Allyn & Fortuna LLP
By: Megan J. Muoio, April 7 2015
On March 25, 2015, the Supreme Court handed down a decision in Young v. United Parcel Service, Inc., a case challenging the interpretation and applicability of the Pregnancy Discrimination Act (PDA) and that has drawn national attention. Young was a part-time driver for UPS, which requires that its drivers lift up to 70 pounds. After Young became pregnant, her doctor advised her not to lift more than 20 pounds. UPS told Young that she could not work under a lifting restriction. However, UPS had a policy to accommodate workers who were injured on the job, had disabilities covered by the Americans with Disabilities Act (ADA), or who lost their Department of Transportation certifications. Young brought suit under the PDA and the ADA in the Federal District Court for the District of Maryland. She argued that UPS discriminated against her on the basis of her pregnancy because it provided light-duty assignments for injured workers and other non-pregnant employees but did not provide her with any such accommodation. UPS argued that, since Young was not injured, disabled, or de-certified by the Department of Transportation, she was not eligible for the accommodation and was therefore treated the same as all “other persons.”
The PDA is a subsection of Title VII of the Civil Rights Act of 1964 which extends Title VII’s prohibition against sex discrimination to discrimination on the basis of pregnancy, childbirth, or other related conditions. A key provision of the PDA requires that employers treat pregnant women “the same for all employment-related purposes…as other persons not so affected but similar in their ability or inability to work.” The Court’s review and decision focused on this second provision.
The District Court granted UPS summary judgment and concluded that Young did not meet her initial burden of establishing a prima facie case of discrimination. The Fourth Circuit affirmed the District Court’s decision, and Young appealed to the Supreme Court. Before the Supreme Court, the parties argued for two different interpretations of the key provision of the PDA. First, Young argued that women should receive the same accommodation when they are pregnant and cannot perform their jobs as any other worker would receive for any other condition that impairs their ability to work. This broad standard would permit pregnant employee plaintiffs to easily satisfy their initial burden under the PDA. It is also the standard adopted by the U.S. Equal Employment Opportunity Commission in its recently-published guidelines. UPS, in contrast, argued for a much narrower interpretation of the second provision of the PDA, which would require a case to proceed only if the pregnant employee could demonstrate that the employer had a policy that singled pregnant workers out for disfavored treatment.
The Court, in a 6-3 opinion, rejected both of the interpretations put forward by Young and UPS. Instead, the Court created a hybrid remedy that would take into consideration Congress’s intent to protect pregnant workers in way that goes above and beyond the basic protections against sex discrimination provided for in Title VII but would also take into consideration employers who have reasonable, non-pretextual reasons for denying accommodations to pregnant employees.
Under the Court’s framework, a pregnant employee must first demonstrate that she is in the protected group (that she can become pregnant), that she asked her employer for an accommodation when she could not fulfill her normal job, that her employer refused to provide an accommodation, and that the employer actually provided an accommodation for others who are just as unable to do their work temporarily. If the employee is able to satisfy those requirements, the burden shifts to the employer to demonstrate that its policy has a neutral business rationale. The burden then shifts back to the employee to demonstrate that the policy was a pretext for bias against pregnant employees, that the policy puts a “significant burden” on female employees, and the policy’s basis is “not sufficiently strong” to justify the burden.
The result of the Court’s newly-fashioned standard is that the Fourth Circuit’s decision affirming the dismissal of Young’s case on UPS’s motion for summary judgment will be vacated and Young’s case will proceed. Whether she can overcome her next burden – to demonstrate that UPS’s policy was pretextual – and will ultimately be successful will be determined after the case has been remanded for further proceedings in the District Court.
This is likely not the end of the Supreme Court’s evaluation of the issue of pregnancy discrimination, however. The Court specifically stated that it was not going to address whether pregnant employees could be protected under the ADA, which was expanded by Congress in 2008 to provide protection to workers with short-term disabilities. The Court did not take a position on the ADA issue in Young, but the EEOC has already gotten out ahead of the Court and stated that under its interpretation of the statute, it protects pregnant employees.
Nicholas Fortuna, March 27, 2015
On March 18, the National Labor Relations Board’s (NLRB) general counsel issued a report offering guidance to employers and labor law practitioners on how to draft handbook rules that will not be deemed unlawful under Section 7 of the National Labor Relations Act (NLRA). The NLRB has been aggressively reviewing employer handbook policies on a variety of topics, including confidentiality, social media, use of employer email systems for non-work related solicitations, and employee conduct rules. What has emerged from these cases is a pattern wherein the NLRB finds unlawful seemingly innocuous, business sensible policies, such as prohibiting the unauthorized distribution of confidential employer information because, in its view, those policies could be interpreted to limit employees’ right to engage in certain types of concerted activity deemed protected by Section 7 of the NLRA.
