The House Committee on Education and the Workforce, chaired by Rep. John Kline (R-Minn.), held a hearing on June 9 to examine the Labor Department’s controversial overtime rule, which among other things raises the weekly salary threshold below which overtime must be paid from $455 to $913 a week, or stated annually, from $23,660 to $47,476 a year. The Committee Majority has expressed concerns that the administration has failed to streamline existing overtime regulations and has finalized a rule that will lead to fewer jobs, less workplace flexibility, and fewer opportunities to climb the economic ladder. But one witness, whose testimony was not featured by the lawmakers in their press release, saw the rule much differently, notably as a vehicle for rolling back the trend of rising income equality that has been underscored by decades of stagnant wages for middle-class workers.
Compromise. It’s worth remembering that the proposed rule would have set a higher threshold of $470 a week or $50,440 annually, but it was reduced in the final rule. In addition, the proposed rule set this salary threshold at the 40th percentile of full-time salaried workers nationally, but the final rule sets it at the 40th percentile of full-time salaries in the lowest-wage Census Region, which is currently the South. This change was in response to concerns that the “one-size-fits-all” approach of the proposed rule did not take into account the lower salaries paid in some areas of the country, particularly in the South.
Negative impact on workers. The testimony highlighted by the Committee Majority underscored the perceived downside of the final overtime rule. Tina Sharby, chief human resources officer at Easter Seals New Hampshire, testifying on behalf of the Society for Human Resource Management (SHRM), said: “Easter Seals New Hampshire will need to reclassify 280 employees from salaried to nonexempt status … limiting career opportunities and reducing flexible work schedules that both attract our staff and enable us to provide certain services … The final rule will impact employees on a personal level … Many staff members have expressed feelings of being demoted.”
According to Seyfarth Shaw attorney Alexander Passantino: “Employees will work the same, they will earn the same, but they will lose the flexibility and be required to track their work in a way that they have not done previously … Teamwork, productivity, and morale will undoubtedly suffer,” and the rule will have “the perverse effect of forcing many employers to take away the benefits, job security, and opportunities for advancement for those employees who will lose exempt status.”
Michael Rounds, associate vice president for Human Resources Management at the University of Kansas, said: “A primary concern is that our centers will not be able to afford as many postdocs and will need to cut back on the number of research openings and opportunities that are available. A decrease in the number of postdocs may have a direct impact on the standing of the University of Kansas in the national higher education research community.”
Vulnerable populations. SHRM’s advocate also pointed to concerns about how the overtime rule will impact services to vulnerable populations, such as veterans and children with disabilities. “A program at significant risk is the Military and Veterans Services Coordination program,” she observed. “Services are provided around the clock to respond to emergency situations for our veterans and their families … Because of the potential cost for overtime, Easter Seals New Hampshire will be forced to limit the number of coverage hours for this already underfunded program, limiting our ability to provide around-the-clock care and lessening these lifesaving support services.” The Special Education School that provides services to over 80 children, will also be impacted, according to Sharby, who said “Easter Seals simply cannot afford to pay overtime and the children with disabilities that we serve are the ones who will suffer the most.”
Implications for students. Rounds also expressed concern about the impact of the final rule on students: “It is inevitable that there will be a significant reduction in the services currently being provided by the University of Kansas units to students as we transition employees from their current exempt to non-exempt status without the flexibility of working more than 40 hours per week regardless of mission demands.”
“It is probable … that tuition will ultimately be pushed higher in future years in order to address the enduring impacts of the new overtime rule,” according to Rounds. “There is simply no way for universities like the University of Kansas to absorb costs of this magnitude without an impact on our academic, research, and outreach missions that will be felt by the public we serve.”
Small businesses. Sharby observed that the final rule will not only directly impact the budgets of nonprofits, but also small businesses. “These employers will be unable to absorb such a massive increase in payroll and labor costs,” she predicted.
“Regulatory familiarization, adjustment, and managerial costs will be significant for all employers,” Passantino suggested. “Perversely, however, these costs may be more significant for those organizations that can least afford it, such as small businesses … These organizations have the least discretion in their budgets and, in many ways, they will need to be the most creative in developing solutions.”
