EEOC Year-End Countdown

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

Posted in Motions for Summary Judgment

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.

+++

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 Workplace Class Action 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.

+++

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 Workplace Class Action 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.

***

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 Workplace Class Action blog here.

The EEOC Issues New Enforcement Guidance On Retaliation

Posted in Regulatory / Guidance Issuance

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 Workplace Class Action blog here.

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.

***

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 Workplace Class Action blog here.

EEOC Loses Landmark Transgender Discrimination Case

Posted in Motions for Summary Judgment

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 Workplace Class Action Blog here.

After A Decade Of Mixed Results, EEOC Rebrands Its Systemic Discrimination Litigation Program

Posted in Strategic / Policy Initiatives

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

Seyfarth Synopsis: With the publication of a ten-year review of its systemic discrimination program on July 7, 2016, the EEOC seeks to blunt employer and judicial scrutiny of the EEOC’s litigation practices by emphasizing its internal staffing and technological improvements, the gains it has made over time in number of people served, programmatic relief achieved, and monetary relief obtained, and its vision for the future as a nationwide law enforcement agency uniquely positioned to overcome challenges faced by the private bar in avoiding binding employment arbitration agreements and securing class-wide relief under Title VII.

As we have blogged about here  here,and here, the EEOC’s systemic discrimination program repeatedly has come under judicial scrutiny for its failure to satisfy Title VII’s jurisdictional requirements that it investigate, provide notice of, and attempt to conciliate claims before launching broad, expensive litigation against employers on those claims, as well as specific failures to bring legally sufficient or factually sustainable litigation. A 2006 Systemic Task Force Report to the Chair of the Equal Employment Opportunity Commission raised specific concerns about EEOC’s inconsistent investigations, lack of training and expertise, lack of capacity for data analyses, and an absence of incentives to properly implement a coordinated, nationwide systemic discrimination program.

Now under the leadership of Commissioner Jenny Yang, a former plaintiff’s class action lawyer for the Washington D.C. firm of Cohen, Milstein, Sellers & Toll, PLLC, the EEOC published on July 7, 2016 a ten-year a review of its efforts to improve its systemic discrimination litigation program and objectives.  Reporting an overall increase in litigation and raw dollars recovered from employers through litigation or conciliation, the EEOC review focuses on its internal efforts to grow its investigatory and litigation capacities and to transform itself into a “national law enforcement agency.”  Restating its purpose that “[t]ackling systemic discrimination — where a discriminatory pattern or practice or policy has a broad impact on an industry, company or geographic area — is central to the mission of EEOC,” the EEOC report signals employers, legislators, and courts alike that its systemic program will proceed undaunted by judicial challenges to its practices, and will continue to be driven by metrics that “incentivize” investigations, conciliations and systemic work.

Employers should pay particular attention to the metrics driving EEOC performance and the trajectory of its systemic litigation program.

Key Findings

From the fall of 2013 through August 2014, EEOC Commissioner Yang and her staff conducted a review of the EEOC’s systemic program since the implementation of the 2006 Systemic Task Force Report.  As a result of its review, the EEOC claims to have “made considerable progress in achieving a truly nationwide, coordinated, and strategic systemic program.”  Some of the key findings published in the report include:

– Investments in hiring and training staff focused on systemic work have produced a 250 percent increase in systemic investigations in the past five years.

– Concerted efforts to reach voluntary resolutions of systemic investigations have resulted in the conciliation success rate tripling from 21% in fiscal year 2007 to 64 percent in fiscal year 2015.

– The systemic litigation program has achieved significant impact, with a 10-year success rate of 94 percent for systemic lawsuits.

– The EEOC tripled the amount of monetary relief recovered for victims in the past five fiscal years from 2011 through 2015, compared to the relief recovered in the first five years after the Systemic Task Force Report.

Although EEOC does not define “success,” the report makes clear that EEOC measures success in three ways: numbers of employees who benefit from a systemic investigation and/or lawsuit, targeted programmatic relief, and the realization of dollars.

