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Updates to OFCCP sex discrimination regulations present some compliance conundrums

August 17th, 2016  |  Cynthia L. Hackerott  |  Add a Comment

The OFCCP’s definition of “similarly situated” for the purposes of evaluating compensation differences in its new sex discrimination regulations is so broad that it provides little guidance for federal contractors and goes beyond Title VII standards, two attorneys who handle OFCCP compliance matters recently told Employment Law Daily. The final rule, published in the Federal Register on June 15, 2016 (81 FR 39108-39169), replaces the guidelines at 41 CFR Part 60-20 with new sex discrimination regulations. The regulations, which implement the prohibition against sex discrimination contained in Executive Order (EO) 11246, took effect on August 15, 2016. Section 60–20.4(a) of the new regulations prohibits contractors from paying “different compensation to similarly situated employees on the basis of sex.” But the standard to which the OFCCP will hold contractors in assessing exactly which employees are “similarly situated” is far from clear, the attorneys stated.

“The final rule focuses on ‘similarly situated employees,’ but offers little in the way of concrete guidance except to say that the determination of similarity is ‘case specific,’” observed Gretchen W. Ewalt, a shareholder in the Raleigh, North Carolina, office of Ogletree Deakins and a member of the firm’s Affirmative Action/OFCCP Compliance Practice Group. “[It] lists factors such as skills, effort, and level of responsibility, among others, as relevant to the determination, but states that employees may be similarly situated where they are comparable on some of these factors, even if they are not similar on others. Although the OFCCP contends that it will follow Title VII case law when evaluating contractor’s compensation systems, this flexible standard appears to be broader than  numerous Title VII cases that define similarly situated as requiring the employees to be similar in all material respects.”

The rule “rewrites Title VII’s definition of ’similarly situated’ employees,” John C. Fox, a former OFCCP official and current president of Fox, Wang & Morgan P.C. in Los Gatos, California, said. “’Similarity situated’ does not mean ‘similarly’ situated,” rather, suddenly “[i]t means whatever the OFCCP wants it to mean.”

Ewalt and Fox provided their insights on the final rule in separate interviews with Employment Law Daily. Discussing topics including pregnancy accommodation, sex stereotyping, gender identity, and limitations periods, the attorneys identified several legal and compliance concerns presented by the new regulations.

Overview of changes. The OFCCP’s outdated sex discrimination guidelines had not been substantially updated since 1970, and the new regulations are intended to align with current law and address the realities of today’s workplaces. The OFCCP says that it enforces the nondiscrimination obligations under EO 11246 by following Title VII and the case law principles that have developed interpreting Title VII.

There are two important ways in which the final rule updates EO 11246’s discrimination law prohibitions, Fox explained. First, it catches EO 11246 up to the 1978 Pregnancy Discrimination Act (PDA) amendment to Title VII. Second, it incorporates into the EO 11246 program the amendment to Title VII made by the Lilly Ledbetter Fair Pay Act of 2009 (FPA) which revises the statute of limitations as to compensation claims. These two amendments to OFCCP regulations are important, Fox said, because EO 11246 itself has not been amended in parallel with the amendments to Title VII made by Congress.  For example: While President Obama amended EO 11246 to make “gender identity” discrimination unlawful, the President did not make a parallel change to EO 11246 to also make pregnancy discrimination unlawful. Rather, in the case of pregnancy discrimination, Fox said, the OFCCP amended only its regulations implementing EO 11246, but EO 11246 itself still does not make pregnancy discrimination unlawful. Accordingly, there may be a legal argument that the OFCCP has improperly amended its regulations without a necessary authorizing amendment to EO 11246 as to pregnancy discrimination prohibitions. As such, he said, the portions of this new rule that the agency may be able to enforce are a “checkerboard.”

Expanded definition of “sex.” The final rule contains a new and broad definition of the term “sex,” Fox points out. In Section 60-20.2(a), it states that “[t]he term sex includes, but is not limited to, pregnancy, childbirth, or related medical conditions; gender identity; transgender status; and sex stereotyping.”

Section 60-20.2(b) of the new regulations lists 14 examples of prohibited disparate treatment sex discrimination that the OFCCP believes its existing rules already outlaw, and Section 60-20.2(c) list four examples of disparate impact discrimination already made unlawful, Fox notes. However, he reports that the majority of concerns contained in these lists have never been prosecuted by the OFCCP in the agency’s history, including during the current administration.

Pregnancy accommodation is a gray area. Section 60–20.5(c) of the final rule requires that federal contractors provide workplace accommodations, such as extra bathroom breaks and light-duty assignments, to an employee who needs such accommodations because of pregnancy, childbirth, or related medical conditions, in certain circumstances where those contractors provide comparable accommodations to other workers, such as those with disabilities or occupational injuries. The OFCCP rejected comments to require accommodation of pregnant employees as an “Affirmative Action” requirement, Fox notes. Therefore, the final rule doesn’t require pregnancy accommodation, he explained; rather, in order to avoid unlawful discrimination, contractors are required to accommodate pregnant workers in certain circumstances where the employer has made accommodations to non-pregnant workers with impairments.