What about the good news for workers? One witness, however, looking in a different direction with his observations, voiced the upside of the impact of the new overtime requirements on workers and their families. “I predict that this overtime rule change, implemented by the Obama administration and its Labor Department and broadly supported by congressional Democrats and the general public—60 percent of Americans backed the proposal in a recent poll—will come to be viewed as an important and positive intervention on behalf of middle-class families,” said Dr. Jared Bernstein, Senior Fellow, Center on Budget and Policy Priorities.
Income inequity up in face of eroding wage standards. Berstein observed that salary threshold in the FLSA regulations “was ignored for decades, other than a notch up in 2004.” He said that the new increase, although historically large, does not even bring the threshold back up to its historical peaks, but rather only partially restores its inflation-adjusted historical value.
In contrast, Berstein pointed to data showing the percent of national income going to the top 1 percent of households, which for decades hovered around 10 percent, at the same time that the FLSA overtime threshold “was regularly maintained at a real level of at or above $1,000 in today’s dollars.” Beginning in the 1980s, as inequality trends began to push up income concentration, Bernstein said labor standards like overtime and the minimum wage were permitted to erode.
Economic impact and worker well-being. Bernstein pointed to the DOL’s estimates that the new requirements will cost employers $1.5 billion a year ($1.2 billion in new overtime pay and $300 million in administrative expenses to implement the change), which amounts to about 0.03 percent of the United States’ $8 trillion total national wage bill. He noted also that “Goldman Sachs’ analysts found that ‘the new rules should have little effect on wages in the aggregate,’ arguing that the rule change is likely to raise average hourly earnings less than 0.1 percent.’”
“This tiny impact on the aggregate wage bill should not undermine our expectations that the rule will improve the well-being of millions of workers and push back to some degree on inequality,” Bernstein urged. “First, some of the higher pay for beneficiaries of the new rule will come from redistribution within the wage bill (from high- to middle- and lower-paid workers). Second, in cases where workers are no longer tapped to work unpaid overtime hours, they are clearly better off in terms of balancing work and family life. Though such a welfare-enhancing change does not show up in the national accounts, it is one of the very important benefits of the new rule.”
Policy win for middle-class families. Bernstein predicted that over time, as the new overtime rule takes effect, it will be recognized as a major policy win for middle-class families. “It will boost some paychecks, help parents balance work and family, and produce new straight-time jobs,” he said.
Moreover, the fact that the threshold will be automatically adjusted will militate against the deteriorating trends of rising income inequity and eroding wage standards, which will remind policymakers that “labor standards must be vigilantly maintained, protected, and updated,” according to Bernstein.
Seeing the big picture. “I’ve urged members of this committee to ignore knee-jerk antipathy to the new rule and instead to deal in substance, as the [Labor Department] did in reviews of tens of thousands of comments and listening carefully to stakeholders on all sides of this issue,” Bernstein pressed. “We see the results of such compromise in the use of the lowest regional threshold, the three-year deferral for certain non-profits, and the leaving of the duties test unchanged.”
A police officer who entered a darkened squad room at his headquarters and pointed his gun at a another was properly terminated, an arbitrator ruled. Wanting to demonstrate his firearm’s laser pointer to whoever was in the room, he pointed the loaded gun, with the laser turned on. The laser light rested on the leg, abdomen, and groin of another officer. After telling the other officer that it “was not a big deal,” he left the room.
A couple of days later, the officer who had the gun pointed at him and a second officer who witnessed the event met the first officer at a restaurant bar, ostensibly to give the first officer an opportunity to explain himself and to apologize. When he failed to do either, they reported the incident to a supervisor, who launched an investigation, which resulted in the first officer being terminated. The first officer then filed a grievance contesting the termination.
