By Paul Galligan and Samuel Sverdlov

Seyfarth Synopsis: The EEOC has filed a class action against an employer on behalf of “non-Hispanic job applicants,” alleging that the employer’s practice of only hiring Spanish-speaking applicants, and policy of using predominantly word-of-mouth recruiting discriminated against non-Hispanic applicants.

The U.S. Equal Employment Opportunity Commission (EEOC) has filed a complaint against a Texas-area manufacturing employer, alleging that the employer discriminated against non-Hispanic applicants.  The complaint was filed on behalf of the Charging Party, Freddie Foster, and a class of “non-Hispanic applicants and job seekers who were adversely affected by such practices.”

The EEOC is claiming that the employer has a “pattern  or  practice  of  unlawfully  failing  to  hire  and/or  to  recruit  non-Hispanic applicants and job seekers,” which the agency claims is discriminatory on the basis of race and/or national origin.  Additionally, the employer’s purported preference for Spanish-speaking applicants, and policy of using predominantly word-of-mouth recruiting has an alleged disparate impact on non-Hispanic applicants and job speakers.

As evidence of the employer’s discriminatory animus, the EEOC’s complaint alleged that the “defendant refused to provide Foster with an application after he responded to a sign posted by defendant advertising for laborer positions.”  Further, “Foster was told by defendant he was being denied the application because he did not speak Spanish.”  According to the EEOC’s senior trial attorney in charge of the case, Connie Gatlin, “[b]y refusing to permit job seekers who do not speak Spanish to even apply for a position, without a valid, justifiable reason for doing so, an employer engages in discriminatory practices that violate Title VII.”

Employer Outlook

The EEOC’s case is just getting started, so it remains to be seen whether there is any truth behind the EEOC’s allegations.  Regardless, employers should take note that the EEOC brought an enforcement action against an employer for what seems like “reverse discrimination.”  Alternatively, the EEOC has seemingly targeted an employer for discriminating against members of a dominant or majority group in favor of members of a minority or historically marginalized group.

This should be a timely reminder to employers that discrimination is always illegal when it is based on a protected category.  Further, even a facially neutral practice or policy can be discriminatory when it has a negative impact on a group of protected individuals.  Accordingly, employers should periodically review their hiring and employment practices to ensure that those practices are not outwardly discriminatory and do not have a discriminatory impact, even if it is in favor of a minority group.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Labor & Employment or Workplace Policies and Handbooks Teams.

By Kelsey P. Montgomery and Dawn Reddy Solowey

Seyfarth Synopsis:  Telling African-American employees “that if they had ‘n—– rigged’ the fence, they would be fired” may be enough, standing alone, to state a hostile work environment claim.  The Third Circuit clarifies that “severe or pervasive” discrimination is the correct standard for hostile work environment claims.   

The Third Circuit recently held that a single word or incident, if severe enough, may create an actionable hostile work environment claim. The Court clarified that in hostile work environment cases, the proper legal standard is not whether the objectionable conduct in question is “pervasive and regular,” but rather whether it is “severe or pervasive.”

The plaintiffs in Castleberry v. STI Group, both African-American men, are pipeline workers who worked for defendants as general laborers on an all-white crew.  In their complaint, they alleged that despite having more experience than their white counterparts, the plaintiffs were assigned to clean around the pipelines, but were not permitted to work directly on them.  Moreover, on multiple occasions, a colleague anonymously wrote “don’t be black on the right of way” on the pipeline workers’ daily sign-in sheets.  The plaintiffs alleged that after working on a fence removal project, a supervisor told them “that if they had ‘n—– rigged’ the fence, they would be fired.”  They reported this final incident, and were terminated two weeks later without explanation.  The complaint alleged that although they were briefly rehired, the defendants’ terminated their employment a second time, claiming a “lack of work.”

The plaintiffs subsequently brought harassment, discrimination, and retaliation claims against the defendants. At the outset of the case, the defendants moved to dismiss on the grounds that a single, isolated incident could not constitute a hostile work environment.  The trial court agreed, dismissing the plaintiffs’ hostile environment claims, holding that a single use of a racial slur was not “pervasive and regular” discrimination.

On appeal, the Third Circuit reversed. After acknowledging inconsistent precedent in the Circuit, the appellate court clarified that “severe or pervasive” was the correct standard for hostile work environment claims – not “pervasive and regular” or even “severe and pervasive.”  The Third Circuit explained:

Indeed, the distinction means that severity and pervasiveness are alternative possibilities: some harassment may be severe enough to contaminate an environment even if not pervasive; other, less objectionable, conduct will contaminate the workplace only if it is pervasive.

The Third Circuit relied on U.S. Supreme Court precedent to support the “severe or pervasive” standard.

