UT-Battelle Labor and Employment Law Training - PowerPoint Presentation

UT-Battelle Labor and Employment Law Training Employment Law Update August 13, 2015 – Oak Ridge, Tennessee Kate Scarbrough Nashville, Tennessee (615) 340-3816; kscarbrough@constangy.com

Why an update?

EEOC Enforcement and Litigation Data For Oct. 1, 2013 – Sept. 30, 2014, released Feb. 2015 Lowest number of discrimination charges since 2007, but data is deceptive because EEOC shut down in 10/13 and first quarter filings were 3K-5K less than other quarters Breakdown in Filings: Retaliation charges (42.8%), highest ever – TN @ 39.8% Race (35%), stable from prior years – TN @ 42.3% Harassment in any form (30%) Sex (29.3%), includes pregnancy and sex harassment – TN @ 29.4% Disability (28.6%) – TN @ 26.2% Age (23.2%) – TN @ 18.4% National Origin (10.8%) – TN @ 4.7% Religion (4%/ 2.5% ), Color (3.1%/ 2.5% ), EPA (1.1%/ 1% ), GINA (0.4%/ 0.2% )

EEOC Enforcement EEOC continues to be extremely aggressive in pursing charges and pushing the “legal envelope,” especially with claims involving background checks, sexual stereotyping in hiring, LGBT issues, religious attire, immigrant/migrant workers EEOC OGC filed 133 lawsuits on the merits, up from prior two years, with monetary relief totaling $22.5 million EEOC’s January 2015 Meeting focused on harassment in all forms, not just sex Harassment and retaliation (“the great equalizers”)

Retaliation Claims - Overview Retaliation = taking adverse action against an employee for exercising EEO or other legal rights (such as reporting a complaint or workers’ comp claim, participating in an investigation of a complaint, etc.) Especially dangerous for employers: Can exist even if the underlying claim is without merit. Timing alone can open the door (but not enough to prove) If still employed, any “adverse” action (disciplinary warning, poor job review, additional assignments, etc.) is often seen as “retaliatory” by the employee.

Retaliation Claims – Lessons Learned If an employee exercises any of those “rights”, as a general rule: Be properly responsive under appropriate company policy and procedures. Never single them out for more difficult job assignments, or subject them to a higher performance standard than similarly situated employees, etc. (unless naturally part of their job position). Never impose harsher discipline than others for a similar disciplinary event. Manage those employees as if the protected activity never occurred (but make sure that i’s are dotted and are t’s crossed before any adverse action). Do not engage in any action that could reasonably be seen as “retaliation.” But equally important, never let employees who have complained about discrimination or harassment, etc. hold you “hostage” at work. In other words, continue to manage them! Always have legitimate, nonretaliatory reason(s) for your actions – i.e., actions that would have occurred even if the alleged protected activity had never happened!

Retaliation Changes In Tennessee No more common law claims for causes of action arising after July 1, 2014 (common law allowed for punitive damages; had a lower causation standard) Caps on compensatory damages depending on employer size (but still none on back pay, front pay, interest or equitable relief) No simultaneous state and federal court actions about the same facts (state court must dismiss) Whistleblowers must report wrongdoing to someone other than wrongdoer, possibly outside entity ( Haynes v. Formac Stables, Inc .) No more individual liability for “aiding and abetting”

Independent Contractor Guidance US DOL issued new guidance in July 2015 taking the position that most workers are “employees” and not “independent contractors” The key question according to the DOL is whether “the worker is economically dependent on the employer” (employee) or “in business for him or herself” (independent contractor) Keep in mind: It doesn’t matter what you call them (DOL will look at “realities,” not labels) It doesn’t matter if you’re paying them via 1099 (except that you’ll owe a lot of money to the IRS and SSA if you’re wrong) It doesn’t matter if the I/C is “highly skilled” True I/C are people “with economic independence operating a business on their own.”

