EEOC Year-End Countdown

EEOC’s “Sex” Discrimination Lawsuit Filed On Behalf Of Transgendered Worker Survives Motion To Dismiss

Posted in EEOC Litigation

lawsuitBy Gerald L. Maatman Jr. and Howard M. Wexler

As we have previously reported, the EEOC is pursuing test cases to establish legal protections for transgender workers under Title VII’s prohibition against “sex” discrimination and harassment as part of its strategic mission even though no federal statute, including Title VII, explicitly prohibits employment discrimination based on gender identity or expression. To this end, the EEOC filed two lawsuits on September 25, 2014 on behalf of transgender workers – EEOC v. Lakeland Eye Clinic, P.A. (Middle District of Florida) and EEOC v. R.G. & G.R. Harris Funeral Homes Inc. (Eastern District of Michigan) — seeking to expand the interpretation of federal civil rights laws..

On April 9, 2015, U.S. District Court Judge Mary S. Scriven approved a consent decree entered into between the EEOC and Lakeland Eye Clinic, P.A. settling one of these two lawsuits.

Less than two weeks later, on April 21, 2015, U.S. District Court Judge Sean F. Cox denied R.G. & G.R. Harris Funeral Homes Inc.’s (“Funeral Homes”) motion to dismiss the complaint in EEOC v. R.G. & G.R. Harris Funeral Homes Inc. for failure to state a claim, thereby allowing the case to proceed to discovery. Judge Cox’s decision is an important read for employers.

Case Background

In EEOC v. R.G. & G.R. Harris Funeral Homes, the EEOC alleges that a Detroit-based funeral home illegally fired a funeral director and embalmer named Aimee Stephens (“Stephens”), weeks after Stephens gave the funeral home a letter saying she was undergoing a gender transition from male to female. She was allegedly terminated, and told by the owner of the employer that what she was “proposing to do” was “unacceptable.” Id. at 1.

Recognizing that transgendered, or transsexual status is currently not a protected class under Title VII, the EEOC alleges that “the Funeral Home’s decision to fire Stephens was motivated by sex-based considerations, in that the Funeral Home fired Stephens because Stephens is transgendered, because of Stephen’s transition from male to female, and/or because Stephens did not conform to the defendant employer’s sex – or gender-based preferences, expectations, or stereotypes.” (emphasis added). Id. The Funeral Home filed a motion to dismiss on the basis that Title VII does not protect transgendered individuals.

Court’s Decision

Acknowledging that Title VII does not protect transgendered individuals, the Court noted that “had the EEOC alleged that the Funeral Home fired Stephens based solely on Stephens’ status as a transgendered person” it would be inclined to grant the Funeral Home’s motion to dismiss. Id. at 10. However, as the EEOC did not allege that the Funeral Home fired Stephens solely because of transgendered status, rather, Judge Cox also found it significant that the EEOC also asserts that the Funeral Home fired Stephens because she did not conform to the Funeral Home’s sex or gender-based preferences, expectations, or stereotypes. Id. at 11.

In reaching its decision to deny the motion to dismiss, the Court acknowledged that “even though transgendered/transsexual status is currently not a protected class under Title VII, Title VII nevertheless ‘protects transsexuals from discrimination for failing to act in accordance and/or identify with their perceived sex or gender.’” Id. at 11-12. Since the EEOC, in part, based its theory of liability on the Funeral Home’s alleged sex-based considerations – that Stephens did not conform to the Funeral Homes sex-based or gender-based preferences, expectations or stereotypes – the Court reasoned that the EEOC had sufficiently plead a sex-stereotyping gender-discrimination claim under Title VII. Id. as 22-23.

In sum, Judge Cox’s decision gives the EEOC a “work around” solution to assert viable claims to achieve relief for a transgendered worker, albeit not explicitly based on the theory that transgendered status is itself a protected category.

Implications for Employers

The theories of liability articulated by the EEOC in this case closely follow the EEOC’s prior landmark administrative ruling titled Macy v. Bureau of Alcohol, Tobacco, Firearms and Explosives, EEOC Appeal No. 0120120821 (April 23, 2012) (previously discussed here), in which it asserted that transgender individuals may state a claim for sex discrimination under Title VII.

Notably, Judge Cox observed in his decision denying the Funeral Home’s motion to dismiss that the Commission “appears to seek a more expansive interpretation of sex under Title VII that would include transgendered persons as a protected class.” Given that the EEOC also alleged discrimination based on sex or gender-based preferences, the Court did not have to reach this issue. However, the Court did note that “there is no Sixth Circuit or Supreme Court authority to support the EEOC’s position that transgendered status is a protected class under Title VII.” Id. at 11.

We expect that EEOC-initiated ligation on behalf of transgendered individuals will continue to increase given the Commission’s enforcement strategy and desire to “push the envelope” in this area. As we previously advised employers must be mindful of issues related to gender identity and/or expression that might arise during interviewing, hiring, discipline, promotion and termination decisions. Employers should be particularly vigilant when an employee identifies as transgender, or announces a plan to undergo a gender transition. Stay tuned!

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

En Banc Sixth Circuit Reverses Itself And Finds That Nearly Unlimited Telecommuting Is Not A Reasonable Accommodation Under The ADA

Posted in Motions for Summary Judgment

US-CourtOfAppeals-6thCircuit-SealBy Christopher M. Cascino and Gerald L. Maatman, Jr.