At the hearing, the officer who was terminated and the two officers in the room at the time of the incident offered differing versions of events. The terminated officer testified that he did not see the other officers in the room, that the placement of the laser pointer on the other officer was accidental, and that he removed the laser pointer from the other officer’s body as soon as he realized his mistake, which meant that the laser pointer was on the other officer’s body for 5-7 seconds. The other two officers, however, testified that he guided the laser pointer over the other officer’s body for 15-20 seconds and that, upon realizing that a third officer was in the room, he said to the third officer, “You did not see anything. Prove it.”
The arbitrator chose to believe the other two officers, noting that they had no reason to lie about what happened. In any event, he said, even 5-7 seconds was a significant amount of time to point a loaded weapon at a co-worker. His conduct clearly violated the employer’s safety rules. Understandably, such an incident would also cause the other officers to lose confidence and trust in the first officer to carry out his duties safely and effectively. Although the first officer had a long service record with no discipline, this incident was so egregious that the employer was justified in terminating him without progressive discipline. Law Enforcement Labor Services, Inc. (Local No. 2, Police Officers) and City of Rosemount. April 23, 2016. Andrew M. Roberts, Arbitrator.
Executive order protecting state employees from gender identity bias is ‘aspirational’ according to state AG
The Louisiana Attorney General’s office has called the executive order extending protections from discrimination based on gender identity to state employees “merely aspirational and without any binding legal effect.”
On April 13, Louisiana Governor John Bel Edwards signed executive order JBE 2016-11, which provides employment protections for state employees and employees of state contractors on the basis of gender identity, sexual orientation, race, color, religion, national origin, age, disability or political affiliation. The executive order also prohibits discrimination in services provided by state agencies and recognized an exemption for churches and religious organizations.
On May 24, in response to a request from several state representatives, Louisiana Attorney General Jeff Landry issued an opinion on whether the Governor had exceeded his authority by extending anti-discrimination protections based on gender identity to state employees. While there is no state law protecting lesbian, gay, bisexual or transgender (LGBT) Louisianans from employment discrimination, former Governors Edwin Edwards and Kathleen Blanco signed similar executive orders.
According to the Attorney General, “while nothing prohibits the Governor from issuing an Executive Order and such orders are statutorily authorized, the content does not constitute nor can it substitute for legislation.” While JBE 2016-11 may purport to establish a new, legally protected class, that is not the case because an executive order may not do so. “‘Gender identity’ is not and has never been a legally protected class under state or federal anti-discrimination laws.” Therefore, the executive order should be interpreted as “merely aspirational and without any binding legal effect” because an executive order cannot expand or create state law. The opinion also stated that JBE 2016-11 had not legally binding effect regarding contracts and, because an executive order may not expand or create state law, JBE 2016-11 could not be the basis for liability or a cause of action initiated by or against the state.
On May 25, the Governor released the following statement in response:
“It is my obligation as the Governor of Louisiana to responsibly lead in developing and implementing best policies and practices across executive agencies so that state government operates in a manner worthy of the people of Louisiana. However, the attorney general has overstepped the authority given to his office, and he is now attempting to erode the constitutionally granted executive order power of the governor and disrupting the work of state agencies. My executive order, as has been the case with previous executive orders, is a fully constitutional, good faith effort by the state to eliminate employment discrimination of any kind,” said Gov. Edwards. “More importantly, this executive order, for the first time, was written in a way that respects the religious beliefs of every single person in Louisiana. Discrimination, of any kind, is not a Louisiana value, and I will do everything in my power, including enforcing this order, to foster a productive and welcoming work environment in Louisiana’s state government.”
In his letter to legislators requesting the opinion by the Louisiana Attorney General, State Representative Mike Johnson (R-Bossier City) indicated that Gov. Edwards’ executive order raised serious “structural questions under the Louisiana Constitution,” citing language that refers to state “officers” and “political subdivisions.” However, identical language has been included in executive orders by previous administrations that Rep. Johnson praised at the time of their signing.
