By John Ayers-Mann and Patrick J. Bannon

Seyfarth Synopsis: Although an employee can prove discrimination by showing that an employer’s reasons for adverse action are pretextual, the Eleventh Circuit finds that an employee must do more than merely contest the proffered reasons to survive summary judgment.

A recent Eleventh Circuit decision illustrates that Plaintiffs in discrimination cases face a difficult path to trial. Hornsby-Culpepper pointed to the fact that male employees were given raises around the same time as when she was denied a raise and that her male predecessor was paid more despite being less qualified to show pretext. But, the court concluded that she was merely quibbling with defendant’s business judgment and that none of her evidence sufficed to create an issue of fact as to pretext.

In Hornsby-Culpepper v. Ware, D.C. Docket No. 1:15-cv-00347-SCJ (Oct. 19, 2018), the Eleventh Circuit held that an employee’s efforts to dispute her employer’s non-discriminatory reason for terminating her were insufficient absent evidence that the reasons offered were false.

Avis Hornsby-Culpepper, an African-American woman, served as the Clerk of Court for the Fulton County Juvenile Court from 2009 to 2011. In April 2011, she was terminated. The County hired Edwin Bell, an African-American man, to replace Hornsby-Culpepper. Bell earned $90,000 annually, which was similar to Hornsby-Culpepper’s salary at termination. In July 2012, the position became vacant.

Following a reduction in force, Omotayo Alli, Chief Administrative Officer for the court, submitted a request to hire a Clerk of Court. Interim County Manager David Ware approved Alli’s hiring request at a salary of $71,172. Alli hired Hornsby-Culpepper for the position and told her that she would receive her prior salary. Alli requested that the salary for the position be supplemented from the “professional services” budget. Ware denied the request.

After the denial, Hornsby-Culpepper approached Ware. She asked him why her salary increase was denied when he previously paid Bell more despite him being less qualified. Ware responded that it was because she was previously terminated. Hornsby-Culpepper believed that he denied the request because she was an African-American woman. She filed an EEOC charge in 2013 and a subsequent complaint in 2015 alleging sex discrimination and Equal Pay Act violations.

In February 2015, Hornsby-Culpepper applied for an Associate Judge position with the court, but was not selected. She believed that this was because Ware was friends with Judge Lovett, who was on the selection panel. In May 2015, Hornsby-Culpepper was terminated from her position. Hornsby-Culpepper amended her complaint, claiming that her non-selection and termination were retaliation against her for filing suit.

After discovery, defendants moved for summary judgment. Defendants claimed that plaintiff’s salary request was denied because the County Board of Commissions wanted Ware to stop supplementing salaries from non-salary budget items. Regarding plaintiff’s non-selection, defendants explained that a more qualified candidate was selected. As to plaintiff’s termination, defendants contended that she was terminated due to her performance as Clerk of Court. The district court found that plaintiff could not refute the offered reasons and granted the motion.

On appeal, plaintiff argued that defendant’s reasons were pretextual. She claimed that Ware had increased salaries for white employees, that it was questionable whether the county wanted him to stop using non-salary budgetary items for salaries, and that her prior termination was an improper consideration because it was without cause. The Eleventh Circuit rejected plaintiff’s contentions, explaining that she must do more than “merely dispute the wisdom of Ware’s reasoning.” Plaintiff also claimed that Ware was facing suit from other African-American women for sexual harassment, but the court declined to find those lawsuits to be a basis to infer discriminatory animus.

The court also rejected plaintiff’s Equal Pay Act claims. Although plaintiff disagreed with Ware’s reasons for paying her less, the court required her to show affirmative evidence that his reason was pretextual. As to plaintiff’s retaliation claims, the court found that she had adduced no evidence that the panel’s decision was retaliation due to Ware and Judge Lovett’s friendship. The court found plaintiff’s contentions surrounding her termination equally unpersuasive because plaintiff had failed to indicate evidence that contradicted Alli’s position that plaintiff was not a good fit. Accordingly, the court affirmed the district court’s decision.

Despite the evidence Hornsby-Culpepper produced, the court found that she had not met the quantum of evidence required to show pretext. In the Eleventh Circuit, the plaintiff’s evidence must do more than simply undermine defendant’s reasons, it must establish pretext itself.

For more information on this topic, please contact the authors, your Seyfarth Attorney, or any member of Seyfarth Shaw’s Labor & Employment Team.

By Linda Schoonmaker and John P. Phillips

Seyfarth Synopsis: In a recent decision, the Eleventh Circuit Court of Appeals held that the use of the N-Word in the workplace one time is sufficient to trigger a hostile work environment. Additionally, the Eleventh Circuit held that an employer may be held liable for workplace harassment when the plaintiff admitted that she did not complain of harassment until her final day of employment (and when the employer alleged that the plaintiff never complained of harassment). In light of this decision, and in light of the increased focus on workplace harassment over the past year, employers should use this case as an opportunity to review their No Harassment Policies and update their employment law training—to proactively ensure that harassing conduct does not occur in their workplaces.

When faced with allegations of a hostile work environment, employers often rely on two defenses: First, in order to be actionable, a hostile work environment must be both “subjectively” and “objectively” hostile. In other words, the plaintiff must subjectively perceive the harassment to be abusive, and the work environment must be one “that a reasonable person would find hostile or abusive.” Over the years, courts have typically required multiple instances of inappropriate or harassing behavior, in order to meet this standard. Second, if the harassing behavior was committed by co-workers, the plaintiff must have complained of the harassment. In other words, the employer must have knowledge of the harassing conduct (either actual or implied—companies cannot hide their heads in the sand) before it can be held liable.

In a recent decision, however, the Eleventh Circuit Court of Appeals held that use of the N-Word on one occasion could create a hostile work environment, and the Court held that the employer could be held liable even though the plaintiff admitted that she never complained about alleged harassment until (allegedly) right before her termination. (In fact, the company denied that she ever complained at all.)

Given the increased media focus on workplace harassment, this case provides a good opportunity for employers to review their anti-harassment policies and procedures, in order to proactively ensure that harassment-related issues do not proliferate in the workplace.

Background on the Case

In Smelter v. Southern Home Care Services, Inc., the plaintiff had been hired by Southern Home Care Services in July 2013 as a customer service supervisor. As part of her job, the plaintiff was responsible for coordinating with caregivers and clients, scheduling in-home visits, and accurately recording all caregivers’ work time. There was no dispute that the plaintiff required extra training and committed many mistakes during her employment. In September 2013, she was terminated for poor performance, after a final incident in which she got in a heated argument with and yelled at a co-worker. Following her termination, the plaintiff asserted the following allegations:

  • She had endured racist remarks from her co-workers nearly every day during her employment.
  • During the argument with her co-worker on the last day of her employment, her co-worker had called her a “dumb black [N-Word].”
  • Her co-workers had made derogatory comments about black men, black women, President Obama, and compared the plaintiff with a monkey from the movie Planet of the Apes.
  • Her supervisor thought the racist comments were funny.

