Updating an earlier post, eight VW workers at the automaker’s Chattanooga, Tennessee, plant have filed charges with the NLRB against the UAW, saying that it misled and coerced them, along with other workers, into forfeiting their rights during the recent card check unionization drive, according to the National Right to Work Legal Defense Foundation (NRTW). Via free legal assistance from NRTW lawyers, the workers filed their charges at the ’s regional office in Atlanta.
And on October 16, it was reported that four more workers filed a federal charge with the Board alleging that statements by German VW officials illegally coerced them into UAW representation, also according to the NRTW. The charge comes after the officials stated, according to recent media reports, that for any expanded production to be considered in Chattanooga, the plant must adopt a works council that would force workers to accept the representation by the UAW.
“With reports that Volkswagen is considering Chattanooga to build its new SUV, this is no idle threat,” said Mark Mix, NRTW president. “If VW management was discouraging workers from joining the UAW with threats, there’s little question that an NLRB prosecution would have already begun at the UAW’s behest.”
The cards not only authorized the union to represent the workers, they also ostensibly authorize the importation of a German-style “work council” to the U.S. plant. The card includes language stating that the workers “commend and embrace the Volkswagen philosophy of co-determination and aim to contribute to the production of the highest quality products, safe and efficient production methods, and the overall profitability of Volkswagen.” The language goes on to state: “We believe that the best way to actively participate in our company and to contribute to VW’s continued success is to achieve representation as our colleagues have at the other 61 Volkswagen facilities across the globe.”
The charges filed by the VW workers — some nine days after a UAW spokesperson confirmed to Employment Law Daily that the union had obtained a majority of UAW authorization cards — are said to state that union organizers told the workers that a signature on the card was to call for a secret ballot unionization election. The charges also purportedly allege other problems in the card check process, including that some of the cards used were signed too long ago to be valid. The NLRB charges seek an order that UAW union officials cease and desist from demanding recognition based upon the tainted cards.
According to the NRTW, union officials have told workers that they must physically appear at the union office if they want their cards returned to them. Purportedly, these workers sought to revoke their signatures following media reports suggesting that workers were misled or bribed into signing cards.
The NRTW acknowledges that this latest development stems from a NRTW “special legal notice” targeted to the VW workers. The notice points to the decline of the UAW and suggests that the union now “sees German-style ‘works councils’ as its salvation.” The notice also disputes the alleged claim of the UAW’s president that workers must join the union and authorize it to be exclusive bargaining agency in order to have such a work council. The NRTW’s targeted notice also advises VW workers of several rights under the NLRA, including their right to revoke a union authorization card that they have signed and exactly how to do so.
Although the OFCCP’s focus on current pay, rather than on pay decisions does not comport with the relevant legal standard following the Supreme Court’s 2007 decision in Ledbetter v Goodyear Tire & Rubber Co (89 EPD ¶42,827), contractors should still analyze current pay in addition to decisions impacting pay, according to experts speaking at the National Employment Law Institute’s (NELI) Thirty-First Annual Affirmative Action Briefing in Chicago, Illinois. In addition to its erroneous focus on current pay, the OFCCP’s enforcement policy allows the agency to operate without any consistent standards, the experts said.
Ledbetter decision and statute. Attorney David A. Copus, recently retired from Ogletree Deakins in Morristown, New Jersey, explained that the Ledbetter decision contained the following two parts:
- Title VII claimants must challenge specific pay decisions; and
- The aggrieved employee must file a charge within 180/300 days of the allegedly discriminatory pay decision.
Congress only addressed the second part of the High Court’s decision in the Lilly Ledbetter Fair Pay Act of 2009, Copus noted, emphasizing that all the Act does is extend the charge filing period indefinitely when a Title VII claimant challenges a discrete pay decision. It does not however, change the requirement that Title VII claimants must identify and challenge discrete pay decisions. In other words, the Ledbetter Act nixed the second part of the Supreme Court’s decision, but didn’t do anything to change the first part.
The OFCCP concedes it is bound by Title VII when conducting compensation enforcement under Executive Order (EO) 11246. Thus, the Ledbetter decision applies with full force to the OFCCP, which means that the agency should be focusing on pay decisions, not current pay, Copus said. Ledbetter “crushed” the OFCCP’s compensation strategy, but the agency has “put its head in the sand” by ignoring that decision’s mandate to focus on pay decisions, according to Copus.
