With similar case pending, High Court grants cert to Sixth Circuit ruling that Michigan’s voter-approved affirmative action ban unconstitutional as to university admissions policies
The U.S. Supreme Court has granted cert to review an en banc Sixth Circuit decision that a voter-approved ban on government affirmative action in the state of Michigan, as it applies to race-conscious admissions policies in public colleges and universities, violated the Equal Protection Clause of the Fourteenth Amendment to the U.S. Constitution (Schuette v Coalition to Defend Affirmative Action, Dkt No 12-682, cert granted March 25, 2013).
On November 15, 2012, a deeply divided Sixth Circuit ruled, 8-7, that the measure violated equal protection under the political process theory because equal protection does not permit the kind of political restructuring that the measure affected (Coalition to Defend Affirmative Action v Regents of the University of Michigan, 96 EPD ¶44,674). The Sixth Circuit ruling was limited to the area of university admissions, but the constitutional analysis could be applicable to race-conscious decisions in state employment and the awarding of government contracts.
Initiative prompted by 2003 Supreme Court ruling. In November 2006, Michigan voters approved a ballot initiative, Proposal 2, to amend the state’s constitution to prohibit state universities, the state, and all other state entities from discriminating against or granting preferential treatment based on race, sex, color, ethnicity or national origin. The initiative impacts the state’s use of affirmative action in a number of areas, including employment, education and government contracting. The Michigan measure was largely prompted by a June 2003 decision in which the U.S. Supreme Court, in a 5-4 vote, upheld the University of Michigan’s consideration of race in its law school admissions policy (Grutter v Bollinger, 84 EPD ¶41,415). However, on that same day in a 6-3 decision, the Court held that the university’s use of race as a factor in its undergraduate admissions policy violated the U.S. Constitution (Gratz v Bollinger, 84 EPD ¶41,416 ). In the Grutter and Gratz cases, white students who claimed they were qualified but denied admission challenged the university’s law school and undergraduate admissions systems on equal protection grounds. The Court found that the law school’s policy was narrowly tailored to achieve the compelling state interest of a diverse student body, but that the undergraduate policy was not.
Similar ballot measures in other states. The Michigan initiative is similar to measures passed by voters in California (1996), Washington state (1998), Nebraska (2008), Arizona (2010), and Oklahoma (2012). Colorado, in contrast, became the first state to reject an anti-affirmative action ballot measure in the November 2008 election.
Similar pending Supreme Court case. The issue of affirmative action is also currently pending before the High Court in another case. On October 10, 2012, the Court heard arguments in Fischer v University of Texas at Austin (Dkt No 11-345). The issue presented in Fischer is whether the High Court’s decisions interpreting the Equal Protection Clause of the Fourteenth Amendment, including Grutter, permit the University of Texas at Austin’s use of race in undergraduate admissions decisions. In 1997, the Texas legislature enacted the Top Ten Percent Law which is designed to increase diversity without taking race into account. The law, which is still in effect, mandates that Texas high school seniors in the top ten percent of their class be automatically admitted to any Texas state university. In 2003 after the Supreme Court issued its Grutter ruling, Texas added the consideration of race among many factors to fill remaining slots at public universities. Two white Texas residents sued the university after being denied spots in 2008.
It appears that the Schuette decision — which could impact the future of similar anti-affirmative action measures in several states — will have broader implications than the Fischer case — which focuses only on the specific policy applied in Texas.
There is an ever-changing landscape that in some jurisdictions may require the employer to provide employees with paid sick leave. Several municipalities and one state have already passed legislation mandating employers to pay employees for sick leave, and others are not far behind. There is also federal legislation pending that would affect employers’ obligations to pay employees for sick leave. Ironically, other states are simultaneously considering legislation to prohibit municipalities from enacting these types of laws. With rapidly changing laws, employers must stay well-versed not only in state and federal laws, but also in local ordinances relating to sick leave.
