When the Supreme Court begins it Fall 2014 term on Monday, October 6, it faces a line-up of labor and employment law cases that give the Justices the opportunity to substantially shape the practice area. The issues laid at the Court’s door include weighty issues such as whether the DOL must go through notice-and-comment rulemaking before changing prior regulatory interpretations and the right of courts to pass judgment on the adequacy of the EEOC’s pre-litigation conciliation efforts. The Justices will also examine the increasingly controversial question of whether time spent in employer security screens is compensable and the extent to which companies must accommodate pregnant workers in keeping with the accommodations they extend to non-pregnant workers.
Below is a brief run-down of cases that should be on the radar of labor and employment law practitioners:
DOL’s flip-flop on FLSA’s administrative exemption. Related petitions in Perez v. Mortgage Bankers Association and Nickols v. Mortgage Bankers Association ask the Court to resolve the question of whether a federal agency must engage in notice-and-comment rulemaking before it can significantly alter an interpretive rule that articulates an interpretation of an agency regulation. The petitions were brought, respectively, by the Secretary of Labor and an intervening mortgage loan officer. The Court has consolidated the petitions and slated the question for an hour of oral argument on Monday, December 1.
Below, the D.C. Circuit reversed a district court order dismissing the Mortgage Bankers Association’s challenge to a DOL Wage and Hour Division “Administrator Interpretation” concluding that mortgage loan officers were nonexempt under the FLSA (Mortgage Bankers Association v Harris, July 2, 2013, Brown, J). According to the appeals court, since the DOL’s most recent interpretation was at odds with its earlier interpretations, the agency was required to go through the notice-and-comment process.
EEOC’s duty to conciliate. In Mach Mining v. EEOC, the Justices are slated to resolve the increasingly controversial question of whether and to what extent courts may enforce the Commission’s mandatory duty to conciliate discrimination claims before filing suit. The case has not yet been set for oral argument.
The Seventh Circuit ruled that Mach Mining could not raise the EEOC’s failure to conciliate in good faith as an affirmative defense to the agency’s sex discrimination in hiring suit against the company. The decision was at odds with the rulings of other federal circuit courts. The language of Title VII, the lack of a meaningful standard for courts to apply, and the overall statutory scheme convinced the Seventh Circuit that an alleged failure to conciliate is not an affirmative defense to the merits of a discrimination suit. The Seventh Circuit also explained that finding in Title VII an implied failure-to-conciliate defense would add to that statute an unwarranted mechanism by which employers could avoid liability for unlawful discrimination.
There is a messy circuit split on the question that begs for resolution by the Court. According to the EEOC, in contrast to the Seventh Circuit, the Second, Fourth, Fifth, Sixth, Eighth, Tenth, and Eleventh Circuits have concluded that courts are permitted at least to inquire into the sufficiency of the agency’s informal conciliation efforts. However, those courts of appeals differ as to what standard the agency must meet and whether its failure to meet that standard warrants dismissal of a Title VII lawsuit on the merits.
Compensation for time spent in employer security screening. Integrity Staffing Solutions, Inc. v. Busk presents a question that employees are challenging more and more: Whether time spent in security screenings is compensable under the FLSA, as amended by the Portal-to-Portal Act? The Court will hear oral argument on Wednesday, October 8.
The petition for cert was filed by an employer that was sued by warehouse workers seeking back pay, overtime, and double damages under the FLSA for time spent in security screenings after the end of their work shifts. The employees purportedly were not compensated for up to 25 minutes spent at the end of their workday waiting to be searched and passed through metal detectors.
The district court initially dismissed the warehouse workers’ claims on the grounds that such activities were not compensable under the FLSA. But the Ninth Circuit saw it differently and reversed. As alleged, the security clearances were necessary to the employees’ primary work as warehouse employees and done for Integrity’s benefit, according to the appeals court. As a result, the employees stated a plausible claim for relief.