In 2014, less than 1,000 individuals were said to have benefited from successful EEOC systemic lawsuits, a sharp decline from the nearly 8,000 individuals in 2013.  However, the 2015 number soared past these figures, with nearly 10,000 individuals benefiting from successful EEOC systemic lawsuits, the most since 2008.  The EEOC reports that “significantly more individuals directly have benefited from EEOC systemic lawsuits that through individual or small multi-victim suits brought by EEOC.”

While the percentage of systemic lawsuits in the active litigation docket has remained roughly the same from 2013-2015, ranging from 22% to 25%, the EEOC reports that the percentage of resolutions with targeted equitable, or “programmatic” relief has jumped from 64% to 81.2% over the last three years.

In terms of monetary relief from the combined resolutions of systemic investigations and systemic lawsuits, the EEOC trumpets that its results have jumped from 15 resolutions totaling $5.99 million in 2006 to 296 resolutions totaling $80.28 million in 2015, with over 16,000 individuals receiving monetary relief that year.

Targeting Enforcement

Statistically, the EEOC continued to focus heavily on disability and race claims. From 2011-2015, 32% of the successful conciliations of systemic investigations involved disability discrimination, with the next highest being race at 17%.  The EEOC’s challenges to employer hiring practices dominated with 23% of successful conciliations, followed by reasonable accommodation practices at 21%.  These areas can be expected to continue as target enforcement areas for the EEOC.

In terms of federal sector compliance, the EEOC reported issuing a series of federal sector decisions finding that discrimination based on gender identity and sexual orientation constitutes sex discrimination prohibited by Title VII.  The report signals the EEOC’s objective of increasing its activity in these developing areas of law.

The report also makes an unusually direct pitch for the EEOC to be the litigation partner of choice in overcoming mandatory employment arbitration agreements and the challenges to the plaintiffs’ bar of bringing statistical disparate impact cases under Title VII in the wake of the Supreme Court’s decision rendering class certification based on mere statistical evidence untenable in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011)

What This Means For Employers

While it certainly is not difficult to imagine the EEOC or any entity positing its best numbers when publishing a self-review, employers absolutely need to pay attention  to these results. First, the data illustrates that the EEOC is putting more time and resources into systemic cases, and as a result, has increasingly become more aggressive in their pursuit of “big fish” employers. While the number of individuals said to have benefited from systemic lawsuits has teeter-tottered up and down the last few years, the report manifests an aggressive agenda to pursue these prime lawsuits.  Thus, employers should expect systemic investigations to continue on the uptick.

Given their success in the disability context, especially with regards to hiring and reasonable accommodation, the EEOC likely will not stray from what has worked.  Thus, employers facing challenges in this area need to focus on strategies of compliance and risk avoidance.  For businesses with nationwide operations, this will require heightened communication amongst various regions and sectors to ensure compliance with the law.

The EEOC trumpets that it has hired systemic investigators, social scientists and labor economists to support its systemic discrimination program in every district, and boldly states that “[t]hey have the expertise and training to effectively manage complex investigations, to analyze relevant data, and to develop statistical evidence.”  The EEOC reports that “[i]n most years since 2008, EEOC has provided systemic training to lead systemic investigators and systemic coordinators.”   While this reporting now leaves the EEOC with little to no excuse when facing judicial scrutiny for failing to comply with Title VII’s mandate of investigating, notifying employers of the claims against them and attempting to conciliate those claims as predicates to litigation, this reporting also signals that the EEOC has increased its trained resources to grow its program.

Further, the EEOC reports a significant investment in technologies that allow personnel to access and analyze employer, regional or industry workforce demographic data to inform charges and investigations on a nationwide basis.  Employers cannot presume that investigators will deal with charges individually without reviewing all EEOC charges and investigations against an employer, and industry data, for potential systemic opportunities.

Finally, the EEOC reports a slow but steady increase in the use of Commissioner’s Charges as a vehicle for enforcement.  Employers may expect the EEOC to continue to increase its reliance on this tool in their toolkit.

