By Gerald L. Maatman, Jr., Christopher DeGroff, Matthew J. Gagnon, and Alex S. Oxyer

Seyfarth Synopsis: The EEOC recently released its enforcement and litigation statistics for Fiscal Year 2020. Notably, the statistics indicate that 2020 saw a dramatic drop in filed charges, with the lowest number of charges filed in over 20 years. For example, despite the #MeToo movement remaining an enforcement priority for the Commission in 2020, the number of gender discrimination charges fell even lower than last year, which was the lowest number since 1997. However, monetary benefits recovered by the Commission in FY 2020 surged. Given the flip of the White House from red to blue and the commitment of the Biden Administration to enhanced enforcement of workplace bias laws, the EEOC’s enforcement data is a “must-read” for all employers.  

On February 26, 2021, the EEOC released its comprehensive enforcement and litigation statistics for Fiscal Year 2020 (available here). In addition to enforcement and litigation activity, the data breaks down charge statistics by allegation and state – showing which charges are being filed and where. The dip in the number of charges that employers saw in 2018 and 2019 continued through 2020, with the number of charges reaching its lowest point since 1997. The prominence of gender discrimination charges seen in 2018 due to the #MeToo movement has all but disappeared, with sex discrimination charges remaining in the fourth-place position and dropping to their lowest number in over 20 years.

Charges Were Down Overall

In total, 67,448 charges were filed in FY 2020, down from 72,675 charges filed in FY 2019 and 76,418 charges that filed in FY 2018. FY 2019 previously saw the fewest charges filed for all fiscal years going back to FY 1997 (the second lowest, 75,428 charges, occurred in FY 2005). Putting these numbers in perspective, the number of charges filed exceeded 80,000 per year in every year from FY 2007 until FY 2018, sometimes by wide margins.

Consistent with this overall decline, there was a decrease in almost every category of charges in FY 2020 as compared to FY 2019, with the exception of a modest increase in charges alleging claims under the Americans with Disabilities Act (“ADA”), charges alleging claims of color discrimination under Title VII,  and, most notably, charges alleging claims under the Genetic Information Non-Discrimination Act (“GINA”), which doubled since FY 2019 and reached the highest number of charges filed since the Act was passed in 2008. The categories that decreased the most were race and sex discrimination. That this does not necessarily mean that fewer individuals are reaching out to the EEOC. This dip could be attributed, at least in part, to the agency’s implementation of new charge intake procedures in an effort to increase efficiencies or as a result of the COVID-19 pandemic. The dramatic change in workplace environments could have also contributed to the charge drop.

Texas And Florida Are Still Hot Spots, And Illinois Falls From The Top Five

Looking at the states where the most charges were filed, the hot spots largely remained the same in FY 2020 as in FY 2019 and 2018. Like FY 2019, Texas (with 10.2 % of all charges filed) and Florida (with 8.7%) were the top two states for charges in FY 2020.

Texas and Florida are no surprise, given their relative populations.

But population is still not everything when it comes to charges. For example, Pennsylvania (at number 3) and Georgia (at number 5, behind California) have more charges filed than New York. Notably, Illinois remained out of the top five states this year, at sixth place with 5.5% of all charges filed.

Retaliation Charges Remain Predominate, With Disability Discrimination Charges Remaining At Second

In total, 37,632 retaliation charges were filed with the EEOC in FY 2020. As has been the case for over six years, this made retaliation the most frequently filed charge in FY 2020. Behind retaliation were disability, race, and sex discrimination charges, each alleged in approximately 32%-36% of the charges filed with the EEOC. As the EEOC’s report noted, the percentages total more than 100 because some charges allege multiple bases of discrimination.

Disability discrimination was again the second-most-often alleged theory of discrimination, seeing the highest percentage of charges filed since 1997 at 36.1%. Race discrimination came in a close third. Interestingly, sex discrimination charges (which would include pregnancy discrimination, gender discrimination, and sexual harassment) remained as the fourth most frequently filed charge, which was where it was in FY 2017, despite continued media attention on such issues.

EEOC Saw A Surge in Overall Recoveries

As we reported here, during FY 2020, the EEOC recovered a record amount of $535.4 million on behalf of alleged discrimination victims. By comparison, the EEOC recovered approximately $486 million in FY 2019; approximately $505 million in FY 2018; and approximately $484 million in FY 2017. However, despite the EEOC’s efforts to enhance and improve its mediation and conciliation programs during FY 2020, the amount recovered through mediation, conciliation, and settlement dropped again from $354 million in FY 2019 to $333.2 million in FY 2020. Conversely, litigation recoveries increased from $39.1 million in FY 2019 to $106 million, the highest in 16 years. The EEOC credits this surge in litigation recovery to its resolution of 165 lawsuits in FY 2020 and states that it achieved “favorable results” in approximately 96% of district court resolutions.

Implications For Employers

Despite the dips in the overall number of charges, the EEOC’s enforcement efforts should not be considered as waning. Employers should treat these statistics as an early warning system that shows where the Commission’s enforcement efforts may be heading next – to that end, it is notable that retaliation and disability discrimination issues are firmly in the forefront, particularly in light of the issues caused by the COVID-19 pandemic. By continuing to set the culture in their workplaces with sound human resources practices, employers can guard against these issues and avoid hefty settlements and litigation with the EEOC.