Integrity asserts that the Ninth Circuit’s ruling “squarely conflicts with decisions from the Second and Eleventh Circuits holding that time spent in security screenings is not subject to the FLSA because it is not ‘integral and indispensable’ to employees’ principal job activities.”
Pregnancy accommodations. In Young v. United Parcel Service, Inc., the Justices are asked to determine the extent to which employers must accommodate pregnant employees in light of accommodations extended to other workers. Specifically, the question for review is: “Whether, and in what circumstances, an employer that provides work accommodations to nonpregnant employees with work limitations must provide work accommodations to pregnant employees who are ‘similar in their ability or inability to work.’” The case is scheduled for oral argument on Wednesday, December 3.
The petition for cert was filed by an employee who became pregnant during a leave of absence to receive in vitro fertilization, but found when she tried to return to work, UPS would not accommodate her 20-pound weight-lifting restriction. The question presented is “exceptionally important,” according to the petition, which points to a recent observation by the EEOC’s General Counsel: “[d]iscrimination against pregnant women and caregivers potentially affects every family in the United States.”
The Fourth Circuit held that the UPS policy providing light-duty work only to employees who had on-the-job injuries, employees with disabilities accommodated under the ADA, and employees who had lost Department of Transportation (DOT) certification was not direct evidence of pregnancy-based sex discrimination. Nor could a pregnant employee who was unable to work during her pregnancy because of a lifting restriction establish a prima facie case of pregnancy discrimination because the court agreed that she was not similarly situated to employees with work-related injuries, ADA disabilities, or those who had lost DOT certification.
Employer knowledge of need for religious accommodation. On October 2, the Supreme Court agreed to review the Tenth Circuit’s decision in EEOC v Abercrombie & Fitch Stores, Inc. involving what kind of “actual knowledge” an employer must have to be on notice that a religious accommodation is required. After losing its argument in the Tenth Circuit that proof by any means of an employer’s knowledge of an existing conflict between an employee’s religious practice and the employer’s workplace policy is enough for purposes of a prima facie religious accommodation case, the EEOC filed its petition for certiorari this summer. Ironically, the clothing retailer already had agreed to modify the policy last fall.
The EEOC had prevailed in the district court, which granted summary judgment to the EEOC finding that Abercrombie & Fitch violated Title VII by failing to provide a reasonable religious accommodation to a Muslim woman’s wearing of a headscarf, or “hijab.” Almost exactly one year ago, the Tenth Circuit reversed, finding Abercrombie was entitled to summary judgment as a matter of law because there was no genuine issue of material fact that the prospective employee never informed the store prior to its hiring decision that she wore her “hijab” for religious reasons and that she needed an accommodation for that practice due to a conflict with Abercrombie’s clothing policy.
Other pending petitions. Other cases of interest to labor and employment practitioners include:
- M&G Polymers USA, LLC v. Tackett, set for oral argument on Monday, November 10. The case presents the question whether, when construing CBAs in LMRA cases, courts should presume that silence concerning the duration of retiree health-care benefits means the parties intended those benefits to vest and thus continue indefinitely.
- Department of Homeland Security v. MacLean, slated for oral argument on Tuesday, November 4. The Justices are asked to determine whether certain statutory protections in the Whistleblower Protection Act that are inapplicable when an employee makes a disclosure “specifically prohibited by law” can bar an agency from taking enforcement action against an employee who intentionally discloses Sensitive Security Information.
- Dart Cherokee Basin Operating Company v. Owens, scheduled for oral argument on Tuesday, October 6, places an important procedural question before the Justices: Whether a defendant seeking removal to federal court is required to include evidence supporting federal jurisdiction in the notice of removal, or is alleging the required “short and plain statement of the grounds for removal” enough?
