Will Federal Courts Review the EEOC Conciliation Process?

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Federal law authorizes the Equal Employment Opportunity Commission (EEOC) to investigate claims of workplace discrimination and, in some instances, to sue an employer to rectify allegedly on-going discriminatory conduct.  Before the EEOC may sue an employer: (1) an employee must file a charge with the EEOC; (2) the EEOC must find reasonable cause for the charge; and (3) the EEOC must attempt informal conciliation with the employer to eliminate the unlawful discrimination. The EEOC may sue an employer only if a conciliation agreement suitable to the EEOC cannot be reached.

But what if an employer believes the EEOC has not fairly attempted conciliation? May the employer request a federal court to review the EEOC’s conciliation efforts? The United States Supreme Court recently addressed this question in Mach Mining v. Equal Employment Opportunity Comm’n. In Mach Mining, a female employee filed a claim with the EEOC alleging sex-based discrimination. The EEOC found reasonable cause for the claim and sent Mach Mining a letter inviting both the employer and employee to participate in informal dispute resolution. What happened next is not clear, but about one year later, the EEOC sent a second letter to Mach Mining stating that further conciliation efforts would be futile. The EEOC then sued. Mach Mining believed the EEOC failed to conciliate in good faith and asked a federal court to pass judgment on the reasonableness of the EEOC’s conciliation efforts.

According to the Supreme Court in Mach Mining, federal courts have little leeway to review the EEOC’s conciliation efforts. Indeed, the only review a federal court may conduct is to ensure the EEOC communicated with the employer about the unlawful discrimination, and that the EEOC contacted the employer to give it an opportunity to remedy the discriminatory practice. Outside of this barebones review, the EEOC has expansive discretion to decide how to conduct conciliation efforts and when to end them.

What does this mean for employers? Employers should be receptive to the requests and demands of the EEOC during the administrative (pre-litigation) process but also insist, during the administrative process, that the EEOC comply with its obligations of giving notice and an opportunity to address the allegedly discriminatory conduct as the employer’s ability to raise the issue later is severely diminished.

Michael Lambert is an associate attorney with GableGotwals who practices in the area of state and federal litigation.

Employer Found to Have Violated Consent Decree; Ordered to Pay EEOC’s Attorney Fees

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The EEOC recently announced that it was awarded nearly half a million dollars in attorney fees after a court found that an employer (the Jewel-Osco grocery store chain) violated a consent decree. See http://www.eeoc.gov/eeoc/newsroom/release/3-6-15.cfm.

The EEOC is not ordinarily allowed to recover attorney fees, even after successfully litigating a claim against an employer.  In this case, the agency was able to recover fees because the court found that the employer was in contempt of the consent decree.

Jewel-Osco had entered into a consent decree that required it to reasonably accommodate employees who were returning from a disability leave.  The court found that the employer violated the decree because two employees were fired and one was forced to resign after going on leave, when Jewel-Osco could have offered low-cost accommodations that would have allowed the employees to return to work.  The court awarded the employees over $80,000 in back pay and allowed the agency to recover $400,000 in fees and costs.

The moral of the story is that, if an employer enters into a consent decree, it must take precautions to ensure compliance with the decree.  Consultation with experienced labor and employment counsel can ensure that compliance.

Is Compensation Owed for All Employer-Required Activities?

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     An employer requires a large number of its employees to spend (on average) between two and two and one-half hours per week performing certain activities prior to leaving the employer’s jobsite. The employees’ demand for compensation (and presumably overtime compensation) for the time expended is denied by the employer. The question presented to and answered by the U.S. Supreme Court is “whether the employees’ time spent waiting to [perform and performing the required activities] is compensable under the Fair Labor Standards Act” of 1938 (“FLSA”) as amended by the Portal-to-Portal Act of 1947.