“Rep. Johnson, it seems, is taking a sudden interest in the constitutionality of language with which he had no objection prior to his current political pursuits,” Gov. Edwards continued. “Discrimination isn’t welcome in Louisiana, but as is the case often, folks running for office seem to forget that we have an obligation to protect all of our citizens. I am not deterred by these actions by Rep. Johnson and the attorney general, and instead am more committed than ever to doing what’s right for the people of Louisiana within the full authority of the Louisiana constitution.”
Title IX guidance. Included in the May 24 opinion is the Attorney General’s stance on the Obama administration’s guidance regarding Title IX and transgender student access to bathroom and locker facilities. The state representatives sought an opinion on whether Louisiana school districts must comply with the guidance and/or whether a legal challenge may be appropriate. The Attorney General declined to issue an opinion, stating it was the policy of the Attorney General’s office not to issue an opinion interpreting federal law or addressing matters that are in or likely to be in litigation. However, because the guidance is “of great concern and creates an immediate harm” to Louisiana, causing confusion and chaos in planning for state and local funding, the opinion includes a copy of the letter sent to various stakeholders who receive Title IX funds addressing the current status of federal law on the issue. The letter is attached to and incorporated into the opinion in response to the representatives’ questions regarding the legal effect and enforceability of the guidance.
Bank of America seeking federal court review of latest ARB decision in 20-plus-year dispute with OFCCP
Earlier this week, Bank of America (BOA) filed a complaint seeking federal court review of the DOL Administrative Review Board’s (ARB) latest ruling in a case that started with the initiation of an OFCCP compliance review over two decades ago. In its most recent ruling, an ARB panel unanimously affirmed an ALJ’s conclusions that the bank intentionally discriminated against African Americans in 1993 as well as the ALJ’s award of remedies on those claims. However, a majority of the ARB panel found—for different reasons—that the OFCCP failed to establish that BOA was liable for the damages awarded for alleged discrimination in 2002-2005, and therefore, reversed the ALJ’s liability and remedy orders pertaining to 2002-2005 period. One of the administrative appeal judges in the 2-1 majority found fault with the OFCCP’s statistical analysis as to that period, while the other determined that the OFCCP violated the bank’s due process rights as to those claims (OFCCP v Bank of America, ARB Case No 13-099 (ALJ Case No 1997-OFC-016), April 21, 2016).
The bank’s complaint, filed in the federal district court for the District of Columbia on May 23, 2016 (dkt no 1:16-cv-968), alleges that the ARB’s conclusion that BOA intentionally discriminated against African American applicants in 1993 was erroneous because it:
- is based upon a fundamental misunderstanding of the nature of a pattern or practice of intentional discrimination case, of the proof required in such a case, and of the use and meaning of statistics in such a case;
- is contrary to the OFCCP’s established procedures, practices and regulations; and
- fails to consider or account for all of the evidence, is contrary to the evidence, and is unsupported by substantial evidence.
BOA also challenges the ARB’s remedy award and its conclusion that the bank voluntarily consented to the compliance review, claiming that the agency violated the Fourth Amendment when it selected the bank for the compliance review. The ARB decision at issue is discussed below.
Procedural history. The case began in November 1993 when the OFCCP initiated a compliance review of the bank’s (at that time known as NationsBank) Charlotte, North Carolina facility. In April 2004, the bank responded without objection by providing the documents requested by the OFCCP and permitting the agency to conduct an onsite investigation. After the OFCCP advised the bank of its findings of discrimination, first in October 1994 and then with a revised notice in June 1995, the bank brought a federal court challenge to the agency’s authority to conduct the review, arguing that the OFCCP’s action violated the bank’s Fourth Amendment rights. When the court challenge failed (NationsBank Corp v Herman, 4thCir, No 98-1127, April 6, 1999 (75 EPD ¶45,814); cert. denied, sub nom. Bank of America Corp v Herman, USSCt, No 99-394, December 6, 1999) and Labor Department attorneys filed an administrative complaint, the bank pursued the case in the administrative forum.