Key Questions about Independent Contractors Does the “contractor” perform work that is integral to your business? (Cake decorator example) Can the “contractor” make more (or less) money depending on his or her managerial skills (decisions to hire others, purchase materials and equipment, advertise, rent space, and manage time tables) Employer’s versus worker’s investment: if employer’s investment is significant relative to the investment by the individual, the DOL is likely to find an employment relationship Work performed require special skill and initiative? (custom cabinet maker) Relationship permanent or indefinite (I/C more likely to have contract for definite term) How much control? I/C must have control over meaningful aspects of the work performed Totality of the circumstances

And now for a healthy dose of “real talk” Heather Bussing, author of the HR Examiner blog, says, “It’s all about payroll taxes.” The fed gov’t will collect 3.18 trillion dollars in revenue in 2015 + 57% from income tax + 34% from SS and Medicare payroll deductions = 91% of the federal gov’t’s cash is collected from workers SS and Medicare deductions are held in trust and the gov’t regularly borrows from those income streams Self-employed workers pay less in taxes because they have more deductions and they pay less frequently and less predictably 116 million employees work for companies (2012), versus 10 million self-employed workers 90% of workers have payroll witholdings, thus, represent 90% of the gov’t’s cash flow Source: http://www.hrexaminer.com/why-the-government-wants-companies-to-have-employees/

ADA/ADAAA – Telecommuting as a Reasonable Accommodation EEOC v. Ford Motor Co. [ 6th Cir. , No. 12-2484, 4/10/15)] Issue: Whether the ADA was violated by not allowing an employee with irritable bowel syndrome to telecommute up to 4 days/week. Court : No . (On rehearing, reversed prior 6 th Circuit decision.) Key Language : Plaintiff’s steel resale buyer position was an interactive job requiring on-site presence. Plaintiff was not a “qualified” individual with a disability able to perform all the essential functions of her job with reasonable accommodation because telecommuting would prevent her from meeting the essential job function of regular and predictable presence in the workplace – significantly, “even with the past reasonable accommodations of telecommuting trials and specialized plans to improve her attendance.” ( Note : 8-5 decision w/strong dissent) Lesson : At least so far, absent proof that regular workplace presence isn’t an essential function, courts have almost universally ruled that telecommuting is not a “reasonable accommodation.”

ADA/ADAAA – Telecommuting as a Reasonable Accommodation Lessons Learned To prevail, an employer must be able to show that regular, predictable physical presence in the workplace is “essential.” Ford Motor Co. provides guidance for employers who are increasingly being asked for flexible working arrangements, the ability to work from home, etc., especially with improved technology. Courts tend to defer to an employer’s judgment about physical presence / attendance requirements. Some good news is that even by allowing some telecommuting in specific circumstances (temporary/short-term illnesses or absences, snow days, while traveling, or even with specific job, etc.), employers do not necessarily create a reasonable accommodation “precedent”. Ford Motor Co. : “that fact shouldn't be used as a sword” against the company. Helps counter an increasing tendency for employers to not allow telecommuting for fear of creating “precedent.” But remember – case-specific facts will control, esp. how a company defines a job’s “essential functions” and actually implements attendance and/or physical presence requirements for the job, department or otherwise.

ADA/ADAAA – Reasonable Accommodation Lessons Learned The ADA prohibits discrimination against a “qualified individual with a disability” who can perform the “essential functions” of a job “with or without reasonable accommodation”. Key : The individual must be “qualified” for the job ( i.e ., skills, education, etc. – and attendance is normally a key qualification!) In appropriate cases, requires reasonable accommodation. Employers can and should still hold employees responsible and accountable – but it must be done in the right way ! When a physical or mental condition adversely affects an employee’s performance, attendance or behavior, employers should engage in an “interactive process” with the employee to determine if a reasonable accommodation is appropriate and might work.

ADA/ADAAA – Reasonable Accommodation Lessons Learned Reasonable accommodation may involve altering specific job duties, acquiring or modifying equipment, providing the ability to sit or stand while performing the job, allowing additional break periods, varying a work schedule – anything that is “reasonable” for a particular position and employee to help enable that employee to properly perform the essential functions of the job. What is “reasonable” may vary depending on the job and position. Employers do not have to agree to employee-selected accommodation; rather, just an accommodation that (hopefully) works. A job transfer to another available position for which the individual is qualified to perform can be a reasonable accommodation. Note : Even under the ADAAA there is no requirement to create a new position. A leave of absence or extended leave of absence may be required as a “reasonable accommodation” under the ADA. There’s no magic length of time, as each situation will differ – the key is what’s “reasonable” given that situation. Note : This can especially impact employees who do not timely return from FMLA leave due to their own serious health condition.