By Karla Grossenbacher, Thomas E. Ahlering, and Andrew R. Cockroft

Seyfarth Synopsis: Both Portland and New York City have followed the example set by Illinois’ Biometric Information Privacy Act (“BIPA”), a statute that has spawned thousands of cookie-cutter class action suits regarding the alleged collection of biometric information. Like BIPA, these new ordinances create a private right of action for individuals that could subject local businesses to potentially millions of dollars in liability. Businesses in these cities should carefully review these new ordinances as well as any technology they be using that has the potential to collect biometric information.

For several years now, businesses operating in Illinois have become well accustomed to the myriad lawsuits being filed, and harsh and unwavering penalties being imposed, under Illinois’ Biometric Information Privacy Act (“BIPA”). Despite the toll on businesses imposed by the ever-increasing class action and appellate litigation brought on by the statute, other jurisdictions have enacted similar legislation.

As of January 1, 2021, Portland, OR and New York City have become the newest jurisdictions to pass laws placing restrictions on the collection and/or use of biometric technology by businesses. Although the Portland and New York City ordinances differ from each other (as well as BIPA) in significant ways, they each share a common feature: a private right of action. Accordingly, these new laws have the potential to bring on a rash of high-stakes class action litigation in each of these cities.

The specifics of each ordinance are detailed below:

Portland, OR

Portland’s ordinance bans private entities from using any “facial recognition technology” in any “places of public accommodation,” with limited exceptions, such as when it is necessary to comply with federal, state, or local laws, for individuals to access their smart devices (like facial recognition on iPhones) and for use in social media applications.

The ordinance creates a private right of action “against the Private Entity in any court of competent jurisdiction for damages sustained as a result of the violation or $1,000 per day for each day of violation, whichever is greater and such other remedies as may be appropriate,” as well as attorneys’ fees to a prevailing party.

While at first reading it may appear that the law only covers the use of facial recognition in public places, the ordinance is not so narrowly drafted. Private entities are subject to the ordinance if they constitute a “place[] of public accommodation,” which is defined in the ordinance to include “any place or service offering to the public accommodations, advantages, facilities, or privileges whether in the nature of goods, services, lodgings, amusements, transportation or otherwise” but excludes “an institution, bona fide club, private residence, or place of accommodation that is in its nature distinctly private.”

Accordingly, if a facility constitutes a “place of public accommodation,” then it could be liable for facial recognition technology employed anywhere in the facility regardless of whether it is public facing. Although a narrower reading of the statute may be more reasonable, courts in Illinois have routinely broadened the scope of BIPA and it is possible Portland courts would do the same.

New York City

New York City’s newly passed biometric privacy legislation has been pending before the city council for several years. Indeed, Seyfarth previously detailed this ordinance while it was still pending legislation.

The ordinance orders that “[a]ny commercial establishment” that collects biometric information from “customers” must disclose such collection “by placing a clear and conspicuous sign near all of the commercial establishment’s customer entrances notifying customers in plain, simple language” that customers’ biometric information is being collected. The ordinance further makes it “unlawful to sell, lease, trade, share in exchange for anything of value or otherwise profit from the transaction of biometric identifier information.”

The law provides that individuals “aggrieved by” a violation of the ordinance may file a private right of action, but places some conditions on this right.

  • If the individual alleges the business collected their biometric information without making the required disclosures, the individual can only initiate a private action if they first provide written notice to the business of their intent to sue and provide the business 30 days to cure the violation by placing clear and conspicuous notice at their establishment. If the business does not cure within 30 days, the individual may sue and recover $500 for “each” violation.
  • If the individual alleges the business shared their biometric information in exchange for something of value or otherwise profited from the “transaction,” then the individual may sue without any prior notice to the business. The individual may recover $500 for “each” negligent violation of this section and may recover $5,000 for “each” intentional or reckless violation of this section.

Only the biometric information of “customers” is protected under the law and the law also makes clear that “‘customer’ means a purchaser or lessee, or a prospective purchaser or lessee, of goods or services from a commercial establishment.”

*****

Businesses in Portland, OR, and New York City should be mindful of these new laws and act accordingly. Such businesses with compliance questions should contact a member of Seyfarth’s Biometric Privacy Compliance & Litigation Practice Group.

By Linda C. Schoonmaker and Brian A. Wadsworth

Seyfarth Synopsis: The Sixth Circuit recently sided with employer Fresh Products, LLC and its HR Manager, Dawn Shaferly, in an age, race, and disability discrimination lawsuit. In doing so, the Court helpfully clarified when an employer can contractually shorten the limitations periods with respect to certain discrimination claims. In addition, the Court provided a helpful discrimination analysis that employers in the Sixth Circuit may want to rely on in any future litigation.