Opening conference. The High Court held its opening conference on Monday, September 29. Following that conference, the Justices granted the petition for cert in EEOC v Abercrombie and Fitch Stores, Inc. and dismissed as improvidently granted Public Employees’ Retirement System of Mississippi v. IndyMac, a case that questioned whether filing of a putative class action serves, under the American Pipe rule, to satisfy the three-year time limitation in Sec. 13 of the Securities Act with respect to the claims of putative class members. Other pending petitions raise questions regarding the requirements of the test to determine compensable work under the FLSA when health and safety matters are at issue, ERISA’s anti-retaliation protections in the wake of unsolicited complaints to management, and whether a granted transfer request can be an adverse action in Title VII and ADEA discrimination cases, as well as several arbitration-related issues.
Fall protection tops the list of the most frequently cited workplace safety standards for fiscal year 2014, followed by hazard communication and scaffolding, according to preliminary figures from the Occupational Safety and Health Administration (OSHA). The list was announced by Patrick Kapust, deputy director of OSHA’s Directorate of Enforcement Programs, at the recent National Safety Council Congress and Expo.
The top 10 most frequently cited OSHA standards for FY 2014 include:
1. Fall Protection (29 CFR 1926.501) – 6,143;
2. Hazard Communication (29 CFR 1910.1200) – 5,161;
3. Scaffolding (29 CFR 1926.451) – 4,029;
4. Respiratory Protection (29 CFR 1910.134) – 3,223;
5. Lockout/Tagout (29 CFR 1910.147) – 2,704;
6. Powered Industrial Trucks (29 CFR 1910.178) – 2,662;
7. Electrical – Wiring Methods (29 CFR 1910.305) – 2,490;
8. Ladders (29 CFR 1926.1053) – 2,448;
9. Machine Guarding (29 CFR 1910.212) – 2,200; and
10. Electrical – General Requirements (29 CFR 1910.303) – 2,056.
Also just released, the Bureau of Labor Statistics’ latest Census of Fatal Occupational Injuries (CFOI) for 2013 indicates a preliminary total of 4,405 fatal work injuries were recorded in the U.S., lower than the revised count of 4,628 fatal work injuries in 2012. The rate of fatal work injury for U.S. workers in 2013 was 3.2 per 100,000 full-time equivalent workers, compared to a final rate of 3.4 per 100,000 in 2012. Final 2013 data from CFOI will be released in the late spring of 2015.
In line with the most frequently cited standard – fall protection – fatal falls, slips, or trips took the lives of 699 workers in 2013. Falls to a lower level accounted for 574 (82 percent) of those fatalities. In 2013, the height of the fall was reported for 466 of the fatal falls to a lower level. Of those, about 1 in 4 occurred after a fall of 10 feet or less. Another one-fifth of the fatal falls occurred from falls of over 30 feet. Ahead of fatal falls, depressingly, were 753 workers killed as a result of violence and other injuries by persons or animals, including 397 homicides and 270 suicides.
By Lorene D. Park, J.D.
Being fired is bad enough. What’s worse from the point of view of many courts? Worse is being told, in the termination letter, that you should find a less stressful job due to your heart condition. Or that your job functions were being transferred out of state, only to find out later that this was not the case. Or that the employer could not accommodate your schedule request even though your supervisor had previously approved it. In each of these real-life scenarios, the termination letters provided evidence that the employers engaged in unlawful discrimination or retaliation.
Get well now. For example, one employee, who was fired when his recovery from triple bypass heart surgery took “too long,” survived summary judgment on his claims of discrimination based on actual and perceived disability. The employer told its disability insurer it would accommodate the employee, who sent emails indicating his intent to return, but the employer then hired two replacements without physical limitations and sent the employee a termination letter that referred to his heart condition and the need for him to find a less stressful job. The federal district court in Louisiana found that the letter suggested that the employer regarded him as disabled and terminated him for that reason (Thomas v Hill).