The 30 page report from General Counsel Richard Griffin examines employer policies across a broad spectrum and highlights policies found to be unlawful and those deemed to be acceptable under law. The report also offers guidance in the form of model policies addressing social media, confidentiality, conflicts of interest, cell phone use, and other areas that presumably would be deemed lawful by the NLRB. Certainly, employers following the recommendations of the general counsel would not be prosecuted by the general counsel.
Some examples of the issues handled in the report are as follows:
Confidentiality – Broad prohibitions on disclosing confidential information are lawful so long as they do not relate to information regarding employees or anything that may be considered a term or condition of employment.
Employee Conduct Towards the Company and Supervisors – The report provides that employees have broad protection to criticize or protest their employer’s labor policies or treatment of employees even if that criticism is false or considered defamatory. The protection does not to cover acts of insubordination or what the Board determines is maliciously false.
Conduct Toward Fellow Employees – Statements, arguments, debates about unions, management, and the terms and conditions of employment are protected even if they are intemperate, abusive and inaccurate. Despite the fact employers have an interest in maintaining a harassment-free workplace, anti-harassment rules cannot prohibit vigorous debate or intemperate comments regarding Section 7 rights.
Interaction with Third Parties – Employers cannot restrict employees from communicating with the media about their terms and conditions of employment. But the employer can restrict who is permitted to speak on behalf of the company.
Use of Company Logos, Copyrights and Trademarks – Employees are permitted to use the company’s name, logo, etc. on picket signs, leaflets and other protected materials.
Photography and Recording – Employees have the right to take photographs and make recordings in furtherance of their protected concerted activities, including the right to use personal devices to take such photographs or make such recordings.
Leaving Work – A fundamental right under Section 7 is the right to go on strike, therefore rules that regulate when an employee can leave work are unlawful if they forbid protected strike actions or walkouts.
In most of the situations addressed in the report, the employer’s interest will be trumped by an employees’ Section 7 rights under the NLRA. In crafting a lawful handbook policy requires that the employer’s should be mindful of those rights in creating policies furthering the interests of the employer. The NLRB will continue to be aggressive in reviewing employer handbook policies and employers need to be careful on what they restrict their employees from doing or saying. The report is useful for employers and practitioners because it provides a summary of the general counsel’s views on a wide range of matters and examples of language likely to be found lawful.
By Diana Uhimov, March 18, 2015.
The U.S. Supreme Court recently heard argument in EEOC v. Abercrombie & Fitch Stores. The Equal Employment Opportunity Commission brought suit against Abercrombie over its refusal to hire a Muslim teen, Samantha Elauf. Although she scored highly in her interview for a sales associate position with the retailer, she was not hired because she wore a black hijab—a Muslim headscarf she has worn since the age of 13. When the interviewer consulted with a manager about the headscarf, she gave Elauf a low score in the category of “appearance and sense of style” and declined to hire her based on the prohibition in the company’s “Look Policy” against wearing “caps”. Abercrombie argued that since Elauf did not explicitly request to be exempt from the rule, they were not required to provide an exemption, despite the manager’s correct assumption that she wore the scarf for religious reasons. EEOC’s argument was that the employer has a duty to make a reasonable accommodation when the it has any type of notice that the prospective employee’s religious practice conflicts with a job requirement.
The Supreme Court agreed in October to hear the EEOC’s appeal from a divided Tenth Circuit ruling that the retailer’s rejection of the candidate due to her headscarf was not discrimination. Their decision was based on the fact that Elauf never explicitly told her interviewer she was Muslim and would need to be excused from the headwear prohibition in the company’s dress code. The EEOC claimed that the employer discriminated in violation of the Title VII protection of religious practice, based on its assumption that she would need an accommodation without ever asking Elauf. Abercrombie’s position was that EEOC regulations and guidance conceded that it was the responsibility of employees and applicants to ask for an accommodation, eliminating any guesswork on the employer’s part. It also maintained that its dress code was a facially neutral dress code, and the EEOC hadn’t made a claim for intentional discrimination because the policy would have treated any headwear, religious or not, the same way. But the Supreme Court was skeptical about how Elauf, as a prospective employee, was expected to know about the headgear policy, much less ask for a reasonable accommodation, if she was never told about it.