Municipal ordinances. Most recently, the speaker of New York City’s city council announced that she has reached an agreement on a proposal for paid sick leave for city workers. Action in NYC’s city council comes on the heels of the Portland Oregon City Council’s adoption of a similar ordinance in mid-March.
If passed, the NYC proposal would eventually apply to employers with 15 or more employees. Initially, however, it would extend to employers of 20 or more employees. Specifically, the bill would require those businesses to provide five paid sick days to their employees beginning April 1, 2014. The threshold drops to 15 or more employees on October 1, 2015. Notably, complaints under the ordinance would be limited to those made to an enforcement agency. Private rights of action would be allowed only to contest the agency’s decision.
Portland ordinance. Under the Portland ordinance, employers with six or more employees are required to provide five days (40 hours) of paid sick leave per year to employees to care for their own illness or for a sick family member. Smaller employers are mandated to grant up to 40 hours of unpaid sick leave.
Employers are also required to post notice of employees’ leave rights and maintain records of leave time accrued and used by employees. (Any health information obtained by an employer pursuant to this requirement must be treated as confidential.) Employers also are prohibited from discriminating or retaliating against employees who request or use sick leave, or complain of being denied requested leave.
Connecticut statute. While municipalities are moving toward passing ordinances requiring paid sick leave, at least one state has already passed legislation requiring statewide coverage. Connecticut last year became the first state to pass a paid sick leave law. Under the law, employers with 50 or more employees are required to provide paid sick leave to certain employees for use for the employee’s sickness; the employee’s child’s, parent’s or spouse’s sickness; or to deal with sexual assault or family violence issues.
Healthy Families Act. Congress has also resurrected legislation in the same arena. On March 20, 2013, the Healthy Families Act was reintroduced into the House and the Senate. That legislation would require employers with 15 or more employees to provide paid sick leave. Specifically, the Healthy Families Act (S 631/HR 1286) would allow workers to earn one hour of paid sick time for every 30 hours worked, for a maximum of 56 hours or seven days of paid leave annually. Sick leave would start to accrue on an employee’s first day of work; employees would be entitled to take accrued leave after 60 days. They also would be allowed to carry over up to 56 hours of unused sick leave from year to year (or more, if the employer permits).
Under the legislation, employees could use their paid sick leave for their own illness, to care for a sick family member, to obtain preventive care, or to address the impact of domestic violence or other crimes. Employers can also require workers to provide documentation supporting any request for leave longer than three consecutive days.
What’s the upshot? The landscape of sick leave law is changing quickly and employers must stay well-versed in current law. Changes in local, state, and federal laws may affect employers’ obligations to provide sick leave to employees and the thresholds for those requirements vary based on the laws. Employers should carefully draft sick leave policies to comport with all applicable laws and ensure that the policies are updated as necessary to meet changes in the law. In so doing, employers also must be careful not to make changes to existing policies that result in discrimination, however.
Despite an express disclaimer at the time of sale that a company, which was acquiring the assets of an employer, would not be liable as a successor employer in pending FLSA litigation, the Seventh Circuit imposed successor liability anyway. Why? There was no good reason not to.
Here’s what happened: Packard, the original company, had its stock was acquired by S.R. Bray, but the Packard name was retained and it operated as a stand-alone entity. Its employees filed suit for overtime violations under the FLSA two years later. Several months after the FLSA suit was filed, Bray defaulted on a $60M bank loan. To pay as much of the debt to the bank as it could, Bray assigned its assets—including its stock in Packard, which was its principal asset—to an affiliate of the bank.
The assets of Packard were placed in receivership and auctioned off. Thomas & Betts was the winning bidder, paying about $22M. One condition of the auction was that the assets be “free and clear of all Liabilities” that the buyer had not assumed. In addition, a more specific condition was that Thomas & Betts would not assume any of the liabilities that Packard might incur as a result of the pending FLSA litigation. After the transfer, Thomas & Betts continued to operate Packard as a going concern and hired most of Packard’s employees.