Silence is not golden. Some attorneys might suggest that cases like this are a good reason to remain silent in the termination letter as to specific reasons for the discharge, but when it comes to questions of intent in discrimination and retaliation cases, silence is not golden. In one case, an employee who had threatened to sue the employer in the past was fired after violating a policy on computer use at work and after requesting an accommodation for his leg injury. The termination letter was silent as to the actual reason for his discharge, merely stating that the company was an at-will employer. To a federal district court in Arizona, this was inconsistent with termination letters the employer provided to other employees because their letters specified the reasons for their terminations. This was enough to raise a triable issue of fact on the employee’s disability discrimination claims (Maxwell v Verde Valley Ambulance Co, Inc).
In another case, a hospital defended its decision to fire an employee with severe depression and anxiety by citing years of “insubordinate and combative behavior,” but it never mentioned such conduct in her suspension memo or termination letter. A district court in Pennsylvania found a reasonable basis for concluding that her discharge, ostensibly for turning in a requested email an hour late, was pretext for discrimination, given that none of the incidents described by the employer were mentioned in the letter, the employee’s previous discipline did not list discharge as the next step, and she had good reviews (Franzi v UPMC Presbyterian Shadyside).
Given the importance of wording a termination letter just right and handling the termination process well, employers should take steps to avoid common pitfalls. Suggestions follow.
Verify the basis for discharge. Before writing the termination letter, review records, interview supervisors, or take other measures to confirm the factual basis for the discharge. For example, if an employee approved for FMLA leave was later fired for excessive absences, make sure none of the absences underlying the discharge were FMLA-qualifying. In another example, a termination letter stated that an accounts payable position was eliminated due to a new electronic record system, but other evidence suggested to a district court in Tennessee that the job was not actually eliminated by the time the employee would have returned from maternity leave, so she advanced her retaliatory discharge and FMLA interference claims (Hawkins v The Center for Spinal Surgery). In a case out of Minnesota, a federal court denied summary judgment on a race discrimination claim based in part on the fact that a termination letter stated the employer was unable to accommodate an employee’s scheduling request, even though her supervisor had previously approved it. The contradiction suggested pretext (Kennedy v Heritage of Edina, Inc).
Be consistent. Make sure the decision is consistent with any disciplinary policy. And even if there is no doubt that an employee violated a policy, ensure that the level of discipline is consistent with that imposed against others who engaged in similar conduct. For example, in an Ohio Court of Appeals case, an employee who was fired for sending sexually explicit emails in violation of an employer’s policy (according to the termination letter) could proceed to trial on his age discrimination claim because the company did not fire younger employees for substantially similar conduct (Bowditch v Mettler Toledo International, Inc).
Maintain a professional tone. The termination letter should be typed and should be professional and objective in tone. It should be dated and have a place for the employee’s signature.
Don’t mention protected characteristics. Do not mention health, age, sex, pregnancy, disability, or other protected characteristics in the termination letter or meeting. Also, avoid telling an employee to “look on the bright side.” For example, stating “This is a great time to retire anyway” could suggest that age was behind the discharge. Telling someone who took FMLA leave that “Now you can spend more time with your ailing wife” might suggest retaliation for that leave. And as mentioned with respect to the Thomas v Hill case, don’t suggest the employee would prefer a different job anyway due to his heart condition (or any disability).
Discuss the termination face-to-face. If possible, meet with the employee and deliver the letter to help avoid misunderstandings and address concerns that any individual might have upon being fired. The letter could provide a good outline for what should be discussed in the termination meeting, and following the letter could help the HR rep or other person conducting the meeting maintain a professional demeanor.
Write for a larger audience. You are delivering the letter to the employee – but how would the letter be read by the EEOC, a Facebook audience, or a jury? Provide enough background facts to keep things in context. If the employee was fired for violating a policy, or for failing to meet performance or behavioral standards, say so. Don’t leave it to a potential jury to fill in the blanks.
Be consistent after the fact. The reasons in the termination letter should also be the reasons provided if the decision is challenged later (perhaps in an EEOC charge). While it is okay to provide additional details on policy violations or other reasons outlined in a termination letter, avoid adding entirely new bases for the discharge that were not mentioned in the letter. Also, if you provide letters of recommendation, avoid saying anything that could contradict your stated reasons for terminating the employee. That could be used against you in court.