At oral argument, the justices probed into whether the employer should presume an accommodation is necessary or whether the employee has to affirmatively ask for one in order for Title VII to apply. The question for the court was one of notice: is an employer on notice that a religious accommodation is needed when an employer should reasonably be aware through the circumstances at hand.
The Solicitor General of the US arguing the case for the EEOC said that the proper course of action for an employer would be to “assume that [there] isn’t a religious problem, to not engage in the stereotyping and assume that the person could comply as they would with somebody who was wearing a headscarf or something else for not religious reasons.” He also recommended that an interviewer in this situation point out to the candidate that the employer doesn’t allow headwear, and then ask if he or she could follow that policy, rather than assume they couldn’t. On the other hand, Abercrombie argued that an employer can’t be liable under Title VII for refusing to hire an applicant based on religious practice unless the company has actual knowledge that a religious accommodation was required, and its knowledge was based on notification by the applicant.
Abercrombie maintained that the EEOC’s rule would present them with two bad options—inquire about a prospective employee’s religious beliefs in an interview to see if an accommodation is necessary, which could open the door to potential bias claims, or face liability for a failure-to-accommodate claim like the EEOC lodged against Abercrombie. However, employee advocates claim that this argument is a red herring and that employers could simply make clear to applicants their policies. They see the Tenth Circuit rule as imposing an extra burden on employees that Congress did not intend.
The Justices were skeptical of Abercrombie’s argument. Their inquiry implied that they believe there is a way to show to a reasonable certainty that someone was being denied a job for religious reasons, without having direct information. Otherwise, an employer would be able to discriminate because of what it perceives to be religious practice as long as the employer didn’t have actual knowledge as to the employee’s religious needs. The Supreme Court is expected to decide this case in the coming months. Its decision will provide employers with clarification as to: (1) the level of knowledge that is sufficient to put the employer on notice of the duty to accommodate; and (2) how the employer could raise the matter with the applicant without the bias that the law prohibits.
By: Megan J. Muoio, March 9, 2015
The first quarter of 2015 has already seen a great deal of activity in the area of class action lawsuits brought by plaintiffs suing their employers under the Fair Labor Standards Act (FLSA). Three recent cases demonstrate the difficulties plaintiffs have faced under the collective action certification standard of the FLSA, which requires plaintiffs who opt in to the collective action to demonstrate they are similarly situated. Although there is no statutory test in the FLSA for determining whether plaintiffs are similarly situated, federal courts have developed a test for an initial determination that focuses on the plaintiffs’ factual claims such as job duties, geographic locations, employer supervision, compensation, and whether a common employer policy, practice, or plan allegedly violates the FLSA.
In Pullen et al. v. McDonald’s Corp. and Wilson et al. v. McDonald’s Corp., two companion cases both currently pending in federal district court in Michigan, the plaintiffs made an unsuccessful motion for conditional collective action certification under the FLSA, alleging that McDonald’s policies resulted in the employees receiving less than minimum wage for their hours worked. The employees alleged that McDonald’s had a nationwide policy to deduct the cost of employee uniforms from pay and to not pay workers for time spent waiting to clock in at the beginning of shifts or when coming back from breaks. The employees’ motion for conditional collective action under the FLSA was denied in September 2014. In February 2015, the plaintiffs resorted to making a motion for class certification under state law and sought discovery from McDonald’s in order to support their class certification allegations. Because FLSA collective action certification was denied, certification as a class is the employees’ final option for advancing their case. McDonald’s has opposed the class certification and resisted the production of discovery and the employees’ fight for class action certification continues to be an uphill battle.
In Goodman v. Burlington Coat Factory Warehouse Corp., the plaintiffs were conditionally certified as a collective class under the FLSA after the suit was filed in federal court in New Jersey in 2011. The plaintiffs had alleged that Burlington Coat Factory misclassified them as assistant store managers in a bid to exempt them from overtime wages to which they were entitled. Now that discovery has been completed, Burlington Coat Factory has filed a motion to deny final certification to the plaintiffs because Burlington Coat Factory argues that there is no similarity in the class of employees as to their job duties and whether they performed managerial functions. Although the employees claim that the more than 500 employees in the conditional class all had similar work experiences, the court may deny final class certification because of the lack of evidence of similarity between the employees identified by Burlington Coat Factory.