Although the plaintiff admitted that she had never complained about any of the comments prior to the final incident, the plaintiff alleged that she had told her supervisor about the harassment before she was terminated. Her supervisor claimed that she never complained about any race-related comments, and the plaintiff’s exit interview paperwork—which both the plaintiff and her supervisor signed—had no mention of any harassment-related complaints.

Ultimately, the district court granted summary judgment for the company, finding that the harassment the plaintiff allegedly experienced was not sufficiently severe or pervasive enough to constitute a hostile work environment, as a matter of law, and that the company had no knowledge of the alleged harassment. The plaintiff appealed to the Eleventh Circuit.

The Eleventh Circuit’s Opinion

On appeal, the Eleventh Circuit reversed the district court’s dismissal of the plaintiff’s hostile work environment claim. In doing so, the Eleventh Circuit made two significant holdings:

First, the Court held that even standing alone, the single use of the N-Word was sufficient to constitute severe harassment. The Court explained:

Southern Home argues that [the co-worker]’s “one-time use” of [the N-Word] was insufficient to establish severity as a matter of law. We strongly disagree. This Court has observed that the use of this word is particularly egregious when directed toward a person in an offensive or humiliating manner.

The Court also held that the other comments alleged by the plaintiffs were similarly sufficiently severe to create a hostile work environment, and consequently, the plaintiff had alleged a legally actionable hostile work environment claim.

Second, the Court disagreed with the district court that the employer did not have knowledge of the alleged harassment. Although it was undisputed that the plaintiff failed to report any harassment until the final day of her employment (and the company disputed whether she had even reported it then), the plaintiff had alleged that the racist slurs were “funny to everybody that worked in the . . . office,” including her supervisor. The Court found that this was sufficient evidence to hold that the supervisor had knowledge of the comments, since she could not have found the comments funny if she did not hear them.

Thus, the Court found that the plaintiff had alleged an actionable hostile work environment claim, and it remanded the case to the district court for trial.

Takeaways

In light of this decision and the increased awareness of improper workplace conduct stemming from the #MeToo movement, there are a number of proactive steps that employers can take to help ensure that their companies have the proper culture to avoid harassment complaints and allegations:

  • Review and revise, if necessary, the No Harassment Policy. Most companies have No Harassment Policies (and if your company doesn’t, it should). However, often those policies have not been updated in a number of years. Now is a good time to pull out the policy, review it, and make any necessary updates, including ensuring that there are clear, and multiple, avenues for employees to report harassment.
  • Train your managers and supervisors. Your supervisors are your most effective buffer against employment law-related allegations and lawsuits, and they serve as a conduit between the company and its employees. Managers and supervisors should get regular anti-harassment and other employment-law based training, in order to ensure that they will know when harassment is occurring and will know what to do if they spot inappropriate conduct.
  • Focus on proper documentation. In conjunction with training your supervisors and managers, documentation issues should be covered. To defend any lawsuit, you must have good documentation. Your supervisors should be trained on correctly documenting all employment actions.
  • Promptly investigate and correct any complaints of harassment. Once the company is aware of any improper harassment-related conduct, whether from a direct complaint or an observation in the workplace, the company must take prompt and appropriate action. In doing so, it is important to take all allegations and complaints of harassment in the workplace seriously, immediately perform a thorough and complete investigation of any harassment complaints, and implement swift, appropriate, and proportional remedial action, if necessary, including possible termination or suspension.

Over the past year, workplace harassment issues have increasingly grabbed headlines. While all employers can agree that use of the N-Word is especially egregious, employers must take steps to ensure that such conduct does not occur. More importantly, employers must ensure that they have the policies and procedures in place to prove that such conduct did not occur. This means having an up-to-date No Harassment Policy, and supervisors and managers who are well-trained on anti-harassment and proper investigation methods. By proactively addressing any workplace harassment issues head-on, employers can put themselves in the best possible position to defend any subsequent lawsuit.

By Ilana R. Morady and Jaclyn A. Gross

Seyfarth Synopsis: The Sixth Circuit recently upheld an administrative decision in favor of a miner’s whistleblower complaint, further underscoring the need for mine operators to implement strong anti-retaliation policies and keep detailed supporting records of internal investigations and employment-related decisions.

The Federal Mine Safety and Health Act (Mine Act) was originally enacted in 1977 to promote safe mining operations. Pursuant to Section 105(c) of the Mine Act, miners who believe they were terminated as a result of voicing their health or safety concerns can file a discrimination complaint with the Secretary of Labor. Recently, the Sixth Circuit ruled in Con-Ag, Inc. v. Sec’y of Labor, et al., to uphold a decision stating that Con-Ag violated Section 105(c) when it terminated one of its employees. The Federal Mine Safety and Health Review Commission declined to review the case, making the decision of the Administrative Law Judge (ALJ) the final decision of the Commission. The ALJ found that the employee was discharged in retaliation for reporting health and safety concerns to the Mine Safety and Health Administration (MSHA), the body that enforces the safety and health standards of mining operations.

A miner can establish a case of discrimination by showing that (1) he or she engaged in protected activity and (2) was subject to an adverse employment action that was at least partially motivated by that protected activity. “Protected activity” is defined broadly and includes filing complaints of alleged unsafe conditions to supervisors or the MSHA, refusing to work in unsafe conditions, requesting specific equipment or training, and participating in proceedings related to the Mine Act. Discriminatory behavior encompasses termination and demotion, but can also refer to being transferred to a less desirable position or to a reduction in pay or benefits. As discriminatory motive is difficult to prove using direct evidence, four factors are generally considered when determining whether the adverse employment action was connected to the protected activity: (1) the mine operator’s knowledge of the protected activity, (2) the operator’s hostility towards that activity, (3) the timing of the adverse action in relation to that activity, and (4) the operator’s disparate treatment of the miner.

Con-Ag conceded that the employee engaged in a protected activity when he spoke with MSHA investigators about working conditions in the mine, however it claimed that he was fired for threatening the company’s owner/manager during a conversation with a co-worker. Despite lack of direct evidence of hostility towards the employee, the ALJ found the elements of knowledge and timing to be persuasive, thus supporting her broader conclusion that “discrimination was at least one of the causes of [the employee’s] discharge.”

In response to Mine Act claims, mine operators can establish an affirmative defense by showing either that the adverse employment action was not related to the protected activity or that the action was related, but the company would have taken the same action even if the miner had not engaged in protected activity. The ALJ rejected Con-Ag’s defense as implausible and found that its asserted reason for the termination was pretextual, in large part due to the cursory nature of Con-Ag’s investigation prior to the employee’s discharge. The company never interviewed the employee and there was nothing in the record showing a history of violence, threatening behavior, or discipline whatsoever. The ALJ found that these oversights undermined Con-Ag’s argument that it would have fired the employee despite his involvement in protected activity.

In addition to upholding the ALJ’s findings, the Circuit Court denied Con-Ag’s request for review regarding back pay calculations and the order to reinstate the employee to his prior position. Con-Ag did not submit evidence pertaining to the calculations to the ALJ, but instead first raised its objection to the amount upon appeal, which the Circuit Court ruled unacceptable. With regard to reinstatement, Con-Ag claimed it was unable to comply due to the fact that it no longer owned the mine and that the employee did not wish to be reinstated. The Circuit Court held that Con-Ag failed to present sufficient proof that it no longer owned the mine and that the employee is free to decline the position.