Avoid joint employer issues. Be mindful of the letterhead used. If an employee for company A was terminated on company B’s letterhead (or by company B’s HR personnel), that could suggest that both A and B exercised control over the termination decision and both could be liable as employers. Also, don’t use the terms “we” or “us” when referring to the employer. This could also become the basis for arguments that related companies received proper notice of EEOC charges or were joint employers for purposes of liability. For example, a federal court in Illinois refused to dismiss Title VII claims against three entities that arguably received notice of EEOC charges served on a CEO, as evidenced by shared offices, equipment, and owners, as well as by the fact that the CEO responded to an EEOC charge by commenting on when the employee “came to us” and stating “we” have always been an equal opportunity employer. Such language could also be problematic in termination letters (Jowers v Village Green Apartments, LLC).
Explain the employee’s rights and responsibilities. If you offer a severance package, the letter should reference the package. State that all property of the employer should be returned and perhaps provide a separate checklist of items, such as cell phones, computers, or keys. The employee should also be reminded of other contractual obligations (e.g., noncompete or nondisclosure agreements). In addition, provide information on available benefits, including COBRA documentation as appropriate. In one recent case, a federal court in Nevada ordered an employer to pay the maximum statutory daily penalty where the employee received an attachment to her termination letter explaining COBRA but was never provided an election form and was merely told that it would be sent separately (Honey v Dignity Health).
Final thoughts. The importance of a properly worded termination letter cannot be stressed enough. Mainly, it can provide evidence of an employer’s legitimate reason for taking the action it did. But it can also provide a roadmap for both employer and employee — guiding the employer through the termination meeting and helping maintain a professional tone, while also providing the employee with information underlying the decision and information on the next steps he or she needs to take. The termination letter also serves to document the employment action and, if EEOC charges are subsequently filed, can provide a ready response to any ensuing inquiry. With that in mind, be sure to have the employee sign the termination letter to acknowledge receipt. As with any document as important as this, having an attorney review the termination letter before delivering it is a good idea.
In a case in which the Third Circuit observed that it “never had occasion to address specifically what constitutes invocation of one’s right to return to work,” under the FMLA, the appeals court found that an employee who spent 60 percent of her job typing, and who was forbidden from returning to work with three fingers taped together after she broke a bone in her hand (even though she presented a note from her treating physician stating she had “no restrictions”), presented sufficient evidence from which a jury could find that she attempted to do so here. Accordingly, the court revived her FMLA interference claim.
When the hospital credentialing assistant came to work with a metal splint on her hand, an HR employee provided her with FMLA leave forms because she was unable to work full duty. She took the forms to her doctor, who taped her pinky, ring, and middle fingers of her right hand together. While there, the employee asked him to fill out the FMLA leave certification form, telling him that while her job required typing, she felt she could type with the five fingers on her left hand, and her thumb and index finger on her right hand. He provided her with a note saying she could return to work with no restrictions.
No restrictions means 10 fingers. Prior to coming back, the employee emailed her employer with her return date, attaching the note from her doctor. When she arrived at work on the specified day, she informed the HR rep that while she still had a splint on her hand, she could type slowly. The HR rep replied that because her return to work note “states ‘no restrictions,’ therefore you should be at full duty (full speed) in your tasks. If you are unable to do so, you should contact your physician and ask him to write you and [sic.] excuse to stay out of work until you may do so.” She also informed the employee that “It seems that your physician was incorrect in stating that you could work unrestricted. If you were truly unrestricted in your abilities, you would have full use of all your digits.”
Capable of working? The employee then left work and returned to her doctor. That same day, he faxed the completed FMLA certification to her employer with the prior specified return to work date. On the last page, however, he asked that the employee be excused until reevaluation. She was subsequently prescribed occupational therapy, and when she was unable to return at the expiration of her FMLA leave, she was permanently replaced. She then sued, asserting claims or interference and retaliation under the FMLA. Granting summary judgment on her interference claim, the district court found that she was never entitled to the protections of the FMLA because she claimed that she was fully capable of working at the time that she attempted to return to work.