Finally, in Rouse v. Target Corporation, which was filed in federal district court in Texas on March 4, 2015, an employee who worked as an executive team leader in asset protection at Target has claimed that Target intentionally misclassified him as a managerial employee, thereby making him exempt from overtime pay in violation of the FLSA. The plaintiff claims that he was misclassified because non-managerial employees performed the same work, and seeks to have more than 1,800 similarly-situated employees opt in to the collective action under the FLSA. However, the plaintiff and the prospective class also face an uphill battle because Target was able to defeat a similar FLSA suit brought by an asset protection employee by convincing a federal district court in Illinois that the asset protection employees in question were managerial employees because they exercised independent judgment in strategizing and selecting cases for fraud investigations. Should the plaintiff be able to obtain conditional collective certification for opt-in plaintiffs under the FLSA in this case, there will undoubtedly be a final challenge to the collective certification after discovery has been completed.
Employers and employment law watchers will be tracking these cases and others that are filed in 2015 to see how collective action certifications under the FLSA are developing. Collective certification under the FLSA is important to plaintiff-employees who seek nationwide policy changes at large corporations and big damage awards on behalf of many employees. Employers faced with collective action claims, however, fight strongly against certification because of the potential for large damage verdicts and the massive legal fees associated with these cases. Whether the case is at the beginning stages as in the Rouse v. Target case, at the post-discovery final certification phase as in Goodman v. Burlington Coat Factory, or at a point where collective action has been denied but class certification under state law is sought as in the McDonald’s cases, the struggle over collective action under the FLSA can continue throughout the action and can be a costly situation for employers to manage.
Nicholas Fortuna, March 2, 2015
New York Attorney General Eric Schneiderman announced last week he intends to submit to the state legislature proposed new laws creating a program to protect and reward employees who report information about financial frauds in banking, insurance, and the financial service industry. Currently, New York does not have a law to protect or encourage whistleblowers who report securities and other financial fraud. The program is modeled after the whistleblower programs at the Securities and Exchange Commission (S.E.C.) and U.S. Commodity Future Trading Commission established by the 2010 Dodd-Frank financial overhaul.
Dodd-Frank requires the S.E.C. to pay awards to whistleblowers who voluntarily provide original information to the S.E.C. that leads to the successful enforcement of a violation of federal securities laws resulting in sanctions exceeding $1 million. By statute, the awards must range from at least 10% to a maximum of 30% of the sanctions collected.
The information must be original. That means it must be based on the whistleblower’s independent knowledge or analysis, not already known to the S.E.C., and not derived exclusively from public sources.
Dodd-Frank also prohibits retaliation. An employee who proves a retaliation claim is entitled to reinstatement and two times back pay, with interest. Even employees who provide immaterial leads to the S.E.C. are protected by the statute’s anti-retaliation provisions.
The criteria for award amounts paid to whistleblowers are set forth in the S.E.C rules implementing the statute. The factors considered by the S.E.C. in determining whether to increase or decrease a whistleblowers award generally weigh the value of the whistleblower’s assistance and his or her culpability in the wrongdoing reported.
New York’s proposed legislation, called the Financial Frauds Whistleblower Act, would pay out awards to tipsters who turn over original information leading to successful cases. Similar to the federal program, the tipsters would get awards between 10% and 30% of the amount of penalties recovered if their information leads to sanctions of more than $1 million dollars. The Act would also protect the confidentiality of the whistleblowers and make it illegal for employers to retaliate in response. Additionally, employers could not fire, demote, suspend or otherwise harass workers who report suspicious activity or fraud to their supervisors or internal compliance staff.
The plan announced by New York’s attorney general will set itself up to be in competition with the S.E.C. for tipsters under their respective whistleblower programs. New York may have a few built in advantages. New York’s jurisdiction would be focused on its Wall Street and banking rich state as opposed to the S.E.C that must deal with the whole country.
If enacted, New York’s program would not have the same limitations on bank cases imposed by Dodd-Frank. Federal authorities are often limited on the amount they can offer whistleblowers in bank cases to $1.6 million. U.S. Attorney General Eric Holder has criticized the federal cap.
Also, the S.E.C. has been slow to pay out on the tips it has received. Relatively few awards have been given compared to the thousands of tips, complaints, and referrals it has received since its whistleblower office opened in 2011. The agency did, however, bestow a monster $30 million award on a single overseas tipster last year. But that was the last award it gave out.
Although a number of states have whistleblower programs, none pay the kinds of awards New York’s would. Most state programs are similar to the False Claims Act which aim to discover fraud against the state. New York would go even further and pay awards to tipsters whose information leads to action by the state’s banking and insurance regulator.