOC’s pre-suit duties under Title VII  is still evolving and shaping the landscape of EEOC litigation.  In EEOC v. Mach Mining, LLC, No. 11-CV-00879 (S.D. Ill. Aug. 22, 2016), Judge Gilbert of the U.S. District Court for the Southern District of Illinois recently denied the EEOC’s motion for clarification or reconsideration of a prior discovery order, while granting in part and denying in part the EEOC’s motion to amend its first amended complaint by adding several entities as defendants.

It is imperative that employers facing Title VII lawsuits brought by the EEOC follow this game-changing litigation, which provides insight into how the EEOC’s compliance with its pre-suit conciliation obligations shapes the parameters of EEOC litigation.  For further analysis of the Supreme Court’s decision and subsequent proceedings, check out our previous blog posts here and here.

Case Background

The EEOC brought suit on behalf of a class of female applicants who had applied for non-office jobs at Mach Mining.  Id. at 1.  The EEOC claimed that Mach Mining had never hired a single female for a mining-related position and did not even have a women’s bathroom on its mining premises.  The complaint alleged that Mach Mining’s Johnston City, Illinois, facility engaged in a pattern or practice of unlawful employment practices since at least January 1, 2006, in violation of Title VII, by engaging in sex discrimination.

In its answer, Mach Mining asserted the affirmative defense that the EEOC failed to conciliate in good faith.  The issue was ultimately resolved before the U.S. Supreme Court, which held “that a court may review whether the EEOC satisfied its statutory obligation to attempt conciliation before filing suit. But we find that the scope of that review is narrow, thus recognizing the EEOC’s extensive discretion to determine the kind and amount of communication with an employer appropriate in any given case.”  Id. at 2 (quoting Mach Mining, LLC v. EEOC, 135 S.Ct. 1645, 1649 (2015)).

Following the Supreme Court’s decision, Mach Mining filed a renewed motion for partial summary judgment, which the Magistrate Judge denied.  Mach Mining then filed a motion for a protective order requesting that the Court preclude the EEOC, “from conducting discovery related to Mach’s relationship with other entities — entities which EEOC failed to include in the investigation and conciliation stage that prompted this action.”  Id. at 2.  Following a hearing, the Magistrate Judge denied Mach Mining’s motion for a protective order, and Mach Mining filed Rule 72 objections to the order.

Per Rule 72, the Court found that the ruling was not clearly erroneous or contrary to law.  However, the Court sua sponte reconsidered the motion and granted in part Mach Mining’s motion, finding that “[t]he EEOC had the opportunity to request any and all documents — including those on related entities —during its investigation of Mach Mining.  There are no allegations that Mach Mining failed to cooperate with that investigation or that Mach Mining did not disclosure all requested information. As such, the EEOC has had ample opportunity to seek information and include any related entity in its investigation of Mach Mining.”  Id.  Thus, in its January 21, 2016 order, the Court limited the EEOC from seeking discovery beyond the entities named in its Letter of Determination.

Thereafter, the EEOC moved for clarification or reconsideration of that order.  Prior to hearing arguments, the Court noted that the January 21, 2016 order did not intend to bar the EEOC from seeking discovery from any third party that may have relevant information pertaining to any issue in this matter.  Id. at 3.  Rather, the Court explained that the holding of the January 21, 2016 order was that the EEOC was barred from additional discovery for the purpose of adding parties where no notice and attempt at conciliation had been made.

The Court’s Decision

The Court denied the EEOC’s motion for clarification or reconsideration of the January 21, 2016 order.  The EEOC argued that Mach Mining had, “a web of complex corporate relationships” and that Mach Mining did not have physical control over the mining location and/or physical facilities.  Id. at 4.  These facilities are owned by other entities from whom the EEOC was attempting to obtain discovery.

The Court explained that it did not seek to bar discovery from property owners and that the EEOC was free to seek discovery from third parties.  Nonetheless, the Court noted that “such discovery is limited to Mach Mining’s hiring/firing and/or lack of female facilities. EEOC can conduct any discovery with regard to the merits of this case and/or discovery to third parties for legitimate purposes. The only discovery that was barred was discovery with regard to adding defendants that have not had notice and an opportunity for conciliation.”  Id. at 4.  As a result, the Court concluded that, “there is no basis for the Court to reconsider its January 21, 2016, ruling.”  Id.

Thereafter, the Court granted in part the EEOC’s motion to amend the complaint.  The EEOC argued that it should be permitted to add as defendants two entities named in the Letter of Determination, which the EEOC asserted had notice and an opportunity for conciliation, and seven entities as defendants for relief purposes only who did not have actual notice and an opportunity for conciliation.  Id. at 5.  In regards to the seven entities to which the EEOC acknowledged at the hearing that did not have actual notice and an opportunity for conciliation, the Court found that the EEOC failed to demonstrate that these entities could provide relief unavailable through Mach Mining.  Id. at 6.  As to the two entities named in the Letter of Determination, the Court held that if the EEOC could demonstrate that these entities had actual notice and an opportunity for conciliation in compliance with EEOC’s rules and regulations, the EEOC was granted leave to amend the complaint and to join those two entities as defendants.  Accordingly, the Court granted the EEOC’s motion to amend its complaint to add two entities as defendants, while denying the remainder of its motion to amend in regards to the seven entities who had no actual notice or opportunities for conciliation.  Id. at 7.

