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

Section 503 prohibits discrimination by federal contractors and subcontractors against individuals on the basis of disability and requires affirmative action on behalf of qualified individuals with disabilities.  However, there continues to be a substantial discrepancy in unemployment rates between working age individuals with and without disabilities.  The current unemployment rate for individuals with disabilities is thirteen percent, one and one half times the rate of individuals without disabilities.  Moreover, almost eighty percent of individuals with disabilities remain outside of the labor force, compared to about thirty percent of those without disabilities. 

OFCCP’s proposed rule strengthens the affirmative action provisions by detailing specific actions contractors must take in the areas of recruitment, training, record-keeping and policy dissemination.  The proposed rule applies to contractors with at least 50 employees and contracts worth $50,000 or more. 

National Utilization Hiring Goal

The most significant proposed change to Section 503 is the establishment of a national utilization goal for individuals with disabilities.  This is the first time the federal government has tried to set fixed numerical targets for the number of people with disabilities in a company’s workforce.  Under the proposed rule, federal contractors are required to set a hiring goal of seven percent disabled workers in each job group in the workforce.  The goal is neither a quota, nor a restrictive hiring ceiling, and a failure to attain the goal does not necessarily constitute a violation of Section 503 or OFCCP’s regulations.  The U.S. Department of Labor noted that the goal is meant to serve as an important tool for employers to measure their progress towards achieving equal employment opportunity, and for assessing where in the workforce barriers to such opportunity remains. 

While the OFCCP is suggesting a national utilization goal of seven percent, it is asking for comments on using a range of values between four and ten percent.  Additionally, it is asking for comments regarding the concept of using a two percent sub-goal for individuals with certain particularly severe or targeted disabilities and if instated, what disabilities should be included in this sub-goal.

Effects On Data Collection, Record Keeping And Personnel Policies

Along with the creation of a hiring goal, the proposed rule expands data collection and record keeping requirements.  Currently, Section 503 requires that contractors maintain specific data such as the total number of applicants, the total number of job openings, and the number of jobs filled.  The proposed rule increases a contractor’s data collection obligations by requiring it to compile annually disability related data such as the number of individuals with disabilities applying for positions and the number of disabled individuals who were hired. 

In addition, the proposed rule mandates that contractors must invite applicants to voluntarily self-identify as “an individual with a disability” at the pre-offer stage of the hiring process, as well as invite post-offer voluntary self identification by anonymously surveying all employees annually.  Contractors will be required to invite applicants and employees to self-identify by using the language prescribed by the OFCCP.  An employee will only be asked about the general existence of a disability and not for information regarding the specific type.  The OFCCP is seeking comments on the potential self-identification text. 

Furthermore, the proposed rule adds an entirely new provision which requires contractors to develop and implement written procedures for processing requests for reasonable accommodations. 

Contractors’ personnel policies and procedures will also be affected by the proposed rule. First, the statutory terms within the existing Section 503 will be revised to conform with the ADA Amendments and the EEOC’s regulations implementing the ADA.  All personnel policies and procedures must be updated to reflect this change, as well as include an affirmative action plan.  Second, Section 503 provides recommended steps contractors must take to review their personnel processes, as well as physical and mental job qualifications.  Presently, these reviews are to be done “periodically.”  However, the proposed rule changes this provision and requires these self-reviews to be completed annually. 

Recruitment And Outreach Efforts

The proposed rule also imposes additional recruitment and outreach requirements.  In accordance with the proposed rule, contractors will have to engage in a minimum of three specific types of outreach and recruitment efforts.  The effectiveness of these efforts in identifying and recruiting individuals with disabilities must be reviewed annually, and this review must be documented.  Additionally, job openings must be listed with one-stop career centers and other appropriate employment delivery systems in order to increase the pools of qualified applicants.  Additionally, all records relating to a contractor’s recruitment and outreach efforts must now be kept for five years, which departs from the standard two year retention period.

Comments To The Proposed Rule

The public may comment on the proposed rule at www.regulations.gov or by mail to Debra A. Carr, OFCCP, Room C-3325, 200 Constitution Ave., NW, Washington, D.C., 20210.  All comments must be received by February 7, 2012 and include the identification number (RIN) 1250-AA02.  Federal contractors should continue to monitor the regulatory activity of the OFCCP and be prepared to make adjustments to their human resources practices and technologies to comply with the OFCCP’s expanded requirements.