     According to the employees, the preceding short synopsis contains all the facts needed in order to sustain a finding that compensation is due. The Ninth Circuit Court of Appeals agreed. However, the District Court and the Supreme Court disagreed with the employees. The Supreme Court stated that post-shift activities are compensable if (1) the activities are necessary to the principal work the employees perform for the employer and (2) done for the benefit of the employer. In establishing that two-part test, the Court rejected the employees’ argument that the time should be compensable simply because the activity they were required to perform was required by and benefitted the employer. Instead, the Court focused on what tasks the employees were hired to do and what was required of them after their shifts ended.

     In the case, Integrity Staffing Solutions Inc., et al. v. Busk, — U.S. — (December 9, 2014) the employees were hired by Integrity Staffing to work at a warehouse and fulfill orders for Amazon.com customers by retrieving products from shelves and packaging the products for delivery. At the end of the shift, warehouse employees were required to undergo security screenings (similar to airport screenings) for the sole purpose of preventing employee theft. The time expended in going through the security screenings amounted to roughly 25 minutes per day.

     Integrity Staffing and the employees agreed that the security screenings were not “principal activities” – meaning the security screenings were not part of work the employees were hired to perform. Given that agreement, compensation would be owed to the employees only if the security screenings were an “integral and indispensable part of the” activities for which the employees were hired. The Court said “integral and indispensable” activities are those: (1) which are “intrinsic elements” of the activities the employees were hired to perform and (2) with which the employee cannot dispense (either because of personal safety or productivity) in order to complete the work the employee was hired to perform.

     In support of its decision, the Court cited two examples of pre- or post-shift activities for which compensation was owed and two examples of pre- or post-shift activities for which compensation could be denied. Compensation was owed to employees of a battery plant for the time spent showering after the conclusion of their shifts as the chemical residue was “toxic to human beings.” Compensation was also owed to meatpacker employees who, before their shifts began, honed their knives since dull knives would slow down production, affect the appearance of the meat, cause waste and potentially lead to accidents.

     Compensation was not owed to poultry plant employees for the time spent donning protective gear since that time was “two steps removed from the productive activity on the assembly line.” The Court also cited regulations passed by the Department of Labor (“DOL”) which explained that time spent waiting to check in or check out of work as well as time waiting in line to do so was not compensable.

     Finally, the Court cited a 1951 DOL Opinion Letter regarding a pre-shift safety search of employees of a rocket-powder plant for any device that could cause a spark and a post-shift search of the same employees for the purposes of preventing theft. That Opinion Letter had concluded that neither activity involved compensable time.

     The Court reasoned that allowing the employees to satisfy the test by arguing the activity was required by the employer would convert all activities required by an employer into “principal activities” in contravention of the amendments to the FLSA enacted by the Portal-to-Portal Act of 1947. The Court also found a test which turns on whether the activity benefits the employer is overbroad.

     Finally, the Court rejected the contention that the time should be compensable since the employer could reduce the amount of time spent at the security screenings to a de minimis amount by staggering the times shifts end or hiring additional screeners. The Court stated these were arguments the employees should present to Integrity Staffing at the bargaining table.

     Thus, the Court concluded that none of the employees in the putative class were entitled to compensation for the two to two and one-half hours per week spent waiting in line for the post-shift security screenings.

Accommodation of Sincerely Held Religious Beliefs

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     Several years ago a young woman wearing a black hijab applied for a retail job at a national chain in a Tulsa mall. The retailer, which caters to the young and fashionable, has a strict dress code which prohibits, among other things, the wearing of “caps” and black clothing. After in-person interviews and multiple discussions at several levels of the company, the retailer determined that the young woman would not be hired for the sales floor job. The reason driving the hiring decision was the Hijab.

     The Equal Employment Opportunity Commission (“EEOC”) sued the retailer on behalf of the young woman. The retailer vigorously defended its hiring decision. After conducting discovery, the parties both filed motions with the Court that asked the Court to rule, as a matter of law, in their favor. The EEOC convinced the trial judge that the retailer violated Title VII’s prohibition against discrimination based on religion by refusing to hire the young woman. The retailer appealed.

