Hunton Employment & Labor Law Perspectives : Employment Lawyers & Attorneys : Hunton & Williams Law Firm : Labor Law Legislative Updates

In response, lawmakers introduced legislation in the House and Senate, including H.R. 3721 and S. 1756, which would effectively overturn Gross.  Legislators note that Gross imposes a higher burden for age discrimination plaintiffs than plaintiffs suing under Title VII or the Americans with Disabilities Act.  If passed, POWADA would standardize the burdens of production and proof in all employment discrimination cases.  Under POWADA, an age discrimination plaintiff -- like a Title VII plaintiff -- could prevail by proving either that an impermissible factor motivated the adverse action or practice complained of, even if other factors also motivated the action or practice; or by proving the action or practice would not have occurred in the absence of an impermissible factor.

Congressman Jerrold Nadler (D-NY), who chaired the hearings on H.R. 3721 in June, stated that Gross “creates substantially different standards across and between federal civil rights laws, thus undermining their predictability, scope, and effectiveness.”  According to Congressman Nadler, “H.R. 3721 seeks to restore the pre-Gross standard for proving age discrimination and the longstanding presumption that Title VII’s framework and precedent applies to other federal discrimination and retaliation laws.  We should act promptly to correct the Gross decision before more damage is done.” 

Congressman George Miller (D-CA), the Chairman of the Committee on Education and Labor who sponsored H.R. 3721, likewise notes that POWADA will “make the standard for proving age discrimination the same as those alleging race, national origin or religious discrimination,” and that Congress intends to “overturn the Supreme Court’s decision [in Gross] and ensure that workers with a legitimate claim will have their day in court.”  Congressman Miller introduced POWADA on October 6, 2009.  When contacted, representatives for Congressman Miller would not predict when a committee report may be issued on H.R. 3721, or when the bill might reach the House floor for a vote.  Bills start in House committees and enter Senate committees only after being passed by the House and received by the Senate.  Many bills are never referred to a committee at all, and most bills never receive committee consideration or are reported out.  POWADA remains in the first step of the legislative process, but it appears to have wide support and has been referred to numerous committees, including the House Subcommittee on Education and Labor and the House Judiciary Committee on the Constitution, Civil Rights, and Civil Liberties.

The district court had identified three possible tests: the “common law agency” test (focusing on the hiring party’s right to control the manner and means by which the product is accomplished), the “economic realities” test (a fact-specific inquiry focusing on the economic realities of the situation, as its name suggests), and the “common law hybrid” test (a combination of the other tests, taking multiple factors into account).  The appellate court said that the three tests are functionally equivalent.  Even if their different formulations suggest variations in practical application, the controlling test is the common law test, as pronounced by the Supreme Court in Nationwide Mutual insurance Co. v. Darden.  That test applies “whenever an employment statute defines the term ‘employee’ in the way ERISA does, and the statute in question does not otherwise suggest that the common law test would be inappropriate.”  The Supreme Court identified 12 factors to consider, including whether the hiring party has the right to assign additional projects to the hired party, the extent of the hired party’s discretion over when and how long to work, and the tax treatment of the hired party. 

Applying those factors, both courts found the plaintiff/appellant in this case to be an independent contractor based on the overall picture presented by her situation.  She was free to operate her business as she saw fit, could decide when and where to work (and in fact, paid rent on her own office), was paid on commission only, reported herself as self-employed to the IRS, and sold products other than those offered by the defendant. 

Now that the court has clarified the appropriate standard, hiring parties in the Ninth Circuit should reevaluate their hired parties to ensure they are classified appropriately.

The Supreme Court’s Decision in Gross
In Gross, the Supreme Court ruled that plaintiffs must prove that their age was the “but for” cause of the adverse employment action to establish an age discrimination claim under the ADEA.  By doing so, the Court eliminated the use of the mixed motive theory to prove discrimination in ADEA actions.  As a result, plaintiffs cannot satisfy their burdens of proof by merely showing that age was a motivating factor in the adverse employment action.  Critics of Gross believe that the decision makes it nearly impossible for plaintiffs to win age discrimination claims unless they have the equivalent of a smoking gun. 

Responding to Gross
Currently H.R. 3721 has 32 co-sponsors and S. 1756 has 23 co-sponsors.  The bills are identical and their proponents hope that they will return age discrimination law to pre-Gross standards.  Specifically, the legislation establishes that the standard of proof for claims under the ADEA is “no different” from the mixed motive theory used in Title VII claims.  Additionally, the legislation states that the burden-shifting framework of McDonnell Douglas v. Green, 411 U.S. 792 (1973) applies to ADEA claims. 