Factual Background

Plaintiff Cassandra Thompson, a 52 year old African American, worked for Defendant Fresh Products, LLC at its production facility in Ohio. Plaintiff suffered from arthritis, which affected her ability to lift heavy objects. When hired by Fresh, Thompson signed a “Handbook Acknowledgment,” which in relevant part provided that Thompson would file “any claim or lawsuit arising out of [her] employment … no more than six (6) months after the date of the employment action that is subject [sic] of the claim or lawsuit.”

After she began working for Fresh, Thompson asked Fresh if she could move to a part-time role based on her medical condition. This never happened. Instead, towards the end of 2016, Fresh suffered from reduced sales and sought to move from three eight-hour shifts to two ten-hour shifts to reduce the number of workers it employed. To facilitate the transition and determine which employees to retain, Fresh asked each of its employees to complete a survey and note whether they could work the ten-hour shift and, if so, which shift they preferred. Thompson responded to the survey and indicated that she could not work the ten-hour shift, but did not provide a reason. She later testified that the reason she could not perform the shift was due to her obligations to look after her grandchildren and was not related to her medical condition.

While Fresh determined how it would implement the new shift schedule and which employees it would retain, Thompson reiterated her desire to work part-time and never indicated she could work a ten-hour shift, nor did she indicate which ten-hour shift she preferred. Fresh subsequently terminated Thompson’s employment because she only wanted to work part-time and Fresh did not have any part-time work for employees in Thompson’s position, though it did have one part-time employee in another group. Fresh also terminated Thompson because she never said she could perform the ten-hour shift and never chose a shift preference, unlike any of the other employees that it retained.

Despite this, there were four other employees who, like Thompson, initially indicated that they could not work the ten-hour shift did not choose a shift preference in response to the survey. However, unlike Thompson, those employees subsequently chose a shift preference. Ultimately, two of these four employees were not fired and did not quit before the transition to ten-hour shifts. Thompson was the only employee who never indicated she could work the ten-hour shift and never selected a shift preference.

In all, Fresh terminated four other employees besides Thompson, all of whom were above the age of 45 years.

Based on this record, the District Court granted Fresh summary judgment as to all of Thompson’s claim and Thompson appealed.

Shortening of the Limitations Period

The Sixth Circuit held that the limitations period cannot be shortened for an ADA or ADEA claim. In doing so, the Court noted its recent decision in Logan v. MGM Grand Detroit Casino, 939 F.3d 824 (6th Cir. 2019), which held that the statutory limitations period to a Title VII claim could not be shortened. The Court found that when a statute, such as Title VII, has an explicit limitations period or extensive pre-suit procedure, the limitations period cannot be shortened by contract. Thus, because the ADA incorporates Title VII and the ADEA contains a self-prescribed limitations period and pre-suit procedures, the Court held “that the limitations periods in the ADA and ADEA give rise to substantive, non-waivable rights,” such as the limitations period.

In contrast to Title VII, the ADA, and ADEA, the Ohio Civil Rights Act does not have a self-contained limitations period. Instead, it relies on Ohio’s general limitations statute. Thus, the Court reasoned that the limitations period could be contractually shortened and, in Thompson’s case, was shortened.

Discrimination Analysis

While the Court found that Thompson demonstrated at least a fact issue as to whether she had a disability and whether she was qualified for her position (despite never claiming she could work the ten-hour shift), it found she could not present a prima facie case of disability discrimination because she had not shown that Fresh singled her out for impermissible reasons. In reaching this conclusion, the Court emphasized that the reason Fresh terminated Thompson was due to the way she responded to the survey asking if she could work the ten-hour shifts and, if so, asking her shift preference. While the Court found “[i]t is possible the process was completed sloppily … it is not enough to ‘tend to indicate that [Fresh Products] singled out [Thompson] for discharge for impermissible reasons.’” Indeed, the Court highlighted that “Thompson was the only employee who stated she could not work either shift, never selected a preference for one of the shifts … , and did not voluntarily quit.” Thus, the Court found that Thompson could not meet her prima facie case.

As to Thompson’s failure-to-accommodate claim, the Court found that Thompson’s claim failed because her accommodation request was unreasonable in that it required Fresh to eliminate an essential function of the job—working the ten-hour shift. In reaching this conclusion, the Court noted that there were no other employees in Thompson’s position who were permitted to work part-time. Fresh’s representatives also testified that part-time work for those positions would be unmanageable. Moreover, the fact that Fresh allowed an employee in another position to work part time was immaterial because part-time work was more manageable in that position. Accordingly, Thompson’s requested accommodation was unreasonable.

Thompson supported her age discrimination claim with statistical evidence, noting that “1) all employees laid off as part of the RIF were over 40, and their average age was 50; 2) the average age of those considered for termination was 45.76; and 3) the average age of those retained was 35.66.” The Sixth Circuit made short work of these statistics, noting that the sample size of five people was insufficient to serve as competent evidence. Moreover, the fact that Fresh retained a younger employee who had also asked for part-time work, but had not received it, was alone insufficient evidence of discrimination. Thompson was required to show that she was more qualified than the younger employee or present evidence of discriminatory animus, such as discriminatory comments, but she could not meet this burden.

