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LGBT employees seek protection from workplace discrimination ASAP

September 25th, 2009  |  Lucas Otto

>There seems to be little that stokes the flames of passionate argument more than the terms “sexual orientation,” and when you add “workplace” and “rights” into the mix, it has the potential to stir up a hornet’s nest of controversy. Yet, Congress is dealing with these very workplace discrimination issues with the introduction of the Employment Non-Discrimination Act (ENDA), a bill (S. 1584) that would prohibit discrimination against employees on the basis of sexual orientation, gender identity, and disability—and specifically includes transgendered individuals—and would apply to civilian employers with over 15 employees (religious employers excepted).

For most employers, discriminatory practices are simply not tolerated, but sexual orientation discrimination, consisting mainly of discrimination against lesbian, gay, bisexual & transgender (LGBT) employees, continues to lie in the proverbial “gray area.” A recent study by the Williams Institute found that:

“Twenty-nine states do not have anti-discrimination statutes that prohibit sexual-orientation discrimination and 35 do not have statutes that prohibit gender identity-discrimination. Of the states that do have anti-discrimination statutes that prohibit discrimination on these bases:

  • Three do not prohibit discrimination on the basis of perceived sexual orientation;
  • Five either do not provide for compensatory damages or subject such damages to caps that are lower than ENDA’s; and
  • Five do not provide for attorneys’ fees, and another five only provide for them if the employee files a court action as opposed to an administrative action.”

The study, which primarily showed that unconstitutional discrimination on the basis of sexual orientation occurred with the same high frequency in state and local governments as it did in the private sector, showed two disturbing workplace realities: (1) Job discrimination on the basis of sexual orientation or gender identity by employers appears to be legal in a majority of U.S. states; and (2) One in five LGBT public sector employees has experienced workplace discrimination on the basis of sexual orientation, and a significant wage gap exists between heterosexual and LGBT employees.

While the study dealt with state and local government employers, it no doubt illustrates the chilling effect this type of workplace discrimination can have on its recipients, even those working for private employers. The question most likely posed by many of these LGBT individuals is: Why—with race, gender, religious and national origin employment discrimination laws—are we, as a group, not also afforded protection by anti-discriminatory laws? The answer does not appear to be simple, and most employers, public and private, likely don’t want to venture into issues surrounding employees and their sexual orientation unless forced to do so.

Yet, with ENDA, these individuals would enjoy workplace discrimination protections. However, ENDA has been introduced in every Congress, except the 109th, since 1994, and has failed to pass. So what is the proper course of action an employer should take with respect to sexual orientation and gender-identity discrimination in the absence of ENDA? Well, when looking at dollars and cents, as every employer does, it only makes sense to preemptively address these issues, and educate company officials on not only current state employment laws regarding sexual orientation, but also on what changes are to be expected if ENDA does pass.

Because, however uncomfortable the discussion of sexual orientation discrimination in the workplace might be, the discussion is not going to go away, and it will cost an employer a lot more (e.g., litigation costs, lower worker productivity) if it simply turns a blind eye to the issue.

Take note of the latest outsourcing trend: Employer liability for contractors’ discriminatory acts

September 21st, 2009  |  Deborah Hammonds

>Most employers assume if they outsource their HR functions to independent contractors, so, too, will they not be held liable for their contractors’ discriminatory acts. That is simply not the case. As the Second Circuit’s recent decision in Halpert v. Manhattan Apartments, Inc., illustrates, just because you have hired an independent contractor to recruit and hire the staff for your company, it does not mean that you are off the hook for the contractor’s bad acts. Kinda scary when outsourcing HR is so commonplace in big business.

Just the facts. Michael Halpert interviewed for a position that required showing rental apartments for Manhattan Apartments, Inc. (MAI). The interview was conducted by the “apparent” hiring agent for MAI, Robert Brooks. During the interview, Brooks allegedly told Halpert that he was “too old” for the position. Not surprisingly, our applicant filed suit under the Age Discrimination in Employment Act (ADEA). The district court dismissed the case, finding that Brooks was an independent contractor, not an employee of MAI, and, the ADEA “does not apply to independent contractors.”

The Second Circuit reversed, holding that “an employer may be liable for discrimination by third parties, including independent contractors, that [it] authorizes to make hiring decisions on its behalf.” By its terms, explained the circuit court, employer liability under the ADEA is direct, not derivative: an employer may not “fail or refuse to hire… any individual…because of such individual’s age.” And, when liability for discrimination is “direct,” that prohibition applies to employers regardless of whether the employer “uses its employees to interview applicants for open positions, or whether it uses intermediaries such as independent contractors to fill that role,” explained the court. “If a company gives someone authority to interview applicants and make hiring decisions on behalf of the company, the company may be held liable if that contractor discriminates against an applicant because of the applicant’s age,” wrote the court.