Implications For Employers

The Mach Mining litigation is a benchmark case for pattern or practice litigation brought by the EEOC, given its ramifications on the scope of review of the government’s pre-suit Title VII obligations.  This ruling illustrates that in instances where the EEOC does not provide parties actual notice or an opportunity to conciliate, courts will likely not allow those parties to later be added as defendants.  Nonetheless, it remains unlikely that courts will conduct in-depth reviews of such conciliations.

Readers can also find this post on our EEOC Countdown blog here.

EEOC Loses Landmark Transgender Discrimination Case

Posted in EEOC Litigation

United_States_District_Court_for_the_Eastern_District_of_Michigan_sealBy Gerald L. Maatman, Jr. and Alex W. Karasik

Seyfarth Synopsis: In one of the first two ever transgender discrimination cases brought by the EEOC, a federal court in Michigan granted the employer’s motion for summary judgment, finding the employer met its burden in demonstrating that it is exempt under the Religious Freedom Restoration Act, while the EEOC failed to suggest a less restrictive alternative in its challenge of the employer’s gender-specific dress code policy.

In one of the first two ever transgender discrimination cases brought by the EEOC, the government alleged that a funeral home wrongfully terminated its former funeral director for being transgender, for transitioning from male to female, and/or for not conforming to the employer’s gender-based preferences regarding its dress code.  The funeral home argued it was exempt under the Religious Freedom Restoration Act (“RFRA”).  In EEOC v. R.G. & G.R. Harris Funeral Homes, Inc., No. 14-13710 (E.D. Mich. Aug. 18, 2016), after the EEOC and employer R.G. & G.R. Harris Funeral Homes, Inc. (“the Funeral Home”) both moved for summary judgment, Judge Cox of the U.S. District Court for the Eastern District of Michigan granted the Funeral Home’s motion and denied the EEOC’s motion.  The court also dismissed the EEOC’s claim that the Funeral Home engaged in an unlawful employment practice by providing work clothes only to males, noting that the EEOC had not done a full investigation of this claim that it uncovered during its wrongful termination investigation.

Although transgender discrimination litigation is not yet explicitly covered under Title VII, this ruling is monumental in terms of shaping the landscape for an evolving area of law that will profoundly impact employers in years to come.

Case Background

The Funeral Home is a closely-held, for-profit corporation operating three funeral homes in Michigan.  Id. at 7.  Owner and operator Thomas Rost has been a Christian for over sixty-five years.  Id. at 15.  While the Funeral Home does not officially affiliate with a religion, its website contains scripture and various bible verses are dispersed at its locations.  Id.  The Funeral Home has a strict employee dress code policy with several requirements, including that men must wear suits and women must wear jackets and skirts/dresses.  Id. at 8-9.

The claimant was hired in 2007.  Id. at 9.  In 2013, the claimant provided the Funeral Home with a letter stating he intended to begin transitioning his gender to female following return from a vacation.  Id. at 10.  Although the claimant intended to abide by the gender-specific dress code by wearing a skirt during the transition, Rost fired the claimant, stating “this is not going to work out.”  Id. at 11.

The claimant filed a charge of sex discrimination with the EEOC.  During its investigation, the EEOC discovered that male employees at the Funeral Home were provided with work clothing and that female employees were not.  The EEOC filed suit against the Funeral Home on September 25, 2014, asserting two claims.  Id. at 12.  First, it asserted a wrongful termination claim, alleging the claimant was fired because the claimant is transgender, because of the claimant’s transition from male to female, and/or because the claimant did not conform to the Funeral Home’s sex or gender-based preferences, expectations, or stereotypes.  Second, the EEOC alleged that the Funeral Home engaged in an unlawful employment practice by providing work clothes to male but not female employees.  The parties filed cross-motions for summary judgment.

The Decision

The court granted summary judgment in favor of the Funeral Home as to the wrongful termination claim, and dismissed the EEOC’s claim regarding the work clothes being provided only to males.  Id. at 55-56.  First, the Funeral Home asserted that its enforcement of its sex-specific dress code cannot constitute impermissible sex stereotyping under Title VII.  The court rejected this argument, opining that “[t]his evolving area of the law – how to reconcile this previous line of authority regarding sex-specific dress/grooming codes with the more recent sex/gender-stereotyping theory of sex discrimination under Title VII – has not been addressed by the Sixth Circuit.”  Id. at 25-26.