ADA/ADAAA – Reasonable Accommodation Lessons Learned Honoring the ADA without conceding “disability” – typical management response to employees who say their unsatisfactory performance, attendance or behavior is being caused by an on-going medical condition : “Judy, I’m sorry you’re having that problem and I hope you’re getting it treated. But we still need to have you ________ [at work on time; not yelling at co-workers/customers; not making these performance mistakes, etc.]” “So let’s talk about what we can do to help make that happen.” Then use the “interactive process” to explore ways to resolve the situation that work around the employee’s limitations while still properly achieving the job’s essential functions. Preferably without even mentioning “disability” or the ADA – and, of course, preferably keeping HR fully informed and part of the process. If it works, great! If not, then you’ve already engaged in “reasonable accommodation” – which is usually all that the ADA and any state law equivalent requires.

Title VII / Pregnancy Discrimination Act Accommodating Pregnant Employees Young v. United Parcel Service [___ U.S. ___ (3/25/15)] Issue: Whether employers must reasonably accommodate pregnant employees. (Similar to ADA reasonable accommodation analysis.) Court : Yes , since under PDA “women affected by pregnancy, childbirth, or related medical conditions shall be treated the same for all employment-related purposes . . . as other persons not so affected but similar in their ability or inability to work.” (6-3 decision vacated 4 th Circuit decision) Key Language : The Court adopted a burden-shifting scheme for discrimination claims based on failure to accommodate pregnancy: Prima facie case – Employee must establish: (1) pregnant or pregnancy-related condition; (2) sought a reasonable accommodation; (3) employer did not accommodate; (4) employer did accommodate others “similar in their ability or inability to work”. Employer must show “legitimate, non-discriminatory reason” for treating the pregnant employee differently. ( Note : Likely quite difficult to do, and the Court gave virtually no practical guidance. The Court also said that the expense or inconvenience of accommodating a pregnant employee was not a legitimate, non-discriminatory reason.) Employee must show “pretext” – (1) a policy imposes significant burden on pregnant employees; and (2) employer’s legitimate, non-discriminatory reasons don’t justify the burden.

Title VII / PDA Accommodating Pregnant Employees Lessons Learned Employers should engage pregnant employees who become limited in their ability to work due to their pregnancy in an “interactive process” similar to ADA reasonable accommodation. Accommodating others “similar in their ability or inability to work” implicates other forms of accommodation under the ADA, workers’ compensation and similar laws. Example: dock worker with 20-lb lifting restriction due to degenerative back disease would be “similar” to pregnant employee with 20-lb lifting restriction. “Pretext” examples included showing how the employer accommodated a large % of non-pregnant employees while accommodating only a small % of pregnant employees; or how accommodation policies do not include pregnancies. Revise employee handbook policies accordingly!

ADEA – Talking Your Way into an Age Discrimination Claim Castelluccio v. IBM , 2014 WL 3696365 (D. Conn. Jul. 23, 2014) Long-time IBM exec filed ADEA (& NY) claims following his demotion and termination Following a 9 day jury trial, jury awarded $999,891.64 back pay and benefits, $999,891.64 liquidated damages, and $500K for emotional distress - AFFIRMED Direct evidence: “You’re old enough to retire, right?” “How old are –” Asked three times about eligibility for retirement Jury instruction: “An inquiry about retirement is not necessarily evidence of age discrimination” Scheick v. Tecumseh Public Schools , 766 F.3d 523 (6 th Cir. 2014) HS principal filed ADEA (& MI) claims after his contract was not renewed (EEOC case) Defendant/Employers initially granted SJ – 6 th Circuit reversed Superintendent’s statements about wanting “someone younger” constituted direct evidence BUT NOT the statement that the Board wanted Pl to retire, because that would require an inference that retirement was a proxy for age Fact issue as to whether age was but-for cause of decision not to renew Never went to trial – offer of judgment in Jan. 2015 for $75K, settlement conf. held in Mar., case settled

Issues in ADEA Cases Whether supervisor statements encouraging “retirement” ( Castelluccio ), “needing “someone younger” ( Scheick ) are direct evidence. Other recent examples: “wanting new blood” or calling employees “old farts” Courts : Yes under these facts. Key Language : Castelluccio – New supervisor made remarks such as “you’re old enough to retire – right?”, then removed him from vp position and marginalized him while repeating similar comments. Scheick – Principal’s contract not renewed because superintendent said they want “someone younger”. Note : Prior statement that Board wanted him to retire not considered “direct evidence” b/c would require inferring “retirement” = “age”.