United Space Alliance ruling. At the beginning of a standard OFCCP compliance review, the agency conducts a preliminary analysis of the summary compensation data it receives from the contractor in response to Paragraph #11 of the “Itemized Listing” that accompanies the agency’s audit scheduling letter. Based on this preliminary analysis, the OFCCP may ask the contractor for more information, including individual employee-level data. The practice of making these supplemental data requests was upheld in a November 2011 ruling by Royce Lamberth, Chief Judge of the federal district court in D.C. With this decision, the “highly respected” Judge Lamberth gave the OFCCP a “slam-dunk victory” that, in essence, allowed the agency leeway to make up its pay data analysis standards as it goes along, according to Copus.
In United Space Alliance, LLC v Solis (94 EPD ¶44,325), Judge Lamberth ruled against the contractor’s attempt to seek relief from an April 11, 2011, order of the DOL’s Administrative Review Board adopting an earlier Administrative Law Judge order requiring the contractor to submit to the OFCCP additional data for analyses beyond that which the contractor had submitted in response Paragraph #11 of the “Itemized Listing.” Rejecting the contractor’s assertions that the OFCCP’s actions violated the Fourth Amendment, the Administrative Procedure Act, the Paperwork Reduction Act, and other laws, the court wrote, “[s]ubmission to such lawful investigations is the price of working as a federal contractor.”
Directive 307. In late February 2013, the OFCCP issued Directive No 307 (Renumbered on September 16, 2013 as DIR 2013-03), entitled, “Procedures for Reviewing Contractor Compensation Systems and Practices.” It was issued in conjunction with the agency’s announcement of a flexible, case-by-case approach to its analysis of systemic compensation discrimination. According to Copus, this directive adopted the United Space Alliance ruling “with a vengeance.”
In Directive 307 and related policy statements, the OFCCP asserts that its enforcement standards are based on “Title VII principles,” but the agency doesn’t specify any standards or analytical models. Although the OFCCP claims this directive “clarifies” the information it is looking for in evaluating compensation, any OFCCP claims of transparency are “bogus” and the agency is “purposely trying to hide the ball,” Copus countered.
On a similar note, labor economist Paul F. White, Ph.D., Managing Director of ERS Group’s Washington, D.C. office, said that the OFCCP has, in a way, “rewritten the rules so that they don’t have to follow any rules.”
Moreover, the OFCCP’s revised Federal Contract Compliance Manual, publicly released on August 23, 2013, provides no guidance on the standards the agency will use in evaluating compensation, Copus pointed out. As such, the contractor community “[doesn’t] have a clue” as to what is going on. Consequently, contractors have no way to predict what analytical models, if any, the OFCCP will use when determining whether to seek information beyond that which the contractor has provided in response to Paragraph #11 of the “Itemized Listing” or at any other stage of the agency’s review process.
Regression analysis. While the analytical models the OFCCP may use at any given stage of its compensation review process are not clear, contractors should run multiple regression analyses on their compensation data for both current pay and pay decisions, the experts advised.
Regression is the statistical analysis method most accepted by the courts for analyzing compensation disparities, White said, describing it as the “gold standard.” But all regression analyses are not the same, he noted, and just because the OFCCP does a regression analysis on a contractor’s data doesn’t mean that it was done correctly. Accordingly, a contractor should run its own regression analyses prior to providing the OFCCP with any data files, so that the contractor can identify disparities and understand why these disparities exist.
It is very important that contractors always conduct their regression analyses under attorney-client privilege, added John C. Fox, a former OFCCP official and current president of Fox, Wang & Morgan P.C. in San Jose, California.
Job group cautions. Directive 307 provides that the agency will examine three key questions in every case: (1) is there a measurable difference in compensation on the basis of sex, race, or ethnicity?; (2) is the identified difference in compensation between comparable employees under the contractor’s wage or salary system?; and (3) is there a legitimate explanation for the difference (i.e. is the difference based on “an appropriate comparison”)?
When determining what employees are comparable, the OFCCP will seize upon contractors’ Affirmative Action (AAP) job groups, and assert that putting jobs in the same group for AAP purposes is an admission on the part of the contractor that these jobs are similar for the purpose of compensation discrimination analysis as well, according to Fox. Therefore, contractors need to be aware of their AAP job groups and carefully review them, he advised.
Focus on the nail, not the hammer. Importantly, neither Directive 307 nor any current OFCCP policy statement acknowledges Ledbetter’s requirement that discrimination claims must be based on pay decisions rather than current pay, Copus observed. Instead, the agency is only seeking information on current pay.
Analogizing to a hammer hitting a nail, Copus said statistical models such a regression analysis, are, like hammers, merely tools. While “it is important to pick the right hammer,” he said, the focus should be hitting the right nail, i.e. pay decisions. Thus, discussions of how to conduct regression analysis are only addressing what tool to use, rather than what nail to hit, he pointed out. Simply analyzing current pay, while ignoring pay decisions, is not viable compliance strategy, he emphasized.
