Last Minute Injunction Stops “Blacklisting” Order

Yesterday a federal court in Texas partially enjoined enforcement of what is known as the “blacklisting” rule.  The injunction comes one day before reporting was to begin under the Fair Pay and Safe Workplaces Executive Order, 13673.

The “blacklisting” order would have required prime contractors, as part of federal contract bidding that occurs after October 25, 2016, to report to the federal government all violations of fourteen labor and employment laws during the preceding year, via a public website.  The government would have the option to reject a contract bidder based on the violations disclosed. The order also would have imposed restrictions on pre-dispute arbitration agreements for civil rights and sexual assault claims, effective today.

The Fair Pay and Safe Workplaces order has received widespread criticism from federal contractors and industry groups since its issuance in 2014.  Discussion of a legal challenge was prevalent, while contractors waited anxiously, but no lawsuit was filed until after final regulations and guidance were issued to implement the Order.

On October 7, 2016, a suit challenging the order was filed in the U.S. District Court for the Eastern District of Texas.  The plaintiffs are Associated Builders and Contractors, Inc.  (ABC), ABC’s Southeast Texas Chapter, and the National Association of Security Companies.  The forum choice was strategic, since “federal courts in the Fifth Circuit have regularly enjoined federal agencies from implementing and enforcing new regulations pending litigation challenging them.”  Assoc. Builders and Contractors of Southeast Texas v. Rung, Case 1:16-cv-00425-MAC, p. 10 (E.D. Tex. Oct. 24, 2016).

ABC’s Complaint alleged that President Obama exceeded his executive authority in issuing the order, which imposes new regulatory burdens that exceed and conflict with those carefully enacted by Congress.  It also alleged the order is preempted by other federal laws, violates the First Amendment, and deprives federal contractors of due process. The court agreed.

The court’s opinion critically addressed not only the Executive Order, but also its Federal Acquisition Regulation (FAR) implementing regulations, and Department of Labor (DOL) Guidance issued to aid enforcement (collectively referred to as the “blacklisting rules”).  It found the rules to be arbitrary and capricious, entitled to no deference.  They are not narrowly tailored to achieve their end, and, in fact, have not been shown by the government to cause any likely improvement in federal procurement.   The rules would impose substantial harm on the plaintiffs (contractors), while no one would be harmed by their relief.  An injunction, found the court, is in the public’s interest.

Judge Marcia A. Crone outlined the reasons for the court’s ruling in a thirty-two (32) page opinion.  It noted that the rules conflict with existing federal laws, which already specify consequences for their violation.  And, the rules could impose debarment without the procedural protections required by Congress in its legislatively-enacted laws.  Id.  The court was troubled that the blacklisting rules would require contractors to report “mere allegations” of employment violations to the government. Non-final violations, issued without even quasi-judicial safeguards, would also be disclosed. Debarment could then result, even though not an existing remedy under the substantive laws encompassed by the order.  The Executive Branch thus “departed from Congress’s explicit instructions dictating how violations of the labor law statutes are to be addressed.” Id. p. 14.  The blacklisting rules also violate the “right not to speak” under the First Amendment, since the required public disclosures would force companies to “publicly condemn themselves” via government compulsion of speech. Id. p. 20. The court described the rules as suffering from “constitutional defect.” Id. p. 19.

The injunction applies nationwide, and enjoins enforcement of all reporting obligations under the order.  It also enjoins the rules’ pre-dispute arbitration limitation, which the court found in conflict with the Federal Arbitration Act (FAA).

The injunction does not reach the separate paycheck transparency requirement, scheduled to take effect on January 1, 2017.  The court found the plaintiffs did not demonstrate a substantial likelihood of success on their claims against that element, nor did they show irreparable harm from its more modest requirements.