On the heels of the Supreme Court’s decision in Burwell v. Hobby Lobby Stores, Inc., 134 S. Ct. 2751 (2014), the Funeral Home also argued that the RFRA prohibited the EEOC from applying Title VII to force the Funeral Home to violate its sincerely held religious beliefs.  Id. at 26.  The RFRA prohibits the “‘Government [from] substantially burden[ing] a person’s exercise of religion even if the burden results from a rule of general applicability’ unless the Government ‘demonstrates that application of the burden to the person—(1) is in furtherance of a compelling governmental interest; and (2) is the least restrictive means of furthering that compelling governmental interest.’”  Id. at 27 (quoting 42 U.S.C. §§ 2000bb–1(a), (b)).  The EEOC conceded that the Funeral Home’s religious beliefs were sincerely held.  Id.  Accordingly, citing Rost’s testimony that permitting employees to dress inconsistent with their biological sex would violate his religion and pressure him to relinquish his business, the court found that “the Funeral Home met its initial burden of showing that enforcement of Title VII, and the body of sex-stereotyping case law that has developed under it, would impose a substantial burden on the ability of the Funeral Home to conduct business in accordance with its sincerely-held religious beliefs.”  Id. at 32.

After finding that the Funeral Home demonstrated that enforcement of Title VII would be a substantial burden to its religious exercise, the EEOC then needed to meet its two-part test: (1) application of the burden is in furtherance of a compelling government interest; and (2) is the least restrictive means of furthering that compelling government interest.  The court assumed without deciding that the EEOC met its first burden, therefore proceeded to analyze the least restrictive means burden.  Id. at 36.  Quoting Hobby Lobby, the court noted that the “least-restrictive means standard is exceptionally demanding.”  134 S. Ct. at 2780.

Rejecting the EEOC’s conclusory argument that Title VII is narrowly tailored, the court noted that the EEOC did not provide “a focused ‘to the person’ analysis of how the burden on the Funeral Home’s religious exercise is the least restrictive means of clothing gender stereotypes at the Funeral Home under the facts and circumstances presented here.”  Id. at 38.  Further, noting the EEOC had been proceeding as if gender identity or transgender status was protected under Title VII, the court opined that the EEOC appeared to have taken the position that the only acceptable solution would be for the Funeral Home to allow the claimant to wear a skirt while working as a funeral director.  Id. at 39.

Finding that the EEOC failed to offer or even explore any solutions that could have worked under the facts of this case, the court rejected the EEOC’s approach and questioned “[i]f the EEOC truly has a compelling governmental interest in ensuring that [the claimant] is not subject to gender stereotypes in the workplace in terms of required clothing at the Funeral Home, couldn’t the EEOC propose a gender-neutral dress code (dark-colored suit, consisting of a matching business jacket and pants, but without a neck tie) as a reasonable accommodation that would be a less restrictive means of furthering that goal under the facts presented here?”  Id. at 38-41.  Accordingly, the court held that the EEOC did not meet its demanding burden, thus entitling the Funeral Home to RFRA exemption from Title VII.

As to the second claim, the EEOC alleged that the Funeral Home violated Title VII by providing a clothing allowance and/or work clothes to male employees but failing to provide such assistance to female employees.  Id. at 45.  Relying on EEOC v. Bailey, 563 F.2d 439 (6th Cir. 1977), the Funeral Home argued that the EEOC may include in a Title VII suit only claims that fall within an “investigation reasonably expected to grow out of the charge of discrimination.”  Id. at 45-46.  Applying Bailey, the court concluded that the EEOC investigation here uncovered possible unlawful discrimination (1) of a kind not raised by the claimant; and (2) not affecting the claimant.  Id. at 54-55.  Thus, the court instructed that the proper procedure would be the filing of a charge by a member of the EEOC and for a full EEOC investigation of that new claim of discrimination.  Accordingly, the court dismissed the EEOC’s clothing allowance claim without prejudice.  Id. at 56.

Implications For Employers

With an increasingly diverse workforce employing more transgender employees, employers would be wise to adopt an inclusive mentality in order allow their business to nurture a broader range of perspectives while also protecting against potential discrimination liability.  As this was a favorable ruling for the employer, businesses with sincerely held religious beliefs can use this as a template to seek protection under RFRA exemptions when defending against various discrimination claims, including those brought on behalf of transgender employees.  Until Title VII eventually incorporates transgender discrimination, the EEOC will continue to bring sex discrimination claims on behalf of transgender employees, but will use this opinion to remedy flaws in their strategy, for instance, in their approach to the least restrictive means test for gender-based dress code policies.

Instead of taking a reactionary approach and waiting for Title VII to evolve or for the EEOC to remedy their case theories, employers should be proactive in revising their policies to be gender-neutral when possible and contemplative of any employment requirement that might affect transgender employees.  As both employees and laws change, employers should follow suit now before having to pay to defend one later.

Our loyal blog readers can also find this post on our EEOC Countdown Blog here.