Federal common law successor liability. The issue of successor liability determines whether the buyer acquires a company’s liabilities when the company is sold in an asset sale. Wisconsin, the state whose law was applicable in this case, is one of the states that limit such liability. But when liability is based on a violation of a federal statute relating to labor relations or employment, a federal common law standard of successor liability is applied—one that is more favorable to employees than most state law standards. So the Seventh Circuit looked at whether this federal standard applies when liability is based on the FLSA, and if so, whether the standard authorized imposing successor liability here.
If Wisconsin law governed the issue of successor liability, Thomas & Betts would be off the hook. However, state law does not control when the federal standard applies. The federal standard requires consideration of a multifactor test that the district judge used to find successor liability. Taking a slightly different approach, the Seventh Circuit agreed that successor liability is appropriate in suits to enforce federal labor or employment laws—even when the successor disclaimed liability when it acquired the assets in question—unless there are good reasons to withhold that liability.
No good reasons to withhold successor liability. Should a federal standard apply when, specifically, the source of liability is the FLSA? In the Seventh Circuit’s view, imposing successor liability helps achieve the goals of federal labor and employment statutes. The FLSA was passed to protect workers’ living standards, which is equally deserving of protection as other federal statutes that protect labor peace (NLRA) or provide antidiscrimination protection (Title VII). Workers don’t often find themselves in a position to head off a corporate sale by an employer aimed at extinguishing its wage-hour liability to them.
None of the arguments Thomas & Betts advanced to convince the court not to “extend” the federal standard to the FLSA were successful. And it was equally unsuccessful arguing that the standard wasn’t properly applied. Thomas & Betts argued that to allow the employees to obtain relief gave them a “windfall.” It said the employees had no right to expect that Packard would be sold, at least as a going concern; had it not been sold, but instead continued under Bray’s ownership, or broken up and its assets sold piecemeal, the bank loan would have precluded the employees from obtaining anything. But, countered the Seventh Circuit, to allow Thomas & Betts to acquire assets without their associated liabilities, thus stiffing workers who had valid claims under the Fair Labor Standards Act, is equally a “windfall.”
(Teed v Thomas & Betts Power Solutions, LLC, 7thCir, Case Nos. 12-2440 and 12-3029, March 26, 2013, Posner, R).
In a July 10, 2012 blog, I discussed how recent amendments to the ADA could be construed to bring obesity within the broadened definition of disability. In light of one recent case, I am left to wonder if obesity (or perhaps “morbid obesity”) shouldn’t be a protected category in its own right. In Bill v City of North Lauderdale, a federal district court in Florida granted an employer’s motion to dismiss an obese city employee’s complaint that detailed “needlessly cruel” behavior by coworkers (Case No. 12-61342-CIV, March 25, 2013). He worked in the public works department for more than seven years and, upon his return from medical leave, discovered that a picture of a small pig was posted above the lunchroom clock with the words “baby found in the rectum of a fat Irish ass.” This was merely one in a long string of derogatory pictures and actions, including pictures of overweight individuals and animals representing the women the employee dated as well as a sticky note pasted on his back which stated “I’m a Fat F*ck.”
In granting the employer’s motion, the court explained that obesity is not a protected category under Title VII. Maybe it should be. To be sure, as federal courts frequently aver, “Title VII is not a general civility code.” However, the abuse endured by this employee seemed much more than the “ordinary tribulations of the workplace.”
Gender, race, disability, and age discrimination cases, which are bread and butter for many employment lawyers, do not garner the attention from mainstream media that is afforded to what is considered “trendy.” In the past weeks, for example, the focus has been on LGBT rights due to pending Supreme Court cases. Even religious discrimination stories of late focus mainly on bias against Muslims. This narrow focus is a problem because, as my astute, twenty-something niece informed me, her generation, which largely lacks a broad range of experiences, tends to form beliefs based on sound bites and Google research. Curious, I Googled “discrimination modern day” and the top two results were from 2007 – one asked “Can anyone give me an example of modern day racial discrimination” and the other, “Is racial discrimination a thing of the past?”
