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

In Kirleis, Alyson J. Kirleis filed a lawsuit against Dickie, McCamey & Chilcote. P.C., the law firm in which she was a shareholder, claiming sex discrimination, sexual harassment, unequal pay, and retaliation under both federal and state anti-discrimination laws.  Among other things, Kirleis alleged that she received less pay than her male counterparts and that discriminatory and harassing comments were made to her during her employment with the firm.  Among other allegations, Kirleis alleged that she was informed that she should give up her shareholder status to spend more time with her children.  She also claimed that she was told that “gals” in the firm should do lower level legal tasks, while the male lawyers took such cases to trial. The U.S. District Court for the Western District of Pennsylvania granted summary judgment to the law firm, based on the threshold question of whether Kirleis was an “employee” protected under the federal and state laws, or an “employer” without such protections. The district court held that certain factors of Kirleis’s shareholder position disqualified her from protection as an “employee” as defined by the federal and state laws, including Title VII and the FLSA.

In making its decision, the district court relied upon the six factors set out in a 2003 U.S. Supreme Court decision, Clackamas Gastroenterology Associates, P.C. v. Wells, which the Court used to determine whether a shareholder-director of a professional corporation is an employee or employer for application of federal anti-discrimination laws.  The six factors were based on a standard defined by the Equal Employment Opportunity Commission and focused on the amount of control the employing entity had over the shareholder-directors at issue. 

In affirming the district court’s decision, the Third Circuit agreed with the district court’s application of the Clackamas decision.  In particular the Court held that, because Kirleis was entitled to a percentage of the law firm’s profits and losses, could not be terminated from employment for cause without a three-fourths majority vote of the Board of Directors, and participated in firm governance, she was not a “mere employee” of the firm and therefore did not qualify for protection under federal and state anti-discrimination laws.

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 First Circuit Court of Appeals recently ruled on an FRD case, holding that “an employer is not free to assume that a woman, because she is a woman, will necessarily be a poor worker because of family responsibilities. The essence of Title VII in this context is that women have the right to prove their mettle in the work arena without the burden of stereotypes regarding whether they can fulfill their responsibilities.”   Chadwick v. Wellpoint, Inc., 561 F.3d 38, 45 (1st Cir. 2009).

According to a report released by the Center for WorkLife Law in February 2010, FRD litigation has increased 400 percent in the last ten years.  Joan C. Williams, a professor at the University of California's Hastings College of the Law and founding director of the Center for WorkLife Law, noted:

“Our database of family responsibilities discrimination suits contains 2,100 cases…. These cases have a 50 percent success rate. Let me say that again: a 50 percent success rate. That is really high. We code employers defeated at summary judgment as success and I think that's fair. The average verdict is over $570,000. There are 21 verdicts over $1 million and four over $10 million. So this is serious business.”

Two-thirds of the 2,100 lawsuits related to pregnancy and maternity leave. Nearly ten percent of the cases concerned elder care, while the rest involved care for sick children, care for ill spouses, time off for newborn care by fathers or adoptive parents, and care for a family member who has a disability. Most of the lawsuits were filed by women, while only twelve percent were filed by men.  Cases where employees achieved favorable verdicts include:

• Selecting an employee for layoff because she was pregnant.
• Denying a promotion to a female employee because she was the mother of young children.
• Firing a male employee who was on approved leave to care for a foster child.
• Instituting production quotas that could not be met by a male employee on intermittent leave to care for his seriously ill parents, and then firing him for not meeting the quotas.

The report also identifies and highlights three factual patterns of which employers should be aware:

• New Supervisor Syndrome:  In some instances, employees with family care obligations were performing well and balancing family and work activities until their supervisor changed. The new supervisors often cancelled flexible work arrangements, changed employees’ shifts, or imposed new productivity requirements. On occasion, comments made by the new supervisors indicated that they were intentionally taking these actions to push family caregivers out.
• Second Child Bias:  In other cases, mothers reported little or no discrimination until they become pregnant with a second child or a multiple birth. Once the supervisor became aware that a female employee was having more than one child, he or she often took preemptive personnel action, apparently based on the assumption that the employee would no longer be sufficiently committed to work because of her additional family responsibilities.
• The Elder Care Effect:  In a growing number of cases, employees are discriminated against because they take time off to care for their elderly parents. As in second child bias cases, supervisors in elder care cases often act preemptively, seemingly based on the assumption that the employees’ commitment to work will be affected.

Employers can protect themselves against these situations and FRD lawsuits through supervisor training and sound legal advice.