     In a lengthy decision, the Tenth Circuit Court of Appeals reversed the trial court but did not send the case back to the trial court for a trial on the merits. Rather, in a decision filed October 1, 2013, the Court entered judgment in favor of the retailer. Central to the majority’s decision was the fact that the young woman never told the retailer that she was wearing the Hijab for religious reasons. The appellate court also relied on the EEOC’s expert witness’s testimony that “although some Muslim women wear hijabs for religious reasons, those are not the only reasons that Muslim women wear hijabs; for example, some do so for cultural reasons or in order to demonstrate a personal rejection of certain aspects of Western-style dress.” The EEOC’s witness also “testified that, in understanding the reasons why people maintain certain styles of dress … the question is, what is their motivation.” Thus, the Court concluded that because “Title VII’s conception of religion as a uniquely personal and individual matter,” it is up to an individual to notify his or her employer (or potential employer) of a closely held religious belief that needs to be accommodated.

     On October 1, 2014, the United States Supreme Court decided to hear the EEOC’s appeal of the Tenth Circuit’s decision. It will be interesting to see if the Supreme Court’s decision favors the EEOC’s position or the Circuit Court’s. A quick survey of the internet shows the pundits’ opinions are clearly split. One can only hope that the Court provides clear guidance to assist employers in negotiating the tension that might exist between an employee’s or applicant’s religious beliefs and the employer’s dress code. Does a hiring employer need to observe an employee’s manner of dress (whether it is a Hijab; a cross; a woman wearing a skirt and not slacks; or a man’s facial hair), determine that the manner of dress is necessitated by the applicant’s closely held religious belief and then accommodate that belief? If it is up to the employer to guess as to the nature and extent of an employee’s personal religious belief, employers need to beef up their research into the various recognized religions (obscure or not) and education of hiring managers so that they are not subject to a Title VII religious discrimination claim when a Pastafarian applicant appears for an interview wearing a spaghetti strainer on her head (http://www.venganza.org/) or something equally authentic but far from the mainstream.

Employment Law Posters to be Displayed in the Workplace – Some New and Some Old

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When the Oklahoma legislature revamped Oklahoma’s anti-discrimination laws in mid-2013, one of the new requirements imposed (and enforced by the Oklahoma Attorney General’s Office of Civil Rights’ Enforcement) was a requirement that all Oklahoma employers display a poster explaining Oklahoma’s prohibition on discrimination in employment because of “race, color, religion, national origin, disability, age, sex or genetic information.” A copy of the required poster can be found here: (http://www.ok.gov/oag/documents/OCRE%20workplace%20poster%207212014.pdf). Unlike Federal law which applies only to employers of certain sizes (for example, Title VII applies to employers with more than 15 employees), the Oklahoma law applies to all Oklahoma employers without regard to the number of people employed. Since many Oklahoma employers appear unaware of the new state-law posting requirement, a quick review of the posters generally required by Federal and State law was developed.

By 2014, most if not all private employers are used to displaying the federally required “EEO is the Law” poster (http://www1.eeoc.gov/employers/upload/eeoc_self_print_poster.pdf), the minimum wage poster (http://www.dol.gov/whd/regs/compliance/posters/minwagep.pdf) and the Family and Medical Leave Act poster. The first poster informs employees of their federal right to employment free of discrimination based on race, color, religion, sex, national origin, disability, age and genetics. The first poster also explains the federal prohibition against retaliation based upon the exercise of an employee’s protected right and informs employees of the enforcement mechanism. The second poster informs employees of the federal minimum wage (currently $7.25 per hour), overtime requirements and a mechanism to lodge an official complaint against their employer. The third poster informs certain employees of their right to take up to twelve (12) weeks of unpaid leave under specified circumstances.

Private employers may also be required, under Federal Law, to display posters informing employees of their rights under the Employee Polygraph Protection Act (http://www.dol.gov/whd/regs/compliance/posters/eppa.htm). Another posting requirement is promulgated by OSHA and relates to “Job Safety and Health” (https://www.osha.gov/Publications/poster.html). Employers must also display a poster informing covered employees of their rights under the Uniformed Services Employment and Reemployment Rights Act (“USSERRA”) (http://www.dol.gov/vets/programs/userra/USERRA_Private.pdf). There are several other poster requirements under Federal Law that may or may not be applicable to a particular employment situation. The Federal Department of Labor has a helpful tool to navigate the federal posting requirements, a link to which can be found here: http://www.dol.gov/elaws/posters.htm.