On October 4, 2011, Congressmen Cliff Stearns (Republican, Florida) and Timothy Bishop (Democrat, New York) introduced H.R. 3086, The Fair Wages for Workers with Disabilities Act of 2011 (the “Bill”). The Bill would eliminate the ability of the Secretary of Labor to approve sub-minimum wages to the disabled to any new businesses, and would require the phasing out of existing certificates held by private, government, and non-profit entities within one, two and three years, respectively. Proponents of the Bill assert that employees with disabilities, when provided proper rehabilitation services, training and tools, can be as productive as nondisabled employees and that the ability of employers to pay disabled workers less than the federal minimum wage gives them an incentive to exploit the cheap labor provided by their disabled workers rather than prepare them for integrated employment in the mainstream economy. Some activist groups oppose the Bill, claiming that if enacted many individuals with disabilities who have lower productivity at work will not be able to maintain employment. Businesses that employ disabled workers or are considering doing so should pay particular attention to the Bill. Hunton & Williams LLP’s labor and employment team will continue to monitor the situation and provide updates to HELP blog readers as the Bill moves through the legislative process.

In its letter, the EEOC makes a distinction between “personal” and “occupational” health information. According to the EEOC, personal health information is “information obtained in the course of diagnosis or treatment,” while occupational health information “concern[s] an employee’s ability to work.” While both the ADA and GINA sharply limit employers’ right to access personal health information, employers who lawfully utilize post-offer questionnaires or medical examinations will likely obtain personal health information in the normal course of business.  Similarly, health care facilities or other employers who provide on-site medical services might have access to both personal and occupational health information.

As the EEOC points out, the ADA and GINA authorize employers to use or disclose an employee’s confidential medical or genetic information only in limited circumstances. Those limited exceptions do not include the provision of occupational health information to healthcare workers providing non-job related medical services. Similarly, while supervisors and managers are permitted to access information regarding an employee’s work restrictions or necessary accommodations, they do not have the right to access other medical information.

Given the dichotomy between personal and occupational health information and the attendant restrictions on who can access what information, the EEOC suggests that maintaining both types of information in a single medical record “presents a real possibility” that employers are violating the ADA or GINA. According to the EEOC, employers who maintain medical records in an electronic format that allows individuals with access to the records to view all the information contained in the record are even more likely to be in violation of the ADA, GINA, or both.

The EEOC’s letter raises two issues for employers in possession of both occupational and personal health information. First, the EEOC’s letter suggests that employers need to distinguish between occupational or personal health information. Making this distinction is not always easy.  Second, once the employer determines what information is occupational and what information is personal, the employer has to determine whether it has appropriate safeguards in place to prevent unauthorized access to or disclosure of either category of information. For paper files, this might mean maintaining separate folders in separate locations. For electronic medical records, an employer may need to erect an electronic “wall” so that the users of the system only have access to the relevant and appropriate information.

The EEOC’s letter increases the costs and complexity of maintaining confidential employee medical records. Instead of a simple partition between medical and non-medical records, employers may now have to consider establishing additional privacy protections for different types of medical information.

The Equal Employment Opportunity Commission (EEOC) recently heard testimony, on March 15, 2011, on the employment of persons with mental disabilities.  The EEOC believes this group continues to experience significant barriers to employment.  And, of course, there is the very notable recent publication of the final regulations implementing the Americans with Disabilities Act Amendment Act, which are discussed in more depth in a separate article.  

The Office of Federal Contract Compliance Programs (OFCCP), has also been focused on the employment of persons with disabilities.  Since 2010 a number of OFCCP initiatives have placed increased scrutiny on whether and how federal contractors employ disabled persons.  These initiatives include the announcement of new audit priorities that focus on disabled persons, and a Notice of Proposed Rulemaking to strengthen the regulations implementing Section 503 of the Rehabilitation Act of 1973, which helps people with disabilities obtain and keep employment.  The OFCCP has also created a website of its own to promote awareness of disability issues to the general public.  This follows the OFCCP’s earlier guidance directing that employer’s online application systems must be made accessible to persons with disabilities.

In early March, the DOL posted an online “toolkit” of resources to help federal agencies become model employers of persons with disabilities.  The toolkit helps implement Executive Order 13548, which was signed by President Obama in 2010 to increase the federal employment of disabled persons.  Federal agencies have until April 11, 2011 to submit hiring plans under the Order for increasing the employment of people with disabilities. 