Key Take Aways

In short, this case demonstrates the importance for mine operators to ensure that members of management are familiar with Section 105(c) and to have anti-retaliation policies in place. More specifically, those in management positions should recognize protected activity and be trained to respond appropriately when it arises. Moreover, mine operators should keep complete records of safety-related incidents and complaints in the event an MSHA investigation occurs.

For more information on this topic, please contact the authors, your Seyfarth attorney, or a member of the Firm’s Workplace Safety and Health (OSHA/MSHA) TeamWorkplace Counseling & Solutions Team, or the Workplace Policies and Handbooks Team.

 

 

By Anne R. DanaNila Merola, and Robert S. Whitman

Seyfarth Synopsis: In compliance with legislation passed earlier this year, New York State has released the final model sexual harassment policy and complaint form, the model training materials, and FAQs, which provide further guidance regarding the legislation. Two significant clarifications to the draft guidance issued several weeks ago are (1) the deadline for completion of employee anti-harassment training is October 2019, not January 2019, and (2) new employees must receive training “as soon as possible,” rather than within 30 days of hire.

Earlier this year, New York State enacted comprehensive legislation targeting workplace sexual harassment. Our previous Management Alerts outlining the various requirements under the law are linked here and here. On August 23, 2018, Governor Andrew Cuomo released a draft model policy and draft model internal complaint form, a draft training script, and draft FAQs. All of those draft documents were subject to public comment. On October 1, 2018, the State issued the final documents. This Alert highlights the key differences between the drafts and the final versions and consolidates the new requirements under the State law in one place.

As background, the law requires the Department of Labor and Division of Human Rights to create a model sexual harassment prevention policy and a model sexual harassment prevention training program. Those agencies have now done so: the model policy and the model training program is available here. Employers must either adopt the model policy and training program, or establish a policy and training program that equals or exceeds the minimum standards provided by the models. The sexual harassment policy must also include a complaint form for employees to report internally alleged incidents of sexual harassment (the model is available here). Below are further details about these requirements.

Policy and Complaint Form

Beginning on October 9, 2018, all employers must distribute to all New York State employees a sexual harassment prevention policy and a complaint form that employees can use to report inappropriate conduct.

For employers that opt to create their own policies, the policy must: (1) prohibit sexual harassment consistent with guidance issued by New York State; (2) provide examples of conduct that constitutes sexual harassment; (3) clearly state that sexual harassment is considered a form of employee misconduct and that disciplinary action will be taken against individuals engaging in sexual harassment and against supervisors or managers who knowingly allow such behavior to continue; (4) clearly state that retaliation against individuals who complain of sexual harassment or who testify or assist in any investigation or proceeding involving sexual harassment is unlawful; (5) include an internal complaint form that employees can use to report conduct that they believe is sexual harassment; (6) explain that complaints of sexual harassment will be investigated promptly and that the investigations will be as confidential as possible and that the rights and interests of all parties will be protected; (7) include information concerning the federal and state laws that prohibit sexual harassment, remedies available to victims of sexual harassment, and a statement that there may be applicable local laws; and (8) inform employees of their right to file a complaint with the New York State Division of Human Rights, the Equal Employment Opportunity Commission, federal or state court, or a local police department.

The final FAQs (available here) offer additional guidance for employers. Specifically,

  • Distribution: The policy must be provided to employees in writing or electronically. If the policy is made available on a work computer, employees must be able to print a copy.
  • Contractors & Non-Employees: The policy does not have to be distributed to contractors and other non-employees. However, because the State Human Rights Law has been extended to cover non-employees who bring sexual harassment claims, employers are “encouraged” to provide the policy to non-employees and anyone providing services in the workplace.
  • Complaint Form: The complaint form does not need to be included in full in the policy, but the policy should be clear about where the form may be found (g., on an internal website).
  • Investigation Procedure: The policy must describe the employer’s internal investigation procedure. The investigation procedure does not, however, have to be identical to the investigation procedure set forth in the State’s model policy.
  • Acknowledgment of Receipt: Employers are not required to obtain or keep a signed acknowledgment that an employee has read the policy, but are encouraged to do so.
  • Languages: The policy must be provided to employees “in the language spoken by their employees.” The State will publish additional model policy and complaint forms in Spanish, Chinese, Korean, Bengali, Russian, Italian, Polish and Haitian-Creole. When a model is not available in an employee’s language, employers may provide that employee with an English version.
  • New Employees: New employees should receive a copy of the policy prior to commencing work.
  • Optional Poster: The State also issued an optional Sexual Harassment Prevention Policy Notice, which is a poster that employers may display in the workplace. The poster simply directs employees and non-employees to the employer’s sexual harassment prevention policy. Posting the State’s Notice is optional. A Microsoft Word version is available here.

Training

The New York State law also requires employers to provide all employees with annual, interactive sexual harassment prevention training. In a key difference between the draft and the final FAQs, the deadline for complying with the training requirement has been extended to October 9, 2019 (previously, it was January 1, 2019). Moreover, employers are no longer required to train new employees within 30 days of hire, but rather are encouraged to provide training “as soon as possible.” The practical effect of these changes is that many employers will likely want to wait to conduct sexual harassment training until after the New York City law goes into effect on April 1, 2019. Our prior Alerts on the New York City law are available here and here.

For employers that choose to create their own training rather than adopt the State’s model, the training must be interactive and include all of the following: (1) an explanation of sexual harassment consistent with State guidance; (2) examples of conduct that is considered unlawful sexual harassment; (3) information about federal and state laws covering sexual harassment and available remedies; (4) information regarding the employer’s procedure for the timely and confidential investigation of complaints, including the specific name(s) of appropriate personnel and location to submit complaints; (5) information addressing supervisor conduct and additional responsibilities of supervisors; (6) an explanation of how to raise sexual harassment complaints with government agencies and courts; and (7) prohibitions on retaliation with examples.

Additional guidance as set forth in the final FAQs regarding sexual harassment training is as follows:

  • Annual: Employees must receive training annually, which can be based either on the calendar year, anniversary date of each employee’s start date, or any other date the employer chooses.
  • Who must be trained: All workers, regardless of immigration status, including exempt and non-exempt employees, part-time workers, seasonal workers, and temporary workers, must be trained. Non-employees, such as third-party vendors, contractors, volunteers, or consultants do not need to be trained. Employers may deem the training requirement satisfied for new employees who received compliant training from a prior employer in the past year if the new employee can verify completion through a previous employer or a temporary help firm.
  • Interactive: The FAQs offer the following examples of trainings that would meet the “interactive” requirement: (i) if the training is web-based, it has questions at the end of a section and the employee must select the right answer; (ii) if the training is web-based, the employees have an option to submit a question online and receive an answer immediately or in a timely manner; (iii) for in-person training, if the presenter asks the employees questions or gives them time throughout the presentation to ask questions; and (iv) the training provides a Feedback Survey for employees to turn in after they have completed the training. An training in which the individual only watches a video or reads a document, with no feedback mechanism or interaction, is not considered interactive.
  • Languages: Employers must provide training to employees “in the language spoken by their employees.” The State will publish model training materials in Spanish, Chinese, Korean, Bengali, Russian, Italian, Polish and Haitian-Creole. When a model is not available in an employee’s language, employers may provide that employee with training in English.
  • Records: Employers are not required to maintain copies of training records, but are encouraged to do so.
  • Duration: There is no specific time requirement for the length of the training.
  • Time and Payment for Training: Any training time must be counted as regular work hours.