Having clarified the hostile work environment standard, the Court in Castleberry found that “it is clear that one such instance [of a supervisor using the ‘n-word’] can suffice to state a claim.”  Moreover, as alleged here, the plaintiffs’ supervisor threatened to terminate their employment (and then actually did) at the same time that he used the derogatory racial epithet.  Thus, the Court held that this allegation was sufficiently severe to state a hostile work environment claim.

Notably, the Court also found that the plaintiffs’ allegations could have alternatively satisfied the “pervasive” part of the clarified standard; not only did their supervisor allegedly make the racially derogatory comment, but they were also allegedly exposed to racial hostility when on several occasions their sign-in sheets bore discriminatory comments and because they were relegated to menial tasks while their white colleagues were allowed to perform more complex work.

Few words are more malicious than the “n-word,” but employers should be alert to the fact that the Third Circuit’s reasoning would logically extend to isolated discriminatory remarks about religion, gender, or any other protected classification. It is, therefore, imperative that employers maintain strong anti-discrimination policies, require and encourage employees to report discrimination, and promptly investigate and remediate any alleged discriminatory remark or other conduct, even if the allegation is of a single remark or incident.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Workplace Policies and Handbooks Team.

 

 

 

 

 

Seyfarth Synopsis: Seyfarth’s Chicago Office hosted its Third Quarter Breakfast Briefing — an extremely well attended event. 

On Tuesday, September 12, 2017, five attorneys from our Chicago Labor and Employment team presented to a packed house of guests.  The group offered an overview of, and their insights on, new and pending legislation impacting Illinois employers, generally, and those within the Chicago Metropolitan area, more specifically.  The topics included Kin Care, Amendments to the Illinois Human Rights Act, The Chicago and Cook County Minimum Wage Ordinances; and the Chicago and Cook County Paid Sick Leave Laws, among others.   As you can imagine, the audience had a lot of questions, which made for a very lively discussion.  Our thanks to all who were able to join us at the briefing.

Checkout the slides from the Breakfast Briefing.  Should you have questions on any of these topics, please contact your Seyfarth attorney.

Seyfarth’s next quarterly Breakfast Briefing will be held on Wednesday, December 13, 2017.  Hold the date and be on the lookout for further details.

By Tracy M. Billows and Megan P. Toth

Seyfarth Synopsis:  If your company provides parental leave benefits beyond what is required by law, it is important that the company’s policies and practices ensure male and female employees are being treated consistent with the prohibition of discrimination based on sex.

On August 30, 2017, the EEOC filed suit against Estée Lauder in the U.S. District Court for the Eastern District of Pennsylvania claiming that the cosmetic company discriminated against male employees by implementing a paid parental leave policy that provides lesser parental leave benefits to male employees than to female employees.  EEOC v. Estée Lauder Companies, Inc., No. 2:17-cv-03897-JP (E.D. PA)

The paid parental leave policy at issue in this case–which was implemented by Estée Lauder in 2013–provides “primary caregivers” six weeks of paid parental leave for child bonding and only offers “secondary caregivers” two weeks of paid leave for child bonding.  In addition, “primary caregivers” are also provided with flexible return-to-work benefits that are not similarly provided to “secondary caregivers.” On its face, this policy does not appear to provide different benefits to new mothers or female employees and new fathers or male employees; however, in practice, the company only allows male employees to receive “secondary caregiver” leave benefits under this policy.

This case arose when a male employee’s request for six weeks of child-bonding leave as the “primary caregiver” was denied and he was only allowed to take two weeks of bonding leave.  According to the lawsuit, the company told him that the “primary caregiver” designation only applied in “surrogacy situations.”  The EEOC claims that the practice of only allowing men to take two weeks of paid leave, while allowing women six weeks and flexible return-to-work benefits violates the Civil Rights Act of 1964 and the Equal Pay Act of 1963.

The EEOC has made it clear that addressing sex-based pay discrimination, including benefits such as paid leave, is a priority.  So it is not surprising that the agency has gone after one of the world’s leading cosmetic companies over this issue and this is probably not the last suit of its kind. With the rising corporate trend of providing generous parental leave benefits to employees, it is important companies who are following this trend to be mindful of their policies and potential claims of disparate treatment and/or disparate impact.

This topic has been on the horizon for some time now and the EEOC is starting to take action. If your company provides parental leave benefits beyond what is required by law, it is important that you review those policies and practices now to ensure male and female employees are being treated consistent with the prohibition of discrimination based on sex.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Absence Management & Accommodations Team or the Workplace Policies and Handbooks Team.

By Jim Gehring

Seyfarth Synopsis:  The IRS has announced a program that allows employees to donate the value of their vacation, sick time, or other paid time off (“PTO”) for the relief of victims of Hurricane or Tropical Storm Harvey. 