The Paycheck Fairness Act would amend the Equal Pay Act of 1963 (prohibiting wage discrimination on the basis of sex) and significantly alter the proof and enforcement provisions of that long standing federal law.  The proposed amendments would provide additional remedies for claims of pay discrimination, including uncapped punitive damages, and would increase the burden on employers to prove that pay differences resulted from factors other than gender.  It also would prohibit retaliation against employees who inquire about, discuss, or disclose their own wages or the wages of other employees. 

Although it is difficult to predict whether the Senate will ultimately vote on and pass the Paycheck Fairness Act, the fact that a Senate committee is turning its attention to bill in today’s financial and political environment should signal to employers that the legislation is not likely to go away any time soon.  Indeed, President Obama mentioned the issue in his State of the Union address in January, stating,  “We are going to crack down on violations of equal pay laws -- so that women get equal pay for an equal day’s work.”  True to his words, the President created the National Equal Pay Enforcement Task Force in January.  In addition, the U.S. Equal Employment Opportunity Commission, which administers Title VII and Equal Pay Act claims, added more than 150 new hires by the end of 2009 and received an additional $23.9 million in funding for the current fiscal year for enforcement.  It is seeking $18 million on top of that for fiscal year 2011.

In light of the growing threat of legislative action, regulatory enforcement, and civil litigation (including class actions alleging systemic discrimination), employers should take proactive steps now to position themselves optimally for a legal challenge.  This may involve a privileged audit of the employer’s pay practices, including a review of policies and procedures and a statistical analysis of compensation data.  Because these are steps that undoubtedly would be taken in the event of a government audit or private lawsuit, employers should not wait until a legal proceeding to identify and address any problems that might exist.

Proactive steps such as these can have substantial benefits in risk reduction.  Employers need a well organized plan for identifying vulnerabilities, assessing employment policies and practices, monitoring outcomes of decisions on a statistical basis, and identifying solutions to address risk, all under the protection of attorney-client privilege.  In addition, employers need systems and tools to help ensure the most informed and defensible decision making.   A privileged compensation audit can help employers meet all of these needs.

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.

The EEOC’s fiscal year data, which ended September 30, 2009, reflects increases in certain types of discrimination and retaliation complaints.  Notably, disability complaints increased by 10 percent, from 19,453 to 21,451; national origin complaints increased 5 percent, from 10,601 to 11,134; and religious discrimination claims increased 3 percent, from 3,273 to 3,386.  Also, retaliation charges reached a record high of 2009, going from 32,690 to 33,613 over the span of a year.  Meanwhile, although the number of age bias claims decreased from 24,582 in 2008 to 22,778 in 2009, it was still the second-highest total ever. The EEOC also reported that it recovered a record high of $294 million through administrative enforcement and mediation. 

According to Stuart J. Ishimaru, acting chairman of the EEOC, “[t]he latest data tell us that, as the first decade of the 21st century comes to a close, the commission’s work is far from finished….Employers must step up their efforts to foster discrimination-free and inclusive workplaces, or risk enforcement and litigation by the EEOC.” 

Employers will likely see similar rises in liability risks and activity in the area of discrimination and retaliation in year 2010, particularly in light of the ADA Amendments Act of 2008, which went into effect on January 1, 2009, and expands the scope of the Americans with Disabilities Act by reversing or nullifying several Supreme Court rulings that significantly narrowed the scope of protection under the ADA. Similarly, the EEOC’s Fiscal Year 2010 Congressional Budget Justification includes, as the EEOC’s objectives for Year 2010, an increased focus on combating systemic discrimination (unlawful patterns or practices of discrimination which have a broad impact on an industry, profession, company, or geographic location) as well as charges raising priority, novel or emerging legal issues in the context of race discrimination.

To help manage exposure, employers should revisit their handbooks, policies, and day-to-day practices, and should take steps to make certain that their supervisors and human resources staff are trained to both identify and properly address potential discrimination and retaliation issues.
 

Although not an employment case, Iqbal did involve claims of intentional discrimination.  Accordingly, employers facing discrimination claims in federal court have been filing motions to dismiss complaints that do not meet the standard articulated in Iqbal. Many federal courts have been granting such motions and dismissing claims that likely would have survived prior to Iqbal.

Opponents of the Iqbal decision have not gone away quietly.  In July, Senator Arlen Spector (D-Pa) introduced the Notice Pleading Restoration Act (S. 1504).  More recently, on November 19, 2009, Representative Gerald Nadler (D-NY) introduced the Open Access to Courts Act of 2009 (H.R. 4115).  Both bills seek to reverse the Iqbal decision and reinstate a pleading standard articulated in a Supreme Court decision from 1957 (Conley v. Gibson).  Under that standard, a complaint was not subject to dismissal “unless it appear[ed] beyond doubt that the plaintiff [could] prove no set of facts in support of his claim which would entitle him to relief.”  The Supreme Court expressly overruled that standard in Iqbal.

