Legal Blog

Labor & Employment Telebrief – 11.25.13

To listen to the Telebrief click on play arrow. By Howard B. Kurman, Esquire An Edited Transcription. Issues Discussed:

  1. Supreme Court agreed to review Canning Case – two reasons why significant to nearly every US employer
  2. Vance v. Ball State
  3. University of Texas Southwestern Medical Center v. Nassar
  4. Fair Labor Standards Act (FLSA) as it pertains to technology today (e.g. EEOC vs. Mobile and Black & Decker)
  5. EEOC is stepping up investigations into hiring practices (e.g. EEOC v. Performance Food Group, Inc.)

Howard Kurman: Good morning to everybody. This is Howard Kurman. This is our twice a month telebrief, labor and employment telebrief. There is plenty to talk about today, and a lot of it emanates from the Supreme Court. So, I am going to address a couple of those developments in some detail because I think they’re very significant from an employer’s or company standpoint. The first thing that I wanted to mention and I know that I mentioned this a couple of telebriefs ago, is that the Supreme Court has in fact agreed to accept the Canning case for review. The Canning case was essentially a decision by the Court of Appeals in the DC Circuit, which held that the Obama recess appointments to the Labor Board in January 2012, three of which were made by the President at that time, were invalid. And, the DC Circuit was joined by the Third Circuit, which includes Philadelphia. And, so, it was no surprise to me that the Supreme Court agreed to hear this case, a very significant case, in October.

Practical Significance of the Canning Case – for nearly every employer in the US

The reason that it is significant is for a couple of reasons. One is because it will test the validity or lack of validity of so-called presidential recess appointments. So, this not only applies to the National Labor Relations Board, but it applies to other governmental agencies as well when the President is making so-called recess appointments, more practically for you all and for employers that have anything to do with the National Labor Relations Board, which is almost any employer in the country, there have been a series of decisions, as you know, from the beginning of 2012 and to the present time where the constituency of the Labor Board will be thrown into question depending on what the Supreme Court does with this case, and there could be a whole series of cases decided by the National Labor Relations Board, which are in fact invalidated if the Supreme Court decides that the Obama so-called recess appointments were invalid when made in January of 2012. Oral arguments on this case will be heard in the October term. We will not get a decision, I’m sure, until sometime in the May-June timeframe in 2014, which throws much of what the Labor Board has done in the last year and a half into question. Nevertheless, it’s no surprise that the Supreme Court has agreed to hear this case, and we’ll just have to hold on and see how the Supreme Court comes down on this, and I will keep you informed, particularly when briefs are filed, which I will read and then try and translate into English for everybody prior to the time that the Supreme Court even holds oral argument on this.