Non-Disclosure Agreements Involving Claims of Sexual Harassment

As of July 11, 2018, New York employers have been prohibited from including an NDA in any settlement of a claim involving sexual harassment that would prevent the person who complained from disclosing the underlying facts and circumstances of the harassment, unless the complainant requests confidentiality.

The final FAQs clarify that the law will not operate like the analogous provisions of the Older Workers Benefit Protection Act. Specifically, waivers cannot be included in settlement agreements that can be presented and executed on the spot in a single document. Rather, if the complainant requests confidentiality, the terms must first be provided to all parties; the complainant must have 21 days to consider the provision; and, after 21 days, if confidentiality is still the complainant’s preference, the provision must be memorialized in a separate agreement signed by all parties. The complainant then has 7 days to revoke the agreement, which shall not be effective or enforceable until the revocation period expires. The 21-day review period is not waivable, so it cannot be shortened, even if the complainant so desires. The FAQs also clarify that there must be two agreements: (1) an agreement that memorializes the preference of the person who complained, and (2) the settlement agreement itself.

As always, Seyfarth Shaw attorneys are available to assist with any questions or concerns you have regarding the New York State Sexual Harassment Laws.

By John P. Phillips and Linda Schoonmaker

Seyfarth Synopsis:  In a recent decision, the U.S. Court of Appeals for the Sixth Circuit ruled that former employees need not return severance pay before filing a lawsuit against an employer, when the employee alleges the severance agreement should be rescinded and is bringing discrimination claims under Title VII or the Equal Pay Act.  This decision means that notwithstanding the fact that the employee signed a severance agreement and accepted severance pay upon leaving the company, the employee may still be able to sue and keep the severance money—if the employee claims she was coerced into signing the agreement.  Given this, it is important for employers to review their severance practices, in order to ensure the process is fair, help protect against claims of coercion, and safeguard the company during the process.

When employers enter into severance agreements with departing employees, they do so with the expectation that the agreement will resolve all legal claims between the two parties.  In exchange for additional compensation, the employee promises not to sue the company, and the two parties part ways.  Most of the time this works, and the severance agreement is the end of it.

However, sometimes employees have second thoughts after signing a severance agreement.  In such circumstances, employees argue that the severance agreement should be set aside, often alleging that they were coerced into signing, did not know what was contained in the agreement, and did not “knowingly and voluntarily” execute the contract.  And if the employee can assert persuasive enough facts surrounding the presentation and execution of the agreement, sometimes employees can actually rescind severance agreements.

Notwithstanding this, at common law there was a legal doctrine that helped to preclude such attempts—the common law tender-back doctrine.  That doctrine held that before someone can rescind a contract and sue, that person must “tender-back” (i.e., return) the money they received under the contract.  In other words, if an employee claimed that she was coerced into signing a severance agreement, she would be required to return the severance payment before she could sue her former employer.  Recently, however, the Sixth Circuit held that the tender-back doctrine does not apply to claims brought under Title VII or the Equal Pay Act, and the Court held that a former employee need not return her severance pay before filing suit.

Background on the Case

In McClellan v. Midwest Machining, Inc., the plaintiff brought a pregnancy discrimination claim under Title VII and alleged that the employer maintained a “sex-segregated workplace.”  In addition, the plaintiff claimed that the company paid men substantially more than their female counterparts, asserting a claim under the Equal Pay Act.

Faced with this lawsuit, the employer informed the plaintiff’s attorney that she had signed a severance agreement when she was terminated, which released “any and all past, current and future claims” she had against the company in exchange for payment of $4,000.  Rather than concede that the severance agreement applied, the plaintiff claimed that she had entered into the agreement under duress and without knowledge that she was releasing her discrimination claim, alleging that the company’s president pressured her into signing, rushed her through the agreement, and used a “raised” tone of voice during the meeting.  The plaintiff then attempted to return the $4,000 to the company, but the employer refused the check, stating that “[t]here is no legal basis for rescinding the severance agreement.”

Ultimately, the district court allowed limited discovery on whether the plaintiff had “knowingly and voluntarily executed the agreement,” and the court asked for briefing on application of the tender-back doctrine.  The employer subsequently moved for summary judgment, alleging the severance agreement precluded the plaintiff’s lawsuit and that the plaintiff could not proceed with the case because she did not tender back the consideration prior to filing suit.

The district court held that there were fact issues as to whether the plaintiff had “knowingly” and “voluntarily” executed the severance agreement.  However, the court agreed with the employer that the tender-back doctrine precluded the plaintiff’s claims, and it dismissed the case.  The plaintiff appealed to the Sixth Circuit.

The Sixth Circuit’s Decision

A divided panel of the Sixth Circuit held that the common law tender-back doctrine does not apply to claims brought under Title VII or the Equal Pay Act.  The Sixth Circuit expressed concern that the tender-back doctrine would limit Title VII and Equal Pay Act claims and would frustrate the “remedial” nature of both statutes.  The Court stated:

Similarly, we worry that requiring recently-discharged employees to return their severance before they can bring claims under Title VII and the EPA would serve only to protect malfeasant employers at the expense of employees’ statutory protections at the very time that those employees are most economically vulnerable.  We therefore hold that the tender-back doctrine does not apply to claims brought under Title VII and the EPA.

Accordingly, at least in the Sixth Circuit, employees who have previously signed a severance agreement need not return their severance pay before filing Title VII or Equal Pay Act claims.  Instead, the Sixth Circuit stated that any severance pay previously paid to the employee could be deducted from any ultimate award in the lawsuit.

Takeaways

The Sixth Circuit’s decision is unwelcome news to employers because it removes a deterrent to suits by former employees who previously signed severance agreements.  However, it is important to remember that the Sixth Circuit’s decision only relates to whether employees must return severance pay; it does not address whether employees can disclaim and void the actual severance agreement itself.  Whether former employees can successfully do so depends on the circumstances under which the severance agreement was presented and executed.