In addition to the requirements of Federal Law, Oklahoma law requires private employers to display additional information for employees. Those topics include:

• Unemployment Insurance (http://www.ok.gov/oesc_web/documents/OES-44_rev_6-10.pdf)
• Oklahoma Minimum Wage (http://www.ok.gov/odol/documents/WHMWPosterPlainLanguage.pdf)
• Anti-Discrimination Notice (a link is found above)
• Child Labor Law (http://www.ok.gov/odol/documents/ChildLaborPoster.pdf)
• Workers’ Compensation (http://ok.gov/wcc/documents/CC-Form_1A_2-1-14(1).pdf)

Oklahoma has two on-line tools to assist employers, too. The links are found here: http://www.ok.gov/oesc_web/Services/Workforce_Services/Labor_Law_Posters.html and http://www.ok.gov/odol/Workforce_Protection/Wage_and_Hour_Services/Workplace_Posters/.

Failure to comply with the posting requirements can result in the assessment of monetary penalties among other sanctions.

EEOC Issues New Guidance on Pregnancy Discrimination

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On July 14, 2014, the Equal Employment Opportunity Commission (EEOC) issued Enforcement Guidance on Pregnancy Discrimination and Related Issues, along with a question and answer sheet and a Fact Sheet for Small Businesses. The Enforcement Guidance, Q&A document, and Fact Sheet are available on the EEOC’s website. This is the first comprehensive update of the EEOC’s guidance on pregnancy discrimination since 1983. In addition to addressing the requirements of the Pregnancy Discrimination Act (PDA), the guidance also addresses the Americans with Disabilities Act (ADA) as it relates to individuals with pregnancy-related disabilities.

Much of the analysis in the enforcement guidance is an update of long-standing EEOC policy. The guidance sets out the PDA requirements that an employer may not discriminate against an employee on the basis of pregnancy, childbirth, or related medical conditions; and that women affected by pregnancy, childbirth or related medical conditions must be treated the same as other persons in similar circumstances. The guidance also explains how the ADA’s definition of “disability” might apply to workers with impairments related to pregnancy. Among other things, the guidance discusses:

• That the PDA covers not only current pregnancy, but discrimination based on past pregnancy and a woman’s potential to become pregnant;

• Lactation as a covered pregnancy-related medical condition;

• The circumstances under which employers may have to provide light duty for pregnant workers;

• Leaves for pregnancy and for medical conditions related to pregnancy;

• That employers may not require pregnant workers who are able to do their jobs to take leave;

• Parental leave (distinct from leave associated with childbearing or recovering from childbirth) must be provided to similarly situated men and women on the same terms;

• When employers may be required to provide a reasonable accommodation to workers with pregnancy-related impairments under the ADA and the types of accommodations that may be necessary; and

• Best practices for employers to avoid unlawful discrimination against pregnant workers.

For employers, it may be a good time to review policies related to pregnancy and leaves related to pregnancy to ensure compliance with applicable regulations.

Employers: You Can Manage the Affordable Care Act Without Cutting Employees’ Hours

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The Affordable Care Act (“ACA”) gives many Americans the opportunity to buy health insurance without facing limitations on preexisting conditions or lifetime benefits. It also requires large employers — which employ fifty full time equivalent workers — to offer a health plan to employees who work an average of thirty hours or more. This is called the “Employer Mandate.”

The Employer Mandate has had a significant consequence: Some employers are cutting employees’ hours to avoid the mandate. Large employers are not required to offer healthcare to employees who work less than an average of thirty hours. Some employers are aggressively cutting hours, which deprives workers of a significant part of their income and forces them to buy insurance out of their own pocket.

A client’s son held a steady job for many years. To avoid the Employer Mandate, his employer cut his work schedule to 28 hours a week. The son still did not have health insurance and lost a quarter of his income. He was forced to quit his long-time job, move in with his mother, and take another job.