Under IRS Notice 2017-48, issued on September 5, employers may contribute the value of the PTO contributed by their employees as Harvey relief to a non-profit organization and will be entitled to a deduction that may be treated as a business expense, rather than a charitable contribution, as long as the donations are specifically for the relief of Harvey victims and are made by January 1, 2019.

The employees who make the donations will not be entitled to take charitable deductions, but will not be subject to income or social security taxes on the amounts donated.

This differs from a traditional leave donation program, under which employees can donate a portion of their PTO to be used in kind by employees who were affected by a natural disaster such as Harvey. The temporary relief announced by the IRS allows the value of the donated PTO to be converted into cash charitable contributions, making it more widely useful, particularly in the case of employers who do not have employees located in the area affected by Harvey.

This relief is in addition to the IRS announcement last week that it was relaxing the rules governing the documentation of hardship withdrawals and loans from 401(k) plans for employees located in the areas affected by Harvey.  For more information on that relief, see our management alert.

Finally, some clients have expressed an interest is using their affiliated private foundations (as opposed to public charities such as the Red Cross) to make charitable contributions for the relief of Harvey victims, so that the relief can be targeted to their employees located in the affected areas. After opposing this practice in the past, the IRS has changed its position and will now allow a private foundation to give priority to employees of the sponsoring employer in making individual hardship relief grants, as long as certain safeguards are met.

If you any questions about actions that employers can take to help alleviate the hardships caused by Hurricane Harvey, please contact Jim Gehring at (312) 460-5856 or dgehring@seyfarth.com or Kelly Pointer at (713) 238-1841 or kpointer@seyfarth.com.

By Sara Eber Fowler

Seyfarth Synopsis: Last minute scheduling change?  Want to make sure you have enough employees on stand-by to cover shifts?  In a growing number of areas around the country, that will cost you. 

Fair scheduling laws – sometimes referred to as “predictive” or “predictable” scheduling – are popping up in city councils and state legislatures across the nation. Typically affecting larger retail employers or fast-food establishments, the laws often require employers to post work schedules with advance notice and mandate a specified amount of “predictability pay” – such as one hour of pay for every four hours of scheduled work – if changes are made to an employee’s schedule on short notice.  These laws also tend to require predictability pay if employees are “on call” but not called in to work, and some restrict the ability to schedule employees for closing and opening shifts (“clopenings”).

San Francisco was the first to pass a law of this kind, which went into effect in July 2015. But in the past year, more states and cities have passed – or are considering – similar legislation.  In June, Oregon became the first state to pass a fair scheduling law (effective July 2018).  Emeryville, CA and Seattle enacted scheduling laws that went into effect July 1, 2017, and New York City’s recently passed ordinance will be enforceable as of November 26, 2017.

Other states and municipalities (including Congress) have introduced predictable scheduling legislation, including Arizona, California, Chicago, Connecticut, Maryland, Massachusetts, Minnesota, North Carolina, Ohio, and Washington, D.C. (Georgia, on the other hand, has taken the opposite approach, and passed a law that prohibits municipalities from passing a law that would require predictability pay.)

The theory behind these laws is that uncertainty in scheduling and last-minute scheduling changes wreak havoc on employees’ ability to plan for caregiving needs, hold second jobs or attend school, and plan their income. Several national retailers have already been forgoing “on-call” scheduling practices, irrespective of any legal mandate.

Retailers should be mindful of these new scheduling laws, particularly for those who have operations in affected jurisdictions. Bear in mind that each law varies.  In Seattle, for example, schedules must be posted 14 days in advance and employees are entitled to receive half-time pay for any shift they are “on-call” but not called to work.  New York City’s law, on the other hand, only requires schedules to be posted with 72 hours’ notice, but bans on-call scheduling altogether.

Many of the proposed and enacted laws also create an “interactive process” obligation – similar to the Americans with Disabilities Act – whereby employers are required to have a dialogue with employees about scheduling preferences and scheduling accommodation requests, and in some instances must grant such requests absent a bona fide business reason. They also generally prohibit retaliation against employees who request changes to their schedules.

Each statute also contains its own unique exceptions. Most do not require predictability pay if operational needs change due to natural disasters or other unforeseen changes, or if an employee requests a scheduling change, volunteers for a change, or swaps shifts.  Oregon’s law calls for the creation of a “voluntary standby list” of employees who may be called upon to work unexpected hours without receiving additional compensation.

Given the differentiation in these laws, employers with national retail operations should review their scheduling policies to ensure compliance with local laws and train management about the penalties associated with last-minute scheduling changes. For some, adopting a broad policy curbing on-call scheduling, providing advance notice of schedules, and creating voluntary “standby” lists may be helpful to comply with these varying laws with minimal interruption to business operations.

For more information on this or any related topic please contact the author, your Seyfarth attorney, or any member of the Absence Management & Accommodations Team or the Workplace Policies and Handbooks Team.