ADEA – Talking Your Way into an Age Discrimination Claim Lessons Learned Lesson : Once again, words matter – especially by an employee’s direct supervisor and/or the “decision-maker”! But “context” will be controlling with any statement, especially given the ADEA’s higher “but-for” standard of proof. [SCT – Gross v. FBL Financial Svcs. ] ADEA legal standards after Gross In Scheick , the Court explained that the ultimate question (even under McDonnell Douglas ) is whether the evidence taken together “may permit the trier of fact to conclude that the employer unlawfully discriminated.” Id. Thus, even when direct evidence of age discrimination has been offered, the question to be asked in deciding an employer's motion for summary judgment is whether the evidence, taken as a whole and in the light most favorable to plaintiff, is sufficient to permit a rational trier of fact to conclude “that age was the ‘but-for’ cause of the challenged employer decision.” Gross, 557 U.S. at 178, 129 S.Ct. 2343. Gross clarified that the burden of persuasion does not shift to the employer in an ADEA case. But, as this and every other circuit has held, application of the McDonnell Douglas evidentiary framework to prove ADEA claims based on circumstantial evidence remains consistent with Gross. Scheick, citations omitted. Eliminating the shift of burden to the defendant actually resulting in more cases getting to a jury?

ADEA – Talking Your Way into an Age Discrimination Claim Lessons Learned Addressing retirement with “problem” employees: Do not use as a perceived “easy way out” to avoid performance or other needed counseling. Note : Broad-based “early retirement” incentives/programs are normally fine if truly a voluntary option for employees based on legitimate, nondiscriminatory business needs. However, retirement can be a preferred method of separation with “problem” employees in that it allows them a more graceful exit from the company. Key: “Retirement” should be the employee’s idea. If an employee mentions retirement – such as during a counseling or performance review session – it’s fine to respond and direct the employee to the proper person for exploring. But stay on message with the counseling or review, and do not appear too eager or especially encouraging about retirement as a preferred “option.” If written documentation includes the retirement discussion, clarify that it was the employee’s idea. Staying “on message” also infers an on-going business relationship, which further defends against meritless ADEA claims.

Title VII – Religious Accommodation New EEOC Guide to Religious Dress and Grooming Published March 6, 2014 Employer does not have to have specific knowledge of employee’s religious practice Accommodation is required regardless of how recently religious practice was adopted Religious Accommodation/Dress & Grooming: Unless it would be an undue hardship on the employer's operation of its business, an employer must reasonably accommodate an employee's religious beliefs or practices. This applies not only to schedule changes or leave for religious observances, but also to such things as dress or grooming practices that an employee has for religious reasons. These might include, for example, wearing particular head coverings or other religious dress (such as a Jewish yarmulke or a Muslim headscarf), or wearing certain hairstyles or facial hair (such as Rastafarian dreadlocks or Sikh uncut hair and beard). It also includes an employee's observance of a religious prohibition against wearing certain garments (such as pants or miniskirts).

Title VII – EEOC v. Abercrombie If an employment decision is motivated by religion – even if the employer does not actually know the religious need of the individual – then the employer may be liable for religious discrimination or failure to accommodate The sky isn’t falling: employer’s lack of knowledge will usually also be sufficient proof of lack of motivation. Employer can still win if it doesn’t know about the individuals’ religious need, but maybe not if they’re willfully ignorant.

Lessons Learned: You can still find out what you actually need to know Job applicant interviews wearing a yarmulke and you suspect he’s observant and will want Friday nights and Saturdays off. NOT THIS:  “Geez, you look Jewish. Are you? Are you really serious about it?” THIS:  “We are open seven days a week, and we are specifically looking for someone who can work weekends because we are so short-handed then. Can you work Wednesdays through Sundays as your regular schedule?” (Also a crazy idea - ask this of all your applicants.)

Title VII – Religious Accommodation Yeager v. First Energy Generation Corp., 777 F.3d 362 (6 th Cir. 2015) (petition for cert. filed) Fundamentalist Christian applicant was rejected because of refusal to provide Social Security number based on his “sincerely held religious belief” 6 th Circuit upheld district court’s dismissal, reaffirming that Title VII does not require employer to reasonably accommodate if accommodation would violate federal statute (tax law) Case may be headed to Supreme Court

Title VII – Increase in LGBT Claims LGBT Executive Order for Federal Contractors Signed by President on July 21, 2014; effective immediately Amends EO 11478 and 11246 Adds “sexual orientation” and “gender identity” to list of protected categories Employment Non-Discrimination Act next? OFCCP Final Rule published December 3, 2014

Obergefell v. Hodges Holding: The 14 th Amendment requires a state to license a marriage between two people of the same sex and to recognize a marriage between two people of the same sex when their marriage was lawfully licensed and performed out-of-state.

