Nolo's Employment Law Blog

A few weeks ago, an appeals court in New Jersey decided, in J.T.'s Tire Service v. United Rentals North America, that one business can sue another business for quid pro quo sexual harassment. If you're wondering how one business might make sexual advances toward another, the answer is: the old-fashioned way, with wandering hands and unwanted sexual propositions.

The facts of the case allege that Harold, the manager of an equipment rental company, stopped buying tires from Eileen, owner of a tire service, after she refused his sexual advances. She had been selling to the company for almost ten years, earning about $29,000 monthly from the account. After she rejected Harold's advances, he kissed and groped her, delayed payments to her company, and then stopped doing business with her altogether.

She (and her business) sued under a section of New Jersey's nondiscrimination law that makes it illegal to refuse to contract or do business with any person on the basis of a protected characteristic, including gender. The court found that Eileen faced quid pro quo sexual harassment, a form of gender discrimination that violated the statute. The court added that allowing such conduct would create barriers to a woman's ability to run a business on an equal footing with men, and was therefore exactly what the legislature was trying to get at when it passed this antidiscrimination provision.

The federal agencies have released their Regulatory Plan and Unified Agenda of Regulatory and Deregulatory Actions (known as the "Unified Agenda.") Twice a year, federal agencies must provide this information to let the public know what regulatory actions they're planning and to coordinate rulemaking among the agencies.

The Unified Agenda can be somewhat daunting, both in length and in jargon (OMB Watch, a nonprofit that works to promote greater transparency in federal regulatory and budget matters, has a nice guide to some of the terms used in the Unified Agenda). Each federal agency that's included in the Unified Agenda must indicate what rulemaking it has planned in coming months. The list of agencies in the current Unified Agenda is here; when you click on an agency's link, you can see its statement.

The EEOC has identified two regulatory priorities:

1. Implementing the employment provisions of the Americans with Disabilities Act Amendments Act (ADAAA). The EEOC issued proposed regulations on the ADAAA in September 2009 (you can check out my blog post reviewing the regs here), and asked for public comments to be submitted by November 23. Now, the agency must review all of those comments and come up with final regulations.
2. Amending its regulations on the "reasonable factor other than age" defense to an age discrimination claim under the Age Discrimination in Employment Act (ADEA), an issue the Supreme Court addressed last year. (Here's my blog post on that case, Meacham v. Knolls Atomic Power Laboratory.)

The Department of Labor painted with a broader brush: It begins its regulatory plan with a sort of mission statement, lising 12 "strategic outcomes," from improving health benefits to helping injured workers return to the job, all intended to further the agency's goal of "good jobs for everyone." Here are the specific regulatory proposals that interested me:

1. Updates to the child labor regulations.
2. A review of the military leave provisions and the 2009 regulations interpreting the Family and Medical Leave Act (FMLA).
3. Changes to the record keeping regulation for Fair Labor Standards Act (FLSA). 

The economic downturn has caused a lot of numbers to decline, such as take home pay, retirement savings, bank account balances, and home equity. But at least two numbers have been skyrocketing recently: the unemployment rate, which is higher than it's been in more than 25 years (10.2%), and the number of personal bankruptcies filed, which surged past the one million mark for the first three quarters of this year, and is expected to exceed 1.4 million by the end of 2009.

Considered together, these numbers mean that more job seekers are likely to have a bankruptcy filing on their record. Bankruptcy discrimination is illegal, according to 11. U.S.C. Section 525. However, this protection includes a large exception that leaves most job seekers out in the cold. Although government employers may not discriminate in hiring, firing, or other aspects of employment against those who have declared bankruptcy, private employers have more leeway. They may not fire employees because they have declared bankruptcy, but the statute doesn't explicitly prohibit refusing to hire someone who has declared bankruptcy. Nearly every court to interpret this statute has found that private employers may legally reject an applicant solely because of a past bankruptcy.

Plaintiffs who bring these cases don't have much chance of winning -- unless they can prove that they were actually hired. If the applicant manages to become an employee before the employer rejects him or her, that employee may have a viable case.