The final rule’s provisions regarding pregnancy accommodation are “a reasonable restatement” of the U.S. Supreme Court’s March 2015 holding in Young v. United Parcel Serv, Ewalt said.

In Young, the Court held that an individual pregnant worker who seeks to show disparate treatment under Title VII through indirect evidence may do so through application of the McDonnell Douglas framework, but such plaintiffs are not required to show that the employer’s policy rationale was intentionally biased; rather, the employee can satisfy her burden of showing pretext by demonstrating that the policy put a “significant burden” on pregnant employees and that the employer’s reasoning was not sufficient to justify that burden.

“There is much litigation to come under the Young standard,” Fox predicts, adding that “there is lots of potential liability out there” because the circumstances requiring accommodation are a gray area. There are not “wooden rule” yes or no answers regarding when an accommodation may be necessary. Accordingly, employers will need to get an employment discrimination lawyer to advise them as to each accommodation request, he recommended.

Disparate impact defense. Under Title VII, as amended by the Civil Rights Act of 1991, an employer may defend a disparate impact claim by proving that a challenged specific and neutral practice or policy (not intended to discriminate) is “job related and consistent with business necessity” (the “business necessity” defense). The business necessity defense is incorporated into the OFCCP’s new regulations. However, Fox explained that EO 11246 has not been amended in parallel with the Title VII amendments made in the Civil Rights Act of 1991 to encompass that entirely new definition of what constitutes a business necessity defense. Therefore, federal contractors faced with disparate impact claims under EO 11246 may choose to avail themselves of the defense contained in the Supreme Court’s 1989 decision in Wards Cove Packing Co. v. Atonio. Specifically, contractors need only show that a challenged practice “serves, in a significant way, the legitimate employment goals of the employer.” While the contractor’s justification must be substantial, there is no requirement that the challenged practice be “essential” or “indispensable” to the employer’s business for it to pass muster, as is now the case under Title VII as amended.

Sex stereotyping, gender identity, and transgender status. The final rule reflects the OFCCP’s view that adverse treatment of employees based on failure to conform to particular gender norms and expectations about their appearance, attire, or behavior is unlawful sex discrimination. Moreover, sexual orientation and gender identity were expressly added to the categories protected from discrimination under EO 11246 on July 21, 2014, when President Obama signed EO 13672 which applies to covered contracts entered into or modified on or after April 8, 2015 (the effective date of the OFCCP’s regulations promulgated under EO 13672).

“This is certainly the trend seen in a lot of Title VII cases as courts seem more receptive to the argument that discrimination due to sex stereotyping is prohibited by Price Waterhouse v. Hopkins, and discrimination against people because they do not conform to traditional expectations on gender in terms of dress or behavior is actionable under Title VII,” Ewalt noted.  “Most arguments being asserted now on discrimination against transgender individuals are couched as sex-stereotyping because the individual does not conform to traditional notions of how a man or a woman would dress or act,” she continued.  “Of course, many contractors are already covered by EO 13672, which explicitly prohibits discrimination based upon gender identity.”

A potential legal impediment to enforcement of the OFCCP’s inclusion of sexual orientation and gender identity in the final rule is the fact that Congress has not explicitly delegated legal authority to the President to protect employees from discrimination based on sexual orientation or gender identity, Fox said. Still, in regard to gender identity, Fox—similar to Ewalt—points out that the U.S. Supreme Court’s 1989 decision in Price Waterhouse interpreted Title VII’s sex discrimination prohibition to include a hidden prohibition on “gender” discrimination and specifically outlawed, under Title VII, sex stereotyping. As a result, federal courts have regularly been allowing gender identity claims to proceed under Title VII since Price Waterhouse.

In contrast, courts have not generally recognized claims based on sexual orientation as cognizable under Title VII. The OFCCP notes the weakness of federal court support of Title VII protection against sexual orientation discrimination in the preamble to the final rule, Fox observed.

[ELD Note: Recently, the Seventh Circuit, in Hively v. Ivy Tech Community College (July 28, 2016), reaffirmed its earlier rulings that sexual orientation is not a protected category under Title VII. On top of the fact that Seventh Circuit precedent has been unequivocal in holding that Title VII does not redress sexual orientation discrimination, this precedent is in line with all other circuit courts to have addressed the matter, the Seventh Circuit noted, citing decisions from the First, Second, Third, Fourth, Fifth, Sixth, Eighth, Ninth, and Tenth Circuits, as well as the D.C. Circuit. These holdings reflect the fact that despite multiple efforts, Congress has repeatedly rejected legislation that would have extended Title VII to cover sexual orientation, even in the face of “an abundance of judicial opinions recognizing an emerging consensus that sexual orientation [discrimination] in the workplace can no longer be tolerated,” the Seventh Circuit wrote. Two of the three judges on the Hively panel further wrote to call out the illogical result, in other court decisions, of denying sexual orientation discrimination claims under Title VII but allowing nearly indistinguishable gender non-conformity claims (based on Price Waterhouse and its progeny).]