The ARB ruled in 2003 (ARB Case No 00-079) that if the bank had consented to the review, there was no Fourth Amendment violation. In 2004, ALJ Linda Chapman held on remand that the bank had, in fact, consented. The bank unsuccessfully sought an interlocutory appeal of that order (ARB Case No 04-169). On January 21, 2010, the ALJ issued a Recommended Decision and Order finding the bank violated Executive Order (EO) 11246 by discriminating against African-American job applicants for entry level positions at the Charlotte facility in 1993 and from 2002 to 2005.
Specifically, ALJ Chapman held that the bank intentionally discriminated against African-American clerical, clerical/administrative and bank teller applicants at its Charlotte facility because the OFCCP sufficiently demonstrated that there were substantial disparities in selection rates for the particular jobs at issue. She also held that the bank’s failure to retain records as required by law without justification did not lessen the statistical disparities found by the OFCCP’s expert. The ALJ retained jurisdiction over the case in order to determine what remedies should be provided by the bank.
On April 29, 2010, the ARB denied BOA’s request for an interlocutory review and remanded the case to the ALJ for further proceedings and “to issue a recommended decision resolving this case in its entirety” (ARB Case No 10-048).
On September 17, 2013, ALJ Chapman issued a ruling awarding over $2 million in damages. Because she found in her 2010 ruling that the bank discriminated against African-American job applicants for entry level positions, she resolved ambiguities in favor of the OFCCP in determining the damages award. Moreover, she adopted the methodologies offered by the OFCCP’s expert over those offered by BOA’s expert, in part due the bank’s failure to maintain and produce relevant records. The ALJ also ordered the bank to extend job offers, with appropriate seniority, to ten people in the affected classes, and to report on the progress of these job offers to the OFCCP. Once again, BOA appealed to the ARB.
Fourth Amendment. Administrative Appeals Judge Luis A. Corchado wrote the ARB’s plurality opinion. Prior to addressing the merits, the ARB briefly addressed BOA’s objections to the OFCCP’s selection of the Charlotte facility. The ARB panel unanimously concluded that the ALJ’s 2004 summary judgment ruling on that issue, combined with BOA’s failure to present additional evidence at the subsequent merits hearing—aside from what the bank had already presented in support of its argument that the OFCCP’s scheduling letter was coercive, which was rejected by the ARB in its 2003 ruling—settled this issue. Consequently, the ARB found that its 2003 ruling was dispositive on the Fourth Amendment issue.
Burden of proof. In the ARB plurality opinion, Corchado began the analysis of the merits by clarifying the burdens and standards of proof required to establish a pattern or practice of intentional discrimination in violation of Executive Order (EO) 11246. To frame the discussion, the ARB pointed out that, as confirmed during oral argument, the OFCCP unequivocally chose to pursue only claims of intentional disparate treatment, meaning that the agency was not pursuing a disparate impact claim or a claim that the bank violated its affirmative action obligations under the laws enforced by the OFCCP. The parties did not dispute that, in order to prevail on its intentional disparate treatment claims under the pattern or practice theory, the OFCCP was required to prove that unlawful discrimination was the bank’s regular procedure or policy.
Noting that, at this stage of the litigation, it was not was not required to engage in the burden of production analysis, Corchado explained that in reviewing the ALJ’s ruling on the merits, its focus was on the ultimate question of whether the OFCCP proved that BOA engaged in a pattern or practice of intentionally rejecting African-American applicants and that race was a factor. Explicitly rejecting the OFCCP’s argument that the bank failed, as a matter of law, to present proper rebuttal evidence on the question of intentional discrimination, Corchado admonished that “the burden of proof always remains with the OFCCP.” Rebuttal evidence includes any evidence that attacks the validity of the agency’s proof, supports an alternative causation theory, or does both, he explained. Here, BOA presented evidence before the ALJ to show that the statistical disparities at issue were not as significant as the OFCCP’s expert claimed and that reasons other than discrimination caused the hiring disparities between white and African-American applicants.