A case decided last month by a federal district court in Florida is a good example. In Myers v. TooJay's Management Corporation, Eric Myers claimed that he was denied employment by TooJay's once the company received his credit report and learned that he had filed for bankruptcy. Both parties in the case filed for summary judgment, and Myers lost his claim for discrimination in hiring. The judge found that the statute doesn't prohibit refusal to hire based on bankruptcy, so Myers couldn't win on that allegation.

However, the judge found that Myers was entitled to continue to trial on his claim that he was actually hired by TooJay's, then fired once the company learned about his bankruptcy. Everyone agrees that Myers interviewed for the position, then spent two days in an on-the-job evaluation. When the evaluation ended, Myers was told that he had performed well and was asked to sign a number of documents, including a W-4 form, an I-9 form, an order form for an employee uniform, a nondisclosure agreement, and acknowledgment forms for the company's sexual harassment policy and employee handbook. Myers said the manager he spoke to made him an unconditional offer of employment and discussed his start date, hours, and salary range. The manager denied making these statements, and said that he told Myers any offer of employment was contingent on passing a background check. (Myers signed a consent to the background check along with the other forms.) After Myers gave notice at his old job, he received an adverse action form from TooJay's, stating that the company was rescinding its employment offer because he had filed for bankruptcy.

Based on these facts, the judge decided that a jury could find that Myers had been hired, and was therefore an employee protected from bankruptcy discrimination. So, Myers will have his day in court. TooJay's apparently has an official policy of not hiring anyone who has filed for bankruptcy. This seems overly punitive, given the many legitimate reasons why someone might declare bankruptcy, especially in this economic climate. But no matter where you come down on this issue, there's a lesson for everyone here: If you believe you haven't yet hired someone, don't ask that person to sign employment forms. Save the first-day paperwork for the first day of work.   

Last term, the Supreme Court decided a controversial age discrimination case called Gross v. FBL Financial Services, Inc. You can read my blog post about it here, including my prediction -- which has now proven accurate! -- that Congress would try to overturn the holding in the case. (In fairness, I wasn't alone; plenty of others made the same prediction.)

The Gross case held that employees alleging age discrimination have to do more than show that their age was a "motivating factor" in the decision they're complaining about. They must show that their age was what lawyers call the "but for" cause of the decision -- in other words, that the decision would not have been made if not for their age.

This standard is different than the one used for other types of discrimination. In Title VII cases, if the employee can show that a protected characteristic (such as race or national origin) was a motivating factor in the employer's decision, the burden of proof then shifts to the employer, who must prove that the same decision would have been made regardless. The logic behind this procedure is that any consideration of a protected characteristic is improper and illegal. So, for example, if the employee can prove that the employer was motivated, even in part, by the employee's race, the employer bears the responsibility of defending its actions and proving that race was ultimately not the deciding factor. The employer bears this burden because the employer is already at fault for taking race into account at all.

The Gross decision is just the latest indication that age discrimination is treated differently than other kinds of discrimination. In part, that's because age discrimination is prohibited by a different statute, which uses slightly different language than Title VII. But it's also due to our societal belief that age discrimination just isn't as bad as other types of discrimination. (For an interesting take on the reasons that might motivate this belief, check out this editorial from The New York Times this weekend.)

Anyone who has practiced employment law will tell you that you have to prove a lot to win an age discrimination case. Biased comments that would be the smoking gun in a sex or race discrimination case seem to barely raise an eyebrow. There's a long line of cases dismissing statements about workers being "too old," having "senior moments," or needing to get out of the way to make room for "younger, more energetic" employees as stray comments, not sufficient -- and sometimes, not even considered relevant -- to prove discrimination.

Last month, the "Protecting Older Workers Against Discrimination Act" (HR 3721) was introduced in Congress. Its stated purpose is to overturn the Gross decision. It would require courts to follow the same burden shifting procedure in age discrimination cases as they follow in Title VII cases: Once the employee shows that age was a motivating factor in the decision, the employer would have to show that the decision would have been made even if age had not been considered. 