Do contractors have to pay for sex reassignment surgery? The rule requires contractors to allow workers to use bathrooms, changing rooms, showers, and similar facilities consistent with the gender with which the workers identify. Additionally, the preamble to the rule states that an explicit, categorical exclusion of coverage for all care related to gender dysphoria or gender transition is facially discriminatory because such exclusion singles out services and treatments for individuals on the basis of their gender identity or transgender status.

Under the final rule, contractors may have to pay for sex reassignment surgery, Fox said. The rule uses the term “transition-related medical services” to encompass sex reassignment surgery and/or non-surgical treatment, such as hormone therapy and other medical services. Pursuant to the Young standard, contractors that pay for every other major medical procedure in their company health plans may have to pay for transition-related medical services, unless they can provide a “legitimate nondiscriminatory reason” for excluding such coverage.

Limitations periods. The applicable limitations periods depends on whether the enforcement action is a compliance evaluation or a complaint investigation. In the preamble to the final rule, the OFCCP notes that both federal and administrative courts have held that the regulations at 41 CFR Part 60–1.26, which govern OFCCP compliance evaluations, contain no statute of limitations. Thus, the agency claims that, in compliance evaluations, it may go back in time to investigate and prosecute any unlawful acts back to the beginning of a contractor’s first federal contract, Fox noted. As to enforcement actions arising from individual complaint investigations, the OFCCP states in the preamble that those are governed by 41 CFR Part 60–1.21, which contains a 180-day statute of limitations.

For compensation claims, the new regulations adopt the limitations period provided for in the FPA. The final rule states that a contractor violates EO 11246 and these regulations “any time it pays wages, benefits, or other compensation that is the result in whole or in part of the application of any discriminatory compensation decision or other practice” (Section 60-20.4(e)).

“The Ledbetter Amendment has now arrived at the OFCCP,” Fox said, referring to the FPA. This means that the OFCCP’s two-year statute of limitations on liability is no longer applicable in compensation investigations. For example, an unlawfully discriminatory initial wage pay decision made 10 years ago is not untimely and is still actionable today in 2016, he explained. Yet, Fox again notes that the portion of the final rule adopting the FPA may not be enforceable because, although the FPA amended Title VII, it did not amend EO 11246, and President Obama has not (yet) similarly amended EO 11246 to allow for and apply the Ledbetter amendment.

Still, both attorneys point out the Title VII’s two-year limit on back pay (i.e. damages) is still in place for OFCCP enforcement actions.

“OFCCP states in the preamble to the final rule that it will follow the FPA in enforcement actions arising from individual [compensation] complaints under 60-1.21,” Ewalt notes. “The vast majority of OFCCP enforcement actions, however, arise out of compliance evaluations and are not governed by a specific statute of limitations, although the OFCCP’s own regulations currently limit the back pay recovery period to two years from the date of the scheduling letter,” she said.

Importantly, the OFCCP’s focus on current pay does not comport with the Supreme Court’s 2007 ruling in Ledbetter v. Goodyear Tire & Rubber Co., both attorneys asserted. While the FPA extended the Title VII charge filing period indefinitely when an employee challenges compensation, it did not change the requirement in Ledbetter that Title VII claimants must identify and challenge discrete pay decisions. Accordingly, the OFCCP cannot claim pay discrimination under the relevant legal standard unless it identifies a specific pay decision (meaning an event that impact pay such hiring, promotions, pay freezes, bonuses, and demotions) and proves that decision is discriminatory, Fox said.

“Although the FPA reversed the timeliness portion of the Ledbetter decision, it did not change the crucial portion of the majority decision, namely that Title VII focuses solely on discrete decisions, not current pay. To the extent OFCCP focuses on current pay disparities instead of identifying specific discriminatory pay decisions, OFCCP’s approach may be at odds with controlling Title VII law,” Ewalt stated.

The OFCCP’s focus on current pay, rather than pay decisions, will lead to the OFCCP missing some compensation discrimination incidents, Fox explains. For instance, the OFCCP won’t recognize a situation where a one-time payment was unlawfully denied in 2006, but did not carry forward into 2016.