By Steve Shardonofsky and Kevin A. Fritz

Seyfarth Synopsis: As employers begin to pick up the pieces following Hurricane Harvey, management will likely encounter questions about employee pay, benefits, and leaves of absence during and after this disaster, and may also have questions about how to help their workers get by during this difficult time. After making sure your workers are safe, and as you start to rebuild and repair, read on for practical guidance on these pressing issues.

This past weekend Hurricane Harvey made land fall, causing unprecedented and catastrophic flooding in southeastern Texas. Our thoughts go out to our colleagues, clients, and friends affected by this natural disaster.  We are thinking of you during this difficult and trying time.

Pay for Non-Exempt Employees

The General Rule

Under the Fair Labor Standards Act (FLSA), an employer is only required to pay non-exempt employees for hours actually worked. In other words, businesses are not required to pay non-exempt employees if they are not working, including times when the employer closes its doors or reduces hours of operation, whether or not forced to do so by inclement weather.  Moreover, while some states require some minimum “reporting” or “show up” pay for employees who show up for work and are either turned away at the door or dismissed before the end of their scheduled shifts, Texas is not one of those states.

An important exception to this general rule exists for non-exempt employees who receive fixed salaries for fluctuating hours from week to week. Because these employees must be paid a “fixed” salary, employers must pay these workers their full weekly salary for any week in which any work was performed and pay not dock their pay for days when the office is closed due to inclement weather.

Even if your business is not open during inclement weather days, you always are free to pay employees for that time, and may also permit them to use their paid leave time, if applicable.

Inclement Weather Delays and Traffic

Flooding and severe weather often cause unpredictable traffic delays, and may even result in employees becoming stranded on the road. Employees who perform work while stranded—for example, by taking phone calls or answering e-mails on their way to work—must be compensated for that time even if done away from the office.  Similarly, an employee who is stranded in an employer’s vehicle on their way to work and instructed to safeguard the vehicle or other property is generally entitled to pay for time beyond their ordinary home-to-work commute (i.e., once their scheduled shift begins).

With respect to inclement weather, the general and most practical advice is to pay for any extra time spent getting to work during a scheduled shift, particularly when employees are stranded for reasons outside their control. It is likely that the Department of Labor or even a court would find that all of the time the employee was stranded within their regular shift is compensable time.  Even where reasonable minds could differ on these questions, since the costs of defending these claims often exceed the underlying payroll costs, it often makes sense to employees for this  time in the first place.

Pay for Exempt Employees

Exempt employees under the FLSA must be paid on a “salary basis” and earn a full day’s pay when they work any part of the day, regardless of the quality or quantity of the work performed. Thus, if a business is closed because of inclement weather and an exempt employee is ready, willing, and able to work, she must be paid for that day.  On the other hand, if the exempt employee does not work for an entire workweek (for personal reasons or because the business is closed), the exempt employee need not be paid for that time—that is, the employer may “dock” her salary for the full workweek.

If the business is open and an exempt employee elects to stay home to make repairs or volunteer at a local shelter, the employer may “dock” their salary in full day increments (but perhaps consider not doing so to encourage volunteerism and aid in recovery efforts). In these instances, and including situations when exempt employees elect to arrive late or leave early for personal reasons, employers may also deduct accrued leave time in full or partial day increments as long as the employee receives his or her full pay for the week.  In the event that the employee does not have any accrued time, an employer may also simply pay him or her for the day or allow the employee to take an advance on accrued paid leave and make it up at a later time. This practice is not allowed for non-exempt employees, who must be paid overtime for all hours worked over 40 in a work week.  For more information on the FLSA salary basis rules, visit our prior blog.

Safe Harbor

Remember, improper or inadvertent deductions from pay will not typically result in the loss of exemption status if the employer reimburses the employees for the improper deductions, has a clearly communicated safe harbor policy prohibiting improper deductions, and a complaint mechanism for exempt employees to use if improper deductions are made.

Telework or Working from Home

Allowing employees to work from home during this time will aid recovery efforts and help families recover faster. Regardless of exemption status, employees who work from home during inclement weather, even if only a few hours per week, must be paid for that time.  Thus, employers who will keep their businesses up and running during the aftermath of Hurricane Harvey should clearly communicate to employees who is and who is not permitted to work from home, when that work can be done, whether overtime is permitted, and how to record time worked outside of the company’s premises.  It is also important to remind employees to record all hours worked, even when the work is done away from the employer’s premises.  Employers should be sensitive to the fact that not all employees will be able to work remotely, and therefore should consider alternative arrangements like temporary or shared offices.

On-Call and Waiting Time

Power outages are common during natural disasters, and many employers will require their employees to wait out or work through such power failures. In most cases, any employee who is required to remain at the employer’s premises or close by and therefore unable to use that time for his own benefit (even if not working) must be compensated for that time.  For example, employees who are onsite to perform emergency repairs and who are not free to leave the company’s premises must be compensated for time even if they do not ultimately perform any work.  Similarly, if an employee is onsite and required to wait through a power outage, the time waiting for the power to resume is typically considered time worked and is therefore compensable.