If this bill passes, it could make a big difference. As our population ages and competition for scarce jobs increases, age discrimination claims are on the rise. In 2008, the EEOC reported that charges of age discrimination increased more than 28% from the previous year, the largest increase of any type of claim.    

The Supreme Court began its 2009-2010 term yesterday. As a number of news reports have pointed out, there are a lot of business cases on the docket this time around, including a challenge to the accounting review board created by Sarbanes-Oxley. There are also a few cases with labor or employment implications on the docket, including a couple of arbitration cases (Union Pacific Railroad Co. and Stolt-Nielsen S.A.) and an ERISA dispute (Conkright).  

And just last week, the Court agreed to hear Lewis v. City of Chicago, a disparate impact case involving racial disparities in the results of a written test given to firefighter applicants. (Sound familiar?) This time around, Black applicants are suing the city of Chicago for using the results of a written test -- which they allege had a disparate impact based on race -- to decide whom to hire.

The issue in Lewis is when the plaintiff-applicants should have filed their charges of discrimination with the EEOC (which is a prerequisite to filing a lawsuit; plaintiffs who don't file a charge with the EEOC or a similar state agency may not sue under Title VII). The Seventh Circuit Court of Appeals found that the applicants filed their charges too late and entered judgment for the city. 

Plaintiffs have 300 days after their claim "accrues" to file a charge of discrimination with the EEOC. In Lewis, the plaintiffs learned their test results (which divided applicants into the categories of "well qualified," "qualified," or "not qualified") and were told that they were unlikely to be hired unless they fell into the "well qualified" category. At about the same time, the city announced that it was likely to hire only a third of those who fell into the well qualified category in the next three years. 

The plaintiffs filed their charge more than 300 days after they received their test scores and learned how the city planned to use them, but within 300 days after the city actually started hiring based on those scores. The Seventh Circuit found that the plaintiffs' claims accrued when they learned their test scores, because that event determined whether or not they would be hired. Other Circuits have reached a different conclusion, finding that plaintiffs don't have to file charges within 300 days after a policy is announced, but only within 300 days after that policy is relied upon to make an employment decision. Presumably, the Supreme Court agreed to hear the case in order to clear up the issue.   

Those of us who live in the Bay Area are familiar with Cafe Gratitude, a small chain of raw food restaurants. These restaurants have a particular atmosphere and culture, one that feels very familiar to me as a local child of the 60s and 70s. I think of it as "control-freak hippie," an apparently easy-going presentation with a very strident center. (As in, "Hey people, I think it would be really cool if we could all DO THIS EXACTLY THE WAY I WANT RIGHT NOW!") 

A game created by the founders, called Abounding River, is available to play at the many shared tables, so diners can explore "Being Abundance" and discover a "Spiritual Foundation that opens up to a whole new way of looking at money and resources" (quotes from the Cafe's website). Everything on the menu is called "I am [positive adjective]", such as "I am worthy," "I am present," or "I am dazzling." And that's what you have to call it when you order: If you try to get away with, "I'd like the pesto pizza," you will be gently encouraged to call it by its true name ("you mean, 'I am sensational'?"). And when your pizza arrives, the server smiles, looks you in the eyes, sets it in front of you, and says, "you are so sensational!" The staff is friendly, the atmosphere is warm, and there are rules.  

As the East Bay Express recently reported, the Cafe's philosophy and culture stem from the Landmark Forum (which grew out of est (Erhardt Seminar Training)), a "transformative learning" program whose graduates sometimes recruit others in ways so insistent that it can feel like proselytizing.

As some Cafe employees have discovered: According to the Express article, all employees are "encouraged" to attend the Landmark Forum, a weekend-long introductory course, and all managers are required to go -- and pay for it. Managers hold daily "clearings," "during which employees answer a series of questions before 're-creating' each other in a process aimed at freeing the workers to be present and alive in the moment for the job" (quote from the Express article). 