The EEOC’s report states that in the future it will focus on three key, although vaguely defined, objectives in order to expand the agency’s impact and better serve the public, including: (1) executing national strategies to address persistent and emerging systemic issues; (2) advancing solutions that promote lasting opportunity in the workplace; and (3) strengthening the agency’s technology and infrastructure. With increases in systemic program resources and incentives to generate big outcomes in terms of individuals benefited, programmatic relief obtained and dollars generated, employers can expect the EEOC to cast a wide range of nets across the county in hopes that some of their catches will result in the next big systemic lawsuit.

Our loyal blog readers can also find this post on our Workplace Class Action Blog here

 

Don’t Mess With Texas: EEOC’s Criminal Background Check Guidance Subject To Challenge

Posted in EEOC Litigation

texasBy Gerald L. Maatman, Jr., Pamela Q. Devata, Robert T. Szyba, and Ephraim J. Pierre

On June 27, 2016, the U.S. Court of Appeals for the Fifth Circuit handed a victory to the State of Texas in Texas v. EEOC , No. 14-10949 (5th Cir. June 27, 2016), by remanding back to the district court the case it dismissed in 2014.  Notably, Fifth Circuit held that the State of Texas has standing to challenge the EEOC’s “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Under Title VII” (“Guidance”), and that the Guidance was a final agency rule subject to court challenge.

As a quick recap, the EEOC issued the Guidance in April 2012, urging businesses to avoid blanket rules against hiring individuals with criminal convictions, reasoning that such a hiring check could violate Title VII if they create a disparate impact on particular races or national origins, and calling for a multi-factor individualized assessment of an applicant’s criminal history.

In an unprecedented and novel action, the State of Texas filed suit against the Commission in November, 2013 seeking to enjoin the enforcement of the Guidance (which Texas nicknamed the “Felon Hiring Rule”) because it conflicted with Texas law that prohibited hiring felons for certain jobs.  On August 20, 2014, Judge Sam R. Cummings of the U.S. District Court for the Northern District of Texas dismissed the case under Federal Rule 12(b)(1) (which we reported here), finding that Texas lacked standing to maintain its suit because no enforcement action had been taken against it pursuant to the Guidance.  Texas, however, was not about to be messed with, and promptly appealed to the Fifth Circuit in November, 2014 (reported here).

Fifth Circuit Reverses And Remands

The Fifth Circuit’s decision is a stunner.

It found that Texas, in fact, has standing to challenge the Guidance because it presented “(1) an actual or imminent injury that is concrete and particularized, (2) fairly traceable to the defendant’s conduct, and redressable by a judgment in [Texas’s] favor.”  Id. at 5.  The Fifth Circuit pointed out that Texas, in its capacity as an employer, was an “object” of the Guidance because the Guidance was directed at all employers, including state agencies.  As an object of the Guidance, Texas did not need an enforcement action to establish a concrete injury.  Instead, it could establish two concrete injuries for purposes of Article III.  First, Texas pointed to the increased regulatory burden on it as an employer because of the hiring policies that the Guidance required.  Id. at 7-8.  Thus, the increased regulatory burden itself constituted a concrete injury.  Second, the Guidance forced Texas to “undergo an analysis, agency by agency, regarding whether the certainty of EEOC investigations stemming from the [] Guidance’s standards overrides the State’s interest in not hiring felons for certain jobs.”  Thus, “being pressured to change state law” constituted a concrete injury.  Id. at 8-9.  Therefore, regardless that there was no enforcement action, the Fifth Circuit concluded that Texas was deemed to have standing to challenge the Guidance.

The Fifth Circuit next determined that the Guidance was “final agency action” that is subject to challenge, finding that the Guidance was the “consummation of the agency’s decision-making process” “from which legal consequences would flow.”  Id.The challenge before the Fifth Circuit focused on whether the Guidance had any “legal consequences.”  The Fifth Circuit pointed out an important distinction for its analysis: Texas challenged the Guidance itself, not the prospect of investigation.  Rejecting the EEOC’s argument that it has no ability to enforce the Guidance and instead can only do so by referring a case to the U.S. Attorney General for prosecution (as it would have to with respect to a public entity), the Fifth Circuit found that the “legal consequence” of the Guidance is that the EEOC has committed itself to applying the Guidance to “virtually all public and private employers.”  Id. The EEOC’s staff is therefore bound by it to follow a certain course of action, and the only way to avoid a potential prosecution is by abiding by one of the two “safe harbor” provisions contained in the Guidance.  If Texas (or any other employer) does not fall into one of these safe harbor provisions — that is, it does not do what the EEOC says — it risks an enforcement action and potential liability, and thus the Guidance has a “legal consequence,” making it an final agency action that can be challenged in court.  Id.