Eleventh Circuit: Job Applicants May Not Sue For Disparate Impact Under § 4(a)(2) Of The ADEA

On October 5, 2016, the Eleventh Circuit, sitting en banc, held that an unsuccessful job applicant “cannot sue an employer for disparate impact [under § 4(a)(2) of the ADEA] because [an] applicant has no ‘status as an employee.’”  Villarreal v. R.J. Reynolds Tobacco Co., — F.3d —, No. 15-10602, 2016 WL 5800001, at *1 (11th Cir. Oct. 5, 2016).

Richard Villarreal, then 49 years old, applied for a position with R.J. Reynolds.  A recruiting agency, using guidelines provided to it by R.J. Reynolds, rejected Mr. Villarreal’s application.  Under the guidelines, preferred candidates where those with little post-college work experience.  The guidelines specifically instructed the agency to “stay away from” applicants with 8–10 years of sales experience.  Neither R.J. Reynolds nor the recruiting agency informed Mr. Villarreal that his application had been rejected, and Mr. Villarreal did not follow up as to the status of his application.

More than two years later, Mr. Villarreal filed charges with and received a right to sue notice from the EEOC.  In April of 2012, Mr. Villarreal filed an action against R.J. Reynolds and Pinstripe, Inc. (another recruiting agency used by R.J. Reynolds), alleging disparate treatment and disparate impact under the ADEA.  The defendants moved to dismiss the disparate-impact claim on the grounds that § 4(a)(2) of the Act does not apply to job applicants.  The district court granted the defendants’ motion.  Mr. Villarreal appealed.

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ACA Update: New HHS Nondiscrimination Rules Applicable to Certain Employee Health Plans

Earlier this year, the Department of Health and Human Services Office of Civil Rights published final rules implementing Section 1557 of the Affordable Care Act (ACA).  Section 1557 prohibits discrimination on the basis of race, color, national origin, sex, age or disability by healthcare providers and group health plans that receive federal financial assistance. The rules include restrictions on discrimination relating to gender identity, as well as requirements regarding accessibility for individuals with limited English and with disabilities.

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How to Escape Joint-Employer Status under the NLRA with Concrete Evidence

Originally published by Construction Business Owner

By now, the employer community is well aware of the wide-ranging implications of Browning-Ferris Industries of California, Inc., 362 N.L.R.B. No. 186 (2015) (Browning-Ferris)—a decision that upended decades of National Labor Relations Board (NLRB) precedent and dramatically expanded the definition of “joint employer” under the National Labor Relations Act (NLRA). On August 16, 2016, in Retro Environmental, Inc./Green JobWorks, LLC , 364 N.L.R.B. No. 70, 2016 WL 4376615 (August 16, 2016) ( Retro), the NLRB applied the full weight of Browning-Ferris and concluded that Retro Environmental and Green JobWorks are “joint employers” under the NLRA. The NLRB also made it more difficult for employers to prove that they have ceased their joint-employer relationship. Retro is the latest in a line of NLRB decisions, issued since Browning-Ferris, which emphasize the need for employers to scrutinize their third-party business relationships for joint-employer risk.

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Eleventh Circuit Rejects EEOC’s Claim that Employer’s Race-Neutral Policy of Prohibiting Dreadlocks Violates Title VII

Enforcing a race-neutral grooming policy that prohibits employees from wearing dreadlocks is not intentional racial discrimination under Title VII.  That is what the Eleventh Circuit recently held in Equal Employment Opportunity Commission v. Catastrophe Management Solutions, — F.3d —, No. 14-13482, 2016 WL 4916851 (11th Cir. Sept. 15, 2016).