Lastly, as to Thompson’s race discrimination claim, the Court similarly found that Thompson’s statistical evidence was insufficiently predicated on the same small sample size. Her statistics also did not account for Fresh’s demographics, which had a high percentage of minority employees. Moreover, as with her disability discrimination claim, the retention of the same younger employee, who was also white, was alone insufficient to demonstrate discriminatory intent.

Dissenting Opinion

Circuit Judge Helen White lodged a concurring opinion, in part, and dissenting opinion, in part. She joined the majority regarding its opinion in full with the exception of Thompson’s disability discrimination claim. Judge White disagreed that Thompson had failed to present a prima facie case of discrimination. She also found that Thompson met her obligations to demonstrate pretext. Thompson had shown that another employee had asked to work part time but retained her position with Fresh. In addition, there were four other employees, like Thompson, who stated on the survey that they would be unable to work the new schedule and did not state a shift preference and two of the employees were not laid off and did not quit. Thus, Judge White would find that Thompson’s disability discrimination claim survived summary judgment.

Learning Points

The Sixth Circuit’s clarification on instances when an employer may contractually reduce the statute of limitations is a beneficial guidepost for employers. Employers in the Sixth Circuit should be cognizant of whether the states in which they operate have a statute that specifies a specific limitations period or, like Ohio, is silent on the issue and relies on the state’s general limitations statute. Employers in states like Ohio should contemplate implementing a handbook that reduces the statute of limitations for state-based claims. However, before doing so, employers should contact an employment attorney to discuss the pros and potential cons of such a policy. As always, Seyfarth Shaw attorneys are available to assist.

By Dov Kesselman and Samuel I. Rubinstein

Seyfarth Synopsis: After the past few years of favorable policy changes and court decisions, religious employers have to navigate the realities of a different presidential administration with its unique set of policy preferences.  The Department of Labor recently filed notices in two Court actions suggesting that it will be rescinding its prior faith-based organization-friendly regulations.  Although these entities may be concerned as to how the new Administration will approach religious rights, it is important to remember that the Supreme Court’s recent decisions on religious rights remain an independent anchor in law that these groups may rely upon in addressing such concerns.

In many respects, religious-minded employers are not that different from their secular counterparts.  Both are concerned with running their respective workplaces more efficiently, and both are usually subject to the same sets of rules and regulations.  Still, the one critical difference between the two is the additional availability of First Amendment protections.  As we have documented here, here, and here, the First Amendment’s protections are not parchment barriers, but can provide valuable protection.

Rulemaking

With command of the White House and the Congress, the Biden Administration will have an easier time nominating and confirming individuals with the Biden Administration’s interests and agendas in mind to lead key administrative agencies (e.g. National Labor Relations Board, Equal Employment Opportunity Commission) and executive agencies (e.g. Department of Labor, Department of Health and Human Services, and Department of Education) to effectuate its policies that will directly impact employers across the nation.  The new Administration will no doubt consider how it will deal with the prior Administration’s “midnight regulations” issued at the end of the Trump Administration, two of which in particular are of significant importance to faith-based organizations.

First, in December 2020, the Department of Health and Human Services announced a joint final rule with eight other agencies to ensure that faith-based and secular organizations are treated equally in federally-supported programs, and it clarifies that faith-based organizations do not lose their religious protections and rights just because they participate in federal programs and activities.

Second, and also in December 2020, the Department of Labor’s Office of Federal Contract Compliance Programs codified the religious exemption to the equal opportunity clause in federal government contracting.

Both rules brought clarity long-sought by many religious-minded organizations and significantly support those organizations in protecting their religious missions, and their rescission would not be welcomed by these groups.  At the same time, both new rules were met with immediate resistance from some states and employee groups.  On January 21, 2021, a group of states led by New York filed a lawsuit seeking to block the latter rule in the Southern District of New York.  That same day, a group of unions filed a similar lawsuit in the District of Oregon.  Because President Biden had been inaugurated, there was some question whether his Department of Justice would even defend the rule in court.

In fact, on February 9, 2021 and February 10, 2021, the Biden Administration made clear in filings in both of those litigations that “The Department of Labor intends to propose rescission of the December 2020 rule through notice-and-comment rulemaking, a process that is expected to take several months.”  Both District Courts granted stays of the action for 90 days.  At least for the federal contracting rule, the Biden Administration will follow the Administrative Procedure Act’s rulemaking requirements.  As such, many faith-based organizations have reason to worry what this process will bring in its place.

Supreme Court Considerations

Despite the changes happening in the Executive Branch, it is far from clear that the change in Administration necessarily means that the Biden administration will look to create a less accepting environment for religious organizations.  Furthermore, in any action the new Administration will take, it will have to be cognizant of the Supreme Court’s jurisprudence on religious protection. Just this past term, the Court expanded the ministerial exception in Our Lady of Guadalupe School v. Morrissey-Berru, further signaling that any proposed policy changes by the Executive Branch will eventually have to meet the scrutiny of the Judicial branch.  (See Seyfarth summary of this case here.)  This upcoming term, the Court is considering Fulton v. City of Philadelphia, a case where a religious adoption agency refused to certify same-sex couples as fit parents for children in Philadelphia’s foster care system based on its religious beliefs.  Although not an employment case, a ruling in favor of the religious agency could allow employers to read the tea leaves of the Court.