Right to be restored. Vacating the lower court’s decision, the appeals court pointed out that her fitness-for-duty certification clearly stated that she could return to work with “no restrictions.” In addition, the court noted, it was undisputed that her employer did not provide her with a list of essential job functions to present to her doctor. Prior to permitting an employee to return to work, an employer may request that an employee provide such a certification, the court observed. In it, an employee’s healthcare provider must merely certify that the employee is able to resume work. While an employer may require that this certification address the employee’s ability to perform the essential functions of her job, it can only do so if it provides a list of essential functions to the employee at the time that the employer notices the employee that she is eligible for FMLA leave.
Because the employer did not provide the employee here with a list of essential job functions to present to her doctor, the fitness-for-duty certification was based only on the job description the she would have supplied. When the employee was asked by the doctor if she felt she could type, she responded that she thought she could.
Although the doctor’s communications were admittedly inconsistent, his second note excusing the employee from work was provided only after the HR rep questioned the doctor’s assessment and told the employee she could not return until she had full use of all 10 fingers. While the regulations provide that if an employer requires clarification of the fitness-for-duty certification, it can contact the employee’s health care provider (as long as the employee gives the employer permission to do so, which the employee did here), an employer cannot delay an employee’s return to work while contact with the health care provider is being made. Here, the court found that a reasonable jury could conclude that the employee attempted to invoke her right to return to work and that her employer interfered with that right when it told her that she could not return.
Essential job function. Even if she actually attempted to return to work, the employer argued that it was still entitled to summary judgment because it would have sent her home as she could not perform an essential function of her job. Noting that whether a particular function is essential is a factual determination that must be made on a case-by-case basis, the court observed that the FMLA regulations place the onus on an employee’s health care provider — not her employer — to certify whether the employee is unable to perform any essential job function. Although the employer could have provided the doctor with a list of specific essential job functions, it did not. Instead, the court observed, the HR rep unilaterally determined, over email, that the employee could not perform an essential function because she had use of only seven fingers.
Hunt and peck. And while the employee admitted that she could not type as quickly with only seven fingers, the court noted that there was no evidence of a minimum words-per-minute requirement in her written job description. Moreover, the court pointed out, both another employee who held an equivalent position and the employee’s supervisor admitted to using a “hunt and peck” method to type. That was sufficient evidence to show she could, in fact, perform this essential function, the court stated.
Employer takeaway. While an employee may not need to be at 100 percent physical capacity in order to be entitled to job restoration, the employee does need to be able to perform the essential functions of the job held prior to FMLA leave. This case emphasizes the importance of reviewing your job descriptions to ensure that they are up-to-date and accurately reflect each job’s essential functions. The case also serves as a reminder to provide employees with a list of essential job functions at the time the employer notices the employee that he or she is eligible for FMLA leave in order that the employee may provide the list to his or her healthcare provider.
OFCCP proposes rule to prohibit reprisals against federal contractor employees and applicants who discuss pay
Pursuant to the provisions of an executive order (EO) signed by the President earlier this year, the OFCCP has published proposed regulations to prohibit federal contractors and subcontractors from discharging or otherwise discriminating against employees and applicants for talking about pay. The proposal was announced by the agency on September 15, 2014, and the Notice of Proposed Rulemaking (NPRM) was published in the Federal Register on September 17 (79 FR 55712-55742). The public has until December 16 to submit comments.