In February of this year, a new website was launched by the Employer Assistance and Resource Network (“EARN”).  Called “Ask EARN.org,” the website assists employers with “recruiting, hiring, retaining and advancing qualified individuals with disabilities.” EARN is part of the National Employer Technical Assistance, Policy, and Research Center at Cornell University, which is funded by the U.S. Department of Labor (DOL)’s Office of Disability Employment Policy (ODEP). The website links employers to several resources, including a Workforce Recruitment Program, a job-matching database of prescreened applicants, a monthly newsletter and an online reference desk. 

The writing is on the wall for increased enforcement activity under the federal disability laws.    Now is the time to audit employment practices, such as: 

• application processes, for accessibility to disabled persons, including online systems
• targeted outreach to recruit disabled candidates
• review of job descriptions, for business necessity of requirements
• EEO policies, to ensure they include, and are accessible, to the disabled
• reasonable accommodations, including an interactive dialogue with employees,
• maintenance and retention of separate, confidential medical files

Generally speaking, the ADAAA will make it easier for individuals to establish ADA protection. The ADA’s three-pronged definition of “disability” remains the same:

• a physical or mental impairment that substantially limits one or more major life activities;
• a record (or past history) of such an impairment; or
• being regarded as having a disability.

However, the new law makes it clear that the definition must be interpreted in favor of broad coverage, extending protection to many individuals who might have been previously denied coverage. 

Some specific highlights include:

• Relaxing the definition of “substantial limitation.” Now, the impairment need not prevent or significantly restrict a major life activity to be considered substantially limiting.
• Expanding the scope of “major life activities” to include the operation of major bodily functions, including functions of the immune system, special sense organs and skin, normal cell growth, digestive, genitourinary, bowel, bladder, neurological, brain, respiratory, circulatory, cardiovascular, endocrine, hemic, lymphatic, musculoskeletal, and reproductive functions. The regulations also state that major bodily functions include the operation of an individual organ within a body system (e.g., the operation of the kidney, liver, or pancreas).
• Specific examples of impairments are listed in the regulations and include deafness, blindness, intellectual disability (formerly termed “mental retardation”), partially or completely missing limbs, mobility impairments requiring use of a wheelchair, autism, cancer, cerebral palsy, diabetes, epilepsy, HIV infection, multiple sclerosis, muscular dystrophy, major depressive disorder, bipolar disorder, post-traumatic stress disorder, obsessive-compulsive disorder, and schizophrenia.
• Positive effects from an individual’s use of one or more “mitigating measures” (other than ordinary eyeglasses and contact lenses) must be ignored in determining if an impairment substantially limits a major life activity. However, mitigating affects may still be considered for purposes other than determining whether the impairment is substantially limiting.
• Coverage is extended to impairments that are episodic or in remission (such as cancer and epilepsy), so long as the impairment is substantially limiting when active.

The regulations also make it easier for individuals to establish coverage under the “regarded as” prong of the definition of disability. The focus is on how a person has been treated because of a physical or mental impairment, rather than on what an employer may have believed about the nature of the person’s impairment. The regulations clarify, however, that an individual must be covered under the first or second prongs (actual or record of disability) in order to qualify for a reasonable accommodation.

The most prominent of these emerging types of claims is retaliation.  Retaliation claims have been filed with the EEOC at a steadily increasing rate in recent years. In 2010, for the first time in history, retaliation claims became the most frequently filed type of claim, even outnumbering claims of race and sex discrimination.  Retaliation claims can be problematic for employers. An EEOC spokeswoman was quoted by the Wall Street Journal as saying, retaliation “is easier [for an employee] to prove.” Adding to employers’ concerns, the Supreme Court recently expanded the rights of third parties to file retaliation claims. See Thompson v. North American Stainless, LP, 562 US __, 131 S. Ct. 863 (U.S. 2011). As retaliation claims continue to gain notoriety, and as employees become more aware of their rights to file this type of claim, the number of retaliation claims filed with the EEOC will assuredly continue to grow in the foreseeable future.

Another emerging type of claim about which employers should be concerned is disability discrimination. In 2010, the number of disability discrimination claims filed with the EEOC increased by nearly 20%. Due in large part to the enactment of the ADA Amendments Act of 2008 (ADAAA), this surge will continue as the EEOC publishes its final regulations concerning the ADAAA. These final regulations are expected to establish a broad definition of “disability,” thereby expanding the pool of qualified individuals who can file claims of disability discrimination. In fact, the final regulations reportedly will include a list of per se disabilities that cannot be challenged by employers. Official publication of the EEOC’s final ADAAA regulations is expected by April 2011. If these regulations prove to be as pro-employee as is anticipated, employers undoubtedly will face an increased number of disability discrimination claims.

