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Final ‘blacklisting’ rule and guidance: What do they mean?

August 24th, 2016  |  Pamela Wolf  |  1 Comment

By Pamela Wolf, J.D.

The much anticipated final Federal Acquisition Rule and Labor Department guidance implementing President Obama’s Fair Pay and Safe Workplaces Executive Order have been released and will be published in the Federal Register on August 25. Since Obama signed it in July 2014, EO 13673 has spawned considerable controversy; it was quickly dubbed the “blacklisting” initiative by opponents, who questioned whether it was necessary or even would produce positive results in light of its impact on employers.

Democratic lawmakers pushed the administration to issue proposed regulations that would implement the EO. When issued in May 2015, however, the proposed rule and guidance only seemed to add momentum to the controversy, prompting Republican lawmakers and others to press the Labor Department and Office of Federal Procurement Policy to withdraw the proposals. Most recently, provisions that would block or limit application of the EO were written into drafts of the 2017 Defense Authorization Act; the administration responded with a veto threat.

What’s behind the executive order? The White House has said that EO 13673 would protect both workers and taxpayers by making sure that government contracts are not going to companies that violate federal labor laws. The EO is designed to:

  • Hold corporations accountable by requiring potential contractors to disclose labor law violations from the past three years before they can receive a contract.
  • Give workers better and clearer information on their paychecks, so they can be sure they’re getting paid what they’re owed.
  • Give more workers who may have been sexually assaulted or had their civil rights violated their day in court.
  • Ease compliance burdens for business owners around the country by streamlining all types of reporting requirements across the federal government, the first step in a series of actions to make it easier for companies, including small businesses, to do business with the government.
  • For companies that have violations, rather than emphasizing punishment, give them a chance to follow good workplace practices and come into compliance with the law.

Final rule and guidance. Announcing the final rule and guidance, the Labor Department said they were “designed to increase efficiency and cost savings by ensuring that federal contractors are responsible and provide basic workplace protections.” The guidance in addition creates a process for agencies and the DOL to assist contractors to come into compliance with labor laws. In crafting the final regulations and guidance, the DOL and the Federal Acquisition Regulatory Council received and considered thousands of comments from members of the public, including many in the contracting community.

The DOL noted that contractors are already required to disclose findings of fault and liability made in administrative or civil proceedings. The problem is that current disclosures do not give the whole picture of the contractor’s labor compliance track record, leaving federal agencies at risk of making awards to contractors that “cheat their workers, competitors, and the taxpayers.”

Required disclosure. When the new rules are fully phased in, prospective contractors will have to disclose violations of 14 basic workplace protections from the prior three years, including those addressing wage and hour, safety and health, collective bargaining, family and medical leave, and civil rights protections. The EO also requires that contractors’ employees get the necessary information each pay period to verify the accuracy of their paycheck. Further, it ensures that workers who may have been sexually assaulted or had their civil rights violated get their day in court, putting an end to mandatory pre-dispute arbitration agreements covering these claims at large federal contractors.

The regulations and guidance build on the existing procurement system to help contractors come into compliance with labor laws. The DOL said that most federal contractors will only have to attest that they comply with laws providing basic workplace protections. Designated Agency Labor Compliance Advisors will be available to assist those who do report violations and coordinate with the relevant enforcement agency experts to help the contractors come into compliance.

What do federal contractors need to know? In a blog posting, Attorney James J. Murphy, shareholder in the Washington, D. C. office of Ogletree Deakins, laid out the contours of the final rules and guidance based on a White House summary and the amended executive order (published on the White House website on August 23):