Not Just Age Discrimination
Although the title of the legislation refers to age do not be fooled - the Protecting Older Workers Against Discrimination Act involves much more than the protected class of age.  In fact, the Act explicitly states that “the standard for proving unlawful disparate treatment under the [ADEA] and other anti-discrimination and anti-retaliation laws is no different than the standard for making such proof under [T]itle VII.”  With this language, the Act sweeps all other claims of discrimination or retaliation into its scope and as a result it has the potential to significantly impact numerous federal discrimination and retaliation laws.  Based on this, it seems apparent that the Act does more than just return age discrimination claims to the pre-Gross standard of proof. 

Clarification or Confusion?
The Act was created to clarify the standard of proof in age ADEA claims and to correct the perceived “misconceptions” relied on by the Supreme Court in Gross.  Yet, if this legislation is passed in its current form, it is likely that instead of simply bringing clarity to age discrimination claims, it will instead muddy the water in all other discrimination and retaliation claims.  The Act’s reference to “other anti-discrimination and anti-retaliation law” is not only broad but also ambiguous.  It will be necessary to turn to the courts for guidance on this ambiguity.  The Act will need to be further explained and this will likely be done through litigation where plaintiffs will rely on the Act’s broad scope to test the water with their various discrimination and retaliation claims.  Because the reach of this Act is beyond just age discrimination, it is important to track its progress and be alert to its potential affect on all “other anti-discrimination and anti-retaliation laws.”

The EEOC took this action in light of two relatively recent decisions by the U.S. Supreme Court relating to claims of disparate impact under the ADEA.  In Smith v. City of Jackson, 544 U.S. 228 (2005), the Court confirmed that an employer can defend against such a claim by showing that the challenged decision was based on a reasonable factor other than age (“RFOA”).  In Meacham v. Knolls Atomic Power Laboratory, 128 S.Ct. 2395 (2008), the Court held that the burden falls on the defendant to prove the affirmative defense of an RFOA.  Neither case specifically stated what factors are “reasonable.” 

The proposed rule explains that a reasonable factor is one that is objectively reasonable when viewed from the position of a reasonable employer under like circumstances.  It is one that would be used in a like manner by a prudent employer mindful of its responsibilities under the ADEA.  The proposed rule lists six considerations as potentially relevant to the reasonableness determination:

• whether the employment practice and the manner of its implementation are common business practices;
• the extent to which the factor is related to the employer’s stated business goal;
• the extent to which the employer took steps to define the factor accurately and to apply the factor fairly and accurately;
• the extent to which the employer took steps to assess the adverse impact of its employment practice on older workers;
• the severity of the harm to individuals within the protected group, in terms of both the degree of injury and the number of persons adversely affected, and the extent to which the employer took preventative or corrective steps to minimize the severity of the harm, in light of the burden of undertaking such steps; and
• whether other options were available and the reasons the employer selected the option it did.

Not all criteria must point to reasonableness to establish the RFOA defense; the rule states that the list is illustrative, not exhaustive.  The rule also provides guidance regarding whether the factors considered by the employer were age-related.  The considerations for this inquiry include:

• whether supervisors are given unchecked discretion to subjectively evaluate employees;
• the extent to which supervisors were to evaluate employees based on factors known to be subject to age-based stereotypes; and
• the extent of training received by supervisors in applying evaluative factors and avoiding discrimination.

Assuming that the proposed rule will become final (after the public comment period expires), these considerations can serve as a filter for decision making.  Employers and their counsel who apply these considerations on the front end likely will find that risk is reduced, more sound decisions are reached, and challenges are more likely to be resolved in their favor.

These budget increases will allow the EEOC and DOJ to increase enforcement efforts.  EEOC Chairman Stuart Ishimaru noted that budget increases would “allow [the EEOC] to build on the progress [ ] made in hiring frontline staff, reducing a burgeoning inventory of charges, and increasing productivity.” BNA 20 Daily Labor Report AA-8.   Furthermore, Ishimaru, who has made the EEOC’s nationwide systemic enforcement program a top priority, noted that increased funding would enable the agency to “continue [its] focus on systemic enforcement.”  BNA 20 DLR AA-8

Systemic discrimination cases typically involve an employer policy or practice that results in a disparate impact upon a group of persons in a protected class or a class action.  Such cases often focus on employer hiring and promotion policies or practices.  Both the EEOC and the DOJ’s Civil Rights Division have authority to litigate systemic discrimination or pattern or practice cases under Title VII of the 1964 Civil Rights Act.  The EEOC handles systemic discrimination cases on behalf of employees in the private and federal sector while the Civil Rights Division litigates pattern or practice cases on behalf of persons employed by state and local governments.  In addition, the EEOC also has the ability to litigate systemic discrimination cases under many of the other laws that it enforces, such as the Age Discrimination in Employment Act and the Americans with Disabilities Act.