Yet, many attorneys do not advise their clients to analyze pay decisions, and instead focus only on current pay, said Fox. Attorneys who don’t put their clients on notice that they should analyze pay decisions are risking malpractice suits, he warned.
What’s a contractor to do? Nevertheless, contractors should still run a regression analysis on their current pay data, advised employment law attorney Brian W. Bulger of Meckler Bulger Tilson Marick & Pearson in Chicago. The OFCCP will disregard contractor’s assertions regarding the correct legal standards until they are faced with litigation on this issue, he said. Because contractors won’t be able to talk the OFCCP out of its focus on current pay, contractors should analyze that in addition to pay decisions.
White, who presented a detailed primer on how to conduct regression analysis, agreed. The bottom line is that the OFCCP will analyze current pay, so contractors should as well, he said, adding that contractors may want to analyze current pay for other reasons.
Nevertheless, when complying with OFCCP information requests that focus on current pay, contractors should, to protect their legal rights, add a disclaimer noting that the correct legal standard is to focus on pay decisions, Bulger said.
“I would definitely protest a request for current pay [information]” under Ledbetter, Copus said in a similar vein. That way, the contractor can establish its objection for the record. Noting that many contractors are more sophisticated in this area than most OFCCP compliance officers, Copus advised that such objection statements include the following information:
- A note that, under Ledbetter, the relevant focus is pay decisions, not current pay;
- A list of the three primary types of pay decisions — starting pay, merit increases; and promotional increases – and emphasize that current pay is a result of years of pay decisions; and
- A note pointing out the OFCCP’s repeated statements of the agency’s commitment to follow Title VII law on compensation.
The presenters. Copus has more than 35 years of litigation and counseling experience and has regularly represented employers in OFCCP matters, including hundreds of standard OFCCP compliance evaluations and “glass ceiling” audits. He began his legal career in 1969 at the Equal Employment Opportunity Commission (EEOC), where for many years he headed the National Programs Division. Since 1977, he has been in private practice representing employers, and he has recently retired from Ogletree Deakins in Morristown, New Jersey.
White is the Managing Director of ERS Group’s Washington, D.C. office. His practice areas cover all aspects of employment discrimination cases, including: compensation, hiring, promotion, and termination. Dr. White has testified numerous times on behalf of plaintiffs and defendants, in local, state, and federal courts. He served as the case manager or testifying expert witness in several prominent cases, and designed statistical analyses of pay and promotion data on behalf of defendant in the national class action Dukes v Wal-Mart Stores, Inc.
Fox is the President and a founder of Fox, Wang & Morgan P.C. He leads large and complex litigation matters in state and federal courts, in cases involving wage-hour and discrimination class actions, trade secret claims, employment contract disputes, wrongful termination, corporate investigations, and the use of statistics in employment matters. Fox previously served as Executive Assistant to the Director of the OFCCP, where he was responsible for all enforcement and policy matters.
Bulger, a founding partner of Meckler Bulger Tilson Marick & Pearson in Chicago, has advised and represented public, private, union and non-union employers on all aspects of the employment relationship for over 25 years. He holds an AV rating in the Martindale-Hubbell Law Directory, the highest possible distinction for legal ability and ethical standards. In addition, the National Law Journal named Bulger as one of the nation’s “Best Litigators in Employment Law.”
NELI’s Thirty-First Annual Affirmative Action Briefing was held in Chicago on October 3-4, 2013. For more information on NELI, including its publications and future programs, call (303) 861-5600 or go to NELI’s website at: www.neli.org.
Contractors must demonstrate dedication to affirmative action for veterans and the disabled under new regulations, expert says
Federal contractors must be prepared to “spend the money” to meet their upcoming obligations under the OFCCP’s revised regulations regarding the disabled and protected veterans, said employment law expert Brian W. Bulger at the National Employment Law Institute’s (NELI) Thirty-First Annual Affirmative Action Briefing in Chicago, Illinois on October 3, 2013. Among other expenses, contractors’ HR and IT departments will need to work together to create new programs to meet the revised requirements. “No one has programs to make this happen yet,” according to Bulger, a founding partner at Meckler Bulger Tilson Marick & Pearson in Chicago.
Among the existing obligations that have been maintained under the new rules is the requirement that each covered contractor assign responsibility for implementation of affirmative action responsibilities to a specified company official and that this official be given the necessary senior management support and staff to manage implementation, he pointed out. Thus, federal contractors are required to come up with the budget and staffing resources necessary to meet the new obligations required under these changes to the law. “You need to show the OFCCP that you get it,” he told the audience.