The transition to part-time workers is a significant problem for the American economy — and should not happen. The little-known reality is that it does not need to happen.

Large employers, which can afford to offer reasonably-priced healthcare to their employees, should offer it. Some employers, however, simply cannot — or will not — offer healthcare to all workers. Retail stores, convenience stores, restaurants, etc., would go broke if they offered healthcare to their employees. Other employers face significant dilemmas because they are being forced to offer healthcare services that are repugnant to the owners.

There is another way — a way that protects employers and employees from the ACA’s penalty taxes without extending coverage to workers. Here is an outline of the way to comply with the law without covering additional workers:

1.Bare Minimum Plan. Establish an employer-funded, “Bare Minimum,” health plan. The Bare Minimum plan does not need to include all the bells and whistles that a health insurance policy must include. It does not need to offer coverage to the employee’s entire family; it can exclude spouses and children over the age of 26. It does need to provide coverage for fundamental benefits such as hospitalizations, physician services, lab work, diagnostic tests, and drugs.

A Bare Minimum Plan should not be attractive or easy to use. One approach would be to use one benefit schedule for in-network providers, and less-generous schedule for providers that are out of network. The plan should include reasonable providers in the network but does not need to include the most popular or most-accessible providers.

2.Provide the lowest permitted value. The Administration has done a good job helping employers know whether their plans provide the “minimum value” required by law. The plan could provide the minimum value that passes the Administration’s test. In general, this would permit about a $6,000 annual deductible.

3.Charge the highest premium permitted by law. The law requires employers to make their plan’s “affordable.” To satisfy this requirement, a plan can charge a premium of 9.5% of total family income — and this is just for the employee’s coverage.

To be on the safe side, you could tell employees that the premium will be 9% of the husband’s and wife’s total income — and require the employee to prove what the income is.

You could charge an additional “COBRA” premium for each child who is covered by the plan.

No sane person would pay 9% of family income for a Bare Minimum Plan.

4.Offer the Plan. You should make a written offer of the plan to each employee who works close to thirty hours per week or more. If you do not want to go through the painful recordkeeping required to determine who works an average of thirty hours, you may want to err on the safe side by offering everyone who works, say, twenty hours per week or more, the opportunity to have coverage — and to determine later whether he/she actually works thirty hours per week.

5.How does the program work? If you really offer the plan to your over-thirty hour employees, you should have complied with the law — and should not owe the employer’s penalty tax.

Since you charge the employee a premium of more than 8% of the family’s income, the employee should be exempt from the obligation to buy coverage on the Exchange or to pay a penalty tax.

Employees, who are not currently covered by your health plan, should be in the same situation as they are today: they should have a job that pays a living wage but they do not have health insurance or a legal obligation to buy it.
Employees could buy insurance on the Exchange, but might not be eligible for some of the ACA premium subsidies.
6.Educate your employees. In all likelihood, they will be able to get better and cheaper coverage on the Exchange. However, since you are charging more than 8% of family income, even if the employee does not get coverage, the employee should be exempt from the “penalty tax.” Remember: only an idiot would take your lousy and costly coverage.

7.Consider alternatives. You could offer an “indemnity” insurance plan that is exempt from many of the ACA’s rules and covers some of your employees. A self-funded indemnity plan would need to cover most employees who work over 35 hours per week (and probably 30 hours per week after new regulations are issued). An indemnity plan comes with a whole set of legal and tax issues, so you should get professional advice before you adopt such a plan.

8.Watch out for discrimination. The ACA prohibits employers from offering a nice insurance package to highly-compensated workers and a bad insurance package to other workers. If you have a nice policy for some employees, you should consult with a specialist to determine whether the other workers must be covered by your nice policy — or whether the law exempts the other workers from coverage.

The “discrimination rule” currently applies to self-funded plans, but it will apply to insured plans later. The new discrimination regulations have not been written, so stay tuned for future developments.
If you cannot afford to insure all of your workers — or if, for some reason, you simply will not do so — at least you should consider the law’s alternatives that would let your workers continue to receive a living wage.