Employers also should take note that the number of claims under the Genetic Information Nondiscrimination Act (GINA) may rise significantly in 2011. GINA is relatively new law and provides a new type of claim to individuals who believe they have been discriminated against because of their genetic information. In fact, the EEOC handled its first GINA claims in 2010. Although the number of GINA claims filed last year was relatively small (just 201 in total), employers should not overlook the expected emergence of this claim type. Since the end of the 2010 fiscal year, the EEOC has issued its final GINA regulations, which took effect on January 10, 2011. See EEOC Issues Final Regulations On The Genetic Information Nondiscrimination Act. Without question, employees will become more informed about their rights under GINA and more ambitious to test their rights under this new law.

It is critical that employers take appropriate steps to protect themselves against these emerging claims. Employers should update policies to correspond with the recent changes in law. Taking proactive steps now can contribute significantly in avoiding potential claims and in defending against claims filed with the EEOC and related local agencies.

In his complaint, Chapman alleged that he was "physically disabled," visited Pier 1's store, and "encountered architectural barriers that denied him full and equal access." Attached to his complaint was an "Accessibility Survey" identifying a list of alleged accessibility violations that "denied him access to the Store, or which he seeks to remove on behalf of others under related state statutes."  The Accessibility Survey merely identified alleged federal and state accessibility violations "without connecting the alleged violations to Chapman’s disability, or indicating whether or not he encountered any one of them in such a way as to impair his full and equal enjoyment of the Store."  This improperly left the Court to "guess" which accessibility violations, if any, actually denied him full and equal access to the Pier 1 store. The Court, per Judge Kim Wardlaw, held that this list of alleged accessibility violations (which was not even prepared by Chapman) "cannot substitute for the factual allegations required in the complaint to satisfy Article III’s requirement of an injury-in-fact. Chapman does not even attempt to relate the alleged violations to his disability."  Thus, because Chapman lacked standing from the instant he filed the lawsuit, his complaint was "jurisdictionally defective," and the district court erred by not dismissing his claims.

Take Away

The Ninth Circuit, which in the past has interpreted remedial statutes such as the ADA favorably for plaintiffs, makes clear that the pleading standard set forth in Iqbal will be strictly adhered to in ADA cases. Courts will more carefully scrutinize Title III complaints to ensure that the plaintiffs are complaining about real issues that caused plaintiffs an actual injury. The 11-0 en banc decision helps to rein in "serial plaintiffs" and "robo-filers" who bring hundreds or even thousands of ADA Title III lawsuits for profit, but have no real stake in issues presented. ADA plaintiffs can no longer file generic, "cut and paste" lawsuits as leverage, hoping to find a hyper-technical violation of the ADA after the fact.

This comes as the EEOC has hired more employees to handle the growth in volume and clear the backlog of unprocessed charges and actions. Despite the sharp increase in new charges filed during FY 2010, the EEOC was apparently able to slow the growth of charge inventory and ended the year with 86,338 pending charges -- an increase of only 570 charges, or less than one percent.  This is significant because during FY 2008 and 2009, the EEOC’s pending inventory increased 15.9 percent.

The EEOC found no reasonable cause in 64.3% percent of the FY 2010 charges, and found reasonable cause in only 4.7% of charges. Of the 99,922 new charges, 35.9% were based on race, 29.1% based on sex, 11.3% based on national origin, 3.8% based on religion, 23.3% were based on age, 25.2% were based on disability, 1.% were based on the Equal Pay Act, 0.2% were based on the Genetic Information Nondiscrimination Act, and 36.3% were retaliation charges (in FY 2009, retaliation claims surpassed race as the most frequently filed charge).

The EEOC’s mediation program also set a record during FY 2010. Of the 99,922 new charges received, 9,370 or 9.3% were settled at the administrative stage, which was ten percent more than FY 2009 and resulted in $319.4 million in monetary benefits for claimants, not including monetary benefits obtained through litigation.