In EEOC v. Ford Motor Co., No. 12-2484 (6th Cir. Apr. 10, 2015), a case we blogged about previously here and here, the U.S. Court of Appeals for the Sixth Circuit upheld summary judgment in favor of Ford and against the EEOC in an Americans With Disabilities Act (“ADA”) failure to accommodate lawsuit. The Sixth Circuit held that the person on whose behalf the EEOC brought suit was not qualified within the meaning of the ADA because the accommodation proposed by the EEOC of allowing her to telecommute up to four days per week was unreasonable. The Sixth Circuit also held that the EEOC did not provide evidence sufficient to allow a trier of fact to find that Ford retaliated against the charging party for bringing an EEOC charge.

The Sixth Circuit’s ruling represents an important win for employers and a significant defeat for the EEOC as the Commission attempts to make telecommuting a reasonable accommodation option for more and more jobs.

Case Background

Jane Harris was a resale buyer for Ford, serving as an intermediary between steel suppliers and the companies that use steel to produce parts for Ford. Id. at 2. Her job was “highly interactive.” Id. As part of her job duties, she was required to meet with suppliers at their sites and Ford employees at Ford’s site, and was further required to meet with Ford employees and suppliers “at a moment’s notice.” Id. at 2-3. In Ford’s judgment, this made “a resale buyer’s regular and predictable attendance in the workplace . . . . essential to being a fully functioning member of the resale team.” Id. at 3.

Throughout her six-year tenure as a retail buyer, Harris had irritable bowel syndrome, an illness that caused her to have severe fecal incontinence. Id. at 3-4. Because of this incontinence and the stress that it caused her, Harris frequently missed work and would otherwise often come in late and leave early. Id. at 3. Her performance suffered, and she ended up ranked in the bottom 10% of her peers for two consecutive years. Id.

Ford tried several accommodations to assist Harris, but none solved her performance problems. Id. at 4. Harris then proposed that she be allowed to work up to four days per week from home as an accommodation. Id. Ford concluded that, out of Harris’ ten job responsibilities, four could not be performed from home, four could not effectively be performed from home, and the two other responsibilities were “not significant enough to support telecommuting.” Id. at 5. Ford thus concluded that the only way a telecommuting accommodation could work would be if it were on a set schedule and if Harris could come to Ford’s worksite as needed on days scheduled for telecommuting. Id. Harris could not agree to that. Id.

Since Harris’ proposed accommodation would not work, Ford offered her other accommodations, including moving her closer to the restroom and jobs more suited for telecommuting. Id. Harris turned these accommodations down, sent an email claiming that the denial of her accommodation request violated the ADA, and filed a charge with the EEOC. Id.

After filing the charge, Harris’ performance continued to slide and, after Harris failed to complete a Performance Enhancement Plan intended to improve her subpar performance, Harris was terminated. Id. at 5-6.

The EEOC filed suit against Ford, claiming that Ford failed to accommodate Harris’ disability and that Ford terminated Harris in retaliation for her decision to file a charge with the EEOC. Id. at 6. The district court granted summary judgment in favor of Ford, finding that “working from home up to four days per week is not a reasonable accommodation under the ADA and that the evidence did not cast doubt on Ford’s stated reason for terminating Harris’ employment: poor performance.” Id. A divided Sixth Circuit panel reversed the district court, after which the Sixth Circuit agreed to hear the case en banc. Id.

The Sixth Circuit’s En Banc Ruling

The Sixth Circuit began its discussion by pointing out that any accommodation that involves removing an “essential function” from a job “is per se unreasonable.” Id. at 7. It then considered whether on-site attendance was essential to Harris’s job.

The Sixth Circuit concluded that “regularly attending work on-site is essential to most jobs.” Id. at 8-9. It concluded this based on numerous U.S. Court of Appeals decisions holding that this is the case, as well as EEOC regulations and informal guidance suggesting that on-site attendance is normally essential. Id. at 7-9. It further concluded that on-site attendance is even more essential in “interactive” jobs like Harris’ job. Id. at 7-8. It thus concluded that Harris’ proposed accommodation was unreasonable. Id. at *10.

The Sixth Circuit also rejected each of the EEOC’s arguments as to why summary judgment was not appropriate. The Sixth Circuit held that Harris’ testimony that she could perform her job functions from home could not create a “genuine dispute of fact” because courts should not “credit the employee’s opinion about what functions are essential” since, if they did, “every failure-to-accommodate claim involving essential functions would go to trial.” Id. at 11 (emphasis in original).

The Sixth Circuit found the fact that other resale buyers telecommuted did not make Harris’ proposed accommodation reasonable because she was requesting a much larger accommodation than Ford had given to any of its other resale buyers. Id. at 11-12. The other resale buyers who telecommuted did so on one set day per week and agreed to come in on their telecommuting day if needed, while the EEOC argued that Harris should have been allowed to telecommute up to four days per week on an unscheduled basis without an agreement to come in on telecommuting days on an as-needed basis. Id. at 12. The Sixth Circuit found the difference between the telecommuting Ford gave to other resale buyers and the telecommuting requested by Harris and the EEOC to be so different that it found the EEOC’s arguments in this regard to be “legally and factually unsupported.” Id.