The final rules containing these regulatory revisions were published in the Federal Register on September 24, 2013. The first rule (78 FR 58614–58679) revises the agency’s regulations at 41 CFR Part 60-300 that implement the provisions of the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA) (and rescinds the outdated regulations at 41 CFR Part 60-250); the second rule (78 FR 58682-58752) revises the regulations in 41 CFR Part 60-741 that implement the provisions of Section 503 of the Rehabilitation Act of 1973, as amended (Section 503). On that same day, the OFCCP submitted the paperwork requirements under the two final rules for Office of Management and Budget (OMB) approval. Bulger noted that the paperwork requirements of the rules must be approved before they can be implemented.
Rulemaking background. The OFCCP published a Notice of Proposed Rulemaking (NPRM) regarding it proposed revisions to the agency’s VEVRAA regulations on April 25, 2011 (76 FR 23358-23425) and the NPRM on the Section 503 proposed revisions was published in the Federal Register on December 9, 2011 (76 FR 77056-77105). On August 27, 2013, the OMB approved the final rules, which were announced by the OFCCP and Vice President Biden that same day.
Both rules underwent a “final edit” prior to Federal Register publication, noted John C. Fox, a former OFCCP official and current president of Fox, Wang & Morgan P.C. in San Jose, California. As a result, there are “subtle changes” between what was posted on the OFCCP website when the final rules were announced on August 27 and the version of these rules published in the Federal Register on September 24.
Commenting on the final rules overall, Bulger said “this isn’t bad,” particularly compared to what was in the NPRMs. The agency took out some of the most onerous parts of the recordkeeping requirements contained in the proposed rules, he noted. In the end, the agency “did this in a reasonable way.”
Effective date. The rules are scheduled to take effect on March 24, 2014. Although federal contractors and subcontractors will be required to comply with most of the requirements of the new rules by this date, contractors with existing affirmative action programs (AAPs) on the effective date may wait to come into compliance with Subpart C of both rules as part of their standard AAP review and updating cycle. In other words, contractors that have an AAP in operation (mid-cycle) on March 24, 2014 may wait to comply with Subpart C of both rules until their new annual AAP cycle begins.
The current government shutdown will likely not impact the effective date, Fox said. Under the Administrative Procedure Act, an agency is only required to allow 30 days following publication for new rules to take effect, he explained. Thus, the OFCCP’s decision to make the effective date 180 days following publication was “generous.” Ultimately, it is up to OFCCP Director Patricia Shiu to decide if she wants to extend the effective date. In any event, Fox predicted that regulations will become effective. “Nothing is going to stop them now,” he said.
Importance of preambles. The preambles included in the Federal Register publication of the final rules – which contain important OFCCP statements regarding enforcement policies – will not be included when the updated regulations are published in the Code of Federal Regulations (CFR). Therefore, contractors should preserve them, Fox advised.
FAQs. The OFCCP has posted FAQs for the upcoming changes to the VEVRAA and Section 503 regulations on its website. In Bulger’s assessment, these FAQs are “well thought out and well done” and “written in relatively plain English.” He suggested that contractors start with the FAQs before consulting a lawyer for guidance on compliance questions.
Invitations to self-identify. The final VEVRAA rule requires that contractors invite applicants to self-identify as protected veterans at both the pre-offer and post-offer phases of the application process. At the pre-offer stage, contractors must extend an invitation to self-identify generally as a “protected veteran.” At the post-offer stage, contractors must extend an invitation to self-identify as to the specific veteran category(ies) that contractors are required to report on in the VETS-100A form.
Appendix B of the VEVRAA final rule includes sample invitations to self-identify (for both the pre-offer and post-offer stages) that contractors may use. Unlike the requirements of the Section 503 final rule, contractors are not required to use any specific form for the VEVRAA invitations. Nevertheless, contractors that do not use the sample forms provided in Appendix B must still ensure that the format they use meets the criteria provided in the VEVRAA rule.
The final Section 503 rule requires contractors to invite applicants to self-identify as individuals with disabilities (IWDs) at both the pre-offer and post-offer phases of the application process. The final rule also requires that contractors invite their incumbent employees to self-identify as IWDs every five years. All invitations must use the standardized form prescribed by the OFCCP. That form was included in the supporting documentation filed with the OMB.
There will be definitely be under reporting at both pre and post offer stages, Bulger said. However, workers will become more comfortable self-identifying as protected veterans and/or IWDs over time, he predicted.
No ADA conflict with pre-offer invitation. There has been concern in the contractor community that the pre-offer invitation requirement might violate the ADA’s general prohibition against pre-offer disability-related inquiries. In the preamble to the final Section 503 rule, the OFCCP notes that the EEOC has provided a letter to the OFCCP to clarify this issue. The letter, dated August 8, 2013, was sent by EEOC Legal Counsel Peggy R. Mastroianni to OFCCP Director Patricia Shiu and explains that the pre-offer inquiry requirement will not violate the ADA because, among other reasons, the EEOC’s ADA regulations (at 29 CFR Part 1630.1(c)(2)) permit employers to conduct a pre-offer inquiry into disability status if it is made pursuant to a federal, state or local law requiring affirmative action for individuals with disabilities.