Employer Takeaways

With all of the new changes happening, religious institutions will need to closely monitor developments at the executive and legislative levels, and should reach out to their Seyfarth contact on how to navigate these new legal and policy landmines.

By Eden Anderson

Seyfarth Synopsis: Ninth Circuit concludes in trilogy of disability access cases that complaints must specifically allege unlawful conditions.

Over the years, ADA Title III complaints filed by the plaintiff’s bar have gotten progressively more vague with respect to the barriers alleged.  This is no coincidence: Some have stated outright that they keep those allegations vague so businesses cannot easily fix the alleged barriers to moot the lawsuits.

The Ninth Circuit is putting an end to this strategy.  In a trilogy of decisions just issued, it made clear that the more stringent pleading standard established in the Iqbal/Twombly cases still applies in determining whether a disability access plaintiff’s allegations state a claim for relief.  All three cases involved the same plaintiff—Brian Whitaker—a serial filer of disability access lawsuits who uses a wheelchair for mobility.

In the first case, Whitaker v. Panama Joes, Investors, LLC, Whitaker alleged he encountered inaccessible “dining surfaces” at a restaurant and that the restaurant also lacked “accessible restrooms” and “accessible paths of travel in the patio area.”  He alleged he was deterred from returning to the restaurant because of these alleged barriers.

The Ninth Circuit concluded these allegations were sufficient to establish Whitaker’s standing to sue, but not to state a claim for relief under Title III of the ADA.  Specifically, no facts were alleged to identify the “specific deficiencies in the dining surfaces,” and there was no description of “how the restrooms were inaccessible” or “which paths of travel in the patio area were accessible.”  Without such specificity, the restaurant was not on notice of the claims, and the allegations did not satisfy the Iqbal/Twombly pleading standard to sufficiently state a claim and avoid dismissal of the complaint.

The second case, Whitaker v. Body, Art, and Soul Tattoos Los Angeles, LLC, involved a tattoo parlor which Whitaker alleged lacked “accessible sales counters” causing him “difficulty and discomfort.”  The Ninth Circuit again found standing, but explained the allegations were too “vague” to state a claim for relief because the “specific deficiencies in the sales counters” were not identified.  It affirmed the district court’s granting of the motion to dismiss on that basis.

In the third case, Whitaker alleged he encountered “inaccessible service counters” at an auto dealership which caused him “difficulty and discomfort” and which deterred him from returning.  The Ninth Circuit again found standing, but affirmed dismissal of the complaint.  The court stated that under Iqbal/Twombly, to state a claim for relief, Whitaker needed to allege “well pleaded facts, not legal conclusions.”  Yet his complaint “failed to answer the basic questions: Were the service counters too low?  Or too high?  Were they positioned in an area that was inaccessible for another reason?”  Without this detail, the complaint failed to state a claim for relief and was properly dismissed.  The Ninth Circuit soundly rejected Whitaker’s plea for “more lenient treatment,” concluding, “we have never held that civil rights litigants are exempt from satisfying the pleading standard demanded by Iqbal and Twombly.”

In each of the cases, Whitaker stood on his allegations and did not amend his complaint to add the requisite factual details—even though the district courts permitted him to do so.  While one might wonder why Whitaker chose that route, his arguments on appeal furnish the answer and some amusement.  Whitaker took the position that providing details about the nature of alleged access barriers would provide a defendant with sufficient information to remediate and moot his ADA claims.  The Ninth Circuit was not persuaded, responding that “defendants should be encouraged to remove barriers from their establishments.  This is an important objective of the ADA.”

As this trilogy of cases makes clear, plaintiffs and lawyers in disability access cases must provide sufficient factual details to place defendants on notice of the nature of the barriers they allege they personally encountered and which allegedly denied them of full and equal access in order to state a claim.

Edited by Minh Vu and Kristina Launey

By Pamela Q. Devata and Jennifer L. Mora

Seyfarth Synopsis: Illinois currently has a ban-the-box law restricting employers from asking about criminal history generally until after an interview and the state’s Human Rights Act makes it unlawful for an employer to take action against an applicant or employee based solely on the fact that the person has been arrested for a crime. However, if Governor Pritzker signs SB 1480, which the state legislature sent to him on February 5, 2021, Illinois employers risk an additional civil rights violation if their decision to take action against someone with a conviction does not meet the heightened standard in the bill.

If enacted, SB 1480 would amend the Illinois Human Rights Act to make it a civil rights violation to use a “conviction record” for employment purposes unless the employer can demonstrate one of the following:

(1) there is a substantial relationship between one or more of the previous criminal offenses and the employment sought or held (“substantial relationship” means a consideration of whether the employment position offers the opportunity for the same or a similar offense to occur and whether the circumstances leading to the conduct for which the person was convicted will recur in the employment position); or

(2) the granting or continuation of the employment would involve an unreasonable risk to property or the safety or welfare of specific individuals or the general public.

“Conviction record” means information indicating that a person has been convicted of a felony, misdemeanor or other criminal offense, placed on probation, fined, imprisoned, or paroled pursuant to any law enforcement or military authority.