Volunteer Time for Company Repairs

Employers should generally be cautious about having employees “volunteer” to assist during an emergency, particularly if those duties benefit the company and are regularly performed by employees. Exempt employees who volunteer to help will not be entitled to any additional compensation. But remember that too much time spent on manual tasks or other tasks unrelated to their regular job duties could invalidate their exempt status and allow them to claim overtime compensation.  Conversely, non-exempt employees must be paid for all time worked, even if they offer to work and help make repairs for “free,” with one exception: Employers may accept free work from employees of government or non-profit agencies who volunteer out of public-spiritedness to perform work that is not at all similar to their regular duties.

Leaves of Absence After a Natural Disaster

Otherwise eligible employees affected by a natural disaster may elect to take leave under the Family and Medical Leave Act (FMLA) for a serious health condition caused by the disaster. Additionally, employees affected by a natural disaster who must care for a child, spouse, or parent with a serious health condition may also be entitled to leave. This includes job-protected leave to care for a family member who is a current service member with a serious injury or illness. FMLA leave for this purpose is called “military caregiver leave.”

Adding to the difficulty, employers may encounter uncommon FMLA issues during and after severe storms, including absences caused by an employee’s need to care for a family member who requires refrigerated medicine or medical equipment that is not operating properly because of a power outage. What’s more, under the Americans with Disabilities Act, an employee who is physically or emotionally injured as a result of a disaster may be entitled to leave as a reasonable accommodation, so long as it would not place undue hardship on the operation of the employer’s business.

Employees who are part of an emergency services organization may also have rights under the Uniformed Services Employment and Reemployment Rights Act (USERRA). Under certain conditions, USERRA provides job-protected leave for U.S. service-members.  Although USERRA does require advance notice of military service, there are no strict time limits for notice after a natural disaster as long as it is reasonably “timely.”  Employers should be prepared to receive and assist employees giving notice under USERRA and other laws allowing for job-protected leave.

Many counties in Texas have been declared in a state of emergency following Hurricane Harvey. While this does not provide pay or other protections for Texas employees, the Texas Workforce Commission advices that “absences due to closure of the business based on bad weather or other similar disaster or emergency condition should not count toward whatever absence limit a business has” —particularly for nonessential employees.  On the other hand, if other employees are able to make it in to work (including workers from similar areas), absences for personal reasons may count toward an absence limit. On balance, however, it is always advisable to discourage the discipline of any nonessential employees who are unable to report to work during a state of emergency.

Weathering the Storm Together

While legal compliance is important, there are other practical ways employers can help workers weather the storm an get back on track. Business owners should consider relaxing the usual telecommuting rules to allow affected employees to work from home as much as possible.  To minimize financial hardship, employers should continue to process payroll in a timely manner.  Consider providing pay advances, loans, or even advances for paid time off/vacation time to help employees offset unanticipated expenses for repairs and insurance deductibles.

To the extent possible, employers may consider offering employees paid leave for time spent volunteering to assist with disaster relief efforts. Employers can also implement a leave donation/sharing policy to allow employees to donate paid leave to employees who will use it to volunteer in relief services or for those otherwise affected by this terrible disaster.

For more information on this topic, please contact the authors, your Seyfarth Attorney, or any member of Seyfarth Shaw’s Wage and Hour Team.

By Christopher Im and Sharisse R. Deal

Seyfarth Synopsis: Private employers can face competing obligations when it comes to responding to employees’ expressive conduct. Employee rights may collide with employer obligations to maintain a safe and harassment-free work environment, not to mention the employer’s interest in maintaining productivity and avoiding adverse publicity. Here are some guiding principles.

“How’s work?” A common question, whether at a party, catching up with an old friend, or just as small talk. It is also a common topic of online conversation. It would be nice if work-related remarks were always positive, agreeable and civil, but, of course, they are not. The reality is that employees sometimes say offensive things about work, their employer, their co-workers, or a co-worker’s cherished political hero or ideals.

And what of the employee who attends a political rally—either as a protester or counter-protester—or does not attend, but merely posts or tweets an incendiary opinion about the event?

What is an employer’s recourse when such communications cross the line? Where is the line?

As a general rule, unless the employee is using company-owned equipment or systems, employers cannot police their employees’ expression. Various California statutes protect employees’ rights to engage in lawful, off-duty conduct (Lab. Code §§ 96, 98.6) and political activity (Lab. Code §§ 1102, 1103), to say nothing of the California constitutional right to privacy, which applies in both the public and private sectors. Meanwhile, the federal National Labor Relations Act prohibits employers from chilling employee participation in concerted activity with respect to their terms and conditions of employment.