Accordingly, now is a good time for employers to review their severance agreements and practices, to help avoid allegations similar to those brought in this lawsuit—that the employee was pressured into signing the agreement, rushed through the process, and not given an opportunity to fully understand its terms.  Following are some best practices to consider:

  • Give the employee time to review any severance agreement, even for younger employees. For employees over 40 years of age, employers must provide a 21-day period to review the agreement and allow the employee to revoke the agreement within 7 days.  This is not a requirement for younger employees, but providing the employee with a reasonable time to review (anywhere from a few days to a week) insulates the employer from claims that the employee was coerced into signing.
  • Allow the employee to take the severance agreement home with her. This allows the employee ample time to consider the proposal, and talk it over with her family.  And an employee will be hard pressed to claim she did not voluntarily enter into the agreement when she took it home, executed it, and then returned it to the company.
  • Inform the employee that she may consult an attorney, if she wishes. Although not necessary in every circumstance, encouraging that the employee consult an attorney will help protect the employer against claims of coercion.
  • Consider having two managers or supervisors present the severance offer to the departing employee. This provides the company with an additional witness in the event the employee raises issues about the meeting down the road, and it avoids any “he said, she said” scenarios.
  • Instruct the manager or supervisor relaying the severance offer to take notes, even if nothing of substance occurred during the meeting. This way, the company will have a record that the meeting occurred and knowledge as to whether any issues were raised during the meeting.  If issues were raised, the company can proactively resolve them.

Above all, the goal of any severance offer is to treat the employee fairly and professionally, while at the same time protecting the company and ensuring closure for all sides.  In order to accomplish this, it is important to protect the company during the severance process—including when presenting the severance offer to the employee—to limit after-the-fact allegations.  And while the Sixth Circuit’s McClellan v. Midwest Machining decision injects more uncertainty into severance agreements, with a little proactive planning employers can still ensure that severance agreements accomplish their goals.

For more information on this topic, please contact the authors, your Seyfarth Attorney, or any member of Seyfarth Shaw’s Labor & Employment Team.

By Annette Tyman, Lawrence Z. Lorber, and Michael L. Childers

Seyfarth Synopsis: The Office of Federal Contract Compliance Programs (“OFCCP”) is closing the summer by issuing two new enforcement directives. The first, Directive 2018-03, clarifies the OFCCP’s enforcement of religious non-discrimination in light of recent court decisions and executive orders. The second, Directive 2018-04, creates focused reviews for Executive Order 11246 (“EO 11246”), Section 503 of the Rehabilitation Act (“Section 503”), and the Vietnam Era Veterans’ Readjustment Assistance Act (“VEVRAA”). These two directives come just a week after the OFCCP released its much anticipated publication outlining what federal contractors can expect from the agency.

“What Contractors Can Expect”

On August 2nd, the OFCCP published the “What Contractors Can Expect” guidance which lays out the agency’s enforcement plans and echoes the message of transparency that the OFCCP announced when the new leadership took over and that Acting OFCCP Director Craig Leen recently reiterated to the contractor community during his opening address at the 2018 National Industry Liaison Group. In it the OFCCP assures contractors that they can expect:

  • Access to Accurate Compliance Assistance Material;
  • Timely Responses to Compliance Assistance Questions;
  • Opportunities to Provide Meaningful Feedback and Collaborate;
  • Professional Conduct by OFCCP’s Compliance Staff;
  • Neutral Scheduling of Compliance Evaluations;
  • Reasonable Opportunity to Discuss Compliance Evaluation Concerns;
  • Timely and Efficient Progress of Compliance Evaluations; and
  • Confidentiality

These expectations are consistent with the message of collaboration that the OFCCP has promised under the current administration. References to the neutral scheduling of compliance reviews and the opportunity to discuss concerns contained in the guidance echo previous actions taken by the agency in 2018.

The agency followed up on August 10th by issuing two new directives.

Directive 2018-03: Executive Order 11246 § 204(c), religious exemption

Directive 2018-03 clarifies the agency’s position on religious non-discrimination under EO 11246 in light of recent cases involving the relationship between federal regulation and the Free Exercise Clause, including Masterpiece Cakeshop, Ltd. v. Colo. Civil Rights Comm’n, Trinity Lutheran Church of Columbia, Inc. v. Comer, and Burwell v. Hobby Lobby Stores, Inc. In its press release, the OFCCP noted that this Directive also serves to align the agency’s enforcement actions with recent executive orders issued by the White House protecting religious freedom and the ability of faith-based and community organizations to compete fairly for government contracts and grants. The Directive instructs OFCCP staff to take these policies into consideration when providing compliance assistance, processing complaints, and reviewing compliance with EO 11246.

In practical terms, this Directive may not impact the vast majority of interactions that occur between the agency and the contractor community, as it is directed to OFCCP staff. However, it does signal a change in the way that the agency reviews religious accommodations during compliance evaluations. It may also impact complaint investigations against certain employers which allege discrimination on the basis of religion or sexual orientation and gender identity. The Directive specifically notes that “[t]his Directive supersedes any previous guidance that does not reflect these legal developments, for example, the section in OFCCP’s Frequently Asked Questions: Sexual Orientation and Gender Identity regarding “Religious Employers and Religious Exemption.” See https://www.dol.gov/ofccp/LGBT/LGBT_FAQs.html.”

Directive 2018-04: Focused reviews of contractor compliance with Executive Order 11246 (E.O.), as amended; Section 503 of the Rehabilitation Act of 1973 (Section 503), as amended; and Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA), as amended

While the impact of Directive 2018-03 appears to be fairly limited, Directive 2018-04 represents a major change in the way that the OFCCP enforces affirmative action and non-discrimination requirements, particularly under Section 503 and VEVRAA. The Directive calls for the agency to direct a portion of future scheduling lists to “focused reviews” of EO 11246, Section 503 and VEVRAA. The Directive further notes that in these focused reviews, “OFCCP would go onsite and conduct a comprehensive review of the particular authority at issue.” The reviews would include “interviews with managers…as well as employees affected” by the particular regulation and also evaluations of “hiring and compensation data.” The Directive instructs the OFCCP staff to develop a standard protocol for conducting the focused reviews as well as staff training, contractor education and compliance assistance materials. This policy suggests that the agency will be increasing its focus on the enforcement of Section 503 and VEVRAA which have historically received less attention than EO 11246 during compliance reviews.

What This Means for Employers?

Neither the “What Contractors Can Expect” policy, nor the directive clarifying the religious exemption signal any significant change for contractors. The creation of the focused reviews, however, puts contractors on notice that the OFCCP will be scrutinizing policies and practices that relate to disability and protected veteran status much more closely. In anticipation of the first round of focused reviews, contractors should ensure that their current policies and practices comply with the 2014 updates to the Section 503 and VEVRAA regulations. Contractors should specifically focus on the following:

  • Implementing an audit and reporting system to measure the effectiveness of their affirmative action efforts and take any necessary remedial measures;
  • Documenting requests for accommodations;
  • Ensuring that an interactive process for requesting accommodations during the hiring process is in place;
  • Soliciting protected veteran and disability status from applicants and new hires;
  • Listing all job openings with state employment delivery services; and
  • Reviewing job descriptions and qualifications to ensure that they do not screen out protected veterans or individuals with disabilities.

Contractors should also remember that in connection with both current compliance reviews and the new focused reviews, they may be asked to provide their most recent VETS-4212 Report. The deadline for filing the 2018 VETS-4212 Report is fast approaching on September 30, 2018.