Recommendations. Fox provided the following recommendations of actions contractors should take now:

(1) Conduct a “quality control check” of your company’s pregnancy leave /accommodation policy against the new Young legal standard that the OFCCP has now adopted. Start by cataloguing ALL of your leave allowances and policies allowing employees to be away from work or to transfer to different duties (i.e. “light duty”). If there is perceived or confirmed variance from Young’s accommodation requirements, consult with an employment lawyer to discuss before meeting with policy/decision-makers to determine next steps.

(2) Review your practices/policies/medical benefits plan/restroom use practice/policy to identify where, if anywhere, company policy/practice is inconsistent with the OFCCP’s final rule regarding transgender workers. If there is variance, meet with policy/legal team to determine whether the company wants to comply or fight.

(3) Change all your company’s written references (EEO policies/employee handbooks; Affirmative Action Programs (AAPs) for minorities and women, EEO training materials; etc) to capture the OFCCP’s ever broadening definition of “sex” discrimination to include—if you have not already done so—sexual orientation and gender identity (unless you are going to resist either or both expansions of the OFCCP’s claimed legal authority). You may also chose (but are not required) to make clear to employees that the OFCCP’s newly expanded definition of “sex” includes pregnancy, childbirth or related medical conditions, transgender status, and sex stereotyping.

(4) Consider advising supervisors/managers what to do if employees confront them with pregnancy accommodation requests or the issue of transgender access to the bathroom of choice. Do you want to train them as to specific contingencies? Should they consult HR in every situation? Should you beef up/expand harassment training to include pregnancy/sex-stereotyping/child rearing/sexual orientation and/or transgender modules?

(5) In light of the Ledbetter amendment, have a policy meeting to decide going forward: (a) what you wish to do as to compensation data recordkeeping, and (b) how you are going to analyze compensation if you are doing a compensation equity study.

(6) Review the names of your job titles, if you have not done so lately, to see how many you may make gender-neutral. Then devise a conversion plan and timeline which will not confuse the compensation group. Consider whether to discuss with the union(s). Identify what document sets need to be changed within the company to capture the new titles (Collective Bargaining Agreements; AAPs for minorities/women (Workforce Analysis/Job Group Analysis); compensation group documents; insurance documents; training materials; recruiting documents; job listing documents, etc)

(7) Review all leave policies and practices to insure they are sex-neutral. Are you affording leave to men on a basis equal to the leave you afford women for birth/child rearing/family leave?

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Religion at work: Dreadlocks, Sabbath, and other tidbits you should know

August 16th, 2016  |  Lorene Park  |  Add a Comment

By Lorene D. Park, J.D.

Media reports, agency activity, and cases involving religious discrimination and accommodation suggest religion in the workplace is a hot topic for good reason. Cases over a CFO repeatedly asking a Muslim employee about terrorists, or a Rastafarian employee being fired for refusing to cut his dreadlocks, are among the more interesting cases. There are also more mundane cases involving employees being fired for absences accrued on their Sabbath or holy day.

Religious issues will likely make headlines more often in the future, as the EEOC has announced plans to improve data collection and outreach on religious discrimination. Civil rights groups are also closely watching developments. For example, CAIR, a Muslim civil rights organization, issued a press release on August 8, 2016, welcoming a Colorado labor department ruling that Muslim workers fired over prayer breaks are eligible for unemployment benefits. On August 10, the Arizona Attorney General’s office defended a state economic security director’s emails to staff about his trip to a Catholic shrine in Lourdes, France, following a letter from the Freedom from Religion Foundation, which asserted that it was “unconstitutional” to use state resources to promote a religion and that he was showing “favoritism.” Given this level of interest, employers, Human Resources professionals, and decisionmakers need to refresh their knowledge on how to comply with federal and state laws governing religion in the workplace. The following points may be a good start:

“Religion” means more than you think

As explained by the EEOC, Title VII defines “religion” broadly and protects all aspects of religious belief, observance, and practice. This includes not only  organized religions such as Christianity, Judaism, Islam, Hinduism, and Buddhism, but also religious beliefs that are new, uncommon, not part of a formal church or sect, or that seem illogical. “An employee’s belief or practice can be ‘religious’ under Title VII even if the employee is affiliated with a religious group that does not espouse or recognize that individual’s belief or practice, or if few–or no–other people adhere to it. Title VII’s protections also extend to those who are discriminated against or need accommodation because they profess no religious beliefs.”

In one recent example, a federal court in Pennsylvania held that an atheist employee fired for refusing to remove tape covering an employer’s religious mission statement on his ID badge can go to trial on his failure-to-accommodate and retaliation claims. Whether the accommodation would impose an undue hardship on the employer will be determined at trial.

