Allyn & Fortuna LLP
Nicholas Fortuna, April 21, 2017
On April 6, 2017, Chamber of Commerce for Greater Philadelphia sued the City of Philadelphia to block the implementation of Philadelphia’s Wage Equity Ordinance, due to take effect in May. The Ordinance makes it unlawful for Philadelphia employers to ask about an applicant’s wage and benefit history to determine future wages. The law also prevents employers from retaliating against any candidate who fails to respond to a wage inquiry. This is the first legal action challenging a pay-history act. The action will consider how far governments can go in regulating commercial speech and may set up other cases against pay-history laws around the country.
The Chamber of Commerce asserts that Philadelphia’s ordinance violates the First Amendment of the U.S. Constitution. The action claims that the content-based and speaker-based restrictions on employer speech cannot survive court review.
The Chamber is arguing that the court should use the toughest standard of Constitutional analysis – strict scrutiny – because the limits the ordinance places on the all-important content and speaker communication violates the First Amendment right to free speech. The City will surely take the position that it is commercial speech which is subject to a lower level of review. The level of review chosen by the court will likely determine the outcome of the case.
The Supreme Court has established three approaches to analyze a statute to determine the constitutionality of the law. Strict scrutiny requires a compelling governmental interest that will be served by the legislation to pass muster. If the court applies a strict scrutiny analysis, the act will almost always fail to meet constitutional requirements. Under, intermediate scrutiny, the challenged law must further an important government interest by means that are substantially related to that interest. If the lowest level of review – rational basis – is used, the act usually survives.
The fight in this case will be around what level of review the court should use when considering the Philadelphia ordinance. Again, courts rarely find that any interest is compelling enough to justify a statutory restriction of a fundamental right. A lower level of scrutiny is used in circumstances where the rights effected are not considered as crucial.
Wage history has long been an essential tool in the hiring process. It identifies potential employees that employers can afford and helps formulate appropriate offers to applicants. According to Philadelphia (and other locations with similar laws), wage history should play no part in salary decisions because it only perpetuates gender-based wage disparities. 2015 U.S. Census Bureau data shows that women earn approximately 80 cents for every dollar their male counterparts earn.
Other states and cities with similar laws will likely be watching this case closely as its outcome will affect their validity. Massachusetts became the first place to enact pay-history legislation. New York City Council passed similar legislation which is awaiting the signature of the Mayor.
Paula Lopez, April 11, 2017.
Last week, in McLane Co. Inc. v. Equal Employment Opportunity Commission, the U.S. Supreme Court ruled 7-1 to vacate a U.S. Court of Appeals for the Ninth Circuit’s decision that overturned a district court’s decision to quash subpoenas served by the Equal Employment Opportunity Commission (“EEOC”) in the course of investigating a sex discrimination charge filed by a terminated employee. The Court held that the Ninth Circuit had erred in applying “de novo” review, a more searching form of review, instead of the more deferential “abuse of discretion” standard of review followed by all other circuits, in overturning the District Court’s decision not to enforce the subpoenas.
McLane involved an EEOC investigation into a charge filed by Damiana Ochoa with the agency, claiming sex discrimination based on her termination after returning from maternity leave because she was subjected to a mandatory physical evaluation, which she failed three times. McLane defended its decision to terminate Ochoa on the basis that the position requires her to lift, pack and move large product bins, and a physical evaluation testing range of motion, resistance and speed is required of all new employees and those returning from medical leave in such positions.
As part of the EEOC’s initial investigation into Ochoa’s claim, McLane provided the EEOC with information about the physical evaluation test and the employees who had been required to take the test. Specifically, McLane provided a list of anonymous employees, their gender, role in the company, reason they had been asked to take the test, and their evaluation scores. However, the employer refused to provide the “pedigree information” requested by the EEOC, consisting of the individuals’ names, social security numbers, last known addresses, and telephone numbers.
The EEOC then expanded the scope of its investigation when it learned that McLane used the physical evaluation nationwide and not just in Arizona, where Ochoa worked. EEOC’s new investigation covered McLane’s nationwide operations and also sought information into possible age discrimination by the company. The EEOC issued subpoenas seeking “pedigree information” for its broadened investigation, with which McLane refused to comply. The EEOC sought to enforce the subpoenas in court.