Statistical evidence. In a pattern or practice claim of intentional race discrimination, the OFCCP must show that there was a sufficient disparity and prove that race was a motivating factor. Recognizing that “some disagreement continues in the courts about the role of statistical evidence in employment discrimination cases,” Corchado then discussed a few principles that “seem fairly established.” First, statistical evidence may be used to rule out chance as a likely reason for a significant racial disparity, and courts have consistently found significance in disparities exceeding the two standard deviation mark. Still, ruling out chance does not automatically mean race discrimination was a motivating factor, but it makes such a reason a viable factor that could be inferred, he explained.
“The more severe the statistical disparity, the less additional evidence is needed to prove that the reason was discrimination,” Corchado wrote. “Indeed, very extreme cases of statistical disparity may permit the trier of fact to conclude intentional race discrimination occurred without needing additional evidence.”
Rulings as to 1993 claims affirmed. Unanimously affirming the ALJ’s finding that BOA intentionally discriminated against African-American applicants in 1993, the ARB concluded that the evidence supported these findings and established a pattern or practice by the bank of intentional racial discrimination against African-American applicants in 1993 for jobs in two specific job groups: (1) a group consisting of bank tellers for prime time, full-time and part-time positions, and (2) a group consisting of several clerical and administrative positions, including data entry operators, account clerks and remittance processing specialists.
When an applicant was disqualified or rejected for a job position, the bank used disposition codes to record the reason. For the job groups at issue, two of these disposition codes fell substantially more harshly on African-American applicants than white applicants; one disqualified applicants because of credit checks and the other disqualified applicants for incompatible hours. In her ruling on the 1993 claims, the ALJ relied on a variety of evidence, including: (1) multiple statistical analyses showing significant standard deviations occurred at various stages of the hiring process and when employment offers were made, (2) the lack of standards for some decision-making processes, (3) anecdotal evidence of arbitrary treatment, and (4) troubling and unexplained disparate use of the “incompatible hours” disposition code. Moreover, there was unrefuted evidence that the “credit check” and “incompatible hours” disposition codes eliminated a grossly disproportionate number of African-American applicants compared to white applicants. The ARB could not identify any objective standards that BOA applied that could explain the gross disparity in the bank’s use of these codes, adding that “[w]e cannot imagine a rational objective reason for a gross disparity in the use of the [“incompatible hours”] code. Even more troubling to the ARB was evidence in the record suggesting the race of the applicants may have been known for some applicants at the time these two disposition codes were applied.
The ARB also affirmed the ALJ’s damages award, finding it to be a reasonable remedy for the unsuccessful 1993 African-American applicants. In addition, the ARB ordered the bank to pay an amount of additional interest on the back pay award for the period from September 18, 2013, to the date on which BOA has paid the monetary judgement in full.
Rulings as to 2002-2005 claims reversed. As to the discrimination claims for the period 2002-2005, the ARB majority ruled that the OFCCP improperly found BOA liable. Therefore, the ARB reversed the ALJ’s finding of a pattern or practice of intentional discrimination during the 2002-2005 period and reversed the ALJ’s remedy orders pertaining to that period.
To begin with, Judge Corchado determined that the 2002-2005 time period must be analyzed as a follow-up, but separate, claim of pattern or practice race discrimination and not as a continuation of the same 1993 pattern or practice claim because the ten-year gap of data and evidentiary information between these time periods prevented any realistic ability to logically connect the two. Among other reasons, Corchado noted that the OFCCP expert’s statistical analysis for the 1993 period had many different standard deviation analyses and tests, while his 2002-2005 analyses rested on only two or three bottom line conclusions for the entire period. Also, fundamental changes occurred with BOA and its hiring process between 1993 and 2002, he observed. The bank changed from NationsBank to BOA. The recruiting process dramatically changed, including the number of recruiters (from two to 58) and the discontinued use of credit checks and drug tests.