Similar to the standards set forth in the Equal Employment Opportunity Commission’s 2012 criminal history guidance, in making this determination, Illinois employers will be required to consider the following factors:

(1) the length of time since the conviction;

(2) the number of convictions that appear on the conviction record;

(3) the nature and severity of the conviction and its relationship to the safety and security of others;

(4) the facts or circumstances surrounding the conviction;

(5) the age of the employee at the time of the conviction; and

(6) evidence of rehabilitation efforts.

If, after considering the above factors, an employer makes a preliminary decision that the applicant or employee’s conviction record disqualifies the employee, the bill requires the employer to notify the employee or applicant in writing of the preliminary decision. The notice must contain:

(1) notice of the disqualifying conviction or convictions that are the basis for the preliminary decision and the employer’s reasoning for the disqualification;

(2) a copy of the conviction history report, if any; and

(3) an explanation of the applicant or employee’s right to respond to the notice of the employer’s preliminary decision before that decision becomes final. The explanation shall inform the applicant or employee that the response may include, but is not limited to, submission of evidence challenging the accuracy of the conviction record that is the basis for the disqualification, or evidence in mitigation, such as rehabilitation.

The employer must provide the applicant or employee five business days to respond before the employer makes its final decision. If the applicant or employee provides additional information, the employer must consider it.

If the employer still decides to move forward with the adverse action, it must provide the applicant or employee a final notice, which must identify the conviction at issue, explain the basis for the decision, advise of any existing internal procedures for requesting reconsideration, and advise the applicant or employee of the right to file a charge of discrimination with the Illinois Department of Human Rights (IDHR).

While not addressed in the bill, any employer that obtains disqualifying conviction history from a third-party background check report must also comply with the pre-adverse and adverse action process set out in the federal Fair Credit Reporting Act (FCRA). While employers can include the Illinois requirements in their FCRA notices (and send one set of letters), it is important to note that the Illinois notices are in addition to, and do not replace, the FCRA’s requirements. As such, employers in Illinois will need to comply with these additional requirements regardless of whether a third-party is utilized.

Reports suggest that the Governor is expected to sign this law, in which case it would be effective on the date of his signature. In the meantime, Illinois employers that use criminal records to screen applicants or employees should consider a review of their criminal record-based screening policies and procedures to ensure compliance with the obligations outlined in the bill.

By: Gerald L. Maatman, Jr., Ian Morrison, Brett Bartlett, and Kerry Friedrichs

Seyfarth Synopsis: Please join us on Tuesday, February 23rd for the 17th Annual Workplace Class Action Litigation Report webinar! Register now to secure your spot and review the workplace class action developments of 2020 and what employers should expect for 2021.

In Seyfarth’s 17th Annual Workplace Class Action Litigation Report Webinar, speakers will provide an interactive analysis of 2020 class action decisions and emerging trends in 2021. The developing trends in workplace class action litigation continue to evolve, morph, and adjust to the modern realities of the American workplace. These trends require corporate counsel to plan and re-order their compliance strategies to stay ahead of and mitigate these risks and exposures throughout the year.

Click here to register and attend!

The Report’s author, Gerald L. Maatman, Jr., along with Kerry Friedrichs, Ian Morrison, co-chair of our ERISA class action group, and Brett Bartlett, co-chair of the Wage & Hour group, will cover this changed national landscape in workplace class action litigation.

Date/Time:

Tuesday, February 23, 2021
1:00 p.m. to 2:00 p.m. Eastern
12:00 p.m. to 1:00 p.m. Central
11:00 a.m. to 12:00 p.m. Mountain
10:00 a.m. to 11:00 a.m. Pacific

Speakers:

Gerald L. Maatman, Jr., Partner, Seyfarth Shaw LLP
Brett C. Bartlett, Partner, Seyfarth Shaw LLP
Kerry M. Friedrichs, Partner, Seyfarth Shaw LLP
Ian H. Morrison, Partner, Seyfarth Shaw LLP

Seyfarth Synopsis: Policy issues often have long term widespread and pervasive impact on businesses. Not only can new governmental policies significantly affect the climate for business innovation and growth, they create precedents that affect future legislation and potentially spread across jurisdictions.

Listen to Podcast Episode 9: GOVERNMENTALphabet Soup: What is an ETS Anyway?

Each installment of the Policy Matters Podcast will provide timely updates regarding potential adverse impacts on benefits that policy changes can have on industry growth and offer a preview of what’s next in the competitive marketplace.

By Patrick J. Bannon, Anthony S. Califano, Molly C. Mooney, and John Ayers-Mann

Seyfarth Synopsis: This series (Is Arbitration the Answer? and Can Arbitration Agreements Protect Employers Against Class Actions?) examines whether an employee arbitration program can help minimize legal risks from COVID-19 and beyond.

In this article, we consider a factor employers sometimes overlook in deciding whether to make arbitration of disputes a condition of employment: Is such an arbitration program consistent with company culture?