Chastity Jones, a black woman with short dreadlocks, was hired for a customer service position with Catastrophe Management Solutions (“CMS”).  She subsequently met with CMS’s human resources manager, Jeannie Wilson (who is white), in private to discuss scheduling required pre-employment lab tests.  During the meeting, Ms. Wilson asked Ms. Jones if she had dreadlocks.  Ms. Jones said yes, and Ms. Wilson advised her that CMS could not hire her with the dreadlocks.  Ms. Wilson told Ms. Jones that dreadlocks “tend to get messy,” thought she did not say Ms. Jones’s dreadlocks were.  CMS’s race-neutral grooming policy required all personnel to dress and groom “in a manner that projects a professional and businesslike image while adhering to company and industry standards and/or guidelines.”  The policy also stated that “hairstyle should reflect a business/professional image,” and that “no excessive hairstyles” would be permitted.

The EEOC filed suit, alleging disparate treatment under Title VII.  According to the EEOC, dreadlocks are “a manner of wearing hair that is common for black people and suitable for black hair texture.  Dreadlocks are formed in a black person’s hair naturally, without any manipulation, or by manual manipulation of hair into larger coils.”  The Court characterized many of the EEOC’s allegations as legal conclusions about the concept of race.  For example, the EEOC alleged that “race is a social construct [with] no biological definition”; that “the concept of race is not limited to or defined by immutable physical characteristics”; that the “concept of race encompasses cultural characteristics related to race or ethnicity, [including] grooming practices”; and that “dreadlocks are . . . a racial characteristic, just as skin color is a racial characteristic.”  According to the EEOC, prohibiting “dreadlocks in the workplace constitutes race discrimination because dreadlocks are a manner of wearing the hair that is physiologically and culturally associated with people of African descent.”  Thus, “the decision of CMS to interpret its race-neutral written grooming policy to ban the wearing of dreadlocks constitutes an employment practice that discriminates on the basis of race.” 

The district court dismissed the complaint, finding that the EEOC failed to state a plausible claim for relief.  In so doing, the district court concluded that “[a] hairstyle, even one more closely associated with a particular ethnic group, is a mutable characteristic.”  EEOC. v. Catastrophe Mgmt. Sols., 11 F. Supp. 3d 1139, 1143 (S.D. Ala. 2014).  On appeal, the EEOC argued that “dreadlocks are a natural outgrowth of the immutable trait of black hair texture; that the dreadlocks hairstyle is directly associated with the immutable trait of race; that dreadlocks can be a symbolic expression of racial pride; and that targeting dreadlocks as a basis for employment can be a form of racial stereotyping.”  Most significantly for the Eleventh Circuit, the EEOC’s “proposed amended complaint did not allege that dreadlocks are an immutable characteristic of black persons.”  In fact, the EEOC stated that “black persons choose to wear dreadlocks because that hairstyle is historically, physiologically, and culturally associated with their race.”

In order to decide the case, the Court needed to define the term “race.”  After noting that Title VII does not define the term, the Court concluded that, at the time Title VII was enacted,

‘race’ as a matter of language and usage, referred to common physical characterizes shared by a group of people and transmitted by their ancestors over time.  Although the period dictionaries did not use the word ‘immutable’ to describe such common characterizes, it is not much of a linguistic stretch to think that such characterizes are a matter of birth, and not culture.

Based on its understanding of the meaning of the word “race” at the time Title VII was enacted, and relying on two binding Fifth Circuit cases, the Court concluded that “Title VII protects persons in covered categories with respect to their immutable characteristics, but not their cultural practices.”  Indeed, “discrimination on the basis of black hair texture (an immutable characteristic) is prohibited by Title VII, while adverse action on the basis of black hairstyle (a mutable choice) is not.”  And even if dreadlocks are a “‘natural outgrowth’ of the texture of black hair[, that] does not make them an immutable characteristic of race.”

The Court was careful not to “take a stand on any side of [the] debate” with respect to the “role and complexity of race in our society.”  That debate, the Court concluded, is best “resolve[d] thought the democratic process.”  Nonetheless, the Court’s discussion on the topic—and its impact on Title VII litigation—is likely to spark debate and could potentially lead to a new approach by the EEOC in similar cases.  For now, the take away for employers is this: enforcing a race-neutral grooming policy that prohibits employees from wearing dreadlocks is not intentional racial discrimination under Title VII.  Employers should keep in mind, however, that a race-neutral grooming policy enforced in a manner that selectively targets members of a particular race can lead to liability under Title VII.

