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Ricci puts employers between a rock and a hard place

July 17th, 2009  |  Pamela Wolf  |  Add a Comment

>Sonia Sotomayor is undoubtedly not the only person responding to questions about the Supreme Court’s Ricci v DeStefano decision – the 5-4 opinion is surely a “hot topic” for employment attorneys and inside-counsel all across the nation. In Ricci, the Court ruled that a city’s decision not to certify firefighters’ exams, in order to avoid potential race bias claims, was discriminatory. The exams rendered no blacks and at most two Hispanics eligible for promotions. The Court’s decision may have generated many more questions than it answered.

While some US Senators sought to use the case as a litmus test for the qualifications of the Supreme Court nominee, more than a few employers and their legal counsel were likely lamenting the lack of clarity – nothing resembling a litmus test – in the High Court’s opinion as to how to meet the new standard announced for the lawful rejection of a selection procedure that has been determined to have a discriminatory impact on protected members of a workforce.

“[U]nder Title VII, before an employer can engage in intentional discrimination for the asserted purpose of avoiding or remedying an unintentional disparate impact, the employer must have a strong basis in evidence to believe it will be subject to disparate-impact liability if it fails to take the race-conscious, discriminatory action,” wrote Justice Kennedy, joined by four other Justices. Applying this standard, the Court concluded that the city “was not entitled to disregard the tests based solely on the racial disparity in the result.”

But what exactly is “a strong basis in evidence” and how is that standard applied in the real world of employers diligently trying to meet antidiscrimination obligations? As Justice Ginsberg points out in her dissenting opinion, the “barely described” standard “makes voluntary compliance a hazardous adventure.” Given that three of her High Court colleagues agreed with her observation, how difficult will it be for employers to navigate this tricky landscape? How many varied interpretations of this new standard will we see in the coming months and years and will the Supreme Court be required to revisit the issue?

And then there is the tension that Ricci creates between Title VII’s disparate treatment and disparate impact provisions. How will employers seeking to avoid selection procedures that create a disparate impact manage not to invite at the same time a disparate treatment claim? As Justice Ginsburg laments, under the High Court’s ruling, an employer that changes an employment practice in order to comply with Title VII’s disparate impact provision is acting “because of race,” which is generally forbidden under Title VII’s disparate treatment prohibition. The Justice finds this position at odds with congressional intent and the EEOC’s interpretive guidance: “Congress did not intend to expose those who comply with the Act to charges that they are violating the very statute they are seeking to implement.”

Employers are caught between a rock and a hard place with a new standard and a new view of Title VII that likely applies to selection procedures for many other types of employment decisions. For example, consider an employer that out of good-faith efforts to comply with Title VII, performs a disparate impact analysis prior to implementing a reduction in force in order to avoid unintentional bias and associated liability. If the statistics show a disparate impact on a minority group, what should the employer do?

Under Ricci, a statistical disparity alone would likely be insufficient to justify a change in selection criteria. How much and what type of evidence of unreliability must the employer collect before rejecting the questionable procedure and implementing a new one without incurring liability for disparate treatment of non-minority members not initially identified for layoff, but selected under a new procedure?

These and many other questions will likely arise in the aftermath of Ricci. But I predict a surge in reverse discrimination cases that will soon begin to generate some answers.

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Signs show move toward stronger, broader OFCCP enforcement

July 15th, 2009  |  Cynthia L. Hackerott  |  Add a Comment

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Although the person who will be the OFCCP Director for the Obama Administration hasn’t been announced yet, signs indicate that the President’s vision for the agency is one that will enhance its enforcement muscle and scope. At this point, we already know that Obama has requested a whopping increase to the agency’s budget and that this increase will be used to beef-up the OFCCP’s efforts to uncover compensation discrimination. We also know that the agency intends to audit significantly more construction contractors than it has in previous years in light of the increase in federal construction contractors resulting from the American Recovery and Reinvestment Act of 2009 (Recovery Act).

Under President Obama’s FY 2010 budget proposal, announced in May, the OFCCP would receive $109.521 million in funding. That amount is a $27.4-million increase over the estimated FY 2009 budget allotment (82.1 million) adopted by Congress – a striking increase of over 33 percent! The Labor Department has stated that this budget request includes $25,600,000 to fund 213 full-time equivalent employees and a new case management system. Moreover, the Labor Department has specifically stated that much of this increase is intended to support enforcement and outreach efforts related to compensation discrimination – including “improving the various approaches and investigative techniques used to evaluate compensation” and to “support litigation to amplify enforcement activities by funding external experts to verify OFCCP’s allegations and assessments to solidify its commitment to strong enforcement.”