  • Effective Date. The final rules will take effect on a phased-in schedule starting on October 25, 2016.
  • Pre-Dispute Arbitration Agreements. Prohibitions against requiring employees to enter into pre-dispute agreements to arbitrate claims brought under Title VII of the Civil Rights Act of 1964 or tort claims arising from sexual assaults or harassment will take effect on October 25, 2016. The White House indicates that this prohibition will not apply “where valid contracts already exist and remain unmodified.”
  • Paycheck Transparency. Paycheck transparency provisions of the final rules will become effective on January 1, 2017.
  • One-Year Delay for Subcontractor Disclosures. For the one-year period beginning October 25, 2016, disclosures of labor law violations will be required only for prime contractors. Subcontractor disclosures will not be required until October 25, 2017.
  • Contract Thresholds. For the first six months after October 25, 2016, the requirement for prime contractors to disclose labor law violations will apply only on solicitations valued at $50 million or more. Starting on April 25, 2017, solicitations valued at or above $500,000 will be covered.
  • Three-Year Lookback Window. The three-year lookback period for disclosures will be phased in gradually. Initially, the period of time covered by the disclosure obligation will be limited to one year preceding the date on which a contractor submits a bid on a covered solicitation. Presumably, that window will increase from one to two years as of October 25, 2017, and then to the full three-year window as of October 25, 2018.
  • DOL to Handle Subcontractor Disclosures. Once subcontractor disclosures are required, the DOL will be responsible for determining whether and how labor law violations will affect subcontractor access to work on covered federal contracts. Subcontractors will make their disclosures directly to the DOL, rather than to prime contractors; and prime contractors will be able to rely on the DOL’s review.
  • Equivalent State Laws. The final rules do not contain any timeframe for rulemaking concerning labor law violations involving “equivalent” state laws. The White House indicates that this requirement will be “phased in at a later time” (with the exception for OSHA-approved state plans, which will take effect in accordance with the above schedule).
  • Early Assessment Opportunities. Starting September 12, 2016, the DOL will offer a pre-assessment” process, which will allow contractors to come forward to the DOL “to discuss their history of compliance with labor laws” and secure guidance on whether “additional compliance measures are necessary.”
  • Helpful Citizens. The White House fact sheet highlights the opportunity for the public to make reports to contracting agencies, a point that largely has escaped notice until now. According to the White House, Agency Labor Compliance Advisors “will also be available to members of the public who have information they feel that prospective contractors should have disclosed about their labor violations.”

Behind the regulatory curtain … Murphy also gave Employment Law Daily his take on the final rule and guidance, calling them “a solution in search of a problem” from the start. “Federal contractors already are subject to rigorous disclosure requirements calling for them to disclose court rulings and adjudicated rulings that they violated federal laws—including the 14 labor laws covered by the final rules. What the final rules do is throw preliminary ‘findings’ by agency staffers into the mix even though there has been no adjudication of the issues before a neutral third party.”

Looking at it from the standpoint of federal contractors, Murphy called the changes to subcontractor reporting and the new phase-in schedule “undeniably positive developments.” However, he added that “they do not do a thing to cure the core deficiencies of the Department of Labor’s framework.”

The management-side labor and employment attorney pointed to another downside for federal contractors. The final rule and guidance “will allow unions and plaintiffs’ lawyers who represent or seek to represent employees of contractors to wield the specter of the barest findings of labor law violations as a weapon with which to demand concessions or settlements from contractors,” he suggested. “Because settlements that precede a finding of a violation are not reportable, unions and plaintiffs’ lawyers are the people wearing the broadest smiles this morning.”

A sword for plaintiffs … “To appreciate the full impact of the final rules, you need to focus on the five agencies that enforce the underlying labor laws—the NLRB, EEOC, OFCCP, OSHA, and Wage Hour Division—and their enforcement agendas,” Murphy said. “The NLRB is notorious for expanding federal labor law in conflict with rulings of the federal courts. It is not uncommon for contractors and these agencies to disagree over how the labor laws should apply, and contractors often have to look to the federal courts for a resolution. The unstated premise of the final rules is that contractors will be putting their contracts at risk if they fight for their day in court.”

Another perspective. In response to the final regulations, David Madland—Senior Fellow for the Center for American Progress Action Fund’s American Worker Project—said “Until now, contractors have continued to receive federal contracts worth billions of dollars despite long track records of committing rampant wage theft, creating unsafe working conditions, or discriminating against workers on the job.” He continued that “Since research has shown that companies with long records of violations frequently deliver poor-quality services to the government, the administration’s actions will also mean that taxpayer dollars will go to businesses that produce a good value for the government.”