The Sixth Circuit also criticized the EEOC’s position because it would create a perverse incentive for employers to deny limited telecommuting as an accommodation for their employees so that they would not have to grant other employees far more expansive telecommuting accommodations:

[I]f the EEOC’s position carries the day, once an employer allows one person the ability to telecommute on a limited basis, it must allow all people with a disability the right to telecommute on an unpredictable basis up to 80% of the week (or else face trial). That’s 180-degrees backward. It encourages — indeed, requires — employers to shut down predictable and limited telecommuting as an accommodation for any employee. A good deed would effectively ratchet up liability, which would undermine Congress’ stated purpose of eradicating discrimination against disabled persons.

Id. (emphasis in original).

Finally, the Sixth Circuit rejected the EEOC’s argument that advances in technology themselves are enough to create an issue of fact as to whether on-site attendance was an essential function of Harris’s job. It first pointed out that the fact of advancing technology “in the abstract” is not proof that technological advances “made [Harris’s] highly interactive job one that can be effectively performed at home.” Id. at 13. It then discussed the fact that “email, computers, telephone, and limited video conferencing . . . . were equally available when courts around the country uniformly held that on-site attendance is essential for interactive jobs,” thus finding that these technologies do not make on-site work attendance non-essential in interactive jobs. Id. Based on this analysis, the Sixth Circuit upheld the district court’s decision to grant summary judgment to Ford on the EEOC’s failure to accommodate claim.

The Sixth Circuit then considered whether Ford retaliated against Harris for making a charge with the EEOC. While agreeing that the timing of Harris’ discharge “seem[ed] suspicious,” it found that “temporal proximity cannot be the sole basis for finding pretext.” Id. at 16. The Sixth Circuit concluded that the other evidence suggesting pretext was insufficient to create a genuine issue of fact. It found that Harris’ meetings with a non-decisionmaker could not prove pretext because “[a]ctions by non-decisionmakers cannot alone prove pretext. Id. at*17. It next found that Harris’ poor performance review after the charge could not establish pretext because it was as poor as her last pre-charge performance review. Id. at 18. Finally, the Sixth Circuit held that Harris’ testimony that the Performance Enhancement Plan she failed to complete was designed to “ensure her failure” did not create an issue of fact because it was “so utterly discredited by the record that no reasonable jury could believe it.” Id. at 19. Based on this analysis, the Sixth Circuit also upheld the district court’s decision to grant summary judgment to Ford on the EEOC’s retaliation claim.

Implications For Employers

This case is a significant win for employers and a significant loss for the EEOC as it attempts to expand telecommuting as a reasonable accommodation under the ADA. Employers can use this ruling to support their position in ADA actions brought by the EEOC as well as private plaintiffs who assert that telecommuting is a reasonable accommodation under the ADA. Of special interest is the Sixth Circuit’s observation that “email, computers, telephone, and limited video conferencing . . . . were equally available when courts around the country uniformly held that on-site attendance is essential for interactive jobs,” which can be used to undercut inevitable arguments by ADA plaintiffs that on-site attendance is outdated in light of technological advances. Moreover, employers can use this case when ADA plaintiffs claim they should have been given a more extensive version of an accommodation given to another employee.  Specifically, employers can argue that the degree of the accommodation matters and that allowing plaintiffs to use such an argument would create a perverse incentive for employers to deny accommodation requests.

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

The EEOC’s Proposed Wellness Plan Regulation: Some Progress, But Issues Persist

Posted in Regulatory / Guidance Issuance

thCAD0SFA4By Paul H. Kehoe and Lawrence Lorber  

Earlier today, the EEOC published its much anticipated Notice of Proposed Rulemaking (“NPRM”) regarding the interaction between wellness plans and the Americans With Disabilities Act (“ADA”). As we have discussed here and here, the issue of whether an incentive or surcharge permitted (indeed, encouraged) under the Patient Protection and Affordable Care Act (“ACA”) is nonetheless impermissible under the ADA and GINA has caused consternation for the regulated community. The EEOC’s proposed rule provides some clarity on that issue, but raises or ignores additional concerns for employers offering wellness plan incentives to employees. The comment period on this proposed rule will close on June 19, 2015. This is important for all employers.

The 30% Rule

Under the Affordable Care Act (“ACA”) and its implementing regulations issued by the Departments of Labor, Treasury and Health and Human Services, employers may offer financial incentives to employees up to 30% of their health care premiums for participating in and reaching certain health outcomes in a wellness plan and up to 50% for smoking cessation programs. The EEOC however, has added a nuance to the nicotine prevention component of the ACA and HIPAA. Under the NPRM, if an employer conducts a biometric exam to test for nicotine, any incentive would be capped at 30% instead of 50%. If no disability-related inquiry is made, a 50% incentive is permissible.

In addition, the NPRM does not specifically adopt the “HIPAA / ACA standard” but instead imposes hard percentage caps. If the percentages rise or fall in the future at the behest of those Secretaries, the EEOC’s adoption of hard numbers would then again leave the EEOC inconsistent with the Cabinet-level agencies.