Ultimately, MAI’s potential liability turned on whether Brooks was acting as the (apparent) hiring agent for the rental company when he interviewed Halpert for the position, or whether Brooks was simply hiring an employee on his own behalf. The Second Circuit observed that there were triable issues of fact precluding dismissal of the case on that issue: (1) MAI sponsored a training program for individuals hired to show the apartments and those chosen for the program would earn commissions from MAI; (2) MAI enlisted so-called “sales associates” like Brooks to interview candidates for the program; (3) the career counselor, who arranged the interview for Halpert, believed he would be interviewing for a position with the MAI, not Brooks; (4) the interview took place at the rental company’s offices; and (5) after the interview, both Brooks and another rental company associate told the counselor they were looking for someone younger.

There was also an agreement between MAI and Brooks, which set forth in great detail the rights and duties of both parties, especially with respect to Brooks’ jobs functions as a sales associate. While Brooks was to pay “his own expenses,” including “automobile, travel and entertainment expenses,” the agreement did not indicate that he was to compensate showers directly. MAI also presented affidavits from Brooks and an MAI representative asserting that Halpert, if hired, would have been compensated by Brooks, not MAI. But, MAI failed to corroborate the affidavits. In all, we are left with evidence cutting both ways.

What does all this mean? Every year we see an increase in HR outsourcing…the obvious reason being because it is “cost effective.” According to a recent survey from HR consultant Hewitt Associates, 94 percent of companies outsource at least one HR function or program. A case like Halpert serves as a warning to employers who want to outsource their recruitment and hiring functions. Employers will not be released from their obligations under federal anti-discrimination laws just because they have authorized independent contractors to make hiring decisions on their behalf. This should be taken into account when structuring any contract that outsources your HR functions. Perhaps a clause in the agreement requiring the independent contractor to buck up on its anti-discrimination training couldn’t hurt…for both parties.

Individualized ADA assessment by checklist?

September 18th, 2009  |  Pamela Wolf


The much-anticipated proposed regulation implementing the Americans with Disabilities Act Amendments Act of 2008 (ADAAA) is set to be published in the Federal Register the week of September 21, now that the Equal Employment Opportunity Commission (EEOC) has approved its notice of proposed rulemaking by a 2-1 vote. And it looks like the new regulation will include a checklist of impairments that always constitute a “disability” under the ADA.

The ADAAA, which took effect January 1, 2009, expands the scope of the ADA’s coverage. The new law leaves undisturbed the basic definition of “disability” as an impairment that substantially limits one or more major life activities, a record of such an impairment, or being regarded as having such an impairment, but changes the manner in which these terms are interpreted.

The federal agency says that, consistent with the ADAAA, its proposed rule emphasizes that:

  • the definition of disability – an impairment that poses a substantial limitation in a major life activity – must be construed in favor of broad coverage of individuals to the maximum extent permitted by the terms of the ADA, and should not require extensive analysis;
  • major life activities include “major bodily functions”;
  • mitigating measures, such as medications and devices that people use to reduce or eliminate the effects of an impairment, are not to be considered when determining whether someone has a disability; and
  • impairments that are episodic or in remission, such as epilepsy, cancer, and many kinds of psychiatric impairments, are disabilities if they would “substantially limit” major life activities when active.

According to the EEOC, its proposed regulation also provides a more straightforward way of demonstrating a substantial limitation in the major life activity of working, and implements the ADAAA’s new standard for determining whether someone is “regarded as” having a disability.

A new question-and-answer document (Q&A) posted on the EEOC’s website on September 17 gives a preview of what to expect in the proposed regulation. Of particular interest to employers is a list of impairments that will “consistently meet the definition of ‘disability’”:

  • deafness;
  • blindness;
  • intellectual disability;
  • partially or completely missing limbs;
  • mobility impairments requiring use of a wheelchair (a mitigating measure);
  • autism;
  • cancer;
  • cerebral palsy;
  • diabetes;
  • epilepsy;
  • multiple sclerosis;
  • muscular dystrophy;
  • major depression;
  • bipolar disorder;
  • post-traumatic stress disorder;
  • obsessive-compulsive disorder; and
  • schizophrenia.

The Q&A instructs that “the individualized assessment of whether a substantial limitation exists can be done very quickly and easily with respect to these types of impairments, and will consistently result in a finding of disability.”

But is an “individualized assessment” meaningful when it is expressly presumed that the same result will always be obtained?