To some, requiring employees to agree to arbitrate disputes is a corporate scheme to make it harder for employees to hold their employer accountable for harassment, discrimination or unlawful pay practices. Under this view, arbitration is unfair because it: (a) forces employees to submit their claims to arbitrators who are beholden to employers; (b) prevents employees from conducting broad discovery to try to show systematic wrongdoing; (c) allows employers to keep their wrongdoing confidential; and (d) deprives employees of their most effective weapon, the class action.

We think this portrayal of arbitration is an inaccurate caricature. Below, we explain why. But, before adopting an arbitration program, employers should consider whether their employees and their candidates for future employment are likely to hold these misconceptions, and, if so, whether the employer can persuade them that arbitration is consistent with a culture in which employees are valued and treated fairly. A misjudgment as to this issue can deal a serious blow to employee engagement. It can hurt an employer’s ability to attract the best candidates or even damage a company’s brand in the eyes of its customers. For example, in 2018, thousands of Google employees reportedly walked off the job to protest the company’s handling of sexual harassment claims, including the requirement that they be arbitrated. After the protest garnered worldwide attention, Google first carved sexual harassment claims out of its arbitration program, then ended the program entirely. (For an account of the episode and a flavor of how arbitration’s opponents describe employment arbitration, see: Google Put An End To Forced Arbitration — And Why That’s So Important.)

Fortunately, employers can usually, we suggest, make a strong case that arbitration benefits both employers and employees, and that the most common employee objections to arbitration are inaccurate or at least overstated. Employers can cite several factors suggesting that arbitration is a fair way to resolve employment disputes:

  • Arbitration has been widely used to resolve disputes in unionized workforces for more than 70 years.
  • Arbitration is often faster than litigation. Employees may not realize that litigation often takes years. Most experts consider arbitration at least somewhat faster.
  • Arbitration is more likely to provide an employee a chance to be heard. Many arbitrations proceed to hearings where an employee can testify about how the employee was treated. Only a tiny percentage of civil lawsuits ever go to trial.
  • Many experts have concluded that employees who arbitrate their claims obtain results that, on average, are as good or better than the results obtained by employees who litigate.

Employers can also refute the criticisms of arbitration that many employees hear.

(a)   Arbitrators can’t be beholden to employers (or employees) or they’ll stop getting cases. Both sides have to agree to an arbitrator and the lawyers who represent employees (like the lawyers who represent employers) learn and share information about an arbitrator’s reputation.

(b)   It’s true that there’s usually less discovery in arbitration than in litigation but many employment disputes don’t require much discovery. And generally nothing prevents an arbitrator from making an exception to discovery limits if an employee shows “good cause,” i.e., that an exceptional range of discovery is essential to proving the employee’s case.

(c)   While it’s true that arbitration is usually confidential, an arbitration agreement doesn’t prevent an employee from filing a complaint with a government agency or telling others about their experience as an employee. In short, it’s a myth that arbitration agreements allow an employer to hide wrongdoing.

(d)   Arbitration agreements do often preclude class and collective actions (see Can Arbitration Agreements Protect Employers Against Class Actions?). But individual employees usually don’t need class actions to pursue their claims. An employee who can prove unlawful compensation is usually entitled to double damages, plus attorneys’ fees, and an employee who can prove unlawful harassment or discrimination is usually entitled to lost wages, emotional distress (and sometimes punitive damages), plus attorneys’ fees. There’s no economic barrier to asserting such claims individually, if they are meritorious. And if an employer is mistreating large numbers of employees, each employee can demand arbitration.

Many of the issues discussed above are hotly disputed by the employee-side bar, and we don’t try to resolve them definitively in this short article. Certainly, if an organization’s employees start out thinking that arbitration would make it harder to combat racism, sexual harassment and other serious workplace problems, it may not be easy to change their minds. At some organizations, the best option might be to require arbitration of some kinds of disputes but not others, or to implement an arbitration policy but allow employees to opt out.

In any case, employers would be wise to try to gauge the attitudes of their employees – and of the individuals they would like to recruit in the future – before rolling out an arbitration program. For some, arbitration may not fit the culture. Other employers may see arbitration as a good way to resolve employment disputes efficiently and fairly on their merits — and their employees may largely agree.

By Matthew J. Gagnon and Benjamin I. Han

Seyfarth Synopsis: Pending federal bill H.R. 7, titled the Paycheck Fairness Act, could import into federal law some significant changes that have already been enacted in a few states around the country. If enacted, it could significantly alter (some would say eliminate) a key affirmative defense of the Equal Pay Act. Specifically, rather than allowing a wage differential to exist due to any factor other than sex, employers, under H.R. 7, would be required to show that the wage differential is a matter of “business necessity.” This article will discuss the contours of this onerous requirement, assess the pertinent implications, and consider its prevalence in state law analogs.

This is the second post in our series that contemplates a possible future for equal pay litigation under a Biden administration through an examination of plaintiff-friendly developments already on the books in many states. In our first post, available here, we analyzed potential changes to the meaning of an “establishment” under the Equal Pay Act (“EPA”). In addition to that change, pending federal bill H.R. 7, titled the Paycheck Fairness Act, could import into federal law significant changes to a key affirmative defense that employer’s rely upon in defending EPA claims: the “factor other than sex” affirmative defense.