In Bulger’s view, no federal judge will, in light of this letter, cite a contractor for asking an applicant to self-identify as required under the revised Section 503 regulations.
Timing of pre-offer invitation. While neither of the final rules adopts the Internet Applicant Rule, the preambles to both final rules provide that contractors may extend the disability and veterans status identification invitations at the same time they are required to extend the invitation to self-identify as to race, gender, and ethnicity under Executive Order (EO) 11246.
Contractors should not use one catch-all form for the required invitations, Bulger advised. Rather, a contractor should use its current form for race and sex self-identification and attach a separate form for veteran status identification and another, separate form (the form to be proscribed by the OFCCP) for disability status identification.
44(k) documentation requirements. The final rules (at 41 CFR 60-300.44(k) and 41 CFR 60-741.44(k)) will require contractors to document and update annually the following data:
• number of IWD and protected veteran applicants;
• total number of applicants for all jobs;
• total number of job openings and jobs filled;
• number of IWDs and protected veterans hired; and
• total number of applicants hired.
This data must be maintained for three years.
These 44(k) obligations require documentation but not any Impact Ratio Analysis, Bulger noted. In the preambles to the final rules, the OFCCP states that compliance determinations for the 44 (k) requirements will be made based simply on whether the contractor has documented and maintained the five metrics listed above. OFCCP compliance officers will not be using the applicant and hiring data to conduct underutilization or impact ratio analyses, as is the case under EO 11246, the preambles state.
Nevertheless, Bulger thinks compliance officers will apply Impact Ratio Analysis at some point because compliance officers are used to doing this under EO 11246. Therefore, he suggests that contractors conduct Impact Ration Analysis for protected veterans and IWDs anyway, but so do under attorney client privilege.
VEVRAA benchmark. The VEVRAA rule will require contractors to establish an annual hiring benchmark, either based on the national percentage of veterans in the workforce (currently 8 percent), or based on the best available data and factors (specified in the regulations) unique to their establishments. Records related to the criteria and conclusions regarding contractor established hiring benchmarks must be kept for three years.
Although the revised regulations do not require that contractors apply this benchmark to each of their AAP job groups, Bulger recommended that contractors should, for their own information, examine the hiring benchmark by job group anyway, but not report this analysis in their AAPs.
Bulger advised against contractors setting their own benchmarks. Even if a contractor can come up with a lessor number its own, that contractor will be opening itself up to another line of OFCCP inquiry as well as more documentation and recordkeeping obligations, he pointed out. Nevertheless, he added that in a few years, once contractors have more experience with these new obligations, they may be in a better position to establish their own benchmarks.
Moreover, Fox pointed out “there really is no down side” for contractors who fail to meet the 8 percent benchmark, calling the benchmark a “requirement without a remedy.” In both the preamble to the final rule and the subsequent OFCCP webinars on the rule, the agency has made clear that failing to meet the benchmark is not a violation of the law and will not carry any penalties.
However, failing to meet the data collection, analysis, and recordkeeping requirements related to this benchmark will constitute violations, Bulger cautioned.
Section 503 utilization goal. The Section 503 rule (78 FR 58682-58752) will require contractors to establish a 7 percent utilization goal for the employment of individuals with disabilities (IWDs). The OFCCP derived this goal primarily from disability data collected as part of the Census Bureau’s American Community Survey. Contractors must apply the utilization goal to each of their AAP job groups, with the exception of contractors with 100 or fewer employees, who may apply the go to their entire workforce. In addition, contractors must conduct an annual utilization analysis and assessment of problem areas, and establish specific action-oriented programs to address any identified problems.
Even though the revised regulations require contractors with more than 100 employees to apply this utilization goal to each of their job groups, rather than to their workforce as a whole, Bulger suggested that contractors should, for their own information, examine the percentage as to their entire workforce as well.
As with the VEVRAA benchmarks, the OFCCP has made clear in both the preamble to the final rule and the subsequent OFCCP webinars on the rule, that failing to meet the utilization goal under the Section 503 regulations is not a violation of the law and will not carry any penalties. Failures to meet the data collection, analysis, and recordkeeping requirements related to this goal will, however, constitute violations.