This looks more like a checklist – a per se list of disabilities – than the “individualized assessment” that has always been the cornerstone of any ADA analysis. Will employers have any argument against these asserted impairments? Has the EEOC gone too far?

Should attorneys’ ethical obligations bar them from bringing whistleblower claims?

September 16th, 2009  |  Cynthia L. Hackerott

>Should attorneys’ ethical obligations to their clients bar in-house counsel from bringing whistleblower claims against their employers? In Van Asdale v International Game Tech (2009 U.S. App. LEXIS 18037, August 13, 2009), the Ninth Circuit Court of Appeals found that the ethical obligations of two Illinois-licensed attorneys, who claimed that a gaming machine company fired them in retaliation for raising fraud claims related to a merger, did not prohibit them from bringing federal SOX whistleblower claims. The federal appellate court ruled that the Van Asdales, a husband and wife who both worked for the company, could bring their SOX claims – even though the Illinois Supreme Court, in Balla v Gambro, Inc (145 Ill. 2d 492, December 19, 1991), has held that in-house counsel cannot bring a state law retaliatory discharge tort claim.  

In Balla, the Illinois Supreme Court held that a corporation’s general counsel, who was terminated as a result of his efforts to prevent a shipment of misbranded and/or adulterated medical devices, could not bring a retaliatory discharge claim even though his discharge was in contravention of a clearly mandated public policy. The state supreme court reasoned that extending the tort of retaliatory discharge to in-house counsel would compromise the attorney-client relationship because employers might be less willing to be forthright and candid with their in-house counsel. Moreover, allowing the claim would not promote disclosure of the misconduct because the attorney was required under the state’s rules of professional conduct to report the employer’s intention to sell the misbranded and/or adulterated medical devices; thus, the public policy of protecting the lives and property of citizens was adequately safeguarded. Finally, the court reasoned that if the tort were extended to in-house counsel, “the employer/client would be forced to pay damages to its former in-house counsel to essentially mitigate the financial harm the attorney suffered for having to abide by [the Illinois] Rules of Professional Conduct,” which was “impermissible” because attorneys may “have to forego economic gains in order to protect the integrity of the legal profession.”

Citing Balla, the company that employed the Van Asdales asserted that allowing them to maintain their SOX claim would violate the attorneys’ obligations under the Illinois Rules of Professional Conduct. Rejecting this argument, the Ninth Circuit distinguished Balla, noting that the Illinois Supreme Court explained that it “base[d its] decision as much on the nature and purpose of the tort of retaliatory discharge, as on the effect on the attorney-client relationship that extending the tort would have.” Furthermore, the Ninth Circuit concluded that “federal courts in Illinois have uniformly declined to apply Balla to claims based on federal law.”  

The company then argued that, irrespective of the specific rules applicable to Illinois-licensed attorneys, the Van Asdales should not be permitted to maintain their SOX claim because doing so would require use of attorney-client privileged information. However, the Ninth Circuit determined that such concerns did not justify barring the Van Asdales’ SOX claims because nothing in statute indicates that in-house attorneys are not protected from retaliation “even though Congress plainly considered the role attorneys might play in reporting possible securities fraud.” In addition, it was unclear to what extent their suit required disclosure of confidential information and the trial court could use equitable measures to minimize the possibility of harmful disclosures, the federal appellate court observed. 

It seems that the federal nature of the SOX claim was a key distinction here. Securities laws are exclusively under the jurisdiction of the federal government, and, as the Ninth Circuit indicated, Congress “plainly considered” when enacting SOX that attorneys would be privy to information regarding possible securities fraud. That being the case, it appears Congress determined that any adverse impact on attorney-client communications did not outweigh its goal of encouraging disclosures related to securities fraud.

Less than half of Americans now approve of labor unions

September 14th, 2009  |  David Stephanides

>The results of Gallup’s annual Work and Education survey find organized labor taking a significant image hit over the past year. While 66% of Americans continue to believe unions are beneficial to their own members, a slight majority now say unions hurt the nation’s economy.

More broadly, fewer than half of Americans – 48%, an all-time low – approve of labor unions, down from 59% a year ago. The 48% of Americans now approving of unions represent the first sub-50% approval since Gallup first asked the question in 1936. The previous low was 55%, found in both 1979 and 1981. That first poll found 72% of Americans approving of unions and only 20% disapproving.

Gallup attributes the downslide to the economic recession, and the aftermath of major economic interventions by the government on behalf of two of the Big Three domestic auto companies. Results were based on telephone interviews with 1,010 national adults, aged 18 and older, conducted Aug. 6-9, 2009. Gallup released its poll on September 3.