Vance v. Ball State

The next Supreme Court case that I want to talk about is a very, very significant case that was decided June 24th. So, in terms of timely topics for the telebrief, we can’t get more topical than this. And, this is a case called Vance v. Ball State University. Some of you may have heard me talk about this previously. The Issue: Essentially, it has to do with the standard by which an employee must prove workplace harassment on the part of an employer, and who is considered to be a supervisor when an active harassment is allegedly committed by somebody in a management chain. The Scenario: Very briefly, this involves Ball State University and an employee at Ball State University who claimed that she was the victim of workplace harassment by somebody that she perceived to be her supervisor. Now, just by way of background, so you all know, under traditional and well-settled Supreme Court law, workplace harassment is actionable if it is done by a co-employee towards another employee, so, in other words, a non-supervisory employee harasses another non-supervisory employee. The employer is liable in that situation only if it was negligent in controlling those working conditions; that is, even if the harassment took place, the employer would be able to be found liable ONLY if it knew or should have known that some active harassment was going on and yet didn’t take affirmative steps to do anything about it. So, again, where you have a rank-and-file employee committing an alleged act of workplace harassment or sexual harassment against another rank-and-file employee, that employee can prove liability under traditional Supreme Court law ONLY if that employee can prove that the employer knew or should have known about the alleged act of harassment and didn’t do anything about it to remedy the situation. On the other hand, under settled Supreme Court law where an act of harassment is committed by a so-called supervisor, and where there is a tangible employment action taken against the employee or committed against the employee by that supervisor such as demotion, firing, transferring, some significant employee action, that employer, if it is done by a supervisory employee, will be absolutely liable without any kind of defense. If there is no tangible employment action taken, in other words there may be an active harassment, but where it doesn’t result in a serious employment action such as demotion or transfer or firing, that employer will have a defense, and that defense is, number one, if it has exercised reasonable care to prevent and correct any of the harassing behavior, and, two, where the plaintiff or the employee who is complaining about the active harassment failed to take advantage of an existing anti-harassment policy promulgated and communicated by the company. So, again, let me just review for you before I get to the decision. The traditional law is where an active harassment is committed by a rank-and-file employee against another rank-and-file employee, the employer is only liable if the employee can show negligence on the part of the employer. On the other hand, where there is a tangible action committed against an employee by a supervisor that employer will be absolutely liable without a defense. And, even if it doesn’t result in a tangible employment action, the employer only has a defense if it has an existing policy against harassment, and the employee did not adequately use or utilize that policy. What was undefined until the case of Vance v. Ball State University was what constitutes a supervisor. Is a supervisor akin in Title 7 law to simply a lead worker or somebody who may give orders to another employee, or is a supervisor under Title 7 established by a higher standard, somebody who has real impact on the employment situation involving an employee? This decision that was handed down on Monday was written by Justice Alito, and it was joined by Chief Justice Roberts, Scalia, Kennedy, and Thomas. And, as you might imagine, the Liberal block of the court, which consists of Ginsberg, Breyer, Sotomayor, and Kagan were dissenting votes in this case. The judgment: Nevertheless, in a very, very significant decision, the Supreme Court under Justice Alito decided that in any kind of a Title 7 case the employer would only be held liable in the absolute sense if the supervisor who is alleged to have committed the offense is empowered by the employer to take tangible employment actions against the victim in a very material and substantial way. And, as the court indicates, and I’ll read this to you:

“We hold that an employer may be vicariously liable for an employee’s unlawful harassment only when the employer has empowered that employee to take tangible employment actions against the victim, i.e., to effect a significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities or a decision causing a significant change in benefits.”

So, what the Supreme Court has stated is that it will be more difficult for an employee to allege and successfully prove a case of workplace harassment involving a so-called supervisor unless that employee can demonstrate that that person whom he is calling a “supervisor” is imbued with very significant authority, the authority to hire or fire or fail to promote or reassign with significantly different decisions or a decision causing a significant change in benefits. So, for those of you who have any EEO responsibilities, I think that you should be heartened by this decision. It was not really a surprise to me given the current composition of the court. The other significant part about this case and the next case that I’m going to mention is you may remember in my last telebrief I talked about the EEOC’s so-called guidance on criminal background checks, [see telebrief for 5/22) and I indicated in my discussion that many times the EEOC’s regulations and rules and guidances don’t get the degree of deference from courts that they might like to obtain. Now, in this case, not only did the Supreme Court buck the EEOC’s position on what a supervisor is, but it also negated the EEOC’s guidance on its definition of what a supervisor is as well. So, in a footnote, the court says:

“The United States urges us to defer to the EEOC guidance but to do so would be proper only if the EEOC guidance has the power to persuade, which depends upon the thoroughness evident in its consideration, the validity of its reasoning, and its consistency with earlier and later pronouncements. For the reasons explained below, we do not find the EEOC guidance persuasive.”

To me, this is a very significant aspect of not only this case, Vance v. Ball State University, but the next case that I’m going to discuss as well. So, as I stated two weeks ago, just because the EEOC puts out regulations or rules or a guidance, doesn’t necessarily give it the force of law when it comes to how they will be interpreted by a federal court. And, in this case, the Supreme Court actually slapped the hand of the EEOC and said, we’re not paying attention to your guidance because we don’t think that it makes a lot of sense.