The Iqbal decision rightly recognizes that lawsuits in which the plaintiff cannot even articulate specific facts to support a claim should be dismissed.  The new legislation, however, would prop up weak claims and ultimately make it more expensive for employers to fight off meritless lawsuits.  According to Representative Nadler’s press release,  the Open Access bill is supported by “a diverse coalition that includes the Leadership Conference on Civil Rights, Christian Trial Lawyer’s Association, Sierra Club, and National Senior Citizens Law Center.”

Although Congress certainly has other, more pressing issues on its current docket (e.g., health care, the economy, and environmental issues), we anticipate that proponents of these bills will push for prompt passage.

Genetic information includes information about an individual's genetic makeup or propensities (such as predisposition for medical problems) and those of an individual’s family members, and any information about diseases, disorders, or conditions that the individual’s family member has experienced.

Enforcement and remedies under GINA will be similar to those available under Title VII of the Civil Rights Act of 1964, as amended.  Thus, employers will face the possibility of increased litigation over claims of genetic discrimination.  Like other federal equal employment opportunity laws, GINA also prohibits employers from retaliating against a person for opposing or complaining about discrimination, filing a charge of discrimination, or participating in an employment discrimination inquiry, investigation or lawsuit.

Last month, the EEOC revised its “Equal Employment Opportunity is the Law” poster, which is a mandatory posting for covered employers, to include information about GINA.

ENDA defines sexual orientation as “homosexuality, heterosexuality or bisexuality”.  It defines gender identity as “gender-related identity, appearance, or mannerisms or other gender-related characteristics of an individual, with or without regard to the individual’s designated sex at birth.”  Like Title VII and other federal anti-discrimination statutes, ENDA would prohibit not only discrimination based on these factors but also retaliation against individuals who oppose discrimination or participate in any in an investigation, proceeding, or hearing under the Act.  ENDA would apply to employers, employment agencies, labor organizations and joint labor-management committees.

• Although ENDA would break much new ground, it is also notable for what it expressly would not do in its current version.  For example, ENDA would not:
• Require employers to provide employee benefits to unmarried couples;
• Require preferential treatment to any individual or group on account of an imbalance that may exist in any community, state, section, or other area;
• Require employers to collect statistics on actual or perceived sexual orientation or gender identity. 
• Allow claims of discrimination under a disparate impact theory;
• Prohibit uniform enforcement of rules and policies (such as anti-harassment policies) that do not intentionally circumvent the purposes of the Act;
• Prohibit an employer from denying an individual access to “shared shower or dressing facilities in which being seen unclothed is unavoidable” based on the individual’s actual or perceived gender identity, so long as the employer “provides reasonable access to adequate facilities that are not inconsistent with the employee’s gender identity as established with the employer at the time of employment or upon notification to the employer that the employee has undergone or is undergoing gender transition.”  (However, an employer would not be required to construct new or additional facilities in order to provide reasonable access.)

If ENDA passes, it will create new causes of action and likely will increase the amount of litigation currently faced by employers.  It also will create new obligations and costs that remain uncertain, such as costs related to modification of facilities (restroom facilities, locker rooms, etc.) and costs related to training and education of employees and managers.  It also remains unclear whether the proposed legislation might conflict with the constitutional rights of religious organizations.  Stay tuned for additional developments on this controversial bill.

Shiu is considered to be an aggressive advocate of employee rights and disadvantaged persons.  This, coupled with an expected increase in the OFCCP’s budget, suggests that the OFCCP’s enforcement efforts will be particularly active under her leadership.  Her new position currently is classified as a Deputy Assistant Secretary of Labor, which does not require Senate confirmation.  However, following a reorganization in the DOL, Shiu will report directly to Labor Secretary Hilda Solis, which could elevate her title to Assistant Secretary of Labor and require Senate confirmation.

Shiu has been an employment attorney with the Legal Aid Society of San Francisco since 1983.  She focuses primarily on employment cases of alleged race and sex discrimination.  Shiu also directs the Legal Aid Society’s Works and Family Project and is the Vice President of Programs.  Shiu graduated from the University of San Francisco School of Law, and spent several years in private practice before joining the Legal Aid Society.

In the federal arena, Shiu’s experience includes an appointment to the Department of Education’s Civil Rights Reviewing Authority during the Clinton administration.  She is also a former board member and past vice president of the National Employment Lawyers Association, a plaintiffs’ attorney group.

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.