It is also unlawful to discriminate against someone who is “perceived” to be of a certain religion based on that perception, regardless of whether they actually are of that religion. For example, it would be unlawful to discriminate against someone because he or she appears to be Middle Eastern and is assumed to be Muslim (there is an EEOC Q&A on this). As another example, a federal court in New York refused to dismiss Section 1981 discrimination claims by a bank’s senior VP who claimed management perceived her to be Jewish and assigned her to clients in “Jewish communities,” while directing clients with “non-Jewish” surnames away from her.

Accommodating religion—neutrality and reasonableness are key

The EEOC has explained that requests to accommodate a “religious” belief or practice could include a Catholic employee requesting a schedule change to attend church, a Hindu employee requesting an exception from the dress code to allow her to wear her bindi (forehead marking), an atheist asking to be excused from a religious invocation at the beginning of staff meetings, or an adherent to Native American spiritual beliefs seeking leave to attend a ritual ceremony.

As these examples suggest, attendance policies, dress codes, and grooming standards are often at the center of religious discrimination and failure-to-accommodate claims. The key for employers is to maintain neutrality and reasonableness in creating and enforcing policies, as well as in considering possible accommodations.

Importantly, an employer need not consider an infinite number of accommodations and is not required to endure an undue hardship to accommodate an employee. Generally, any cost in efficiency or wages that is more than de minimis is an undue hardship (e.g., hiring someone to fill in on an employee’s Sabbath or other holy day). Moreover, as explained by a federal court in Colorado, an employer’s mere failure to make a religious accommodation, without more, does not create a “freestanding” cause of action under Title VII. In that case, an employee’s discrimination claim was tossed because she did not suffer an adverse employment action.

Attendance policies

The undue hardship defense often comes up in cases involving employees who ask to be excused from scheduling or attendance requirements. For example, a federal court in Utah granted summary judgment against Title VII discrimination claims by two Seventh Day Adventists who were fired after repeated Saturday absences. The employer had a neutral attendance policy, and it had tried to accommodate the employees by advising them of ways in which to avoid accruing absences, including the use of paid time off and swapping with the coworkers. The alternative accommodations suggested by the employees (e.g., ignoring the absence policy) would have posed an undue hardship on the employer, and that was something Title VII did not require.

On the other hand, a federal court in New Jersey denied Dollar General’s motion for summary judgment against a claim by a Seventh Day Adventist who was denied his request for Saturdays off to observe his Sabbath. He was a store manager, and the employer claimed his absence would have such negative consequences as deprivation of leadership, improper delegation of tasks, inadequately stocked shelves, and lower employee morale. In response, the employee argued that the so-called “Saturday Duties” were delegable and could have been referred to another employee without impacting overall operations. The court concluded that a jury would have to decide whether a scheduling accommodation would have been an undue hardship for the retailer.

Dress and grooming standards

Another common workplace dispute involves deviations from dress and grooming standards. In Abercrombie, a case involving the rejection of a job applicant because her headscarf conflicted with the retailer’s “Look Policy,” the Supreme Court wrote: “An employer may not make an applicant’s religious practice, confirmed or otherwise, a factor in employment decisions.” It also noted that Title VII gives religious practices “favored treatment,” meaning it doesn’t just require that religious practices be treated no worse than other practices—religious practices must be accommodated and the failure to accommodate can support a discrimination claim.

Now, a little over a year later, the EEOC has sued a staffing company serving Florida’s massive hospitality industry, alleging that it violated Title VII by firing a Rastafarian employee over his dreadlocks, which he grew as part of his religious beliefs. For a year he had kept them tucked under his hat without incident, but after a Disney staff member saw him in the kitchen, he was told he had to cut his hair to return to work. He refused and was fired.

Prayer, proselytizing, and other religious statements

According to the EEOC, employers “should not try to suppress all religious expression in the workplace,” but “if an employee’s proselytizing interfered with work, the employer would not have to allow it. Similarly, if an employee complained about proselytizing by a co-worker, the employer can require that the proselytizing to the complaining employee cease.”

As for case law, innocuous statements about religion appear acceptable, but derogatory remarks or jokes are a bad idea. For example, the Fourth Circuit recently reversed summary judgment against a Muslim employee’s discrimination and hostile work environment claims based in part on evidence that her supervisor (the company’s CFO) at various points initiated a discussion on the differences between Christianity and Islam, said his birthday (September 11) reminded him of “terrorist attacks by the Muslims,” and asked her “why are the Muslims killing people.”

In a federal case out of New York, a Jewish sales manager avoided summary judgment on his state and federal religious discrimination and hostile work environment claims based largely on workplace remarks such as “you people are manipulative” and “Jews only buy from Jews,” along with other evidence concerning the treatment of Jewish employees.

Not all cases are so extreme. Some merely involve general discussions on religion or isolated remarks, which usually aren’t actionable. For example, when a car rental employee’s wallet was found, he expressed his happiness, saying to a coworker “praises and love and glory to God.” In the employee’s lawsuit, he claimed a manager-in-training overheard him and created a hostile environment by mocking him through a “comedy skit” in which he pretended to be an excited pastor saying “thank you, Lord Jesus.” Noting that the employer took prompt remedial action, the court found this instance was not enough to be actionable.