The U.S. District Court in Arizona quashed the subpoenas (refused to enforce them), holding that the information they sought was not relevant to Ochoa’s individual claim, and “an individual’s name, or even an interview he or she could provide if contacted, simply could not shed light on whether the [evaluation] represents a tool of …discrimination.”
The EEOC appealed the District Court’s decision to the Ninth Circuit Court of Appeals. The Ninth Circuit followed circuit precedent in reviewing the lower court’s decision de novo, and after doing so, held that the District Court erred in finding that the pedigree information was irrelevant. The Ninth Circuit questioned the appropriateness of applying de novo review to issues related to the enforcement of subpoenas, when the other circuits applied the more deferential abuse of discretion standard.
The U.S. Supreme Court agreed to hear the appeal and ruled that a district court’s decision whether to enforce or quash an EEOC subpoena should be reviewed for abuse of discretion and not de novo. The Court based its decision on longstanding appellate practice to review district court decisions related to the enforcement of subpoenas for abuse of discretion. The Court did not rely only on cases involving subpoenas under Title VII but also administrative subpoenas issued under the NLRA, which predated Title VII’s subpoena enforcement powers by thirty years and was the predicate for amending Title VII to authorize the EEOC to issue subpoenas.
The Court also found that “basic principles of institutional capacity” favor the more deferential abuse of discretion standard of review because the district court must conduct a case-specific inquiry in deciding whether to enforce or quash subpoenas. The district court must look at whether the evidence sought by the subpoena is relevant to the specific charge or whether the subpoena is unduly burdensome under the circumstances. Such an analysis is often “fact-intensive” and does not turn on a “neat set of legal rules” that would warrant de novo review. The Supreme Court also supported its decision to apply the abuse of discretion standard by noting that district courts, as opposed to appellate courts, have the experience in making similar relevancy decisions, such as deciding whether evidence is relevant for admissibility at trial or the reasonableness of pre-trial criminal subpoenas. The deferential review would streamline the appellate process by not having the court of appeals re-weigh evidence and re-consider facts already reviewed and considered by the district court.
Justice Ginsburg, while agreeing that the abuse of discretion standard should normally apply in such cases, nevertheless dissented with the decision to vacate the Ninth Circuit’s ruling, because she found the District Court’s decision erroneous as a matter of law because it called on the EEOC to show more than relevance in support of enforcing the subpoenas.
In reaching its decision, the Supreme Court rejected arguments that the district court should defer to the EEOC’s determination on whether information sought through the subpoena is relevant, finding that the district court can make its own relevancy determination while remaining “cognizant of the agency’s broad authority to seek and obtain evidence.” The Court’s ruling brings the Ninth Circuit in line with its sister circuits. The case will return to the Ninth Circuit so it can review the District Court’s decision under the more deferential abuse of discretion standard. The practical impact of the Court’s decision to McLane and similar cases is that the losing party in a proceeding to enforce or quash an EEOC subpoena will find it very difficult to have the decision reversed on appeal.
By: Megan J. Muoio, April 3, 2017
On March 27, 2017, a three-judge panel of the United States Court of Appeals for the Second Circuit decided the case of Christiansen v. Omnicom Group, Inc., an appeal from the United States District Court for the Southern District of New York. The Second Circuit reinstated the plaintiff’s claim for gender stereotyping under Title VII of the Civil Rights Act of 1964, but declined to overturn earlier precedent about sexual orientation discrimination under Title VII. A strong concurrence by two of the three judges hints that the Second Circuit may be evolving on this issue and may reconsider its earlier jurisprudence on this issue in an en banc review of this case.
Plaintiff Matthew Christiansen worked as an associate creative director and director at DDB Worldwide Communications Group, an advertising agency that is a subsidiary of Omnicom Group, Inc. Christiansen is an openly gay man who is HIV-positive, although his employer was not aware of his HIV status. Over a period of three years, his supervisor engaged in a pattern of harassment against him, which included sexually suggestive drawings of Christiansen posted in public places in the office and humiliating comments. Many of the drawings and comments concerned Christiansen’s alleged effeminacy or depicted him dressed as a woman.
Christiansen filed a complaint with the Equal Employment Opportunity Commission (EEOC) and commenced an action in the District Court after receiving a Notice of Right to Sue from the EEOC. Christiansen’s complaint alleged that he was discriminated against on the basis of sex under Title VII. The District Court granted Omnicom’s motion to dismiss Christiansen’s complaint and agreed with Omnicom’s argument that Christiansen’s claim was one for sexual orientation discrimination and not sex based discrimination. (Sexual orientation is not a protected class under Title VII.)