In contrast to the variety of evidence that supported the ALJ’s rulings on the 1993 claims, Corchado noted that for the 2002-2005 claims, the ALJ relied on only the statistical disparity of that four-year period as a whole. He also drew other contrasts between the evidence presented for the 1993 period and that presented for the 2002-2006 period. First, dissimilar from the 1993 period, there was no evidence that BOA used the “credit check” and “incompatible hours” disposition codes or other code to eliminate African-American applicants disproportionately during the 2002-2005 period. Second, contrary to the 1993 standard deviation analysis, the OFCCP’s evidence of discrimination in 2002-2005 boiled down to one standard deviation of 4.0 (or 4.1) for the four-year period, but no standard deviation conclusions year by year. Third, unlike the 1993 analyses, the OFCCP did not argue that there were statistically significant standard deviations for one or more stages of the hiring process. In terms of raw numbers for each year, two of the four years failed to provide powerful statistical evidence of intentional discrimination. Specifically, in 2003, 44 African Americans were offered a job instead of the expected number of 47.9, and in 2005, 32 instead of 34.5.
“These are small shortfalls,” Corchado observed. “Without more evidence, one bottom line standard deviation of 4.0 for four years with minor shortfalls in two of those years is not enough in this particular case to prove a pattern or practice of intentional racial discrimination.”
Concurrence. Judge E. Cooper Brown concurred as to the majority’s resolution, but wrote separately to express his opinion that the bank’s due process rights were violated by the way in which the OFCCP incorporated the job data for 2002-2005 into the enforcement proceeding before the ALJ without having first afforded BOA the procedural protections mandated under EO 11246 and OFCCP regulations. “[A]s the comments accompanying the regulations in effect at all times relevant to this action attest, up until the present case it has apparently been the OFCCP’s practice to limit its assessment of liability for discriminatory practices in a contractor’s employment practices to the two-year period prior to the initiation of a compliance review,” Brown wrote. Therefore, he found the OFCCP’s actions as to the 2002-2005 claims were both arbitrary and capricious, and consequently, rejected the ALJ’s finding of liability for that period on those grounds.
A footnote in the plurality opinion notes that Judge Corchado “took no position as to whether the OFCCP was authorized to conduct a follow-up review for the period of 2002-2005 or the extent to which the OFCCP is authorized to conduct follow-up compliance reviews after finding a violation, especially in a case where BOA refused for many years to submit to a meaningful compliance review.”
Dissent. Judge Joanne Royce concurred with the plurality opinion as to the Fourth Amendment and 1993 discrimination liability rulings, but disagreed with the panel majority’s finding that BOA may not be held liable for the discrimination alleged during the 2002-2005 time period. The OFCCP offered a statistical analysis in support of the 1993 claims that demonstrated discrimination against many of the same class of applicants and in the same facility, between 2002 and 2005, she noted. Agreeing with the ALJ, Royce concluded that BOA neither successfully attacked the OFCCP’s statistical method nor demonstrated that the statistical disparities could be explained by non-discriminatory factors. Accordingly, she would affirm the ALJ’s finding that the OFCCP established by a preponderance of the evidence “that BOA’s illegal practices against African-American candidates for entry level positions continued over an extended period of time as demonstrated by the statistical disparity of 6.9 standard deviations for entry level positions between African-American and white job applicants during 1993, and a statistical disparity of 4 standard deviations for similar entry level positions during 2002-2005.”
[Note: This case (ALJ Case No 1997-OFC-16) is not to be confused with the other long-term OFCCP litigation against BOA (ALJ Case No 2006-OFC-003), which ended on January 12, 2015, when the D.C. Circuit issued an order granting Bank of America’s “Consent Motion to Dismiss” the bank’s appeal of a July 2014 decision by a federal district court for the District of Columbia that upheld a 2009 DOL ARB decision in favor of the agency. That case involved OFCCP charges of gender and race bias in compensation and the bank’s claim that the agency violated its Fourth Amendment rights.]
Update: On June 4, 2016, OFCCP Director Patricia Shiu posted a blog entitled, “Setting the Record Straight: OFCCP v. Bank of America,” where she writes that: “A number of published reports and statements reflect a misunderstanding of the ARB’s split decision, in which three judges took three distinct approaches to resolving the allegations regarding discrimination during 2002-2005.”