Forewarned is forearmed

Other recent developments in the industry include the following:

Flu vaccines in the healthcare industry: Denying a Muslim hospital employee’s religious-based request to avoid flu vaccines while keeping her patient-care position would have created an undue hardship for the hospital, ruled a federal court in Massachusetts. The hospital provided reasonable accommodations by allowing her to seek a medical exemption, helping her find a new job, and granting her leave. It will be interesting to see if a federal court in North Carolina comes to a similar conclusion in a suit filed by the EEOC alleging that several hospital employees were denied requests to forego the flu vaccine based on “various sincerely held religious beliefs.”

Freedom from profanity: Dismissing in part the claims of a fired worker who alleged that he was fired just days after complaining to HR that his supervisor’s unrelenting use of profanity violated his religious beliefs, a federal court held that the Kentucky Civil Rights Act did not allow an individual to be held personally liable for religious discrimination.

Office composition: The mere fact that more Jewish individuals were hired than Christians was not enough to show that the termination of a Christian employee for poor performance (which had been documented for years) was pretext for religious discrimination, ruled a federal court in Arkansas. Note, however, that it was enough to make a prima facie showing, and the employer had to spend time and resources defending itself.

Ministers: There is a “ministerial exception” barring employees in ministerial jobs from filing discrimination claims against the religious institutions that employ them. A federal court in Illinois recently explained that the individual’s job title isn’t enough to show he or she is a “minister.” The analysis depends on the employee’s “functional role.” The court therefore denied a Catholic Archdiocese’s motion to dismiss a suit by its former “director of worship,” who was fired when the church learned he was marrying his same-sex partner. The parties will conduct limited discovery on the issue of his functional role.


When it comes to religion in the workplace, the foregoing examples make it plain that the issue is very complex and outcomes depend on the particular circumstances. As with most issues involving workplace discrimination, the usual advice applies—maintain and enforce neutral workplace policies (e.g., on appearance, attendance, and discrimination); enforce the policies consistently and fairly; adequately train your employees on your policies; fully investigate complaints; and promptly respond to any requests for religious accommodation.

For those wanting more information and examples, the EEOC has provided a plethora of online resources to educate employers, employees, and the public about religious discrimination. The easiest way to access the various guides is simply to go to the agency’s website and type “religion” into the box provided for search terms. The many agency resources include a Q&A on religious discrimination;  a Q&A and fact sheet on dress code, garb, or grooming policies; and an informal discussion letter on flu vaccines and religious accommodation.

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In revised EEO-1 proposal, EEOC missed opportunity to increase utility, decrease burden, expert explains

August 12th, 2016  |  Cynthia L. Hackerott  |  Add a Comment

In the EEOC’s recent revision of its proposal to add the collection of summary pay data to the EEO-1 Report, the agency has declined to adopt some stakeholder recommendations that could have simultaneously increased the utility of the proposed information collection and decreased the burden on employers, according to attorney Mickey Silberman, a Principal in the Denver, Colorado, office of Jackson Lewis P.C. Moreover, despite the proposed new data collection, the agency would still lack the necessary data to precisely and accurately identify potential pay discrimination and then use those results to correctly target employers for investigations and audits, he said. Silberman further stated that the revised proposal does not adequately address confidentially concerns raised by some employers in response to the original proposal.

The agency published its original proposal in the Federal Register on February 1, 2016 (81 FR 5113- 5121), and the comment period for that original proposal closed on April 1, 2016. The revised proposal was published in the Federal  Register on July 14,  2016 (81 FR 45479-45497), and public comments are due by August 15, 2016.

Current reporting obligations. Federal regulations require that all employers in the private sector with 100 or more employees, and some federal contractors with 50 or more employees, annually file the Employer Information Report, commonly known as the EEO-1 Report, with the Joint Reporting Committee (a joint committee consisting of the EEOC and the OFCCP) by September 30. The current EEO-1 Report data provides the federal government with workforce profiles from private sector employers by race, ethnicity, sex, and job category. In its revised proposal, the EEOC refers to this data as “Component 1.”

Proposed changes. In both the original and revised proposals, which the Commission says were made in partnership with the OFCCP, the EEOC proposes adding aggregate data on pay ranges and hours worked to the form, in addition to the Component 1 data. The revised proposal refers to this added data collection as “Component 2.” The new information would be reported across 10 job categories and by 12 pay bands and would not require the reporting of specific salaries of each individual employee. Federal contractors with 50-99 employees would not report pay data but would continue to report ethnicity, race, and sex by job category. Consistent with current practice, non-contractor employers with 1-99 employees and federal contractors with 1-49 employees would not be required to file the EEO-1 Report.