Outreach and recruitment. The current VEVRAA and Section 503 regulations require contractors to engage in outreach and recruitment activities for IWDs and protected veterans. Under the revised regulations, contractors still have flexibility to choose methods that meet their needs, but will have the additional obligation to document each outreach and recruitment effort and undergo an annual written assessment of the effectiveness of each of activities. If the totality of the contractor’s efforts is not effective, the contractor must identify and implement alternative efforts. Further, contractors must retain records relating to these efforts for three years.
The revised regulations (at 41 CFR 60-300.44(f) and 41 CFR 60-741.44(f)) provide examples of appropriate outreach and positive recruitment activities in which contractors may engage to meet their affirmative action obligations. The list is not intended to be exhaustive, but rather is designed to provide contractors examples of “best practices,” from which to choose, and contractors outreach activities are not limited to what is included in the list.
When selecting from this list or otherwise deciding the extent of their outreach efforts, contractors should “look for the high, not the low, end,” Bulger advised. Contractors who reach for the high end will be less likely to be cited by the OFCCP for inadequate outreach efforts.
As to assessing the effectiveness of outreach efforts, Bulger recommended that if a particular effort is ineffective on the first try, don’t delete it, but rather, put it on a “watch list.” Contractors should also document success stories, he suggested.
Job listings required by VEVRAA. VEVRAA, as amended by the JVA, requires covered contractors to list all employment openings with “the appropriate employment service delivery system” which is defined as “a service delivery system at which or through which labor exchange services, including employment, training, and placement services, are offered in accordance with the Wagner-Peyser Act” [see 38 USC §4101(7)]. (The Wagner-Peyser Act established the Employment Service, which is a nationwide system of public employment offices.) A contractor also may list employment openings with “one-stop career centers under the Workforce Investment Act of 1998, other appropriate service delivery points, or America’s Job Bank (or any additional or subsequent national electronic job bank established by the Department of Labor).”
The new VEVRAA regulatory revisions clarify that when listing their job openings, contractors must provide that information in a manner and format permitted by the appropriate state or local job service, so that the service can access and use the information to make the job listings available to job seekers.
What this revision means, explained Bulger, is that whatever a contractor is currently doing to provide job listing information that its state/local agency is accepting, the contractor may keep doing that; however, if the state/local agency changes its job listing information requirements, the contractor will have to make the necessary changes to comply with the state/local agency requirements.
The job listings requirement in VEVRAA is not a requirement under Section 503, Fox observed.
Background on presenters. Bulger has advised and represented public, private, union and non-union employers on all aspects of the employment relationship for over 25 years. He holds an AV rating in the Martindale-Hubbell Law Directory, the highest possible distinction for legal ability and ethical standards. In addition, the National Law Journal named Bulger as one of the nation’s “Best Litigators in Employment Law.”
Fox represents companies and tries cases in state and federal courts that involve primarily individual trade secret claims, employment contract disputes, wage-hour and employment discrimination class actions, wrongful termination, corporate investigations, and the use of statistics in employment matters. He previously served as Executive Assistant to the Director of the OFCCP, where he was responsible for all enforcement and policy matters.
NELI’s Thirty-First Annual Affirmative Action Briefing was held in Chicago on October 3-4, 2013. For more information on NELI, including its publications and future programs, call (303) 861-5600 or go to NELI’s website at: www.neli.org.
By Lorene D. Park, J.D.
What is the cost of disciplining an employee without following your standard procedure or policy? How about disciplining one more harshly than another for doing the same thing? It could be extended litigation if a court finds those circumstances cast suspicion on your reason for the discipline. For example, in Terpo v RBC Bank (USA), a bank employee who brought her child to work when no one else was there and another time let her child step behind the teller line was fired for two security violations while a coworker who did the same things was merely given a written warning and put on probation. The court found that a jury would have to decide whether the difference in discipline was due to a legitimate reason or because the employee has a disabled daughter and had just been approved for FMLA leave. This case is but one of many where a procedure used to discipline or the level of discipline imposed created triable issues on whether the employer’s reasons were pretext for discrimination or retaliation. To avoid trial, some employers need only ask themselves a few questions before disciplining an employee.
Are you following your own disciplinary policy or standard procedures?
Sometimes, an employer’s failure to follow its own disciplinary policy is evidence that its reason for disciplining an employee is pretext. In Linkous v Stellarone Bank, a long-time employee was fired for making a suggestive comment. Refusing to grant summary judgment for her employer on her age bias claim, the court noted her recent positive reviews and the company’s corrective action policy, which provided that most first-time disciplinary problems were to be handled with a warning or additional training. A jury could be suspicious of the refusal to offer such measures to an employee who was recently so highly regarded, the court found. Similarly, the Seventh Circuit reversed summary judgment on a state gaming board employee’s Title VII and First Amendment retaliation claims, finding that irregularities in and the breadth of an internal investigation into alleged wrongdoing that the state police already found unsubstantiated presented a “convincing mosaic” of evidence that the gaming board was only interested in seeing him punished for helping a coworker sue the board (Hobgood v Illinois Gaming Board).