University of Texas Southwestern Medical Center v. Nassar

The issue: Now, the second case that I’m going to mention was decided again on June 24 of this year, two days ago, decided by the Supreme Court in a case called University of Texas Southwestern Medical Center v. Nassar, and the major issue in this case had to do with the standard under which an employee who claims a retaliation case must prove in order to successfully promulgate or successfully prosecute his retaliation claim. The Scenario: Essentially what happened here was that there was an individual named Nassar who filed both substantive claims against the University Medical Center on the basis that he has been discriminated against on the basis of his religion and national origin or ethnic heritage, and then he coupled that with a claim of retaliation. The case wound up in the court, in a lower court, which found for him and awarded him $400,000 in back pay and more than $3,000,000 in compensatory damages. The district court reduced that compensatory damage award to $300,000. The case wound its way through the Federal Court of Appeals and eventually got to the Supreme Court on what the appropriate test is for assessing whether there has been actionable retaliation, and the differences are these. The plaintiff in this case recovered on the basis that one of the motivating factors behind the employer’s decision to terminate him was a retaliatory motive for his earlier filing of an EEOC complaint. The other standard, which the Supreme Court has adopted, is the so-called ‘but for’ test, which is a more stringent test. And, essentially what it says is this: That in any case brought in federal court or under the EEOC’s Title 7, where an employee is alleging that he or she has been the victim of not only substantive discrimination but retaliation on top of discrimination, and, as you know, in fiscal year 2012-2013, there were about 100,000 filed with the EEOC, fully one-third of them consisted of retaliation charges, so retaliation is often piggybacked on substantive EEOC charges. The Judgment: And, what the Supreme Court said in the Nassar case, just two days ago, was that in order for an employee to successfully prosecute a claim for retaliation he must show that but for the act of retaliation, but for the employer knowing that the employee had engaged in a protected act of filing a charge, that the so-called act of retaliation would not have taken place. It’s a much more stringent standard than simply saying that a motivating factor behind the employer’s decision was retaliatory in nature. So, here the Supreme Court laid out a scenario in the context of its decision, which I think is very instructive for those of you who face these kinds of situations. What the Supreme Court said in its decision was,

“In addition, lessening the causation standard could also contribute to the filing of frivolous claims, which would siphon resources from efforts by employer, administrative agencies, and courts to combat workplace harassment. Consider in this regard the case of an employee who knows that he or she is about to be fired for poor performance, given a lower pay grade, or even just transferred to a different assignment or location. To forestall that lawful action, he or she might be tempted to make an unfounded charge of racial, sexual, or religious discrimination. Then, when the unrelated employment action comes, the employee could allege that it is retaliation. The respondent, meaning the employee, could allege that it is retaliation. If the respondent were to prevail in his argument, that claim could be established by a lessened causation standard all in order to prevent the undesired change in employment circumstances. Even if the employer could escape judgment after trial, the lessened causation standard would make it far more difficult to dismiss dubious claims at the summary judgment stage.”

Essentially what the court is saying here is what you all may face frankly in a practical sense, which is you have situations where an employee may have complained or even filed a charge of discrimination. They do that in a preemptive fashion because they know that they’re on thin ice either because of bad performance or conduct, etc., and they believe that because they have filed a charge or a complaint that they are therefore immunized by any kind of further adverse or negative action on the part of the employer. What the Supreme Court has expressly said in the Nassar case is that that employee will only get the protection of the anti-retaliatory provisions of Title 7 by showing that but for his act of filing a charge or filing a claim that the employer would not have taken the action it did, which is a much more lenient standard for an employer to meet than would be the standard of a motivating factor behind the employer’s retaliatory action was the fact that the employee had previously filed a charge or a complaint. So, both of these cases, Vance v. Ball State University and University of Texas Southwestern Medical Center v. Nassar, filed by the Supreme Court on the very same day are extremely pro-employer, and Justice Ginsburg was thoroughly annoyed that both decisions wrote over 20-page dissenting opinions under both decisions and basically said in her opinion Congress should take both of these decisions up and change the law in Title 7 to accommodate her view of the law as opposed to the majority’s view of the law. I doubt very much given the present composition of Congress if that will happen. So, at least, I know many times in these telebriefs, I kind of give you difficult news. This is news emanating from the highest court in the land two days ago, very favorable towards employers both in terms of the retaliation aspect and frankly the definition of supervisor under Title 7 of the Civil Rights Act.