The Dissent

Circuit Judge Patrick E. Higginbotham disagreed with the majority of the Fifth Circuit panel.  First, he opined that the Guidance was a mere expression of the EEOC’s view of what the law requires, which the EEOC has no authority to enforce without the Attorney General taking the case.  Judge Higginbotham also opined that the issue identified by Texas was not ripe for adjudication.  Because Texas presented no factual dispute, in the judge’s view the dispute was theoretical since any potential adverse effect identified by Texas was too remote and abstract.  In additional to disagreeing with the majority’s constitutional analysis, Judge Higginbotham opined that the Guidance also lacked a legal consequence because, again, it was an expression of the EEOC’s view of the law, and thus had no specific consequence for any specific party.

Implications For Employers

This case continues to be flagged as “one to watch,” especially now that the case is remanded to the district court, where the State of Texas is anticipated to challenge the “Felon Hiring Rule” created by the EEOC’s Guidance.  Likewise, the EEOC is anticipated to continue its staunch defense, positioning the parties for future clashes.  The EEOC’s positions, which thus far have included admissions that the Guidance is not “legally binding” and does not carry any “legal consequences,” stand to provide employers with additional defenses when faced with the EEOC’s own investigations or prosecutions relating to criminal background checks.  As this case continues in the district court, we will be continue our coverage of this important case.  Stay tuned!

Readers can also find this post on our Workplace Class Action blog here.

A Call For Harmony Between The EEOC And NLRB’s Rules Concerning Prevention And Investigation Of Workplace Harassment

Posted in Regulatory / Guidance Issuance

th7Y6M6GN7By Christopher J. DeGroff, Matthew Gagnon, Andrew R. Cockroft, and Gerald L. Maatman, Jr.,

Seyfarth Synopsis: The EEOC’s Select Task Force on the Study of Harassment in the Workplace offers insight into how employers’ harassment prevention policies can change for the better and, in furtherance of this desire for change, calls for interagency clarification between the EEOC and the NLRB on how employers may investigate harassment while requesting confidentiality, how they may promote general civility through workplace harassment policies, and how employers may prevent and respond to harassment through social media. 

On June 20, 2016, the Equal Employment Opportunity Commission’s Select Task Force on the Study of Harassment in the Workplace released its final report. The report can be found here.  The report found that workplace harassment remains a persistent problem and that harassment often goes unreported. The Task Force urged that harassment prevention training must change as much of the training done over the last 30 years, which focused simply on legal compliance, has not been effective as a prevention tool. It should be noted that in reaching this finding, the Task Force admits that there are deficiencies in almost all of the empirical studies done on the effectiveness of training standing alone. However, the Task Force concluded that the existing reliable studies, along with the practical and anecdotal evidence provided by employers and trainers agree that training cannot stand alone, but must be a part of a holistic effort to prevent harassment.

The Task Force recommended that new and different training approaches should be explored to empower “bystanders” to intervene when they witness harassing behavior and training ought to be geared towards promoting respect and civility in the workplace generally, without necessarily focusing on protected characteristics. Additionally, the report suggests that employers may need to reassess their harassment reporting systems and find ways to ensure that employees believe there will be a genuine effort to resolve harassment when it is reported. The report offers recommendations and helpful tools to aid in designing anti-harassment policies, training curricula, implementing complaint, reporting and investigation procedures, and assessing and responding to workplace “risk factors” for harassment.