The ADA Safe Harbor

Section 501(c) of the ADA provides that it cannot be construed to prohibit or restrict “a person or organization covered by this chapter from establishing, sponsoring, observing or administering the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks, or administering such risks that are based on or not inconsistent with State law.” In its discussion of Seff v. Broward Cty., 691 F.3d 1221 (11th Cir. 2012), the NPRM seems to definitively reject the notion that any wellness plan can be part of a bona fide benefit plan. In other words, the EEOC rejects the premise that a wellness plan can be structured to fall within the safe harbor established by the ADA. The fact is, some wellness plans fall within the safe harbor, and some do not. While the EEOC may disagree with the 11th Circuit’s decision in Seff, it seems to have gone beyond its disagreement with the Seff decision and has unilaterally written the safe harbor out of the statute. The EEOC lacks that authority.

A Question About Affordability

Under the ACA, employers are not required to provide health insurance.  Instead, an employer can choose to pay a fine. Even where an employer offers health insurance, it only must offer a single plan that is affordable, and even then, employees can choose whether to enroll in that plan or a more robust plan that may not meet affordability standards.

However, in the NPRM, the EEOC specifically requested comments on the following:

Whether to be considered “voluntary” under the ADA, the incentives provided in a wellness program that asks employees to respond to disability-related inquiries and/or undergo medical examinations may not be so large as to render health insurance coverage unaffordable under the Affordable Care Act and therefore in effect coercive for an employee…

Where such incentives would render a plan unaffordable for an individual, it would be deemed coercive and involuntary to require that individual to answer disability-related inquiries[.]

If an employer would have to test affordability under some  as yet to be determined test for each of its plans for each employee, then the same wellness plan incentives could conceivably be voluntary for some employees, and non-voluntary for other employees. Such an outcome was not contemplated by the ACA or the implementing regulations, and would likely chill employers from offering any wellness plan incentives — exactly the opposite of Congressional intent and contrary to White House statements. Nor does the EEOC provide statutory support for its question regarding affordability so that the basis of this discussion in the rulemaking process would seem to be unanchored to any statutory provision.

Spousal Incentives

The regulated community has, for years, raised concerns about EEOC investigations into incentives offered to employee spouses for completing health risk assessments where information related to manifested conditions is inquired about. Indeed, this was part of the Honeywell litigation late last year. Unfortunately, the EEOC failed to address the issue and continues to leave the regulated community and its career staff without guidance.

Implications For Employers

While the rule, if promulgated, would provide some clarity for employers, it would also raise some important questions related to the EEOC’s power to strip employers of a statutory defense, and potentially muddy the waters if an affordability standard is included.  In addition, the NPRM opens the door to uncertainty with reference to wellness program-related claims under Title VII and the ADEA as well. Given these potential issues and more that will inevitably arise in the coming weeks, it is important for the regulated community — employers, wellness program providers, and others — to consider submitting comments for the record regarding the pros and cons of the proposed rule.  As we have throughout this entire process, we will keep you posted on any developments.

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

The EEOC Settles Its First Transgender Suit Filed Under Title VII

Posted in Remedies

thCAD0SFA4By Gerald L. Maatman Jr. and Howard M. Wexler

As we have previously reported, the EEOC has decided to pursue protections for transgender workers under Title VII’s prohibition against “sex” discrimination and harassment as part of its strategic mission even though no federal statute, including Title VII, explicitly prohibits employment discrimination based on gender identity or expression. To this end, the EEOC filed two lawsuits on September 25, 2014 on behalf of transgender workers – EEOC v. Lakeland Eye Clinic, P.A. (Middle District of Florida, Tampa Division) and EEOC v. R.G. & G.R. Harris Funeral Homes Inc. (Eastern District of Michigan, Southern Division) — on behalf of transgender workers.

On April 9, 2015, Judge Mary S. Scriven of the U.S. District Court for the Middle District of Florida approved a consent decree entered into between the EEOC  and Lakeland Eye Clinic, P.A. settling one of these two lawsuits. The terms of the Consent Decree, including the nature of the programmatic relief required by the EEOC make it crystal clear that this is an area that the EEOC will continue to pursue in 2015 and beyond.

Case Background

In EEOC v. Lakeland Eye Clinic P.A., the EEOC claimed that an organization of healthcare professionals fired an employee because she is transgender, because she was transitioning from male to female, and/or because she did not conform to the employer’s gender-based expectations, preferences, or stereotypes. The complaint alleged that even though the claimant had been performing her duties satisfactorily, she was terminated soon after she began presenting as a woman and informed her employer that she was transgender.

Terms Of The Consent Decree

The EEOC and Lakeland Eye Clinic, P.A. reached a settlement during the course of discovery. In full and complete settlement of the claims raised by the EEOC, the parties entered into a Consent Decree which Judge Scriven approved on April 9. The following are highlights of the terms of the Consent Decree:

  • Total payment of $150,000 to the aggrieved employee as well as a neutral letter of reference;
  • Revised employer discrimination and harassment policies stating that no employee will be terminated (or harassed) “based on an employee’s status as transgender, because of an employee’s transition from one gender to another, and/or because the employee does not conform to the Defendant’s sex or gender-based preferences, expectations or stereotypes”
  • Managerial and Employee Training including “an explanation of the prohibition against transgender/gender stereotype discrimination under Title VII” and “guidance on handling transgender/gender-stereotype complaints made by applicants, employees and customers.”
  • Monthly reports to the EEOC every six months certifying compliance with the terms of the Consent Decree; and
  • Two years of monitoring by the EEOC, including the right to conduct workplace inspections with 24 hours’ notice.