The Recovery Act adds $3 million more for the 2009 budget estimate and $5 million more to the 2010 request. Just last week, the OFCCP posted on its website its plan to conduct 450 compliance evaluations (from July 1, 2009 through September 30, 2010) of federal contractors in receipt of Recovery Act funds in addition to roughly 5,000 federal contractors per FY targeted for audits through the agency’s existing Federal Contractor Selection System (FCSS). Although the OFCCP will audit approximately 90 supply and service contractors receiving federal contracts through Recovery Act funding, it will place a special emphasis on the construction industry because the majority (estimated at roughly 80%) of Recovery Act contractors will be recipients of direct or federally assisted funds for construction projects. To this end, the OFCCP will utilize 50 full-time equivalent employees to complete at least 360 compliance evaluations of construction contractors. By way of comparison, of the 4,333 audits the OFCCP completed in FY 2008 under the FCSS, 204 were of construction contractors. These audits were conducted by a workforce of approximately 400 compliance officers who focused primarily on supply and service contractor audits.

These developments indicate that President Obama has indeed started to implement his vision for the OFCCP, but many elements remain a mystery. For example, given that it seems the agency will continue to increase its focus on systemic discrimination (particularly systemic compensation discrimination), does that mean (as it has in the past) a reduced focus on the affirmative action aspects of federal contractor obligations? Or do the increased funding levels signal an intent to intensify the agency’s focus on affirmative action in addition to systemic discrimination?

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President Obama rounds out his picks for vacant NLRB seats

July 13th, 2009  |  David Stephanides  |  Add a Comment

>Beginning late April of this year, President Obama made his first of three nominations to the NLRB. The Board, presently composed of Chairman Wilma Liebman (D) and Member Peter Schaumber (R), has been the focus of judicial scrutiny over whether it has the authority to issue decisions as a quorum of just two. That issue was petitioned to the Supreme Court on May 27th. With that backdrop, one would believe that seating new members to the Board ought to move quickly.

While perhaps more urgent matters have stolen the spotlight, here are the President’s picks for Member, National Labor Relations Board:

  • Republican Senate staffer Brian Hayes. Hayes currently serves as the Republican labor policy director for the Senate Committee on Health, Education, Labor and Pensions. Previously, he was in private practice for over 25 years, representing management clients exclusively in all aspects of labor and employment law. Hayes has represented employers before the Board, the EEOC, and various state agencies and has extensive experience negotiating labor contracts on behalf of management clients, as well as representing clients in arbitrations, mediations and other forms of alternative dispute resolution. Before entering private practice, Hayes clerked for the Chief Judge of the NLRB and thereafter served as counsel to the Chairman of the NLRB. Hayes earned his J.D. from Georgetown University Law Center.
  • Democrat Craig Becker. Becker is associate general counsel to both the SEIU and the AFL-CIO. He received his J.D. from Yale Law School and has practiced and taught labor law for the past 27 years, as a professor of law at the UCLA School of Law and at the University of Chicago and Georgetown. Becker has published numerous articles on labor and employment law in scholarly journals and has argued labor and employment cases in virtually every federal court of appeals and before the US Supreme Court.
  • Mark Pearce, Democrat and founding partner of Creighton, Pearce, Johnsen & Giroux, a Buffalo, New York, law firm. Pearce practices union-side labor and employment law before state and federal courts and agencies. In 2008, he was appointed to the New York State Industrial Board of Appeals, an independent quasi-judicial agency responsible for review of certain rulings and compliance orders of the state department of labor in wage and hour matters. Prior to 2002, he practiced union-side labor law and employment law at Lipsitz, Green, Fahringer, Roll, Salisbury & Cambria LLP, and from 1979 to 1994 was an attorney and district trial specialist for the NLRB. Pearce received his J.D. from State University of New York. He is a Fellow in the College of Labor and Employment Lawyers.

All three nominations have been sent to the Senate; however, hearings have yet to be set on the Health, Education, Labor and Pensions Committee calendar. It’s also unclear whether the three will be considered as a package or individually.

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Ricci may be a “hot topic” during Sotomayor’s confirmation hearing

July 10th, 2009  |  Deborah Hammonds  |  Add a Comment

>The confirmation hearing for Judge Sonia Sotomayor’s nomination to the U.S. Supreme Court is scheduled to begin on Monday morning (July 13, 2009). If confirmed, she will be the first Hispanic, and the third woman, to be an Associate Justice on the High Court. Judge Sotomayor currently sits on the U.S. Court of Appeals for the Second Circuit.

While Sotomayor has received significant support in favor of her nomination, what should really spark interest in Monday’s hearing will be the appearance of two witnesses who were part of the Ricci v DeStefano litigation. Ricci is the reverse race discrimination case decided by the Supreme Court last week (07-1428). In that decision, the High Court held that the city’s refusal to certify firefighters’ promotion exams to avoid a potential race discrimination lawsuit from minority firefighters was discriminatory. A divided Supreme Court (5-4) reversed the Second Circuit’s affirmation of the district court’s grant of summary judgment to the city.