H.R. 7’s Limitation of the Catchall “Factor Other Than Sex” Defense

The Equal Pay Act prohibits employers from discriminating “between employees on the basis of sex by paying wages to employees in such establishment at a rate less than the rate at which [it] pays wages to employees of the opposite sex in such establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions . . . .”  The law recognizes four affirmative defenses, one of which is a catchall provision: “a differential based on any other factor other than sex.” In other words, an employer is not liable under the EPA if it can establish that a sex-based wage differential is due to a factor other than sex, as that defense has been interpreted by the federal courts. (Seyfarth’s annual publication, Developments in Equal Pay Litigation, provides a more extensive analysis of the EPA and current trends in EPA litigation.)

H.R. 7, however, proposes to change the “factor other than sex” defense by requiring the employer to also show that the factor: (1) is not based upon or derived from a sex-based differential in compensation; (2) is job-related and consistent with business necessity; and (3) accounts for the entire differential in compensation at issue. Each of these elements represents a critical change to existing law. This post discusses the introduction of the “job-related and consistent with business necessity” criterion, which is already a feature of some states’ laws.

That a wage differential must be due to a factor that is “job-related” is relatively uncontroversial and, in fact, is already how many federal appellate courts interpret the current version of the EPA. But that such a factor must also be “consistent with business necessity” threatens to impose a significantly more onerous burden on employers. Nevertheless, that requirement has already been added to a number of state laws over the past few years as part of a nationwide trend towards easing the path for plaintiffs in equal pay litigation.

For example, California, Illinois, Maryland, New Jersey, New York, Washington, and other states have already adopted a similar change. Under California’s equal pay statute, an employer must demonstrate that a wage differential is based on “[a] bona fide factor other than sex, such as education, training, or experience,” but “th[e] factor shall apply only if the employer demonstrates that the factor is not based on or derived from a sex-based differential in compensation, is job related with respect to the position in question, and is consistent with a business necessity.”  The California statute defines “business necessity” as “an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purpose it is supposed to serve.” The New York statute, by comparison, provides that a factor is consistent with business necessity if the factor “bears a manifest relationship to the employment in question.” The majority of states that have enacted their own equal pay laws, however, offer affirmative defenses similar to those provided in the existing version of the EPA without reference to business necessity. (A complete, state-by-state list of critical equal pay statutory provisions is available in Seyfarth’s 50 State Pay Equity Desktop Reference.)

These laws are still relatively new and therefore lack a body of case law sketching the outline of these provisions. Questions that remain include how, for example, would an employer establish that the decision to pay one employee more than another, due to differences in education, experience, or any number of intangible factors, fulfills an “overriding legitimate business purpose?”

The imposition of such a requirement also further separates the legal framework from the evil the law is meant to prevent; namely, sex-based pay discrimination. Unlike Title VII sex discrimination claims, the EPA imposes a form of strict liability in that it does not require any intent to discriminate. Although this operates as a constraint on an employers’ ability to shape its compensation policies as it sees fit, it is at least one that is directed at ensuring that compensation differences are not based on sex-based criteria. The addition of a “business necessity” requirement further constrains an employers’ ability to make compensation decisions, but in a way that goes far beyond simply ensuring that they are not based on sex.

Proponents of the change argue that employers have no reason to worry because such compensation decisions would be consistent with business necessity so long as they are directed at legitimate business goals. But this ignores the realities of the working world, and especially the world of employment litigation. When it comes to differences in compensation, people tend to have very different ideas of what is fair and which business goals are legitimate ones to pursue. It is the leaders of a business who are tasked with making those decisions for the company. And in a competitive marketplace, they must be free to do so with as much leeway as possible, provided that they are not basing those decisions on discriminatory reasons. Imposing a “business necessity” requirement threatens to subject every compensation decision to judicial scrutiny, and ultimately, could replace employers’ business judgment with that of the federal courts.

The change could also vastly increase the expense and burden of employment litigation. Under the current law, an employer need only justify its pay decisions on the basis of some reason that is not based on sex. Determining what that reason is can often be accomplished through testimony elicited from the decision makers and an examination of the surrounding documentation. Under the proposed change, a court would have to analyze what “business necessity” means for a particular employer operating from a specific competitive position within a particular industry. It is hard to see how that could be accomplished without the use of substantial expert testimony, thus significantly raising the price and stakes of equal pay litigation.

***

Although the Biden administration will have the support of Democrats leading both houses of Congress, it is still too early to tell whether these proposed changes to equal pay litigation will make it to the top of their agenda, particularly in light of the numerous other crises they are currently facing. But even if those changes are never enacted at the federal level, various forms of the “business necessity” requirement already exist in several states, including some that are the most populous. Employers should be aware of what those states require in terms of justifying a sex-based pay disparity so they can prepare to meet those requirements. Those preparations might involve tracking developments in federal and state equal pay legislation and assessing how compensation decisions accomplish key business purposes. Seyfarth’s Pay Equity Group is standing by to assist should the need arise, and we look forward to continuing to share our analysis of these issues.