Doing my part, as an employment law attorney who thinks the younger generation needs more than sound bites, I am going to answer: no, racial discrimination is not a thing of the past. And, by the way, here are some examples of very recent cases that show the continuing importance of Title VII of the Civil Rights Act of 1964 (For you non-lawyers, this law prohibits employment discrimination based on race, color, religion, sex, and national origin).
Race discrimination. A federal court in Texas ruled that seven African-American freight terminal employees who were subjected to racist graffiti, epithets, property damage, and the presence of nooses at work could proceed on their Title VII hostile work environment claims (Brooks v Yellow Transportation, Inc c/o The Frick Co, March 18, 2013, No. 3:06-CV-1566-D). The graffiti involved frequent use of the n-word and drawings of monkeys and swastikas and the comments included “Get a rope,” “Boy,” and “Fat monkey.” Management knew of the incidents but did next to nothing. Meanwhile, in Maryland, a white employee who submitted evidence that his African-American supervisors resented his being singled out for commendation and subsequently referred to him as “that stupid White boy” and made false allegations that he was performing his job poorly, was allowed to proceed on his Title VII discrimination claim (Shank v Baltimore City Board of School Commissioners, March 19, 2013, No. WMN-11-1067).
Sex discrimination. A female mortgage loan officer in Tennessee who was fired despite being the top sales performer survived the employer’s attempts to get her gender bias case tossed by providing evidence that her supervisor made comments showing discriminatory intent (Arnold v Reliant Bank, March 21, 2013, No. 3:11-cv-1083). He called her the “woman that makes all the money” and said that men should “take back” the mortgage department. He also said, at one point that he was going to use his “man power” to take her down. At first she thought he was joking, but it soon became apparent that he was not. As for sexual harassment, which continues to be prevalent, a Texas employee sued her supervisor (and the employer) after the supervisor sexually harassed her by making offensive comments, touching her, exposing himself both at work and in pictures he put on her cell phone, and threatening to fire her if she failed to perform sexual acts (Calvert v Brachfeld Law Group, PC, d/b/a Law Offices of Brachfeld & Associates, March 36, 2013, No. H-12-3683). She fulfilled his sexual demand on one occasion when he threatened that either she or her coworker would be fired. The coworker was fired the next day.
Age and disability. Sadly, these examples of discrimination prohibited by Title VII are not unique. There are also many cases involving discrimination against individuals with disabilities (prohibited by the ADA) and against older individuals (prohibited by the ADEA). For example, a deaf teacher’s aide, who was passed over for a position in a “deaf classroom environment” in favor of an aide who was “able to communicate as a hearing person” due to a cochlear implant, was allowed to go forward on her ADA discrimination claim (Golembeski v Moorestown Township Public Schools, March 13, 2013, No. 11-02784 (RBK/JS).
In the age column, a 60-year-old project manager at a Pennsylvania dental school, who was replaced by the dean’s 30-year-old research assistant when his job was eliminated and a new position encompassing his duties was created, was allowed to go to trial on his ADEA and state law age discrimination claims (Sullivan v Temple University, March 5, 2013, No. 11-7305). He applied for the new position but was not interviewed. There was evidence that the qualifications required for the position were changed to fit more closely to the younger assistant’s resume and some of the interview questions written by the dean asked about skills that she had, but that were never actually used by the assistant after she took the new position.
Level playing field. As this meager sample of cases illustrates, notwithstanding the relative lack of media coverage and Google presence, unlawful discrimination of all sorts remains prevalent in the workplace and anti-discrimination laws are still exceedingly relevant. At the end of the day, in addition to prohibiting harassment, these laws are mostly about leveling the playing field. Employment decisions should not be made based on someone’s race, color, gender, religion, age, disability, or other protected characteristic.