The Second Circuit reversed, holding that Christiansen did state a cognizable claim under Title VII by identifying multiple instances of gender stereotyping discrimination, specifically those instances that depicted Christiansen as effeminate or as a woman. The decision acknowledged that the Second Circuit’s earlier decisions in Simonton v. Runyon and Dawson v. Bumble & Bumble prohibited a plaintiff with a sexual orientation claim from using gender stereotyping to “bootstrap” a claim under Title VII. The Court stated that only an en banc panel of the Second Circuit could revisit the Simonton and Dawson decisions.
In a concurring opinion, Chief Judge Robert A. Katzmann and Judge Margo K. Brodie explicitly asked the full Court to reconsider Simonton and Dawson in light of the changing legal landscape since those decisions. In recent years, the EEOC has taken the position that sexual orientation discrimination is discrimination based on sex. The concurring judges urged the Second Circuit to reexamine its jurisprudence in this area based on three arguments.
First, sexual orientation discrimination is sexual discrimination because it treats similarly-situated people differently solely because of their sex. The concurring judges cite the example of an employee who is suspended for displaying a photo of their female spouse on their desk: if the employee is a lesbian, she can claim that she was suspended on the basis of her sex because her employer would not have taken the same action if she was male. The standard is whether an employee would have been treated differently but for the employee’s sex.
The second argument is that sexual orientation discrimination is associational sex discrimination under Title VII. The Second Circuit has held that it is a violation of Title VII for an employer to take action against an employee because of that employee’s association with a person of another race. The concurring judges would apply this “associational theory” to sex discrimination. If an LGBT employee shows that they would not have been discriminated against by their employer but for their association with someone of the same sex, the concurring judges would find a claim for sex discrimination under Title VII.
Finally, the concurring judges would expand the gender stereotyping category to find that discrimination on the basis of sexual orientation is sex discrimination because so much of sexual orientation discrimination is “motivated by a desire to enforce heterosexually defined gender norms…and the proper roles of men and women.” Because the line between gender stereotyping and sexual orientation discrimination is blurry and unworkable, the concurring judges would revisit Simonton and Dawson and hold that all sexual orientation discrimination involves gender stereotyping and therefore would be discrimination on the basis of sex under Title VII.
It remains to be seen whether an en banc panel of the Second Circuit will consider the Christiansen case. If it does, there is a very strong possibility that the Second Circuit will redefine Title VII sex discrimination.
Nicholas Fortuna, March 24, 2017
On March 21, 2017, the U.S. Supreme Court ruled that the National Labor Relations Board’s (NLRB) former acting general counsel, Lafe Solomon, served in violation of the Federal Vacancies Reform Act (FVRA) when he continued in that position after President Barack Obama nominated him for a full term as General Counsel. The decision in NLRB v. SW General, Inc. invalidated the almost three-year period that Solomon served as acting general counsel while his nomination languished.
Article II of the Constitution requires that the President obtain “the Advice and Consent of the Senate” before appointing “Officers of the United States.” As a result, the responsibilities of an office requiring Presidential appointment and Senate confirmation may go unperformed if a vacancy arises and the President’s appointments are not promptly confirmed. Congress has accounted for this circumstance by authorizing the President to direct certain officials to temporarily carry out the duties of a vacant office without Senate confirmation.
The FRVA grants the President limited authority to appoint acting officials to temporarily perform the functions of a vacant office without first obtaining required Senate approval under Article II of the Constitution. The FVRA prohibits persons from serving as acting officers if the President has nominated them to fill the vacant office permanently.
In June 2010, the NLRB’s general counsel, who had previously been confirmed by the Senate, resigned. President Obama directed Solomon to serve temporarily as acting general counsel, citing the FRVA as the basis for the appointment. On January 5, 2011, the President nominated Solomon to serve as NLRB’s general counsel, but the Senate did not act on the nomination.
SW General argued that the unfair labor practice complaint filed against it under Solomon was invalid because under the FRVA, Solomon could not legally perform those duties. The D.C. Circuit Court of Appeals agreed with SW General, Inc. and the Supreme Court affirmed the D.C Circuit Court’s opinion.