Implications For Employers

The theories of liability articulated by the EEOC in this case closely follow the EEOC’s prior landmark administrative ruling titled Macy v. Bureau of Alcohol, Tobacco, Firearms and Explosives, EEOC Appeal No. 0120120821 (April 23, 2012) (previously discussed here) in which it held that transgender individuals may state a claim for sex discrimination under Title VII.

We expect that EEOC-initiated ligation on behalf of transgendered individuals will continue to increase given the Commission’s enforcement strategy and desire to “push the envelope” in this area. As we previously advised employers must be mindful of issues related to gender identity and/or expression that might arise during interviewing, hiring, discipline, promotion and termination decisions. Employers should be particularly vigilant when an employee identifies as transgender, or announces a plan to undergo a gender transition. Stay tuned!

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

EEOC Issues Probable Cause Determination Against New York City To The Tune Of $246 million

Posted in EEOC Litigation

thCAD0SFA4By Gerald L. Maatman Jr. and Howard M. Wexler

On April 1, 2015 the EEOC’s New York District Office issued a Determination finding probable cause to believe that the City of New York’s Department of Citywide Administrative Services (“DCAS”) violated Title VII and the Equal Pay Act based on its “pattern of wage suppression and subjective promotion based on…sex, race, and national origin.” In the accompanying conciliation agreement proposal, the EEOC demanded numerous forms of programmatic relief from DCAS (e.g., EEOC monitoring, notice postings, etc.) as well as back pay, future pay, compensatory damages and legal fees and costs totaling over $246 million. For any employer, the EEOC’s position is one that ought to be heeded for “lessons learned….”

The Charge

The Communications Workers of America, AFL-CIO Local 1180 filed a charge of discrimination with the EEOC against DCAS in 2014 on behalf of a class of African-American and Hispanic women who were (or still are) employed as Administrative Managers in various NYC agencies. The Union asserted that a discriminatory pattern of wage suppression on the basis of sex, race and national origin exists as well as facially neutral policies governing assignment, promotion and wages that have a disparate impact on female African-American and Hispanic Administrative Managers. To this end, the Union alleged that the minimum salary for Administrative Managers – which is disproportionately paid to Hispanic and African-American women – has been frozen for many years whereas the maximum salary for Administrative Managers (a position held primarily by Caucasian males) has increased significantly.

In addition to arguing that the Union did not have standing to file a Charge with the EEOC, DCAS denied the allegations of discrimination and provided “a small sample of Administrative Managers along with their gender, race, agency, salary, and description of their job duties in an attempt to demonstrate that Administrative Mangers do not perform equal work.”

EEOC’s Determination And Proposed Conciliation Agreement

The EEOC agreed with the Union, opening that DCAS’ evidence “was insufficient” and did “not withstand scrutiny.” The EEOC also alleged that DCAS declined to provide certain requested information and “the Commission determines that the silence is an admission of the allegations in the charge, and exercises its discretion to draw an adverse inference with respect to the allegations.”

In addition to its Determination, the EEOC provided a proposed Conciliation Agreement to resolve the Charge against DCAS. The Conciliation Agreement, were DCAS to accept it, would require DCAS to, at a minimum, award raises via “an annual step process”; increase the minimum salary for all Administrative Managers; and agree to “proper oversight, opportunity and enforcement of equal employment,” which would include the appointment of an EEO Monitor; amended job descriptions, with a revised posting and bidding process; and the provision of tuition assistance to union members to “level the playing field” for union members so that they can “effectively compete with their white male colleagues in the workplace.”

With respect to monetary damages, the EEOC demanded $188,682,531.00 in back pay; a new starting salary for Administrative Managers of no less than $92,117.00; $56,922,000.00 in compensatory damages under Title VII; and no less than $1,000,000.00 in legal fees and costs.

The EEOC gave DCAS until April 17, 2015 to provide a written counter-proposal or advise if it did not wish to engage in conciliation. Absent what it deems a “reasonable written counter-proposal” from DCAS, the EEOC warned that it may deem conciliation futile and fail conciliation.

Implications or Employers

The headline grabbing dollar amount requested by the EEOC in this proposed conciliation agreement is certainly staggering and catapults this case into the “one to watch” column. Furthermore, this confirms what we predicted in our EEOC-Initiated Litigation Report – that the EEOC is going to focus this year on recovering large settlements and verdicts to try to make up for low recoveries in fiscal year 2014. As DCAS has already publically stated that it intends on participating in the conciliation process, we will be sure to monitor developments.  Stay tuned!

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

The EEOC Snares A $12.2 Million Settlement In Colorado, Representing More Than Half The $22.5 Million The EEOC Recovered In The Entirety Of FY 2014

Posted in Remedies

thCAD0SFA4By Christopher M. Cascino and Gerald L. Maatman, Jr.