Under the revised proposal, the due date of the 2017 report would move from September 30, 2017 to March 31, 2018, to simplify employer reporting by allowing employers to use existing W-2 pay reports, which are calculated based on the calendar year. Employers would use Box 1 of Form W-2 (W-2 income) as the measure of pay for Component 2 of the EEO-1 Report.  By definition, W-2, Box 1 includes income that is received between January 1st and December 31st of the relevant calendar year. The revised proposal would also change the “workforce snapshot” to a pay period between October 1st and December 31st of the reporting year, starting with the EEO-1 Report for 2017.

Notably, the reporting schedule for 2016 EEO-1 Report remains unchanged. EEO-1 respondents must comply with the September 30, 2016, filing requirement for the currently-approved EEO-1, and must continue to use the July 1st through September 30th workforce snapshot period for that report.

Expert insight. Silberman, the Chair of the Jackson Lewis Affirmative Action & OFCCP Defense Practice Group and the Co-head of the firm’s Pay Equity Resource Group, provided his insights on the revised proposal in the following interview with Employment Law Daily:

ELD: While the EEOC made a few changes to its original proposal in light of stakeholder concerns, the agency did not adopt many stakeholder recommendations. Which of these do you think are the most important to employers?

Silberman: The most important, and one rejected by EEOC, is a change to the requirement to submit W-2 earnings data and work hours, rather than annualized base salary or hourly pay rate, recommended by so many stakeholders who submitted comments. EEOC’S decision to use W-2 earnings goes to the heart of the burden and utility of this proposal. Submitting W-2 earnings data and work hours will be extraordinarily burdensome because it will force employers to gather race/ethnicity and sex, as well as the W-2 earnings and work hours, from different systems – at least two separate systems (HRIS and payroll) for most employers and a third (work hours time-keeping) for many.  Generating, reconciling and merging large data sets from different systems is a complex and burdensome project and one which EEOC does not appear to fully appreciate, based on its burden estimate. Also, receiving W-2 earnings will not permit EEOC and OFCCP to focus distinctly on base pay or other individual components of pay (for example – bonuses, overtime, commissions). As a result, it will not allow the agencies to get at a real picture of employers’ pay systems and will cause them to arrive at conclusions and initiate investigations of employers based upon “false positives.” Finally, if EEOC accepted the recommendation, the use of annualized salary or hourly pay rate would have eliminated the need to report work hours; thus, EEOC could have simultaneously increased utility and decreased burden but chose not to.  The minimal utility of collecting W-2 data does not justify the burden and expense to employers.  By going after more, EEOC is actually getting less helpful data.

ELD: The EEOC revised its estimated burdens in light of the public comments. Are the revised estimates realistic? Are the statements regarding employer HRIS systems accurate/realistic?

Silberman: We discussed this issue with many employer representatives directly involved in EEO-1 reporting and ran our own simulations. Based upon those efforts, while EEOC increased its burden estimate somewhat, EEOC update burden projection continues to vastly underestimate the actual burden that will be imposed upon employers.

ELD: What are your thoughts on the agencies’ assertions regarding employer’s confidentiality concerns?

Silberman: There are really three issues here, each of which presents real risk to employers: data security, meaning whether the submitted data is secure from data system and transmission breaches; access to the pay data by the public through FOIA; and, confidentiality concerns related to EEOC’s plan to publish aggregates pay data:

  1. EEOC has responded to the first of these issues with largely the same statements as the original proposal. Data security experts should weigh-in on the first issue.
  2. As for FOIA requests, protection of EEO-1 data is not absolute for federal contractors, which most large U.S. employers are. Whereas requests to EEOC “will be denied by the EEOC under Exemption 3 of the FOIA,” OFCCP will only protect EEO-1 data “consistent with FOIA” which does not provide a blanket protection from disclosure. And almost certainly there will be greater public interest in obtaining EEO-1 data than in the past, so we have concerns about OFCCP’s disclosure of pay data in response to FOIA requests.
  3. Finally, under some circumstances (for example, in rural areas), EEOC publishing aggregate pay data by industry and geography may identify particular employers and, even, employees. Despite many comments by stakeholders raising this concern, EEOC has not addressed this important issue.

ELD: In the revised proposal, the EEOC goes into some detail about its justifications for collecting pay data. Will this proposed pay data collection be as effective for enforcement as the agencies suggest?

Silberman: In a word, no.  Based on the proposal, EEOC would lack the necessary data to precisely and accurately identify potential pay discrimination and then use those results to correctly target employers for investigations and audits. To the contrary, false positives will be a common outcome of analyses on the proposed data collection, leading to unnecessary time and effort expended by the agencies and burden on employers not deserving of such scrutiny. At most, the prospect of having to annually submit pay data to the federal government may prompt employers to give more attention to pay equity [that] otherwise would not. That may be a positive byproduct of this proposal, but there are more efficient and effective methods to achieve that goal.