The Court concluded by a 6-2 vote that the nomination rendered Solomon ineligible to serve in acting status under the FRVA. Writing for the majority, Chief Justice Roberts wrote “applying the FRVA to this case is straightforward,” and concluded that once President Obama submitted Solomon’s nomination to the Senate to fill the general counsel position, the FRVA prohibited Solomon from continuing in the acting general counsel role.
The consequence of this decision was not addressed by the Supreme Court. The D.C. Circuit Court, however, opined that the actions of Solomon are voidable not necessarily void. Another possible approach could be that the current general counsel, Richard Griffin, an appointee of President Obama and philosophical ally of Solomon, could attempt to ratify all decisions made by his office during the period in question.
The Court’s ruling will certainly have an impact on the current President, who faces the daunting task of filling a multitude of positions that are either already vacant or will become vacant as Obama’s appointees transition out. The option of naming someone as acting until they are confirmed by the Senate is now not available to the current administration.
Diana Uhimov, March 16, 2017
The Equal Employment Opportunity Commission (EEOC) recently issued proposed guidance on workplace harassment. The EEOC is a federal agency charged with enforcing laws that protect individuals from harassment based on race, color, religion, sex, national origin, disability, age, or genetic information. The Proposed Enforcement Guidance on Unlawful Harassment clarifies the legal standards that apply to harassment claims under federal employment discrimination laws. In its press release accompanying the issuance of the proposed guidance, the EEOC stated that the new direction is essential because of the increase in harassment claims filed over the past several years, making harassment prevention one of its national priorities. According to the EEOC, between 2012 and 2015, the percentage of annual private sector charges that included an allegation of harassment increased from approximately 25% of all charges to over 30% of all charges.
The proposed guidance encourages employers to be actively involved in preventing workplace harassment by creating programs to eliminate known or obvious risks of harassment. Under the EEOC’s instrutions, employers who fail to be proactive in eliminating such risks may be subject to forfeiture of established affirmative defenses to harassment claims such as, the Faragher/Ellerth defense that the employer exercised reasonable care to prevent and promptly correct the harassment. This reaffirms the EEOC’s stance that employers have a duty to curtail conduct before it becomes actionable harassment to prevent escalation that could lead to a legal claim.
The section of the proposed guidance titled “Promising Practices” lists five core principles that the EEOC states have generally proven effective in preventing and addressing harassment:
- Committed and engaged leadership
- Consistent and demonstrated accountability
- Strong and comprehensive harassment policies
- Trusted and accessible complaint procedures
- Regular, interactive training tailored to the audience and organization
While it is important to recognize that these practices are not themselves affirmative defenses to harassment claims, implementing them would put an employer in a better position to rely on the Faragher/Ellerth defense to refute a harassment claim. In order benefit from this affirmative defense, the proposed guidance urges employers to ensure that:
- Management is committed to maintaining a corporate culture where harassment is not tolerated.
- There is a clear and comprehensive anti-harassment policy in effect that is regularly communicated to all employees and strictly enforced.
- An effective, confidential and readily accessible complaint system is in place with an objective investigation and resolution process performed by well-trained employee.
- Harassment training to educate all employees on prohibited conduct, policies, and procedures is conducted regularly.
Harassment is covered by the EEOC only if it is based on an employee’s legally protected personal characteristics. The types of prohibited harassment have been expanded by the proposed guidance beyond the traditional Title VII prohibitions against harassment on the basis of race, color, national origin, religion, sex, age, and disability. Actions under the proposed guidance may be based on a wider range of conduct such as, sex stereotyping, sexual orientation, gender identity, genetic information, and pregnancy. Furthermore, the EEOC has declared that it will consider harassment claims:
- Based on the perception that an individual is part of a protected class (even if the perception is incorrect).
- For “associational harassment” against a complainant because he or she associates with individuals outside the complainant’s protected class.
- Where the alleged harassment was not directed at the complainant.
- Where the alleged harassment occurred outside of the workplace in a work-related context.
Although the proposed enforcement guidance will not have the effect of statutory or regulatory authority, it provides insight into how the EEOC will likely handle administrative complaints filed with the agency. Employers should use the issuance of the proposed guidance as an opportunity to review their anti-harassment policies and complaint procedures, together with their employee training offerings.