The EEOC recently announced reaching its largest settlement in the last 2 years in EEOC v. Patterson-UTI Drilling Co. LLC, No. 15-CV-600 (D. Colo. Mar. 24, 2015). In this case, Patterson-UTI agreed to settle a race and national origin pattern or practice claim brought by the EEOC for $12.2 million. This settlement almost equals the approximately $13 million the EEOC received in litigation settlements for the entirety of its Fiscal Year 2014, and represents more than half of the $22.5 million it recovered, in total litigation settlements and verdicts, during the same period.  The high value of this settlement comes as no surprise.  As we reported in our 2014 EEOC-Initiated Litigation Report, found here, the EEOC is focused on achieving high value settlements and verdicts this year to make up for its low recoveries in 2014. This case also confirms another trend we also reported in our 2014 EEOC-Initiated Litigation Report – the EEOC is focused on bringing systemic, class-like cases.

Case Background

The EEOC received a number of charges of discrimination filed by employees and former employees of Patterson-UTI, a Texas-based oil and gas drilling company, alleging discrimination based on race or national origin.  The EEOC concluded that there was reasonable cause to believed that Patterson-UTI engaged in nationwide discrimination against its minority employees.

On March 24, 2015, the EEOC filed suit against Patterson-UTI, alleging that individuals of Hispanic, Latino, African American, American Indian, Asian, and Pacific Islander race and/or national origin were subject to harassment, a hostile work environment, and disparate treatment. Specifically, the EEOC alleged that Patterson-UTI’s minority employees were subject to racial and ethnic slurs, jokes, and comments and verbal harassment and intimidation. The EEOC further alleged that Patterson-UTI’s minority employees were relegated to lower-level positions, were denied training, and were subject to disparate treatment in discipline. Finally, the EEOC alleged that Patterson-UTI retaliated against employees who complained about discrimination or harassment. The EEOC alleged that Patterson-UTI engaged in this prohibited conduct on a nationwide basis.

Settlement Agreement

Patterson-UTI and the EEOC entered into a settlement on the same day the Complaint was filed.  To that end, the parties filed a Proposed Consent Decree with the Court. Under the terms of the settlement as outlined in the Proposed Consent Decree, Patterson-UTI agreed to pay $12,260,000 to a settlement administrator to provide compensation to Patterson-UTI’s purportedly aggrieved minority employees. Such compensation will be available to any minority employee who worked for Patterson-UTI from January 1, 2006, to the date the Proposed Consent Decree is entered.

In addition to agreeing to provide monetary relief, Patterson-UTI also consented to wide-ranging equitable relief.  Among other things, Patterson-UTI agreed to be enjoined from engaging in any employment discrimination practice which discriminates on the basis of race or national origin. It agreed to develop new Equal Employment Opportunity policies and to annually train its employees on its Equal Employment Opportunity policies. It also agreed to create a Vice President position dedicated implementing the Consent Decree and ensuring Patterson-UTI’s employees were protected from unlawful discrimination.

Implications For Employers

This settlement confirms what we predicted in our annual EEOC-Initiated Litigation Report – the EEOC is going to focus this year on recovering large settlements and verdicts this year to try to make up for low recoveries in fiscal year 2014. Employers who find themselves the subject of EEOC conciliation or litigation this year can expect that the EEOC will demand larger recoveries than it has in prior years. Moreover, employers can expect that the EEOC will continue focus on large-scale, systemic litigation. Whether this focus will result in more successes like it achieved in this case or defeats like it received last year in cases like EEOC v. Kaplan Higher Educ. Corp., 748 F.3d 749 (6th Cir. 2014), remains to be seen. Stay tuned.

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

It’s So Nice, The EEOC Wants To Hear Your Input Twice: The EEOC Seeks Public Feedback On Its Regulations Again!

Posted in Regulatory / Guidance Issuance

thCAD0SFA4By William David and Laura Maechtlen 

In 2011, the U.S. Equal Employment Opportunity Commission (EEOC) invited the public to comment on how its significant regulations could be improved by modifying, streamlining, expanding, or repealing them.  Since opening its doors for public comments, the EEOC has received 93 comments.  The EEOC summarized and responded to these comments, which are publicly available on the EEOC website. The goal is to make the agency’s regulatory programs more effective in achieving its objectives and less burdensome to the public.  Consistent with its practices in 2011, the EEOC again published a notice asserting that it welcomes public comment on a variety of regulatory review topics within the EEOC’s jurisdiction.  Specifically, the EEOC seeks public comment on the following:

  • Which regulations and/or reporting requirements should the EEOC consider for review, modification, streamlining, expansion or elimination, and why?
  • Are any EEOC regulations and/or reporting requirements outdated, ineffective, insufficient, inconsistent, redundant, duplicative or excessively burdensome?
  • Are there alternative regulatory approaches for particular EEOC regulations and/or reporting requirements that would reduce the burden on regulated entities while maintaining the same level of protection for applicants, employees, employers, employment agencies, federal agencies, and unions?  If so, please describe.

How Can Employers Have Their Voices Heard By The EEOC?

Considering the level of public feedback when the EEOC opened its regulations for public commenting in 2011 and the EEOC’s response to that feedback, employers are encouraged to submit comments if they would like to weigh in on EEOC regulations. Between now through April 20, 2015, comments or suggestions may be submitted to Public.Comments.RegulatoryReview@eeoc.gov.  Remember, the EEOC may make comments public, so please do not submit comments that include information you don’t want to make public.

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

Court Orders EEOC To Pay Defendants’ Attorney’s Fees For “Baseless, Unreasonable and Frivolous” Lawsuit

Posted in EEOC Litigation

00-money-bagBy Courtney Bohl, Christopher DeGroff, and Gerald L. Maatman, Jr.