What does Obergefell mean for employers? Maybe not much, depending on what you’re already doing Ensure that benefit plans (health, life insurance, etc.) define “spouse” in accordance with the Court’s ruling Develop a strategy for dealing with “sensitivity” and harassment issues among your employees. Cover sexual orientation, gender identity, and related issues in your training

Facebook: the New Frontier Soaring use of social media to broadcast “sincerely held religious beliefs” or just “express opinions” Gay marriage, Caitlyn Jenner, Confederate Flag, Planned Parenthood, Cecil the Lion It used to be difficult to tell what was in someone’s head (causation, intent). Not anymore. Social media policies may need updating May be a good time for some training Employees should understand they are to treat each other with courtesy and respect and to avoid harassing or discriminatory behavior on any basis

EEOC Filing LGBT Lawsuits EEOC v. Lakeland Eye Clinic, P.A. (M.D. Fla., No. 8:14-cv-2421-T35 AEP filed Sept. 25, 2014). EEOC sued Lakeland Eye Clinic, a Florida-based organization of health care professionals, alleging that it discriminated based on sex in violation of Title VII by firing 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 EEOC's lawsuit alleged the employee performed her duties satisfactorily throughout her employment. However, after she began to present as a woman and informed the clinic she was transgender, Lakeland fired her. On April 9, 2015, the U.S. District Court in Tampa approved an agreement in which Lakeland Eye Clinic will pay $150,000 to settle the lawsuit. Lakeland also agreed to implement a new gender discrimination policy and to provide training to its management and employees regarding transgender/gender stereotype discrimination.

EEOC Filing LGBT Lawsuits EEOC v. R.G. & G.R. Harris Funeral Homes Inc. (E.D. Mich. No. 2:14-cv-13710-SFC-DRG filed Sept. 25, 2014). The EEOC sued Detroit-based R.G. & G.R. Harris Funeral Homes Inc., alleging that it discriminated based on sex in violation of Title VII by firing a Garden City, Mich., funeral director/embalmer 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 lawsuit alleges that an individual had been employed by Harris as a funeral Director/Embalmer since October 2007 and had always adequately performed the duties of that position. In 2013, the worker gave Harris a letter explaining she was undergoing a gender transition from male to female, and would soon start to present (e.g., dress) in appropriate business attire at work, consistent with her gender identity as a woman. Two weeks later, Harris's owner fired the transgender employee, telling her that what she was "proposing to do" was unacceptable. Parties currently embroiled in discovery disputes, including discovery re: sex organs. EEOC is claiming this is irrelevant because the issue is “stereotyping,” not actual gender status.

Title VII – Increase in LGBT Claims Use of gender stereotyping theory and language of sex discrimination in statute ( Price Waterhouse v. Hopkins ) – Tennessee follows this interpretation Gender identity, gender expression EEOC’s strategic enforcement plan published in December 2012 – an agency priority 400 EEOC charges/year on average involving sexual orientation or transgender status 2012 Macy v. Holder – EEOC held Title VII covers transgender discrimination

Title VII – Increase in LGBT Claims Eure v. Sage Corp. (WD TX and Fifth Circuit) Female-to-male transsexual truck-driving instructor – WD TX found the bias alleged was based on transgender status, versus Plaintiff’s failure to conform to traditional gender stereotypes (e.g., looking or acting more like a male) Eure (and her supervisor) petitioned the Fifth Circuit to examine the “inescapable fact” that he would not have encountered the discrimination he’s challenging had he been assigned male at birth Sage founder and VP saw Eure through a glass door and said, “What the hell is that out there?” and “We don’t hire cross-genders in this company.” To the supervisor that hired Eure: “We will deal with you seriously for hiring that.”

Proposed Overtime Rule Released June 30, proposing changes to the executive, administrative, professional, and highly-compensated employee exemptions Key Points Salary test - $455/week ($23,660/year) -> $970/week ($50,440/year) w/an automatic increase every year (40 th % of weekly earnings) Highly-compensated executives - $100K -> $122,148, also w/automatic increases every year No change to duties test (but comments solicited) We’re in the comments period – no action required at this time

Questions? Kate Scarbrough kscarbrough@constangy.com 615-340-3816