EO 13665. To mark “Equal Pay Day” on April 8, 2014, President Obama signed EO 13665 (79 FR 20749-20750), entitled “Non-Retaliation for Disclosure of Compensation Information.” Section 2(b) of EO 13665 amends Section 202 of EO 11246 by adding the following provision:
“The contractor will not discharge or in any other manner discriminate against any employee or applicant for employment because such employee or applicant has inquired about, discussed, or disclosed the compensation of the employee or applicant or another employee or applicant. This provision shall not apply to instances in which an employee who has access to the compensation information of other employees or applicants as a part of such employee’s essential job functions discloses the compensation of such other employees or applicants to individuals who do not otherwise have access to such information, unless such disclosure is in response to a formal complaint or charge, in furtherance of an investigation, proceeding, hearing, or action, including an investigation conducted by the employer, or is consistent with the contractor’s legal duty to furnish information.”
EO 13665 also requires the Department of Labor (DOL) to propose, within 160 from the date it was signed, regulations to implement its requirements. Accordingly, the OFCCP’s proposal was submitted to the Office of Budget and Management (OMB) for review on July 21, 2014, and on September 11, the OMB approved it for publication.
Proposed rule. If finalized, the proposal will amend the OFCCP’s regulations at 41 CFR Section 60-1 that implement EO 11246. The proposed rule would apply to all federal contractors with contracts entered into or modified on or after the effective date of the rules that exceed $10,000 in value.
Changes to equal opportunity clauses. The current regulations at § 60-1.4 enumerate the basic equal employment obligations of federal contractors in a clause required to be included in all federal contracts. The NPRM would amend this clause to include the requirement that federal supply and service contractors (§ 60-1.4(a)(3)) and federal construction contractors (§ 60-1.4(b)(3)) refrain from discharging or otherwise discriminating against employees or applicants who inquire about, discuss, or disclose their compensation or the compensation of other employees or applicants, except where the disclosure was carried out by an employee who obtained the information in the course of performing his or her essential job functions.
The proposal provides that contracting agencies may either incorporate the equal opportunity clauses by reference or expressly include it in government contracts and modifications thereof if not included in the original contract.
This prohibition in no way compels employees to share compensation information with others, the OFCCP explains in the NPRM. Rather, it simply protects those who choose to do so from discrimination by their employer. The proposed amendment to the equal opportunity clauses would generally protect employees who reveal compensation information but would not protect employees who disclose compensation information that they had access to as part of their essential job functions. This exception allows contractors to take adverse action against employees who have access to compensation information pursuant to their work duties (e.g., human resources professionals) and disclose that information to other individuals who do not otherwise have access to such information, unless the disclosure is in response to a formal complaint or charge, in furtherance of an investigation, proceeding, hearing, or action, including an investigation conducted by the employer, or is consistent with the contractor’s legal duty to furnish information.
Defenses. The proposal would create a new provision at § 60-1.35 entitled, “Contractor Obligations and Defenses to Violation of the Nondiscrimination Requirement for Compensation Disclosures.” This new provision would provide employers with two defenses to alleged violations of the nondiscrimination obligation for employees who inquired about, disclosed, or discussed compensation: one based on enforcing rules against disruptive behavior; and the other based on the essential functions of the person’s job. Specifically, proposed § 60-1.35(a) and (b), respectively, would establish a general defenses provision and an essential job functions defense provision.
The proposed defenses provisions would allow contractors to pursue a defense as long as that defense is not based on a rule, policy, practice, agreement or other instrument that prohibits employees or applicants from discussing or disclosing their compensation or that of other employees consistent with the provisions in the equal opportunity clauses in § 60-1.4.
In the NPRM, the OFCCP notes its concern that contractors’ legitimate workplace rules, policies and practices such as those related to maintaining discipline in their workplaces and protecting their businesses be consistently and uniformly applied and narrowly defined to ensure they do not unnecessarily prohibit, or tend to prohibit, employees or applicants from inquiring about, discussing or disclosing their compensation or the compensation of other employees or applicants. As such, the OFCCP invites comments on how to harmonize contractors’ enforcement of legitimate workplace rules with the rights of applicants and employees to discuss, disclose, or inquire about compensation.