On March 18, 2015, in EEOC v. Global Horizons, Inc., et al., Case No. 2:11-CV-03045, Judge Edward F. Shea of the U.S. District Court for the Eastern District of Washington ordered the EEOC to pay defendants Green Acre Farms, Inc. and Valley Fruit Orchards, LLC (collectively “Grower Defendants”) their reasonable attorney’s fees and costs incurred in defending against the EEOC’s meritless lawsuit. Judge Shea’s scathing opinion chastised the EEOC for: (1) failing to conduct an adequate investigation to ensure that Title VII claims could reasonably be brought against the Grower Defendants; (2) pursuing a frivolous theory of joint-employer liability; (3) seeking frivolous remedies; and (4) disregarding the need to have a factual basis to assert a plausible basis for relief under Title VII against the Grower Defendants.

This is a significant opinion for employers who are currently litigating against the EEOC, as it makes clear that the EEOC should be and will be held accountable for brining unfounded or baseless lawsuits against employers.

Factual Background

In 2004 and 2005, Global Horizons, Inc., a staffing company, brought workers from Thailand to the United States through the H-2A visa program to work on the Grower Defendants’ farms. Id. at 7. A number of these workers absconded from the farms to California where they filed charges of discrimination with the EEOC alleging that Global and the Grower Defendants discriminated and retaliated against them based on their national origin. Id.

Between 2009 and 2010, the EEOC conducted a scant investigation of the charges. The EEOC interviewed some of the workers, but many of the workers indicated that the Grower Defendants never subjected them to unlawful or improper treatment.  The EEOC also received information from Grower Defendants, including position statements where the Grower Defendants argued that they were not the workers’ employer (Global was); that the charges were untimely; and that the allegations in the charges were too vague. Id. at 10. The Grower Defendants also made multiple requests for further information regarding the bases for the charges, but the EEOC never provided this information. Id.

In August and September 2010, the EEOC issued letters of determination, finding that the Grower Defendants discriminated against the charging parties and a class of similarly situated individuals on the basis of their national origin. Id. at 16. The EEOC sent the Grower Defendants a conciliation proposal demanding significant monetary relief and injunctive relief. Id. at 17. The Grower Defendants again requested information that supported the bases for the charges and the EEOC’s monetary demand, but the EEOC refused provide any further information. Id. In September 2010, the EEOC determined conciliation had failed, and, in April 2011 the EEOC filed suit. Id. at 18.

The Grower Defendants moved for summary judgment on the EEOC’s claims. In May 2014 the Court granted summary judgment in the Grower Defendants’ favor, finding that the EEOC failed to present evidence to establish a triable issue of fact that the Grower Defendants violated Title VII. Id. The Grower Defendants subsequently filed a motion for attorneys’ fees and costs.

The Court’s Ruling

In granting the Grower Defendants’ motion for attorneys’ fees and costs, the Court considered “the totality of the information possessed by the EEOC when it filed the lawsuit in order to determine if the filing was reasonable, frivolous, or without foundation.” Id. at 5.

The Court scrupulously analyzed the EEOC’s pre-suit investigation, finding multiple failures on the part of the EEOC. The Court determined that the EEOC failed to provide the Grower Defendants basic information regarding the Thai workers’ allegations, despite their numerous requests. The Court noted that the EEOC failed to consider or react to statements by some of the Thai workers that the Grower Defendants did not treat the Thai workers unfairly, and treated them the same as the Latino workers. Id. at 26. The Court highlighted the EEOC’s failure to interview any of the Grower Defendants’ managers, supervisors, or owners. The Court also found that the EEOC failed to take simple steps to identify and clarify which farm a worker experienced the claimed discriminatory treatment. Id. at 26. The Court noted that the EEOC was well aware of these deficiencies in its investigation, because counsel for the Grower Defendants repeatedly advised the EEOC of these issues. Id.

In addition, the Court found it troubling that the EEOC refused to examine Global’s invoices and other documents that the Grower Defendants had repeatedly offered to the EEOC, until after the start of litigation. Id. at 25. Equally as troubling to the Court was the EEOC’s failure to gather information to support a plausible finding that the Grower Defendants were joint employers with Global, including evidence that the Grower Defendants either (1) discriminated against a Thai worker or (2) knew or should have known that Global discriminated against a Thai worker and failed to take any remedial measures. Id. at 28. Finally, the Court noted that none of the information discovered by the EEOC in its investigation reasonably supported the high damages demands the EEOC made during conciliation. Id. at 27. The Court indicated that it was “unsurprising” that the Grower Defendants’ declined the EEOC’s conciliation proposal “in light of the vague and factually unexplained charges.” Id.

Based on its review of the EEOC’s investigation, the Court held that the information in possession of the EEOC “clearly did not justify the filing of Title VII claims against the Grower Defendants on specific Thai worker’s behalf.”  Id. In short, the Court found the lawsuit “baseless, unreasonable, and frivolous” and the award of attorneys’ fees appropriate. Id. at 24. The Court ordered defense counsel to submit their fee request per the ruling.

Implication For Employers

This ruling is extremely important for employers. Not only does it hold the EEOC accountable for its conduct during its pre-suit investigation, but also it serves as a reminder to all employers to make sure that they engage with the EEOC during the pre-lawsuit investigation and conciliation process, sufficiently documenting their efforts to obtain information and communicate with the EEOC.