Is the timing of the discipline suspicious?
In most cases, timing is important. If a supervisor learns of an employee’s violation of company policy but does not take any action until a few months later, a court could find the misconduct wasn’t really worthy of discipline but was just being used to justify a decision that the employer wanted to take for some other unlawful reason. In McCallum v Archstone Communities LLC, for example, evidence that an employee was rated as “meets expectations” despite ongoing policy violations but was then fired for the violations after she announced her pregnancy, combined with her manager’s negative reaction to the pregnancy and the employer’s failure to follow its own policy in investigating the misconduct, precluded summary judgment on the employee’s pregnancy bias claim. And in the Terpo case discussed above, the employee’s supervisor learned of one of the two policy violations that formed the basis for the termination months before recommending her discharge but, in the meantime, the employee requested FMLA leave.
Timing is also important because close temporal proximity between a protected activity (e.g., complaining of discrimination) and an adverse employment action can suggest an employer’s reason for taking the action was pretextual. Courts vary as to what is close enough to be suspicious. However, most hold that while close temporal proximity is enough for a prima facie case of discrimination or retaliation, it is not enough, by itself, to show pretext. For example, a recruiter for a retained search firm who was fired two months after announcing her pregnancy and just a day after asking about maternity leave showed suspicious timing, but it only created triable issues on pretext when considered in conjunction with comments made by decisionmakers and evidence of her prior positive feedback (Dominick v Hospitality Valuation Services, Inc).
Has another worker engaged in similar misconduct?
Consistency is also very important. If two employees have engaged in similar misconduct but did not receive the same discipline, the question is why. If the coworker had a similar position, similar disciplinary or performance history, and the same supervisor, the question becomes even more important because the coworker is considered “similarly situated” and a good comparator for purposes of analyzing discrimination or retaliation claims. Note that courts do not require that the coworker have held the identical position or have engaged in identical misconduct as the employee who filed suit, so long as the two are similar enough to compare.
For example, in Lerman v Turner, a tenured professor who was given the option of being fired or resigning after she allegedly mishandled grant money could proceed on her discrimination claims where the timing and approach of the college’s investigation suggested pretext and a comparator was treated differently. The professor identified four comparators, but the court rejected one because he was subjected to the same adverse action and another because he was accused of different misconduct (selling college property). The third and fourth had potential even though they were non-tenured faculty, but the third was rejected as a comparator because he was not a primary investigator on the grants so was not subjected to the same standards as the employee. The fourth sufficed as a comparator, however, because he was in charge of administering grant funds. He got reprimanded (but not fired) for invoicing work that had not yet been completed.
Even if there is no doubt that an employee violated a policy, employers must ensure that the level of discipline is consistent with that imposed against others who engaged in similar conduct. In Bowditch v Mettler Toledo International, Inc, an employee who was fired for sending sexually explicit emails in violation of an employer’s policy could proceed to trial on his age bias claim because the company did not fire younger employees for substantially similar conduct. Likewise, in Dall v St. Catherine of Siena Medical Center, an employee who was constructively discharged after taking a picture up a nurse’s dress survived summary judgment on his gender bias claim because the nurse engaged in similar, if not worse, conduct and she was not even disciplined.
Checklist of questions
When an employer’s decision implicates all three issues — not following usual procedures, making a disciplinary decision at a suspicious time, and treating similarly situated employees differently — the discipline can be particularly hard to defend in court. For example, a long-time female deputy, who started receiving reprimands soon after complaining about having to re-interview before receiving a second K9 dog while male deputies automatically received dogs when theirs retired, and who was demoted for improperly disposing of property that had no evidentiary value while similarly situated males were not, survived summary judgment on her gender bias claim under both the direct and indirect methods of proof (Aldridge v Lake County Sheriff’s Office).
With that in mind, it might be advisable to have a list of questions to be answered before any discipline is imposed (or recommended), including:
- Is the discipline justified by a legitimate nondiscriminatory or retaliatory reason?
- Is any conclusion that misconduct occurred supported by an investigation that would be considered impartial? Did the investigation follow the employer’s normal procedures?
- Did the employee get to defend his or her actions before discipline was imposed?
- Is the level of discipline consistent with the employer’s policy?
- Is the timing of the discipline appropriate (e.g., reasonably proximate to the misconduct and after an investigation)?
- Have similarly situated workers engaged in similar misconduct and, if so, did they receive the same or similar discipline?
In addition to asking such specific questions, take a step back and try to look at the situation from an outsider’s perspective. How would a jury view the decisions made and actions taken?