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Election tension sure to run high as we head into November

August 11th, 2016  |  David Stephanides  |  Add a Comment

Water cooler talk about politics can create a hostile work environment for staff and an HR nightmare for business. While certainly everyone has the right to free speech, the First Amendment does not provide blanket protection in the workplace. As tensions are expected to rise as we head toward November, the law firm Fennemore Craig has some suggested guidelines to help keep the peace at work:

(1) There are no federal laws in place that protect employees from discrimination or retaliation as a result of their political activities or discussions in the workplace.

(2) The First Amendment does not apply to the private sector in most cases as it only protects an individual’s right to free speech without interference from the government, but not from anyone else.

(3) Employers should approach conversations about discussing political candidates or issues with care to ensure they do not discriminate against a protected class such as race, religion, or national origin as defined by federal or state law.

(4) Take into account the National Labor Relations Act that protects politically charged speech in some cases by giving employees the right to engage in collective bargaining activities and can cover interactions between employers and employees.

(5) Consult with a labor relations attorney about an appropriate code of conduct clearly defining policies around political comments in the workplace. It can go a long way to stabilizing the environment.

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FMLA notice’s failure to include job restoration rights might be interference if employee prejudiced

August 10th, 2016  |  Kathy Kapusta  |  Add a Comment

In a case emphasizing the importance of providing proper notice to employees of their FMLA rights, the Fourth Circuit found that the notice a federal reserve bank purportedly sent to an employee failed to inform him of his right to job restoration. And because he presented evidence that he would have structured his leave differently had he known his job was protected, the federal appeals court revived his FMLA interference claim.

When the employee’s supervisor noticed he was having problems with his work and attendance, he told the bank’s medical director the employee might be depressed. The medical director had previously treated him for depression and knew the employee had taken antidepressant medications “for a long time.”

Diagnosis. Not long after, a counselor diagnosed him with “major depressions” and several weeks later, he was admitted to a hospital for psychiatric treatment. His physicians recommended that he enter a 30-day rehabilitation program for treatment of depression and alcohol dependency. Purportedly concerned that taking time off would result in his termination, he refused.

Around that time, he submitted an application for short-term disability, which also functioned as a request for FMLA leave. Attached to the application was his physician’s statement taking him out of work for a month. Fearful of losing his job, the employee reported to work but was sent home because he didn’t have a doctor’s note. He returned the next day with a doctor’s note and was sent on a three-day work assignment in another city. While he drove a company vehicle and stayed in a hotel at the company’s expense, he did not report to work.

Upon his return to the office, he was placed on a performance improvement plan and was ultimately terminated for failure to properly communicate unscheduled time off and insubordinate behavior for leaving work despite instructions to complete the PIP. He then sued, alleging that the bank violated his rights under the FMLA and the ADA and the district court dismissed his claims on summary judgment.

FMLA interference. On appeal, the employee argued that the bank failed to provide him individualized notice of his job protection rights as required by the FMLA, which affected his ability to take the medical leave he needed. Under the FMLA regulations, a statement of the employee’s right to job reinstatement must be included in the rights and responsibilities notice an employer sends an employee who may be entitled to FMLA leave, said the court, observing that the bank did not contest that the only relevant document in the record failed to show notice of the employee’s job restoration rights. Therefore, the employee established for purposes of the bank’s summary judgment motion that its notice did not comply with the regulatory requirement.

Prejudice. And while the FMLA does not provide relief unless the employee has been prejudiced by the violation, the court found sufficient evidence to show that the employee, who returned to work prior to the expiration of the medical leave he initially requested, would have structured his leave differently had he known his job was protected. He initially requested medical leave from November 10 to December 10 in accordance with his physician’s note but instead of taking the leave, he returned to work early. He claimed that had he known of his right to reinstatement, he would have taken the full 30-day leave of absence set out in his initial FMLA application to obtain the inpatient treatment.

Further, his testimony that “I think [a notice of job protection rights] would have made a huge difference because I wouldn’t have been so fearful of losing my job and I would have known I could have gotten help and that I had the support of the bank and that they wanted me to get well. And I could have gone to treatment” was supported by the testimony of his family. Indeed, said the court, after his termination, he completed an inpatient treatment program.

Employer takeaway. This case should serve as a reminder to employers that failure to comply with the FMLA’s notice requirements could constitute interference with, restraint of, or denial of the use of FMLA leave. If an employee is able to demonstrate harm as a result of an employer’s failure to provide a required notice, the employer may be liable for the harm suffered. Employers should review all forms and policies to ensure that they are in compliance with this requirement.

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