Would you like a side of "I am litigious" with that? Because there could be some employment law problems here, as the article also points out. First of all, employers that require employees to attend training sessions have to pay for it -- twice. The employer has to pay the cost of the training, and then has to pay employees for the hours they spend doing it. Then there's the potential religious discrimination problem: Whether or not the Landmark Forum or the owners of Cafe Gratitude would describe their philosophies as "religious," the belief in human potential -- that we create our own reality -- may itself conflict with a religious view that a higher power does the creating. And, if an employer fires or disciplines those who don't share the company's official belief system or complain about feeling pressure to adopt it, an experience one employee described in the Express article, a retaliation claim may not be far behind.   

In the ADA Amendments Act, which went into effect at the beginning of this year, Congress told the Equal Employment Opportunities Commission (EEOC) that it had defined the term "substantially limits" too narrowly, in a way that inappropriately restricted the number of people protected by the ADA. Last week, the EEOC responded by issuing proposed regulations that represent a significant departure from the way the ADA has been interpreted by the agency and by courts. Here are a few changes I found interesting: 

List of disabilities. Courts -- and the EEOC -- have tended not to categorize a particular impairment as a disability, instead looking at the particular effect the impairment has had on the particular person in question. In the proposed regs, the EEOC has taken a very different approach: It provides a nonexhaustive list of impairments "that will consistently meet" the definition of disability, including deafness, blindness, intellectual disability, partially or completely missing limbs, mobility impairments that require use of a wheelchair, autism, cancer, cerebral palsy, diabetes, epilepsy, HIV/AIDS, multiple sclerosis, muscular dystrophy, major depression, bipolar disorder, post-traumatic stress disorder, obsessive compulsive disorder, and schizophrenia. The regs still nod to the need for an individualized assessment, but say it can be conducted "quickly and easily" in the case of these impairments.

"Substantially limits" redefined. Like the ADAAA, the proposed regs explicitly disavow the test created by Justice O'Connor in Toyota v. Williams, which held that someone is substantially limited only if he or she is unable to perform activities of central importance to daily life. Instead, the regs state that this term should be construed in favor of broad coverage, and that a substantial limit in one activity is sufficient. The regs also say that factfinders should use their common sense when determining whether someone is substantially limited in a major life activity as compared to the general population; scientific or medical evidence won't necessarily be required.

Working as a major life activity. The proposed regs make it easier for employees to show that they are substantially limited in the major life activity of working. Previously, employees had to show that they were unable to perform a class or broad range of jobs -- and the Supreme Court had expressed doubt as to whether working even counts as a major life activity. In the proposed regs, the EEOC makes clear that working is a major life activity, and that an employee has met this standard if he or she is substantially limited in performing or meeting the qualifications for the job he or she has held or for jobs with similar qualifications or requirements. It doesn't matter that the employee could find work elsewhere, could perform jobs with different requirements, or could perform the job with a reasonable accommodation.

Ted Kennedy, who died last night, was known as "the Lion of the Senate." He was also a true working class hero, or more accurately, a hero of the working class. He was one of my heroes as well.

Every day, those of us who practice, write about, or apply employment laws are dealing with Senator Kennedy's life work. Since he was first elected to the Senate in 1962, Kennedy introduced, sponsored and/or vigorously supported these landmark employment, labor, and civil rights laws (among many others):

• The Civil Rights Act of 1964 (the subject of his first speech to the Senate)
• The Occupational Safety and Health Act (OSHA)
• The Worker Adjustment and Retraining Notification Act (WARN)
• The Americans with Disabilities Act (ADA)
• The Civil Rights Act of 1991
• The Family and Medical Leave Act (FMLA)
• The Health Insurance Portability and Accountability Act (HIPAA)
• The Pension Protection Act
• The Genetic Information Nondiscrimination Act (GINA)
• The Lilly Ledbetter Fair Pay Act
• The COBRA subsidy portion of the American Recovery and Reinvestment Act

In his decades in the Senate, Kennedy was instrumental in increasing the minimum wage, protecting the rights of workers to organize, fighting discrimination, and much more. He was a reliable and fierce advocate of the rights of people of color, women, gay men and lesbians, and people with disabilities. What an unbelievable legacy.  