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A sign of the times? Justices asked to decide the threat-level of a hangman’s noose placed in a black employee’s work station

August 18th, 2016  |  Pamela Wolf  |  Add a Comment

In the current political climate, in which many assert that dog-whistle politics have paved the way for divisiveness and racial discrimination more common in times that many Americans hoped were safely relegated to the past, the Supreme Court has been presented an opportunity to rule on just how powerful one particular symbol of racism—a hangman’s noose—remains today.

A senior HVAC mechanic at the University of California, San Francisco, has asked the highest court in the land to tell the Ninth Circuit that it was wrong when it affirmed a district court ruling that, as a matter of law, “an operational hangman’s noose purposefully hung in an African-American employee’s work area by his non-African-American supervisor is insufficiently ‘severe’ or ‘extremely serious’ to constitute a racially hostile work environment in violation of Title VII”—as the petition for certiorari characterized the court’s ruling. The case may be emblematic of a persistent racial divide felt so strongly by many blacks, and barely perceptible, if at all, to some of their white counterparts.

The Ninth Circuit affirmed summary judgment for the employer because the employee had failed to make a prima facie case—the noose, as it turns out, was not clearly enough targeted to the employee to be one of those single acts of harassment that are threatening enough to create a hostile work environment—at least in the eyes of the district court and the Ninth Circuit.

Symbol of racial violence. The employee asserts that the Ninth Circuit’s ruling is in direct conflict with the holdings of the Seventh, Tenth, Eleventh, and D.C. Circuits, which have “expressly recognized that a hangman’s noose—a devise historically used to lynch, murder, and terrorize African-Americans—stands apart as a self-evident symbol of racial violence, akin to a swastika.” The Ninth Circuit has effectively reduced the racially violent symbol to the status of a stray remark, according to the petitioner in Henry v. Regents of University of California (Dkt. No. 16-167).

The employee alleges that the record below shows he suffered a “plethora of racially harassing conduct,” including physical assault and being called a “n—-r” and a “monkey.” However, the “gravamen” of his case at summary judgment was that in July 2012, his supervisor had hung an operational hangman’s noose in a maintenance warehouse. When he and another African-American coworker discovered the noose, the employee felt intimidated, harassed, and threatened. The employee said the university acknowledged that the operational noose was hung by his supervisor, whom he already knew to harbor discrimination against African-Americans.

The district court acknowledged that a single, harassing incident may be enough to be “extremely severe” if it included violence or the threat of violence. Here, however, the noose could not serve as a threat of violence because it was not hung in the petitioner’s personal work area (such as a locker) and lacked a note or picture or other indication that the petitioner was the target of the display.

Hangman’s noose not inherently racial? The district court and the Ninth Circuit concluded that, as a matter of law, there is nothing inherently racial about the operational hangman’s noose that the employee encountered in his employer’s warehouse, thus creating a circuit split, according to the petition. The Court should take up the question, not only to resolve the circuit split, but “because the federal judiciary should not deny all remedy to a Title VII plaintiff merely because a symbol of racial violence appears to be anonymized and general.” The fact that the perpetrator did not adorn the noose “with exceptionally obvious indicia of his animus, or place it in an equally obvious location,” should not alone determine “severity.” To hold otherwise, would give incentive and leeway to those who harbor violent racist tendencies “to promulgate racial terror in the workplace so long as the violent objects appear non-specific or generalized,” the petition argues.

Question presented. The petitioner would like the Justices to resolve this question: “Is an operational hangman’s noose intentionally placed in an African-American employee’s work area by his non-African-American supervisor sufficiently ‘severe’ as a matter of law to constitute race harassment under Title VII?”

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Updates to OFCCP sex discrimination regulations present some compliance conundrums

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By Lorene D. Park, J.D.

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

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

“Religion” means more than you think

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

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

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

Accommodating religion—neutrality and reasonableness are key

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

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

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

Attendance policies

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

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

Dress and grooming standards

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

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

Prayer, proselytizing, and other religious statements

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

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

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

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

Forewarned is forearmed

Other recent developments in the industry include the following:

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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