The decision is also another significant sanction award against the EEOC. Critics of the Commission are apt to point to the decision as yet another example of the problems with the EEOC’s litigation enforcement program.

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

Tenth Circuit Clarifies ADA Direct-Threat Defense For EEOC Litigation

Posted in EEOC Litigation

250px-US-CourtOfAppeals-10thCircuit-Seal2By Gerald L. Maatman, Jr. and Alexis P. Robertson

On March 16, 2015, in EEOC v. Beverage Distributors Co., LLC, No. 14-1012 (10th Cir. 2014), the U.S. Court of Appeal for the Tenth Circuit held that the U.S. District Court for the District of Colorado erred by providing improper jury instructions on the direct-threat defense under the Americans With Disabilities Act (“ADA”). In rendering its decision, the Tenth Circuit clarified the direct-threat standard in a manner favorable to employers. The ruling is instructive for all employers involved in ADA litigation with the EEOC.

Case Background

A former employee of Beverage Distributors Corporation filed a charge of discrimination with the EEOC after he was unable to secure employment in a new position with the company. The employee was legally blind. After his original position with Beverage Distributors was eliminated, he was able to secure a new job with the company. However, his new employment was conditioned upon passing a physical examination. Although he passed the physical exam, the examining doctor stated that the employee would require workplace accommodations to mitigate the risks from his impaired vision. Beverage Distributors concluded that it could not reasonably accommodate his conditions and rescinded the job offer. The employee subsequently filed a charge of discrimination with the EEOC against Beverage Distributors. The EEOC then sued Beverage Distributors, on the employee’s behalf, under ADA.

At trial, amongst other things, Beverage Distributors asserted that the employee’s impaired vision created a significant risk of harm to him and others and no reasonable accommodation could reduce or eliminate that risk. The jury found that Beverage Distributors was liable for discrimination and that the employee’s condition did not pose a direct threat.  Beverage Distributors appealed to the Tenth Circuit, arguing that the direct-threat jury instruction constituted reversible error.

The Decision Of The Tenth Circuit

The Tenth Circuit ruled that the direct-threat jury instruction constituted reversible error because the district court inaccurately conveyed the direct-threat standard to the jury. Under the ADA, an employer may assert as an affirmative defense to a claim of discrimination, that it declined to hire an individual because the individual posed a “direct threat to the health or safety of themselves or others.” Id. a 4. “A direct threat involves a significant risk of substantial harm to the health or safety of the person or others that cannot be eliminated or reduced by reasonable accommodation.” Id.

The Tenth Circuit reasoned that direct-threat instruction, as delivered by the district court, did not accurately convey the direct-threat standard because it failed to communicate that proof of an actual threat was unnecessary.  The Tenth Circuit reasoned that Beverage Distributors should have avoided liability “if it had reasonably believed the job would entail a direct threat.” Id. at 6. It should not have been required to prove that the employee posed an actual direct threat. The jury instruction overstated Beverage Distributors’ burden. Further, the second portion of the jury instruction – which stated that the jury was to consider the reasonableness of Beverage Distributors’ belief regarding the existence of a direct threat – did not cure the error because the jury was never told why it was to consider the reasonableness of what Beverage Distributors thought. Therefore, the Tenth Circuit concluded that the error was not cured by the instruction regarding the reasonableness of the company’s subjective belief. The Tenth Circuit held that it had to reverse the jury’s verdict, because the jury could have been misled by the erroneous instruction.

Implications For Employers

This is a significant case in that it clarifies the direct-threat standard in a manner that is favorable for employers. As illustrated above, the key inquiry for the defense is the reasonableness of the employer’s belief regarding the direct-threat, and not whether there was in fact a direct threat posed. Employers and defense lawyers should take notice of this ruling and add it to their tool box when litigating cases under the ADA cases.

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

Supreme Court Tea Leaves: What Employers Should Expect In EEOC v. Abercrombie & Fitch

Posted in EEOC Litigation

The U.S. Supreme Court recently heard oral arguments in EEOC v. Abercrombie & Fitch, No. 14-86, a case alleging that implementation of the retail store’s “Look Policy” caused religious discrimination.  We have blogged about this case previously –  here, here, here, here, and here.  To recap, this case was brought by the EEOC alleging that Abercrombie & Fitch failed to hire Samantha Elauf, a Muslim woman, as a sales associate because she wore a hijab.  Abercrombie & Fitch has a policy called the “Look Policy” that prohibits the wearing of any head coverings.  Our blog editor, Gerald L. Maatman, Jr. (@g_maatman) discusses the oral arguments in the case and his take on what to expect from the case with Colin O’Keefe from LXBN TV (@LXBN) in the video below.

For more information on EEOC v. Abercrombie & Fitch, our readers can check out the following posts:

The EEOC Scores Summary Judgment Win In Religious Discrimination Case

Don’t “Look” Now – Tenth Circuit Delivers Blow To EEOC In Its Battle Over Abercrombie’s “Look Policy”

EEOC Litigation Over Religious Accommodation Issues

Compliance: Religious discrimination — It’s on the EEOC’s radar

Take Two? EEOC Moves For Reconsideration After Losing High-Profile Religious Discrimination Case Over Abercrombie’s “Look Policy”

 

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