On the list of witnesses invited to appear before the Senate Judiciary Committee (http://judiciary.senate.gov) were the names Frank Ricci and Lieutenant Ben Vargas. Both Ricci (Director of Fire Services, ConnectiCOSH (Connecticut Council on Occupational Safety and Health)) and Vargas (New Haven Fire Department) were plaintiffs in Ricci v DeStefano. Vargas has the distinction of being the lone Hispanic plaintiff.

One of the reasons Ricci was so closely watched was Sotomayor’s participation as part of the Second Circuit’s panel that affirmed the district court in an unpublished order that was later withdrawn and replaced with a per curiam opinion and an order denying a rehearing and rehearing en banc with written concurrences and a dissent. Will these men be a roadblock in Sotomayor’s path to the High Court? What can they say about her legal analysis and/or performance in a case that was ultimately decided so closely? Particularly when the now-retired Justice Souter (who’s seat she is slotted to fill) voted to affirm the circuit court? Will there be any fallout from Ricci for Sotomayor?

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Hartmarx and beyond

July 8th, 2009  |  Connie Eyer  |  Add a Comment

>Hart Schaffner Marx, an Illinois-based maker of men’s apparel that boasts President Obama as one of its regular customers, recently averted liquidation after it was purchased by Emerisque, a London-based private equity firm. Hartmarx employs nearly 4,000 people nationwide. Here is a look back at the struggle displayed by its workers and supporters over the last six months:

January 2009: Only a few days after President Obama wore one of their suits to his inauguration, Hartmarx, Inc. declared bankruptcy, citing lower borrowing capacity under Wells Fargo, a senior creditor.

May 2009: By early May, Hartmarx had attracted three potential buyers, two of which, it was reported, intended to keep the company intact. Rumors flew, however, that Wells Fargo, which was a recipient of federal bailout funds, was leaning towards a third buyer that favored liquidation. This threat, however, was enough to galvanize workers, supporters, union leaders and federal lawmakers to put a little pressure on Wells Fargo. Two Congressional members at the forefront of this fight, Rep. Phil Hare (D-Ill), who spent 13 years in the employ of Hartmarx, and Rep. Jan Schakowsky (D-Ill), whose great-aunt also worked at the company, urged the bank to keep the company afloat.

During a few days in May, rallies featured labor leaders and workers, along with Rep. Hare and Illinois Treasurer Alex Giannoulias, who threatened to cut off the State of Illinois’ $8 billion in business with Wells Fargo if the company proceeded with liquidation plans. The Hartmarx workforce, in a page taken from that of the Chicago-based Republic Windows and Doors, whose employees staged a successful sit-in to secure the 60 days’ severance and unused vacation days they were lawfully owed, voted to occupy the plant if liquidation were the outcome.

On May 20, Emerisque resubmitted a substantial offer to purchase the company. Choosing not to take this for granted, the next move included a letter to Treasury Secretary Timothy Geithner, written by Schakowsky and Hare and signed by over 40 members of Congress, stressing that the liquidation of Hartmarx should not be an option. “Given the fact that American taxpayers have provided Wells Fargo/Wachovia with $25 billion,” the letter read, “we find it incomprehensible that it would continue to push for the loss of jobs in a viable company.”

Wells Fargo released a statement May 29 opposing the bid by Emerisque, contending that the company “has committed to sell Hartmarx factories in Rock Island, Ill., and Cape Girardeau, Mo., and its distribution centers in Easton, Penn., and Rector, Ark., all within three months of the acquisition.” Emerisque disputed the bank’s claim, noting that “the only factual component of the Wells Fargo statement today is that they believe they should realize a higher cash return on their claim.”

June 2009: Talks, however, continued, and a resolution was finally reached whereby Emerisque revised its cash offering from a numerical amount to a percentage of the debtor-in-possession financing provided by the lending group to keep Hartmarx operating during the bankruptcy process.

When the approval of Emerisque was finally announced on June 26, Rep. Hare noted that “today’s approval of Emerisque’s bid to buy Hart Schaffner Marx and the cooperation by Wells Fargo is good news for nearly 4,000 workers, their families, and our economy. It is proof positive that the voices of America’s working men and women still do matter, even in an era of unprecedented greed.”

Related worker uprising news: In the wake of Hartmarx’s victory, the focus now moves to Moline, Illinois, where Wells Fargo has cut off credit to the Quad City Die Casting factory. Workers at the plant, who are members of the same union that occupied Republic Windows and Doors last year, are calling for Wells Fargo to keep the plant open. As of yet, the bank has refused to even sit down with the union and negotiate.

Stay tuned.

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