Fair Labor Standards Act (FLSA) as it pertains to technology today

I want to mention another thing that has come up to me a couple of times in the last month, and that is an issue under the Fair Labor Standards Act, particularly as it pertains to technology today. We all have smart phones, we all use e-mail on our phones, and we all have access to work networks probably while we’re driving or while we’re texting or while we’re at home, etc. I want to bring up an issue that has come with a couple of my clients that may come up with you as well. And, that is, there is no issue when exempt employees work on the weekends or work off hours in answering e-mails or responding or using the work network to be responsive to a supervisor or a boss or something like that in terms of work time, because, as we all know, exempt employees are paid the same whether they work 30 hours a week or 80 hours a week and whether they are answering e-mails at night or on the weekends, etc. That is not the case for nonexempt employees. So, if you have distributed smart phones or cell phones to nonexempt employees or in fact if you give nonexempt employees access to your work network, you have to be careful about expecting or condoning or permitting nonexempt employees to be considered “working” by answering or responding to e-mails off hours, weekends, or nights because that time can well be considered by the Department of Labor as work time. CAVEAT: Look at policy statements and how you track time if exempt employees are expected to be responsive after hours (T Mobile and Black & Decker cases) You need to take a look at your policies, you need to take a look at how you keep track of time, and if you expect employees to be responsive off hours, particularly nonexempt employees, you’re going to have to figure out either how to track time or how to prohibit the access of those employees to a work network during off hours. Otherwise, if the Department of Labor were to audit your policies, it would very likely find that to be work time. And, there have been several recent cases involving big corporations, like T-Mobile and Black & Decker, where FLSA collective actions have been brought by nonexempt employees on the basis that the employer did not compensate them for hours that were worked or time that was worked in the form of answering or responding to e-mails during time that wouldn’t be their typical work hours. So, just a word to the wise, take a look at that. If you are allowing your employees to do that, you need to make sure that you have policy statements on that or that you have a method of tracking that time.

EEOC is stepping up investigations into hiring practices (e.g. EEOC v. Performance Food Group, Inc.)

The last thing that I will mention to you is (and I know I’ve covered this in the past), that the EEOC is looking very carefully at hiring practices of companies as part of its strategic plans for 2013 and 2014 and beyond. The EEOC announced on Monday a lawsuit in Baltimore in federal court against a company called Performance Food Group, Inc., on the basis that the company was engaged in an ongoing pattern of refusing to hire woman for positions at the company’s distribution facilities. The lawsuit says that the positions included such jobs as drivers, forklift operators, mechanics, transportation supervisors, and warehouse supervisors. Again, as I have indicated, you’ve got to make sure that you’re not stereotyping positions as male or female or that you’re not guiding any particular gender into any particular classification that you might have because this is very high on the EEOC’s radar screen at the present time. So, those are the topics for today. If there are any questions, I’d be glad to answer them. Jeanne Hyatt: The next telebrief will be the second Wednesday of July, which is July 10th. Howard Kurman: Okay. So, again, as I always say, if you have private questions, fee free to call me on my work line, 410-209-6417, or my work e-mail hkurman@offitkurman.com. I appreciate everybody’s participation as usual, and I hope everybody has a good weekend. At least we got some good news from the Supreme Court on Monday. Jeanne Hyatt: REMINDERS: We’ll be resuming Executive Sessions in the fall. We’ll do two, probably October and early November, and you should be receiving information on that details and topics in August. Also, many of you have requested blocks of PINS so that other members of your team can listen in. We are happy to do that. If you want other members of your team to have a pin, just please e-mail me. My e-mail address is jhyatt@offitkurman.com. Thanks Howard.

Q & A

Participant: Howard, I have a question, please. Going back to Vance v. Ball State… You mentioned that if the harassment occurred but no employment action taken, the employer has a defense, and what’s that defense again? Howard Kurman: The defense is that it has promulgated and communicated a clear policy on workplace harassment. In another words, there is a probably a handbook policy on what employees can do to remedy harassment and that the employee did not take full advantage of it.