It is unclear how the introduction of the focused reviews may impact desk audit submissions or whether these reviews will necessitate additional analyses for hiring or compensation. We anticipate further announcements from the OFCCP given its promise to provide contractor education and compliance assistance materials. We will continue to monitor these changes and will alert you as more develops.

In the meantime, if you have questions about best practices for OFCCP compliance and audit defense, please contact a member of Seyfarth’s Organizational Strategy & Analytics Team or your Seyfarth relationship partner.

By Karla Grossenbacher and Jaclyn W. Hamlin

Seyfarth Synopsis: The Fourth Circuit revived the retaliation case of a former city employee who was terminated one day after expressing an intent to file a formal grievance against her supervisor for race-based harassment, finding the plaintiff’s belief that she was being subjected to unlawful harassment to be reasonable – and noting that the city was on notice of objectionable behavior by the supervisor for some time.

When Felicia Struthers interviewed for an administrative assistant job with the city of Laurel, Maryland, three out of four of her interviewers were persuaded that she was the best and “most qualified” applicant, and she was given a job offer. Unfortunately, the interviewer who disagreed was to become her immediate supervisor. According to Struthers’ second-level supervisor, her direct supervisor had wanted to hire “someone of a different race.” Strothers v. City of Laurel, Maryland, No. 17-1237 (4th Cir. July 6, 2018). Despite this opposition, Struthers was extended a job offer.

From the inception of her employment, Struthers experienced difficulty with her immediate supervisor. Prior to beginning employment, Struthers negotiated a 9:05 a.m. starting time to enable her to put her children on the school bus. On her very first day, her supervisor marked her tardy, then overruled management’s agreement to allow Struthers to start five minutes after the office opened – demanding instead that Struthers report to work at 8:55 a.m., before the office was officially open for the day. The clashes continued, with Struthers’ supervisor insisting that Struthers ask permission before every bathroom break and report how long she spent in the bathroom; reprimanding her for alleged lack of teamwork; giving her a negative performance evaluation; and on one occasion, grabbing Struthers’ pants in an attempt to establish a dress code violation. Struthers believed that she was being harassed because of her race – a belief bolstered by her second-level supervisor’s admission that the immediate supervisor had wanted to hire someone of a different race, and by the complaints of former employees, African-American like Struthers, who had also felt harassed by the supervisor.

Struthers complained internally about her supervisor’s behavior on several occasions. Finally, she requested a grievance form, indicating that she planned to file a formal grievance the next day – but before she could do so, the City discharged her for “tardiness.” Struthers filed claims of race discrimination and retaliation; while the EEOC dismissed her discrimination claim, her retaliation claim advanced to federal litigation, where the City prevailed on summary judgment.

Struthers appealed, and in a decision published in July, the Fourth Circuit overturned the District Court’s grant of summary judgment to the City. The District Court had based its decision on a conclusion that Struthers could not possibly had a reasonable belief that the conduct of which she complained was based on her race. The Fourth Circuit disagreed, noting that the City itself had injected Struthers’ race into the conversation when, during one meeting, Struthers’ second-level supervisor had admitted that her immediate supervisor wanted to hire a white applicant for her job. Struthers’ reasonable belief was further bolstered, the Fourth Circuit noted, by other African-American former employees who had told her that they themselves felt harassed by the same supervisor, also because of their race, and by the fact that Struthers knew that her supervisor had only ever surveilled and reported policy violations upon other African-American employees.

The Court concluded that a reasonable jury could find that Struthers’ belief that she was being harassed because of her race was indeed reasonable. The Court further found that a reasonable jury could find that the supervisor’s behavior – including requiring Struthers, and Struthers alone, to report all time spent in the bathroom, and on one occasion lunging at and grabbing Struthers’ pants – to be sufficiently severe or pervasive to support a hostile work environment claim, and that the City’s action in firing Struthers the very day after she expressed intent to file a grievance was so temporally close to her protected activity as to create an inference of retaliatory animus. Based on these findings, the Fourth Circuit concluded that the District Court had erred in dismissing the case, and remanded it for further proceedings.

Takeaway for employers: The Court noted that the City was on notice, and had been for some time, of a rogue supervisor who had already been the subject of multiple complaints by African-American employees. If there is a lesson for employers to learn from this case – which is still pending – it is that no employer can afford to bury its head in the sand. Where there is smoke, there is at least the possibility of fire, and to safeguard the interests of the organization, employee complaints should be taken seriously and addressed promptly.

For more information on this topic, please contact the authors, your Seyfarth Attorney, or any member of Seyfarth Shaw’s Labor & Employment Team.

By Andrew R. Cockroft

Seyfarth Synopsis: In May 2018, the Illinois General Assembly considered and also passed a series of measures aimed at changing existing employment discrimination law. On May 16, 2018, the Assembly passed House Bill 4572 which amends the Illinois Human Rights Act (IHRA) to allow employers of any size to be liable under the IHRA. On May 18, 2018, an extensive amendment was added to Senate Bill 577, seeking to expand employer liability as well as reporting and notice requirements for claims of sexual harassment. On May 30, 2018, both chambers of the Assembly unanimously passed Senate Bill 20. SB 20 amends the IHRA to provide new powers to complainants, allow complainants to wait longer to file their claims, and to make the Illinois Human Rights Commission more efficiently address the existing backlog of charges.

The month of May was a busy one for the Illinois General Assembly. Last month, the Assembly passed a series of bills that together greatly expand which employers may be held liable under the Illinois Human Rights Act, reshape the Illinois Human Rights Commission (the “Commission”) and Illinois Department of Human Rights (IDHR) in order to increase transparency and efficiency, and gives employees new powers in exercising their rights under the IHRA.

What’s more, the Illinois Senate is now considering another amendment to the IHRA which expands liability for claims of sexual harassment and further adds new employer reporting and notice requirements when incidents of sexual harassment occur.

House Bill 4572

Currently, the IHRA only covers employers who employ 15 or more employees within Illinois for at least 20 weeks during the year. The now passed House Bill 4572 amends the IHRA such that any employer who employs one or more employees for at least 20 weeks during the year may be held liable under the Act.

On May 18, 2018, the measure officially passed both chambers of the Assembly, passing the House 64-37 and the Senate 33-13.

The measure has yet to go before Governor Bruce Rauner, however, and a spokesperson for the Governor declined to comment on whether he would sign it.

With this new development, employers who employ fewer than 15 employees should familiarize themselves with the IHRA as well as Commission and IDHR proceedings.

Senate Bill 20

On May 30, 2018, Senate Bill 20 was unanimously passed by both chambers of the Assembly. The bill contains numerous revisions to the IHRA which greatly expand the powers of employees in litigating their claims:

  • Previously, a complainant could not opt out of an investigation once they initiated it. Under the new bill, a complainant may now opt out of an IDHR investigation within 60 days after filing a charge with IDHR to commence an action in Circuit Court.
  • Previously a complainant had to file their claim with the Commission within 180-days of the incident giving rise to the claim. SB 20 extends the statute of limitations to 300 days to be consistent with federal law and EEOC limits.