© David B. McKinney, 2014. David B. McKinney is listed in Best Lawyers in America for Employee Benefits and Health Care. This article is a general educational summary. It is not legal advice and does not create an attorney-client relationship with any reader.

Oklahoma Supreme Court Upholds New Discrimination Damages Caps as Constitutional

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In late February 2014, the Oklahoma Supreme Court, in MacDonald v. Integris Health, 2014 OK 10, upheld November 2011 amendments to the Oklahoma Anti-Discrimination Act (OADA), which abrogated common law remedies for victims of status-based employment discrimination and established exclusive statutory remedies in their place.

In MacDonald, the plaintiff alleged her employer terminated her because of her gender and age in May 2012 (after the effective date of the amendments), in violation of federal and state law. She claimed that she was entitled not only to the remedies available under the ADEA and Title VII, but also the full range of normal tort damages under Oklahoma common law for a “public policy” wrongful discharge. Anticipating that the employer would raise the OADA’s recently enacted exclusive remedial scheme as a defense, the MacDonald plaintiff alleged that the scheme was unconstitutional as a “special law” under Article V, Sections 46 and 59 of the Oklahoma Constitution.

In addressing whether the OADA’s abrogation of common law remedies and imposition of damages caps was constitutional, the Oklahoma Supreme Court noted that the state’s public policy against discrimination is established by the OADA. Accordingly, the Court found, the state legislature would act within its power to create limited statutory remedies to vindicate this public policy as long as (i) it treats all victims of status-based discrimination uniformly, and (ii) the statutory remedies are sufficient to protect Oklahoma’s public policy. The Court found that the legislative amendments to the OADA do treat all victims of status-based discrimination (defined as race, color, religion, sex, national origin, age, disability, or genetic information) the same by providing the same remedies to each. The Court further found that the amendments, which allow for injunctions against unlawful practices, reinstatement to employment, back pay and liquidated damages, provide an “adequate remedy” sufficient to vindicate Oklahoma’s public policy. Therefore, the Court found, the amendments do not violate Article V, Sections 46 and 59 of the Oklahoma Constitution.

This is certainly good news for employers, as the statutory scheme provides more certainty in dealing with state-based claims of discrimination, and precludes recovery of compensatory damages for emotional distress and punitive damages. However, we may see additional challenges to the OADA in the future as the law develops.

Proposed Family and Medical Leave Enhancement Act Would Have Large Impact on Employers

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U.S. House Representative Carolyn B. Maloney of New York has introduced H.R. 3999, which would provide for a far-reaching expansion of the Family and Medical Leave Act (“FMLA”). The bill introduces two big changes to the current Act.

First, the FMLA would be expanded to cover employees whose employers have 25 or more employees within a 75-mile radius. The FMLA currently covers only employers with 50 or more employees.

Second, the “enhanced” FMLA would allow employees to take intermittent, “parental involvement leave to participate in or attend their children’s and grandchildren’s educational and extracurricular activities” and would also allow FMLA-protected leave to cover “routine family medical needs and to assist elderly relatives.” See https://www.govtrack.us/congress/bills/113/hr3999/text Currently, the FMLA generally allows for job-protected, unpaid leave only for “serious health conditions,” including pregnancy and childbirth.

There are some limitations on the additional leave provided by the amendment. An employee would be limited to 4 hours of leave in a 30-day period, and 24 hours of leave in a 12-month period.

In promoting the bill, Representative Maloney referred to President Obama’s statement in his recent State of the Union address that “it’s time to eliminate workplace policies that belong in an episode of Mad Men.” See http://maloney.house.gov/press-release/anniversary-family-medical-leave-act-maloney-introduces-bill-expand-rights-millions. The President also endorsed the components of the proposed bill in a June 2008 speech in Albuquerque, New Mexico. See id. Representative Maloney’s press release did not address any potential impact on employers.

The proposed bill has been sent to the House Oversight and Government Reform and House Administration Committees.

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