Additionally, employers will be happy to know that the report emphasized that the EEOC and the National Labor Relations Board should work together to harmonize the relationship between federal EEO laws and the NLRA. Employers have often struggled to comply with both federal EEO laws and the NLRA in preventing and investigating workplace harassment. This is especially true when employers craft their harassment prevention policies with a focus on workplace civility. See Karl Knauz Motors, Inc., 358 NLRB No. 164 (2012) (finding that “Courtesy” rules in the employee handbook violated the NLRA because an employee may reasonably believe that such rules prohibited statements of protest or criticism of the employer); First Transit, Inc., 360 NLRB No. 72 (2014) (same).

The same is true when employers ask for confidentiality in the course of investigating harassment, something promoted in the report but in conflict with several rulings of the NLRB finding that requests for confidentiality may burden protected concerted activity under the NLRA. Likewise, because of the ever increasing use of social media and its effect on the workplace, employers are often in the difficult position of trying to stop online harassment while simultaneously complying with decisions of the Board finding that employers’ social media policies restrict Section 7 rights if they sweep too broadly.

The report recognizes the tension such rulings may create and their potential to undermine genuine harassment prevention. As such, the report issues the following recommendations in the hopes of getting employers out of this difficult bind.

  • The EEOC and the Board should confer, consult, and attempt to jointly clarify and harmonize the interplay of the National Labor Relations Act and federal EEO statutes with regard to the permissible confidentiality of the workplace investigations, and the permissible scope of policies regulating workplace social media usage.
  • EEOC and the National Labor Relations Board should confer, consult, and attempt to jointly clarify and harmonize the interplay of the NLRA and federal EEO statutes with regard to permissible content of workplace “civility codes.”

We believe that this is a positive development from the EEOC, and we know that loyal blog readers will appreciate any efforts at interagency cooperation. We hope that these steps will bring clarity to how employers may effectively address workplace harassment while complying with all aspects of federal labor and employment law.

Readers can also find this post on our Workplace Class Action blog here.

Taking The EEOC At Its Word: Court Relies On Agency’s Own Declaration In Granting Summary Judgment

Posted in Motions for Summary Judgment

maryland state flagBy Gerald L. Maatman Jr. and Alex W. Karasik

Seyfarth Synopsis: Court granted EEOC’s partial motion for summary judgment on issue of pre-suit conciliation, finding that a declaration submitted by an EEOC official was sufficient evidence to show that the EEOC satisfied this obligation under Title VII.

In EEOC v. Dimensions Healthcare System, No. 15-2342 (D. Md. May 27, 2016), the Commission alleged that the defendant employer, Dimensions Healthcare System (“Dimensions”), unlawfully discriminated against one of its former employees on the basis of sex after it allegedly passed her over for a promotion due to her maternity leave. The EEOC filed two motions relative to the employer’s affirmative defense based on the Commission’s alleged failure to conciliate, including: (1) for partial summary judgment on the issue of pre-suit conciliation and (2) a motion to strike portions of Dimensions’ response in opposition to the EEOC’s summary judgment motion. On May 27, 2016, Judge Hazel of the U.S. District Court for the District of Maryland granted both of the EEOC’s motions.

The ruling, which heavily relied on the U.S. Supreme Court’s Mach Mining v. EEOC decision from 2015, held that a declaration submitted by an EEOC official was sufficient evidence that the government satisfied its Title VII pre-suit conciliation obligations. For employers seeking to challenge whether the EEOC met its Title VII pre-suit obligations, this ruling is instructive regarding the very low burden of proof the government needs to block the defense.

Case Background

The complainant was employed as a “Team Lead” by Dimensions, where she oversaw and managed several team members and performed various human resources tasks. Id. at 2. The complainant took maternity leave between January and April of 2014. On or around October 2014, she learned that Dimensions had promoted a less-experienced male employee, who was her subordinate, to a manager position. After learning of the promotion, the complainant met with a Dimensions executive. The executive told the complainant that while she was considered for the position, the male employee was selected instead because the complainant had been “on maternity leave for a while.” Id. Shortly thereafter, the complainant resigned and filed a charge of discrimination with the EEOC.