The bill also devotes vast, new resources to reshaping the Commission itself and how it handles the existing backlog of claims:

  • The bill decreases the size of the Commission from 13, part-time members to 7, full-time members who must either be licensed to practice law in Illinois, served as a hearing officer at the Commission for at least 3 years, or has at least 4 years of experience working for or dealing with individuals or corporations affected by the IHRA or similar laws in other jurisdictions.
  • Each commissioner will be provided one staff attorney.
  • The bill also creates training requirements for Commissioners and further requires ongoing training of at least 20 hours every two years.
  • A temporary panel of 3 Commissioners will be created to specifically address the backlog of charges and requests for review. The panel also will have one staff attorney to assist them in addressing the backlog.

Finally, SB 20 provides a series of new requirements for how claims are processed, litigated, decided, and ultimately published:

  • If an employee has filed allegations of employment discrimination at the IDHR and in another forum, such as a municipal human relations agency, and if the employee makes the choice to have his or her claim of discrimination adjudicated in the other forum (such as in front of a federal judge, a hearing officer, or an administrative law judge), the IDHR will be required to dismiss the state-level charge and cease its investigation.
  • The statute will now require that Commission decisions are based on neutral interpretation of the law and the facts.
  • IDHR is permitted to allow an attorney representing the respondent or the complainant to file a response on a request for review.
  • Additionally, the bill mandates that within 120 days of the effective date of SB 20, the Commission must adopt rules for minimum standards for the contents of requests for review including, but not limited to, statements of uncontested facts, proposed statements of the legal issues, and proposed orders.
  • The Commission website must provide its decisions on requests for review or complaints within 14 days of publishing of the decision.
  • The IDHR must provide a new notice within 10 business days following the receipt of the EEOC’s findings, the EEOC’s determination, or after the expiration of the 35-day period when a decision of the EEOC has been adopted by the IDHR for a lack of substantial evidence.
  • The Commission must provide notice within 30 days if no exceptions have been filed with respect to a hearing officer’s order or when a Commission panel decides to decline review.
  • Each Commission decision must be published within 180 days of the decision.

The new provisions will hopefully create more transparency in Commission and IDHR proceedings and better allow employers to respond to claims of discrimination. Employers should keep track of any new Commission proposals in the event SB 20 is signed into law.

Senate Bill 577 – Amendment 1

A new proposed amendment to Senate Bill 577 seeks various changes to the IHRA.

First, the amendment expands what workers may bring claims of sexual harassment against an employer, what constitutes sexual harassment, and by when such a claim must be brought.

  • Independent contractors will become entitled to protections against harassment and discrimination under the IHRA.
  • The definition of sexual harassment is expanded to state that harassment on the basis of an individual’s actual or perceived sex or gender is prohibited.
  • Workers who experience harassment or discrimination will have two years to file a charge with the IDHR.

Additionally, the amendment creates new reporting and notice requirements for employers.

  • Public contractors and large employers must annually report to the IDHR on the number of settlements they enter into or adverse judgements against them related to sexual harassment or discrimination. This provision also allows the IDHR to initiate an investigation of repeat violators.
  • Employers will be required to post notice of an employee’s right to a workplace free from sexual harassment as well as the procedure for filing a charge.

The amendment also extends protections from the Victims’ Economic Security and Safety Act (VESSA) to cover claims of sexual harassment. VESSA provides an employee who is a victim of domestic or sexual violence, or an employee who has a family or household member who is a victim of domestic or sexual violence with up to 12 weeks of unpaid leave to address issues arising from domestic or sexual violence. This new amendment would, therefore, require an employer to provide 12 weeks of leave to any employee who makes a claim of sexual harassment.

Finally, the amendment also addresses the issue of non-disclosure agreements in the employment context. Employers would be prohibited from including nondisclosure clauses in settlements of sexual harassment allegations unless the employee alleging harassment chose to include such a provision. Even more, the amendment also prohibits an employer from entering into a nondisclosure agreement with any employee whose earnings do not exceed the federal, State, or local minimum wage law or who do not earn more than $13.00 an hour.

SB 577 has not passed either chamber of the Assembly. However, employers should note the Assembly’s increased focus on employment discrimination law and the myriad ways they seek to change it.

For more information on this topic, please contact the author, your Seyfarth Attorney, or any member of Seyfarth Shaw’s Labor & Employment Team.

By: Scott Rabe, Sam Schwartz-Fenwick, Marlin Duro

Seyfarth Synopsis:  In a largely symbolic ruling, in Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Commission, the Supreme Court ruled 7-2 in favor of a cake shop owner who refused to make a wedding cake for a gay couple based on his religious beliefs.  By limiting its holding to the facts of the case, however, the Court sidestepped an opportunity to delineate the intersection between free expression of religion and LGBT rights.  As a result, the decision provides little in the way of guidance to employers regarding the role of free expression of religion in the workplace.

In the highly anticipated decision in Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Commission, a case closely followed by the media, religious rights advocates, and gay rights advocates alike, the Supreme Court delicately avoided making a decision that could be declared a victory by either side.  Instead, the majority emphasized that the holding in Masterpiece Cakeshop was limited to the facts of the case and that further clarification as to the boundaries between religious rights and LGBT rights would have to play out in the courts.

The Case

Charlie Craig and David Mullins were looking to celebrate their marriage by purchasing a custom wedding cake at Masterpiece Cakeshop, a bakery in Colorado.  Jack Phillips, the owner of the bakery refused to make the wedding cake for the couple because of his religious opposition to same-sex marriage.

The couple filed a Charge with the Colorado Civil Rights Commission (the “Commission”), claiming that the baker’s refusal was in violation of the Colorado Anti-Discrimination Act, which makes it “a discriminatory practice and unlawful for a person, directly or indirectly, to refuse, withhold from, or deny to an individual or group because of  . . . sexual orientation, . . . the full and equal enjoyment of the goods [and] services” of “any place of business engaged in any sales to the public and any place offering services . . . to the public.”  The owner of the bakery, however, maintained that the First Amendment rights to freedom of speech and free exercise of religion protected his refusal to make custom wedding cakes for same-sex couples.

The Commission found in favor of the couple and determined that the actions of the bakery violated Colorado law.  Phillips appealed the Commission’s decision to the Colorado Court of Appeals, which affirmed the Commission’s ruling.

After the Colorado Supreme Court refused to hear his appeal, Phillips appealed to the United States Supreme Court.

The Supreme Court’s Decision

In a 7-2 decision, the Supreme Court reversed the judgment of the Colorado Court of Appeals and found the Commission had violated Phillips’ First Amendment rights of free speech and free exercise of religion.

In its decision, the Supreme Court acknowledged that the case presented “difficult questions as to the proper reconciliation of at least two principles,” one, the authority of the State “to protect the rights and dignity of gay persons who are, or wish to be married but who face discrimination when they seek goods or services” and two, the “right of all persons to exercise fundamental freedoms under the First Amendment.”  While acknowledging the tension between these two principles, the Court did not seek to reconcile them.