End run around plaintiff’s counsel to reach settlement didn’t spare employer obligation to pay attorneys’ fees
Employers who take it upon themselves to privately settle wage claims with employees do so at their own risk. That point was driven home again by the Eleventh Circuit in an unpublished opinion in Wolff v Royal American Management, Inc. In the salient ruling Lynn’s Food Stores, Inc v US Dep’t of Labor, the Eleventh Circuit rejected a private settlement of back wage claims between an employer and its employees. The agreement in that case was not negotiated or supervised by the Department of Labor nor was it entered as a stipulated judgment in an action brought against the employer by its employees. Further, there was no evidence that any of the employees had consulted with an attorney before signing the agreement. Moreover, some of the employees who signed the agreement could not speak English. Thus, the agreement did not reflect a reasonable compromise of disputed issues, but was an attempted waiver of statutory rights brought about by the employer’s overreaching, concluded the appeals court.
Although the situation in Wolff was not as one-sided as that evidenced in Lynn’s Foods, the result was still punishing for the employer. The issue presented in Wolff was whether an employee’s voluntary acceptance of payment from her employer as settlement of her claims for unpaid overtime precluded a separate award of attorneys’ fees under the FLSA. In this instance, a district court concluded that the offer was fair and reasonable and entered judgment in favor of the employee. However, it was determined that the settlement did not provide the employee with all of the relief to which she was entitled to under the FLSA, so it did not moot her claim, and she was entitled to seek attorneys’ fees and costs from the employer.
Settlement offer. After filing her complaint alleging FLSA violations, the employee calculated that her employer failed to pay her $1800 in overtime wages. With liquidated damages, that brought her total itemized damages to $3600. In December 2011, the employer tendered $3600 to the plaintiff through her attorney and moved to dismiss the action. The employee’s counsel returned the check. In December 2012, the employer offered to settle the case for $5,000, but the employee’s counsel claimed that he never submitted the offer to the employee because it was never put in writing. Evidently, the employer became frustrated with its attempts to put the matter behind it, so it mailed the employee a 1099 form reflecting a payment of $3600. The employee called to determine the reason for the 1099. At that time, the employee for the first time learned of the prior tender offer to her attorney. She stated that she wanted to settle the case. Thereafter, the employee met with the employer, signed a general release and took the $3600 check. The employee’s counsel was not involved.
Subsequently, the parties moved the court to determine whether the payment and release rendered the action moot, stripping the employee of attorneys’ fees on the ground that there was no judgment in the case to indicate that she was the prevailing party. Ultimately, the district court approved the settlement as reasonable, even though it was reached without the participation of the employee’s counsel. However, the district court found that the settlement had not mooted the lawsuit awarded the employee’s counsel more than $61,000 in fees and costs.
Prevailing party determination. Because the FLSA seeks to protect employees from “inequalities in bargaining power between employers and employees,” Congress has made its provisions mandatory. Moreover, the FLSA plainly requires that a plaintiff who receives a judgment in his favor is entitled to attorney’s fees and costs.” The Supreme Court has recognized that a plaintiff is a prevailing party only when she obtains either (1) a judgment on the merits, or (2) a settlement agreement “enforced through consent decree.”
In the absence of a judgment on the merits, to be a prevailing party, an FLSA plaintiff needs a stipulated or consent judgment or its “functional equivalent” from the district court evincing the court’s determination that the settlement “is a fair and reasonable res[o]lution of a bona fide dispute over FLSA provisions.”
Here, the employer’s settlement offer to the employee did not include an offer of judgment in the employee’s favor and against the employer. Rather, the employee signed a release providing that she acknowledged receipt of the $3600 check as full and complete satisfaction of any monies owed to her by the employer. Under such circumstances, the employer’s offer did not constitute full relief of the employee’s claim. Thus, the employer’s settlement with the employee did not moot her FLSA claim, and she was entitled to seek attorneys’ fees and costs from the employer.
The appeals court observed that the district court plainly found that the settlement was reasonable, and entered judgment in favor of the employee. Moreover, the district court found that the parties did not intend the settlement to preclude attorneys’ fees. Accordingly, the appeals court rejected the employer’s claim that the district court abused its discretion in awarding the fees in this case, and the judgment of the district court was affirmed.
As tempting as a nice tidy settlement of a wage claim may appear, as Wolff demonstrates private settlements are froth with their own perils. “FLSA rights cannot be abridged by contract or otherwise waived because this would nullify the purposes of the statute and thwart the legislative policies it was designed to effectuate.” In this instance, the employer provided the appeals court with no reason to depart from Lynn, which directs a district court to enter judgment after “scrutinizing” for the fairness of a proposed settlement entered into between the employee and the employer in an action for back wages.