Generally, as long as controversial comments and ideas are lawfully expressed, do not implicate a protected class (such as race, religion, gender), do not name or implicate the employer, and remain out of the workplace, they are none of the employer’s business.

The trouble starts when a controversial comment is not lawfully expressed, implicates a protected class, implicates the employer, or has a deleterious effect in the workplace. Competing against the employee rights set out above are the employer’s duties to prevent and correct harassment in the workplace and to provide a safe workplace. Failure to do so can lead to hostile work environment or retaliation claims, regardless of whether the harassment comes from a supervisor or a co-worker.

Not all offensive remarks will be cause for concern: to get from “how’s work?” to a hostile work environment claim, an employee’s comments must relate to a protected status and be sufficiently severe or pervasive to alter working conditions. But in todays’ highly charged political environment, many people look to their places of employment as the last bastion of civility and stability. Discussion of events, images, symbols, or social media memes concerning topics as varied as immigration, same-sex marriage, transgender rights, and the history of American slavery and its aftermath may, depending on the communication’s content and context, be freighted with racial or gender connotations.

For most people, perception is reality. Remarks or conduct that several years ago would not have raised an eyebrow may now lead to multiple disgruntled people in the HR office, seeking action. And while California employees are guaranteed privacy, the privacy right does not prevent an appropriate reaction from an employer in response to a public online posting, text message, or comment. As someone once said: “Freedom of speech does not mean freedom from consequences.”

There is no magic bullet to making sure your employees play nice. But there are several steps you can take to ensure that they know what will and will not be tolerated. You can set employee expectations by implementing or reminding them of your anti-harassment and anti-retaliation policy, your code of conduct, your “zero tolerance” policy regarding violence, your social media policy, and your rules concerning use of company internet and other electronic communication systems. We recommend that employers articulate a strong business purpose to justify any occasions when they must intrude on an employee’s privacy, and never intrude more than is necessary to serve that business purpose.

Interpretation of the laws around employee workplace rights and the intersection with employer duties to comply with anti-harassment and OSHA laws are constantly evolving, particularly with the ever-increasing use of social media. To help stay current, don’t hesitate to contact your favorite Seyfarth attorney.

 

By Sam Schwartz-Fenwick, Michael W. Stevens, and Kylie Byron

Seyfarth Synopsis: The first eight months of the new administration signals a retrenchment on the executive branch’s view of legal protections due LGBT individuals, including in employment.

Recently, in a dramatic shift, the Department of Justice broke ranks with the Equal Employment Opportunity Commission, and filed an amicus brief in the Second Circuit in Zarda v. Altitude Express, Inc., No 15-3775, Dkt. #417 (S.D.N.Y. July 26, 2017).  In that brief, the Department argued that, contrary to its prior position (and that of the E.E.O.C.), discrimination on the basis of sexual orientation was not prohibited under Title VII as harassment on the basis of gender. The E.E.O.C.’s longstanding position is that such discrimination is prohibited, a position that recently found support in the Seventh Circuit in Hively v. Ivy Tech, No. 15-720 (7th Cir. Apr. 4, 2017) (en banc).

There is currently a circuit split on this issue, with the Seventh Circuit finding that sexual orientation discrimination is prohibited by Title VII, and the Eleventh Circuit finding that it is not. The sudden reversal of the Department of Justice, injects further uncertainty in the already unsettled landscape of LGBT protections under Title VII.  Employers can expect this uncertainty to continue until the issue is addressed by either Congress or by the Supreme Court. Employers seeking to navigate this in flux legal landscape should work closely with counsel.

In another shift on LGBT issues, in March 2017, the Administration revoked Executive Order 13673, or the “Fair Pay and Safe Workplaces Order.”  Order 13673 required federal government contractors and prospective contractors to show compliance with Order 13672, an order that barred federal contractors from discriminating in employment on the bases of sexual orientation or gender identity. By revoking Order 13673, the  Administration has limited the impact of Order 13672.  While the nondiscrimination Order remains in place, the Order that would hold contractors accountable has been revoked.  Revocation of Order 13673 has created uncertainty among federal contractors as to their responsibilities, and as to appropriate best practices. To remain compliant with Order 13672, employers should work closely with counsel.

In addition, the Administration has revoked the Department of Education issued guidance regarding transgender students. The DOE under the Obama administration stated that transgender students were protected under Title IX on the basis of gender identity.  Thus, schools that did not permit transgender students to use the necessary hygienic facilities (such as bathrooms) appropriate to their gender were in violation of Title IX’s nondiscrimination provisions and risked losing federal funds.