Since mid-2009, 23 complaints have been filed with the New York State Division of Human Rights (SDHR) against the Service Employees International Union Local 32BJ (SEIU), in which the union was alleged to have discriminated against an employee member. Each of those complaints was filed against the union in its capacity as an employee’s collective bargaining representative, and involved allegations that the union failed to demand arbitration, failed to handle an arbitration properly, or engaged in some other discriminatory conduct in its role as collective bargaining representative, in violation of the New York Human Rights Law (HRL).
The union consistently made written submissions to SDHR arguing that its duty of fair representation (DFR) arising from the NLRA “preempted the SDHR’s investigation and prosecution of the administrative complaint and deprived it of jurisdiction over such a complaint.” For its part, the SDHR has disagreed, and has continued to investigate and issue final determinations in such cases.
Declaratory relief. Finally, in Figueroa v. Foster, the SEIU sought judicial relief and filed suit alleging that it was entitled to a declaratory judgment finding that its duty of fair representation preempted claims made against it under the HRL when acting in its capacity as collective bargaining representative.
Currently, SEIU represents over 81,000 employees in New York State. Each collective bargaining agreement to which it is a party includes a mechanism for resolving disputes regarding discipline or termination of employees. Union members notify the union when they believe they have been treated unfairly, and it evaluates and investigates requests to file grievances, attempts to resolve grievances, and determines whether to demand arbitration of unresolved grievances.
Duty of fair representation. Unions owe the employees they represent a duty of fair representation (DFR) in enforcing collective bargaining agreements. “[W]hen a union’s conduct toward a member of the collective bargaining unit is arbitrary, discriminatory, or in bad faith,” it breaches this duty. The DFR arises by implication under the NLRA. “Under this doctrine, the exclusive agent’s statutory authority to represent all members of a designated unit includes a statutory obligation to serve the interests of all members without hostility or discrimination toward any, to exercise its discretion with complete good faith and honesty, and to avoid arbitrary conduct.”
The federal duty of fair representation will preempt state law unless a state claim can be “shown to arise wholly outside the ambit” of the DFR, “that is, unless it involved union activity that was peripheral to the concern of the applicable federal statutes and presented only a tangential or remote potential conflict with the federal regulatory scheme.” Federal appellate courts have consistently held that the DFR preempts substantive state law. Although “[t]he Second Circuit has not addressed the issue of whether the NYSHRL or NYCHRL are preempted by the duty of fair representation,” the “vast majority” of cases in the circuit hold that the DFR preempts the HRL in situations where the union was acting in its capacity as the plaintiff’s collective bargaining representative.
Co-exist. Against this backdrop, the court declined SDHR’s invitation to disregard the overwhelming weight of precedent and to conclude instead that the DFR does not preempt state anti-discrimination law. The NLRA does not expressly preempt state law, nor did the parties argue that enforcement of the HRL conflicts with federal law—rather, the DFR has been held to preempt state laws because “[a] union’s rights and duties as the exclusive bargaining agent in carrying out its representational functions” comprise an area in which “Congress has occupied the field and closed it to state regulation.”
Title VII and the DFR co-exist. “It is well established that a union’s duty breach of its duty of fair representation may subject it to liability under Title VII.” Likewise, Title VII and the HRL complement each other. “State laws obviously play a significant role in the enforcement of Title VII.” However, the court rejected SDHR’s proposition that the interplay between Title VII and the HRL prevents preemption by the DFR. Rather, the DFR works in tandem with Title VII and a breach of the DFR is an element of Title VII claims of discrimination against unions acting as collective bargaining representatives. The synergies between Title VII and the DFR, and between Title VII and the HRL, do not prevent the DFR from preempting the HRL.
The fact that the DFR preempts the HRL merely means that when a union discriminates in its role as a collective bargaining representative, the aggrieved party has recourse under Title VII and the DFR. Here, the court found that the duty of fair representation arising from the NLRA preempts the HRL to the extent that the claimed discrimination arises from acts or omissions of a labor organization acting in its role as a collective bargaining representative under the NLRA. Accordingly, the SEIU was entitled to declaratory judgment regarding the preemptive effect of the DFR.