The EEOC also filed 250 lawsuits during FY 2010, resolved 285 lawsuits, and resolved a total of 104,999 private sector charges resulting in a total of $404 million in monetary benefits from employers, which the EEOC reported is “the highest level of monetary relief ever obtained by the Commission through the administrative process.”

The record level of charges and recoveries -- more than at any time in the EEOC’s 45 year history -- comes during the worst job market since the Great Depression, suggesting that the increase stems, in large measure, from an increase in adverse actions caused by the bad economy, and displaced employees who refuse to go without a fight.

The Americans with Disabilities Act Amendments Act (“ADAAA”) and the Genetics Information Nondiscrimination Act (“GINA”) have created areas ripe for litigation. Among the lawsuits announced by the EEOC during October, however, none includes a claim brought under GINA and only one suit includes a claim under the ADAAA.

Since October 1, the EEOC has announced in press releases that it has filed 19 lawsuits against private employers.  Disability discrimination and retaliation tie for the most causes of action -- each are included in seven of the 19 complaints.  Nearly all of the disability discrimination claims include a claim that the employer failed to provide the allegedly disabled employee with a reasonable accommodation.  Only one of the disability claims is brought under the ADAAA. The ADAAA requires that the definition of “disability” be interpreted broadly, and overrules the interpretive framework that Supreme Court case law had established.

The prevalence of disability discrimination and retaliation claims is not a surprise.  In the press release announcing the filing of one of the EEOC’s lawsuits earlier this month, the EEOC’s San Francisco District Director Michael Baldonado noted that, in fiscal year 2009, retaliation had overtaken race discrimination as the most often alleged cause of action.  The EEOC’s reported litigation statistics show that disability discrimination charges reached record levels in fiscal year 2009, and had increased nearly 10% over the previous year.

Sex discrimination, including sexually hostile work environment claims, was a close second behind the causes of action tied for first.  Race and religious discrimination claims were the next most prevalent causes of action, as each appeared in three of the complaints.  One race and one sex discrimination claim also alleged that the employer had paid lower wages to the charging party as compared to similarly situated employees outside of the charging party’s protected category.

Only two of the 18 defending employers (two suits have been filed against one employer) are Fortune 500 companies.  Available information suggests that about the same number of defending employers in the remaining 16 lawsuits employ less than 100 employees as employ between 100 and 10,000 employees.

The lawsuits filed this month by the EEOC suggest that (1) no particular type of employer is being targeted, and (2) employers should pay close attention to their obligations under the Americans with Disabilities Act.  If a disabled employee requests an accommodation for a disability, the employer has an obligation to discuss potential accommodations with that employee.  These suits also remind employers to ensure that employee complaints of harassment or other unlawful discrimination are responded to promptly and appropriately.  If an employee has complained about discrimination or harassment, make doubly sure that any subsequent adverse action taken against that employee is firmly based on reasons that are legitimate, non-discriminatory, and have no connection to the employee’s prior complaint.

The significant increase in the number of ADA-related lawsuits is the result of the ADAAA’s express directive that the definition of “disability” is to be construed in favor of “broad coverage.”  Not surprisingly, this change has encouraged Plaintiff’s attorneys regarding the prospects of successfully advancing a client’s ADA claim.  More specifically, the ADAAA (i) expands the definition of “disability”-- which, necessarily increases the number of individuals covered under the ADA -- and (ii) shifted the focus from whether an individual is disabled to whether and how that individual should be accommodated.  The ADAAA’s proposed implementing regulations, which are expected to become final later this summer, leaves no doubt that the operative question is no longer: Is an employee disabled?  Instead, the key question is now: What should an employer do to accommodate the employee’s disability?  For example, the proposed regulations create a list of “per se” physical and mental impairments that will “consistently” qualify as disabilities, such as cancer, blindness, deafness, epilepsy, HIV/AIDS and cerebral palsy.  Additionally, the proposed regulations clarify what it means for an impairment to “substantially limit” a major life activity or major bodily function and explain how to evaluate impairments when mitigating measures are used.   

In light of the significant increase in the number of ADA-related claims filed this year, and the prospect that these claims will increase, employers should be proactive in order to minimize potential exposure.  First, employers should conduct a policy review to ensure that their policies and practices are up-to-date with the ADAAA and its proposed regulations.  Second, employers should provide training for their human resources personnel as well as their frontline managers and supervisors regarding the ADAAA, particularly with respect to accommodation issues.  Finally, employers should review and update (or prepare new) job descriptions to ensure that they include all of the essential functions of a particular position.