Instead, the Court first found the creation of wedding cakes was a “creative” endeavor implicating freedom of expression under the First Amendment, not merely selling a good which might not implicate the First Amendment.

The Court then explained that as Phillips’ refusal to bake  of a wedding cake implicated the First Amendment’s freedom of expression and free exercise of religion clauses, the Commission was obligated to weigh the cake shop owner’s First Amendment rights against the rights of the gay couple. Instead of performing this balancing with “the neutrality that the Constitution requires”, the Court found the Commission exhibited hostility toward Phillips’ beliefs throughout the hearing, making disparaging comments about his religious beliefs and treating the cake shop owner’s case differently than other cases addressed by the Commission involving cake shop owners with different beliefs.  The Court found that this treatment of Phillips’ case violated the First Amendment as it indicated a hostility to a religion or religious viewpoints.

The Court took great care to underscore that the holding in Masterpiece Cakeshop was limited to the facts of that case, stating that “[t]he outcome of cases like this in other circumstances must await further elaboration in the courts, all in the context that this disputes must be resolved with tolerance, without undue disrespect to sincere religious beliefs, and without subjecting gay persons to indignities when they seek goods and services in an open market.”

The Takeaway for Employers

Many anticipated that the decision in Masterpiece Cakeshop would provide employers and small-business owners with guidance on how to lawfully traverse the landmines that arise when religious beliefs conflict with civil rights statutes. By restricting the decision to the facts, the Court did not provide this guidance.

As such, employers, need not and should not change their EEO or other employment practices, policies, and trainings in light of the Masterpiece Cakeshop decision. Masterpiece Cakeshop does not place rights to the free exercise of religion over LGBT rights or other civil rights, and therefore employers should not take action that elevates the right to free exercise of religion within the workplace.

As always, we invite employers to reach out to their Seyfarth contact for solutions and recommendations regarding anti-harassment and EEO policies, addressing compliance with LGBT issues in the law, and tackling questions regarding the free exercise of religion in the workplace.

By John P. Phillips and Linda Schoonmaker

Seyfarth Synopsis: In recent months, sexual harassment has seized national headlines and raised significant questions about company policies, procedures, and culture. In response, many companies and HR personnel have questioned how to appropriately respond to complaints of sexual harassment. A recent decision out of the Western District of Wisconsin provides a helpful summary of the state of Title VII, the federal anti-discrimination and harassment law, and the appropriate company response to harassment. Given the national debate and this recent decision, now is a good time for employers to implement some best practices to (1) prevent harassment before it occurs and (2) take appropriate remedial action if it does.

Sexual harassment has been around for a long time, but recently it has garnered national headlines. Movements such as #MeToo and Time’s Up have appropriately focused the spotlight on company policies and procedures. It is important for companies to continue to improve workplace culture and their responses to harassment when it does occur. At the same time, it is important for companies to understand the legal framework for a harassment claim, and their legal responsibilities.

A recent decision out of the Western District of Wisconsin provides an important reminder on the state of the federal law prohibiting sexual harassment in the workplace, and an employer’s responsibility to prevent and correct any harassing behavior.

Background on the Case

In Lee v. Dairyland Power Cooperative, the plaintiff alleged that several of her co-workers sexually harassed her, and that the company failed to take adequate steps to prevent the harassment. After an analysis of the applicable framework for sexual harassment under Title VII, the Court dismissed the plaintiff’s case, finding that she could not prevail on her harassment claim as a matter of law.

The facts of the case were largely undisputed and simple: on one occasion, the plaintiff overheard her immediate supervisor, a co-worker, and a security contractor—all male—discussing their desire for her to wear her “spring outfits.” They also compared her physically to another employee, who they described in a sexually suggestive manner; and they discussed the sex life of yet another employee. These facts were undisputed, and the plaintiff complained to Human Resources the same day. HR immediately investigated the incident and concluded that the sexually demeaning conversation had occurred.

The plaintiff’s supervisor personally apologized to the plaintiff and promised that the action would never happen again; that he would not engage in any further sexual harassment; and that he would protect the plaintiff from retaliation. The company asked the plaintiff to return to work, but she refused, believing the company’s response was inadequate. The company followed-up, explaining that there were no positions to which she could be transferred to be away from the supervisor. Feeling that the company had not fixed the situation, the plaintiff quit her employment. That same day, the company suspended the supervisor for two weeks without pay, and ordered him to attend retraining on the company’s sexual harassment policy.

Application of Title VII

The Court laid out the legal standard for maintaining a sexual harassment claim under Title VII (the federal law prohibiting harassment in the workplace): the plaintiff must prove that (1) she experienced unwelcome harassment, (2) the harassment was based on sex, (3) the harassment was so severe or pervasive that it altered the conditions of her employment and created a hostile or abusive environment, and (4) a basis exists for holding the employer liable. Here, it was undisputed that the plaintiff had experienced unwelcome harassment based on her sex. However, the Court found that she could not meet the third and fourth prongs of the test.

First, the Court found that overhearing the statements on only one occasion did not create an abusive working environment. Indeed, the Court applied Seventh Circuit precedent for the proposition that “verbal harassment limited to a one-time incident that was overheard, rather than intentionally inflicted, does not rise to the severe or pervasive standard under Title VII.”

Second, the Court found that the employer could not be held liable for the wholly inappropriate conduct of the supervisor. The company maintained an anti-harassment policy, which the supervisor violated. And as soon as the company learned that harassment had occurred, it initiated an investigation pursuant to its no harassment policy; and the company instituted discipline reasonably calculated to end the harassment. The Court found that the two-week suspension, apology, promise to protect the plaintiff from any harassment, and retraining on sexual harassment issues were sufficient for the company to meets its legal burden to resolve the problematic work environment. Accordingly, the company could not be held liable under Title VII.

Takeaways and Best Practices

When sexual harassment occurs in the workplace, nobody wins. And as the Dairyland Power case makes clear, even companies that have and enforce no harassment policies can face costly litigation. Given the current national debate over harassment, now is a good time for employers to review and reevaluate their sexual harassment policies and procedures.

Employers should consider several proactive steps—to help prevent sexual harassment on the front-end and then to appropriately handle the situation if it were to arise—including: (1) ensuring the company’s no harassment policy and reporting structure is up-to-date and clear; (2) providing harassment and employment law training to supervisors and managers; (3) taking all allegations and complaints of harassment in the workplace seriously; (4) immediately performing a thorough and complete investigation of any harassment complaints; and (5) implementing swift, appropriate, and proportional remedial action, including termination or suspension if necessary.

Above all, employers should strive to ensure that their company’s culture is one where sexual, or any other form of harassment, is simply not tolerated. Instead, each employee should enjoy a safe and respectful work environment, and feel empowered to raise any workplace harassment issue with his or her supervisor, manager, or HR. At the same time, the company should feel secure that taking proactive action on the front-end to eliminate any harassment before it occurs, and taking immediate action to stop and remedy any harassment after it occurs, is sufficient to satisfy its legal obligations under Title VII. Fortunately, the Dairyland Power decision continues to apply this legal standard.

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 or the Labor & Employment Team.