Briefing Continues in Browning-Ferris Appeal

In a brief filed on September 7, 2016 (“NLRB Brief”), the National Labor Relations Board (“NLRB” or “the Board”) urged the United States Court of Appeals for the District of Columbia Circuit to uphold its new “joint employer” standard, set forth in Browning-Ferris Industries, 362 NLRB No. 186 (Aug. 27, 2015). Through this new standard, the Board now seeks to impose collective bargaining and other NLRA obligations on companies that may indirectly control certain conditions of employment, or that merely reserve (but do not exercise) such control.  Casting aside the more precise “direct and immediate control” standard it explicitly adopted in 1984, the Board in Browning-Ferris opted instead to analyze joint control issues on a fact-specific, case-by-case basis, with a greater focus on reserved and indirect control.  The case on appeal is entitled Browning-Ferris Industries of California, Inc., d/b/a/ Browning-Ferris Newby Island Recyclery v. National Labor Relations Board,  Nos. 16-1028, 16-1063 and 16-1064.

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Register Now For The OFCCP Institute’s Compliance Conference in Chicago

The OFCCP’s increasingly aggressive enforcement scheme continues to present challenges for federal contractors and subcontractors.   Please join The OFCCP Institute for a comprehensive two-day seminar featuring several distinguished speakers, including Chai Feldblum of the EEOC, Consuelo Pinto of the DOL’s Division of Civil Rights, and OFCCP and employment attorney, Christy Kiely.

Date: Wed, November 9th – Thurs, November 10th, 2016

Early Bird Discount ends September 29th


Seattle Passes “Secure Scheduling” Law for Hourly Retail and Food Service Employees

On Monday, September 19, 2016, the Seattle City Council approved an ordinance (C.B. 118765) designed to bring more stability to the schedules of retail and food service industry workers, who often experience last-minute scheduling changes, loss of paid hours, and back-to-back shifts. The law, which was developed during a series of meetings between the City, business owners and worker advocates, will be codified in Chapter 14.22 of the Seattle Municipal Code and will take effect on July 1, 2017.

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Federal Contractor Alert: Government Reporting Under The New “Blacklisting” Order

Join us on Wednesday, October 5, 2016, from 1:00 p.m. – 2:30 p.m. ET, for a practical breakdown of President Obama’s “Fair Pay and Safe Workplaces” Executive Order (13673), issued in 2014.

President Obama’s “Fair Pay and Safe Workplaces” Executive Order (13673), issued in 2014, at last is going into effect. The Order requires federal contractors and subcontractors to report a three-year history of violations of fourteen different labor and employment laws, to the government as part of the procurement process. The government can deny a federal contract to a contractor with a sufficiently negative compliance record.

The first wave of reporting, for prime contractors, is due on October 25, 2016.

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D.C. Circuit Affirms Board Ruling On Overbroad Confidentiality Policy

Employers should be aware of a recent ruling by the U.S. Court of Appeals for the District of Columbia Circuit that overly broad confidentiality and nondisparagement policies violate the National Labor Relations Act (“NLRA”).  The case, Quicken Loans v. NLRB, 2016 U.S. App. LEXIS 13778 (D.C. Cir.), involved an employment policy which prohibited employees from using or disclosing a broad range of personnel information without Quicken’s prior written consent or to criticize publicly the company and its management. The National Labor Relations Board (“NLRB” or “Board”) determined that those rules ran afoul of Section 7 of the NLRA because they “unreasonably burden the employees’ ability to discuss legitimate employment matters, to protest employer practices, and to organize.” Quicken then appealed the NLRB’s decision to the D.C. Circuit Court of Appeals.

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