On May 11, the EEOC issued a reasonable cause determination to Dimensions. Id. at 2-3. According to the EEOC, the parties “engaged in communications” between May 11, 2015 and July 7, 2015 to provide Dimensions an opportunity to “remedy the discrimination practices described.” Id. at 3. Thereafter declaring the “communications” unsuccessful, the EEOC filed a lawsuit against Dimensions on August 10, 2015. In its answer to the complaint, Dimensions asserted the affirmative defense that the EEOC’s claims were barred to the extent it failed to properly conciliate, but later withdrew this defense.

While discovery was ongoing, the EEOC moved for partial summary judgement, arguing that Dimensions refused to stipulate that the EEOC fulfilled its pre-suit obligations. Id. at 4. Dimensions argued that there was a genuine dispute of material fact as to whether the EEOC failed to conciliate prior to filing its lawsuit. The EEOC moved to strike the specific allegations contained within Dimensions’ argument regarding the conciliation process. The Court granted the EEOC’s motion for partial summary judgment and its motion to strike.

The Decision

The Court began its analysis by discussing the U.S. Supreme Court’s decision in Mach Mining, LLC v. EEOC, 135 S. Ct. 1645 (2015), which examined whether and to what extent a federal district court can review the EEOC’s conciliation efforts. Id. at 5. Quoting Mach Mining, the Court noted that “[a] sworn affidavit from the EEOC stating that it has performed the [pre-suit] obligations . . . but that its efforts have failed will usually suffice.” Id. at 7. Further, the Court noted that “this ‘relatively barebones’ review is all that a court is permitted to inquire into when considering a failure-to-conciliate defense.” Id. Finally, discussing Mach Mining’s holding that the district court in that case erred by not striking from the record descriptions of the conciliation process, the Court opined that “[c]onfidentiality in the conciliation process is necessary.” Id.

Applied here, the Court noted that in support of its motion for partial summary judgment, the EEOC submitted the declaration of the Director of the Baltimore Field Office of the EEOC. Id. at 8. The declaration stated that after the EEOC determined there was reasonable cause to believe that Dimensions failed to promote the complainant because of her sex, it sent a letter of determination to Dimensions, and invited the employer to informally resolve the claim. Id. Further, the declaration explained that the EEOC “engaged in communications” with Dimensions and subsequently determined that further conciliation efforts would be unproductive. Id. at 8-9.

Granting the EEOC’s motion for partial summary judgment, the Court found that “[t]his evidence is sufficient for the EEOC to satisfy its burden to establish that it ‘endeavor[ed] to eliminate [the] alleged unlawful employment practice by informal methods’ prior to filing suit.” Id. at 9. Further, the “declaration establishes that the EEOC ‘tr[ied] to engage the employer in some form of discussion’ prior to filing suit.” Id. In opposition, Dimensions argued that the EEOC did not try in earnest to reach a resolution prior to litigating the case. Rejecting this argument, the Court held that “[t]hose details . . . are not only irrelevant to the scope of this Court’s review under Mach Mining, but also violate the confidentiality provision of Title VII.” Id. Accordingly, the Court granted the EEOC’s motion to strike the portions of Dimensions’ briefing regarding what was “said or done” during the conciliation process. Id.

Implications For Employers

This ruling is a very-pro Commission interpretation of the Mach Mining decision. It holds that merely mailing a demand letter and stating a settlement demand is enough. The practical realities of negotiation and give-and-take in the conciliation process are ignored. In this respect, it parts company with previous rulings on the Mach Mining issue that view the give-and-take of conciliation in a practical manner [see here].

As a result, this ruling gives employers an idea of how the EEOC will respond to challenges regarding whether it satisfied its Title VII pre-suit obligations: by submitting a declaration from one of its employees as to the mailing the determination, stating a settlement demand, and unilaterally deciding that further conciliation discussions are fruitless.

More importantly, this case illustrates how courts will likely find the EEOC’s declarations to be “sufficient evidence.” Id. Given that the EEOC only needs to submit a declaration to prove it satisfied its Title VII pre-suit obligations, employers can likely expect such conciliations to be far from fruitful if courts will now merely take the government at its word. Accordingly, employers engaged in future EEOC litigation likely have one less defense in their arsenal as a result of the Mach Mining decision.

Readers can also find this post on our Workplace Class Action blog here.