Systemic discrimination cases are important to the EEOC’s goal of eliminating employment discrimination because such cases often gain nationwide attention, can lead to large settlements or damage awards, and can impact a broad section of an industry or a profession.  Private employers should be aware that the EEOC often utilizes information that it gathers from individual charges and requests for information to build a case for potential systemic discrimination claims.

Under Lipnic’s leadership, the agency made the first revisions to the union financial disclosure regulations in forty years, and the Office of Federal Contract Compliance Programs (OFCCP) issued its first compensation guidance and regulations.  Lipnic also served as counsel for the House Committee on Education and Labor.  Before her work for Congress, Lipnic spent six years as in-house labor and employment counsel for the U.S. Postal Service, then the largest employer in the country.  Most recently, 1she has been Of Counsel with law firm Seyfarth Shaw LLP.   She received a B.A. from Allegheny College in 1982, and graduated from the George Mason University School of Law in 1991.  She is admitted to the Pennsylvania bar.

In July 2009, the President named Jacqueline A. Berrien as the next Chair of the EEOC.  Berrien has a strong background in civil rights advocacy, and particularly in the area of voting rights.  Since September, 2004, Berrien has been the Associate Director-Counsel for the National Association for the Advancement of Colored People (NAACP)’s Legal Defense and Educational Fund (LDF).  In that capacity, she supervises litigation, public education, and organizational work.  From 2001-2004, Berrien was a Program Officer in the Governance and Civil Society Unit of the Ford Foundation’s Peace and Social Justice Program.  Before that, she was an attorney with the Voting Rights Projects of the Lawyers’ Committee for Civil Rights and then Assistant Counsel for the LDF, where she coordinated the areas of voting rights and political participation. 

Berrien received a B.A. with high honors in government from Oberlin College.  She graduated from Harvard Law School, where she was General Editor of the Harvard Civil Rights-Civil Liberties Law Review.  She began her legal career by clerking for the Honorable U.W. Clemon, who was the first African-American U.S. District Court Judge in Birmingham, Alabama.  She has represented African-American voters before the United States Supreme Court and various U.S. Courts of Appeals and U.S. District Courts.  She also has taught trial advocacy at the Harvard and Fordham law schools, and is an Adjunct Professor of Law at New York Law School. 

In September 2009, President Obama chose Chai R. Feldblum to fill another vacancy on the EEOC.  Feldblum is a law professor at the Georgetown University Law Center, where she has taught since 1991.  She specializes in disability discrimination and gay and lesbian rights.  If confirmed, she will serve a five-year term.  Before Georgetown, Feldblum was legislative counsel to the American Civil Liberties Union (ACLU)’s AIDS Project, where she led efforts (among others) to draft and negotiate the Americans with Disabilities Act of 1990.  She also has also been instrumental in supporting the more recent ADA Amendments Act of 2008, and is considered an expert on the proposed Employment Nondiscrimination Act, which if enacted would prohibit discrimination based on sexual orientation.

Feldblum received her J.D. from Harvard Law School and her undergraduate degree from Barnard College.  She clerked for Judge Frank M. Coffin on the First Circuit Court of Appeals and for Justice Harry A. Blackmun on the U.S. Supreme Court.

All these nominations require Senate confirmation.  They are currently pending before the Senate’s Health, Education, Labor and Pensions Committee.  Some commentators speculate that Lipnic’s recent nomination will help speed along those of Berrien and Feldblum. 

President Obama has at least one other EEOC appointment on the horizon.  He will need to replace Commissioner Constance Baker, whose term expires in 2011. 

These new EEOC appointments may lead to new enforcement and litigation goals and priorities.  The Commission already has stepped up enforcement activity and likely will continue increasing the overall number of cases filed, particularly those involving systemic discrimination.  Focus likely will turn also to reducing the EEOC’s significant backload of charges, which has more than doubled since 2004.