You won't be surprised to hear that the economic downturn has led to huge numbers of layoffs. According to the Bureau of Labor Statistics, more than half a million employees lost their jobs in a "mass layoff event" in the first quarter of 2009, the highest numbers on record. And this counts only incidents in which at least 50 employees at the same company were laid off in a five-week period, not the many more jobs lost in smaller layoff actions or at smaller employers every day.  

In recognition of these figures, the Equal Employment Opportunity Commission recently released some guidance on waivers of discrimination claims. Many employers who lay off workers condition severance payments on the employee signing a release, agreeing to give up (waive) the right to sue the company for any violations of employment law. To be enforced by a court, such waivers must be knowing and voluntary, and must give the employee something of value (typically money) in exchange.

Additional rules, intended to make sure that the waiver really is knowing and voluntary, apply when an employer asks an employee to waive the right to sue under the Age Discrimination in Employment Act (ADEA). And, an employee who is at least 40 years old and is part of a group that's laid off or offered an incentive to resign must be given certain statistical information on the program and the affected employees. These rules are described in the EEOC's regulations interpreting the ADEA, at 29 C.F.R. 1625.22 and 1625.23.

The EEOC's new guidance, written for an employee audience in the form of questions and answers, doesn't appear to create any new rules or requirements. But it does provide a good refresher for companies that are using releases, including a checklist and some sample language waiving discrimination claims that meets the EEOC's requirements. (If you're using an attorney to draft or review your releases -- as you should -- he or she will no doubt find the brevity of the EEOC's sample language humorous.)

Employment law experts have been paying close attention to how federal courts are interpreting the 2009 Supreme Court case of Ashcroft v. Iqbal. In the Iqbal case, the Court held that a man who was arrested as a "high interest" detainee after 9/11 could not sue various government officials for the mistreatment and abuse he allegedly suffered in detention. The facts of the case have little to do with employment law (although Iqbal made claims of discrimination), but the court's holding -- which changed the standard for determining when a judge may dismiss a complaint -- will affect all kinds of civil cases, including those alleging employment discrimination.

For more than 50 years, the rule has been that federal judges may dismiss a complaint for failure to state a claim only if it is beyond doubt that the plaintiff could not prove any set of facts that would entitle him or her to relief. The complaint only had to include a "short and plain statement of the claim," according to Rule 8 of the Federal Rules of Civil Procedure. Unless it was clear that the plaintiff couldn't win -- for example, because the plaintiff filed the lawsuit well after the statute of limitations expired and gave no reasons for the late filing -- the judge would allow the case to proceed to discovery, where each side gathers facts and evidence to prove its claims and defenses. 

The standard announced in Iqbal is stricter: To avoid dismissal, the plaintiff must state a claim that is "plausible on its face." Although this might not sound like a tough requirement, the Court applied it in a way that requires plaintiffs to come forward with more facts at the outset to support their legal claims -- which may be very hard for plaintiffs to do before they have had a chance to conduct discovery.

In the two months since Iqbal was decided, it has been cited more than 500 times by lower courts, according to a recent New York Times article ("9/11 Case Could Bring Broad Shift on Civil Suits"). Joe Seiner, a law school professor at the University of South Carolina, recently posted on the Workplace Prof Blog that Iqbal and an earlier case that began changing the pleading standards have led to significant confusion in Title VII and Americans with Disabilities Act (ADA) cases, and have led to some claims being dismissed that should have been allowed to proceed. Even Congress will soon begin considering the ramifications of the Iqbal case: Last week, Senator Arlen Specter introduced a bill that would undo the decision and require federal courts to use the more liberal standards previously in effect when determining whether a complaint should be dismissed.