In February 2017, the Trump Administration rescinded that guidance finding it did not “contain extensive legal analysis or explain how the position is consistent with the express language of Title IX.” Absent legal mandates to the contrary, schools can continue to offer protections to their transgender students consistent with their beliefs as to what is in the best interest of students.  Schools that seek to limit bathroom access to the sex-at-birth assigned to their students will need to grapple with how they can enact and implement such a rule while still complying with the present DOE guidance which provides that LGBT students must be assured that they “are able to learn and thrive in a safe environment” and cannot be subjected to discrimination.

The Administration’s view that Title IX does not protect transgender individuals has also led it to consider making changes to Section 1557 of the Affordable Care Act, Section, the regulations containing anti-discrimination protections in the provision of healthcare. Section 1557 bars covered entities from discriminating, including barring coverage based on a transgender exclusion in a plan. Last year, a court in the Northern District of Texas placed a nationwide preliminary injunction on enforcement of the transgender related Section 1557 regulations in a suit against HHS. The current administration chose not to appeal the decision. The Department of Justice further asked the court for a remand to HSS, so that HHS could determine whether or not the regulations comported with Title IX. The court granted this remand, and HHS is currently reportedly planning a new proposed rule for that purpose.

On August 4, 2017, the Justice Department announced that it was reviewing a draft proposed rule already prepared by HHS. It is likely that the proposed rule will unwind the transgender protections of Section 1557, in whole or provide exemptions to the regulations. Healthcare providers, employers, human resources departments and benefits administrators should work closely with counsel on this rapidly changing area of the law.

In further recent action, on July 26, 2017 President Trump tweeted that he would bar transgender persons from service in the military, and thus discharge all transgender service members. While a tweet does not appear to create legal policy, the tweet, and subsequent tweets on the subject, sent strong signals regarding his intention. On August 9, 2017, two lawsuits were filed alleging that although the ban has not yet been enacted, the policy announcement itself caused harm to service members. While this policy change does not directly impact private employers it underscores the need to keep abreast of change in the law that relate to gender-identity based protections, and to consult with counsel to evaluate internal policies, practices, and procedures with an eye toward gender identity claims.

Finally, in understanding the impact of the new administration on LGBT issues, it is instructive to examine the President’s judicial appointments, especially his appointment of Neil Gorsuch to the Supreme Court. While numerous publications, including ours, have been written on Justice Gorsuch’s outlook towards LGBT individuals, his dissent in Pavan v. Smith is instructive as to his leaning in future LGBT-related cases. In Pavan, the Court held that the same-sex parents of children in the state of Arkansas may not be prohibited from being listed as legal parents on their child’s birth certificate.  The Court held, per curiam, that because Arkansas already listed non-biological parents on birth certificates for non-same-sex couples, the state could not deny the same treatment to same-sex couples.

Justice Gorsuch, along with Justices Alito and Thomas, dissented in part arguing that “essentialist” biological or anatomical rationales should be the primary determining factor of parenthood, rather than adoption and other legal same-sex parenting methods. He further called into question the reach of Obergefell v. Hodges.  Judge Gorsuch’s views on LGBT issues will receive attention next year when the Court addresses whether a business can refuse to provide service to a gay couple.  This decision has wide ranging implications for employers and plan administrators, as it is expected to touch on the extent to which religious liberty can trump discrimination claims.

As the current administration continues to unwind regulations and legal arguments put forth by the Obama Administration, the legal landscape regarding LGBT employment issues will continue to remain in flux. Stay tuned to this blog for further analysis of subsequent developments.

For more information on this topic, please contact the authors, your Seyfarth Attorney, or any member of Seyfarth Shaw’s Workplace Policies and Handbooks Team.

By Erin Dougherty Foley and John P. Phillips

Seyfarth Synopsis: A recent decision out of the U.S. District Court for the District of Columbia serves as a helpful reminder on the difficulties of maintaining privilege during internal company investigations.  But with a clear understanding of the limitations of the attorney-client privilege, thoughtful preparation of the investigation’s goals, and pro-active planning, employers can put themselves in the best possible position to control what information becomes public and maintain work-product and attorney-client privileges.

When conducting an internal investigation, every in-house counsel pays particular attention to maintaining privilege throughout the investigation. But maintaining privilege can be very difficult.  A recent decision from the U.S. District Court for the District of Columbia tackles this issue, and it provides useful lessons for helping to ensure that confidential and privileged internal investigation notes and reports remain confidential and privileged.

Background on the Case

In Banneker Ventures, LLC v. Graham, the U.S. District Court for the District of Columbia ordered the production of 51 interview memoranda prepared by an outside law firm during an internal company investigation. The Washington Metropolitan Area Transit Authority (WMATA) had been in negotiations with Banneker Ventures, LLC over a development project.  When negotiations broke down, Banneker’s attorney sent a letter to WMATA outlining what Banneker believed to have been improper actions on the part of WMATA and its Board of Directors.  WMATA briefly responded to the letter, but did not reopen negotiations on the project.