Dissemination. Proposed § 60-1.35(c) would also require federal contractors to incorporate a nondiscrimination provision, as prescribed by the OFCCP Director and made available on the OFCCP website, into their existing employee manuals or handbooks, and disseminate the nondiscrimination provision to employees and to job applicants. This dissemination could be executed electronically or by posting the prescribed provision in conspicuous places available to employees and job applicants. The language of the provision would be based on the language in Section 2(b) of EO 13665 and will be prescribed by the Director of OFCCP “to ensure consistency of message and clarity of purpose,” the agency explains in the NPRM.
Manager training. For those contractors that provide manager training or meetings, the OFCCP is considering making it a requirement that they include nondiscrimination based on pay in their existing manager training programs or meetings. As for other contractors, the agency would encourage them to adopt this as a best practice for minimizing the likelihood of workplace discrimination. Thus, the OFCCP is seeking comments on the feasibility of requiring contractors with manager training programs or meetings to include a regular review of the nondiscrimination provision. It is particularly interested in the cost associated with including a review of the provision in existing manager training programs or meetings.
Definitions. In addition to the proposal amending the existing equal opportunity clauses in § 60-1.4 to include the nondiscrimination provision in EO 13665, the NPRM also proposes to define key terms used in EO 13665 that are incorporated into the proposed rule. Specifically, the proposal would change the list of relevant definitions at § 60-1.3 by adding the following three definitions:
(1) The definition of the term “compensation” would include payments made to an employee, or on behalf of an employee, or offered to an applicant as remuneration for employment, including but not limited to salary, wages, overtime pay, shift differentials, bonuses, commissions, vacation and holiday pay, allowances, insurance and other benefits, stock options and awards, profit sharing, and contributions to retirement. This definition aligns with the definition OFCCP uses in the context of compensation discrimination investigations, the agency notes.
(2) The OFCCP proposes to define “compensation information” by adopting the definition used by agency in existing guidance. Accordingly, the definition would cover any information related to all aspects of compensation, including, but not limited to, information about the amount and type of compensation as well as decisions, statements, or actions related to setting or altering employees’ compensation. This proposed definition is meant to be broad enough to cover any information directly related to employee compensation, as well as the process or steps that led to a decision to award a particular amount or type of compensation.
(3) The proposed definition of “essential job functions” would include the fundamental job duties of the employment position held by an individual. The term does not include the marginal functions of the position. A job function may be considered essential for any of several reasons, including but not limited to the following: (a) the function may be essential because the reason the position exists is to perform that function; (b) the function may be essential because of the limited number of employees available among whom the performance of that job function can be distributed; and/or (c) the function may be highly specialized so that the incumbent in the position is hired for his or her expertise or ability to perform the particular function.
Other updates. In addition, the NPRM would delete the outdated reference to the “Deputy Assistant Secretary” in §60-1.4(d) and replace it with the “Director of OFCCP.” The proposal also includes changing the title of §60-1.4(d) to “Inclusion of the equal opportunity clause by reference” and making a conforming change in the text.
Justification for proposal. According to an OFCCP “Fact Sheet” on the proposed rule, a pay gap between men and women persists today, despite the existence of laws protecting workers from gender–based compensation discrimination for more than five decades.
“While research has found that many factors contribute to the wage gap, such as occupational preferences, pay discrimination remains a significant problem, especially for the working poor and the middle class,” the fact sheet states. “Among the possible contributing factors is the prevalence of workplace prohibitions against discussing compensation. Strictures against revealing compensation can conceal compensation disparities among employees, making it impossible for an employee to know he or she is being underpaid compared to his or her peers.”
“Workers cannot solve a problem unless they are able to identify it. And they cannot identify it if they aren’t free to talk about it without fear of reprisal,” said OFCCP Director Patricia A. Shiu. “Pay transparency isn’t just good for workers. It’s good for business. Fairness and openness are great qualities for a company’s brand.” Director Shiu, along with DOL Women’s Bureau Director Latifa Lyles, has also posted a blog regarding the proposal.
For more information, the OFCCP has created a resource page about the proposal on its web site at www.dol.gov/ofccp/PayTransparencyNPRM.