After more than two years, WMATA retained an outside law firm to conduct an investigation into the actions of WMATA’s Board in connection with the project. The investigation took approximately five months, included interviews of 34 individuals (including 19 current or former WMATA Board members or employees), and resulted in the drafting of 51 interview memoranda.  These memos were created by the outside attorneys conducting the investigation, and they were marked “attorney work product.”

In addition, the outside law firm prepared an investigative report for WMATA, which included references to and citations from the interview memoranda. The WMATA Board subsequently voted to publicly release the investigative report, but the Board did not release any of the 51 interview memos.

Banneker eventually sued WMATA for breach of contract and other claims, and during discovery, Banneker sought all 51 of the interview memos. After considering whether the memos were protected by the attorney work-product doctrine or the attorney-client privilege, the court ordered WMATA to produce the memos.

The Court’s Reasoning

The Court first addressed whether the interview memoranda were protected attorney work-product. To be work-product, they must have been prepared “in anticipation of litigation or for trial.”  The Court looked at the time between Banneker’s letter to WMATA and the start of the investigation, and it tried to ascertain the intent behind the investigation.  WMATA argued that Banneker’s letter caused it to believe litigation was probable.  Although not articulating any specific amount of time, the Court found that the more than two years between the letter and the start of the investigation was too long for the investigation to have any link to the letter sent by Banneker’s attorney.  In addition, the Court reasoned that the interview memos would have been created in the ordinary course of business, with or without litigation.  The WMATA Board had stated that the investigation was to formulate and recommend changes to policies, standards, and procedures; the Court said this was a business—not litigation—goal.  And the Court concluded that none of the interview memos were protected by the attorney work-product doctrine.

The Court next addressed the attorney-client privilege. To be privileged, the documents must have been “confidential communications between attorneys and their clients made for the purpose of obtaining or providing legal advice.”  The interview memos clearly fit this criteria.  However, Banneker argued that WMATA had waived the attorney-client privilege for the interview memos when it publicly released the investigative report.  The Court agreed, reasoning that the report and the memos concerned the same subject matter and the report cited extensively to the memos, even containing references to at least 23 different witness interviews.  The Court also explained that WMATA could not use the investigative report to its advantage during litigation while withholding the remaining information in the interview memos (this invokes the old maxim that a party cannot use privileged information both as a sword and a shield).  But the Court did give WMATA some relief, allowing WMATA to redact any information from the interview memos on subjects that were not included in the investigative report.  In other words, by publicly releasing the report, WMATA had only waived privilege on the subject matters that were actually contained in the public report.

Takeaways and Best Practices

This decision can serve as a useful reminder to both in-house attorneys and outside counsel on the importance of carefully planning all internal investigations. Following are some tips to assist employers when conducting internal investigations.

  1. Clearly articulate the reasons for and the goals of the investigation. Often investigations, such as workplace harassment and other company investigations, are conducted for multiple purposes. When the investigation is conducted in anticipation of litigation, that reason should be clearly articulated. Management directing the investigation and the individuals conducting the investigation—whether in-house attorneys or outside counsel—should clearly understand the reasons for and the goals of the investigation.
  2. Expect interview notes to be discoverable. Remember that privilege does not attach to underlying facts. In many cases, interview notes will be discoverable in a subsequent lawsuit. Accordingly, interview notes should contain only clear statements of facts and information gathered during the interview. It is important to thoroughly train the interviewers to include only appropriate information in their notes, especially if the company is conducting the investigation itself.
  3. Prepare an Executive Summary. An executive summary can provide a broad overview of the investigation and its results, while at the same time protecting confidential and privileged information that should be reserved to a more select audience. When preparing an executive summary, carefully scrutinize the amount of detail necessary and consider whether citation or detailed discussion of the underlying investigation documents is necessary.
  4. Consider whether a public or more general release serves the company’s purposes. Be especially careful when releasing information or conclusions gathered during the investigation to anyone outside of the organization. As the Banneker case makes clear, public disclosure can result in waiver of the attorney-client privilege. Remember that this may also include disclosure to government agencies or other third-parties. If some disclosure is necessary, consider whether a confidentiality agreement or a joint-defense agreement serves the company’s interest.
  5. Maintain realistic expectations. Finally, no amount of planning can guarantee that an investigation will not become public. Remember that anything created during an investigation may become public. Accordingly, handle all communications, notes, and any other documents created during the investigation with this in mind.

Internal investigations are a necessary part of any company’s business, and this recent decision can serve as a helpful reminder of the importance of thoroughly planning any investigation. By knowing the rules relating to privilege and pro-actively planning any internal investigation, employers can put themselves in the best possible position to control what information becomes public and maintain work-product and attorney-client privileges.

For more information on this topic, please contact the authors, your Seyfarth Attorney, or any member of Seyfarth Shaw’s White Collar, Internal Investigations, and False Claims Team or the Labor & Employment Team.