By Phillip J. Ebsworth and Jennifer L. Mora

Seyfarth Synopsis: While employees often will toot their own horn, employers sometimes may have concerns about their ability to safely perform their job. If this situation rings a bell, it will be music to your ears to hear that it may be possible to request employees to undergo a medical examination to certify their fitness for duty.

Fitness for duty examinations are permitted under both the federal Americans with Disabilities  Act (ADA) and the California Fair Employment and Housing Act (FEHA). However, because employers are generally prohibited from inquiring about employees’ physical and mental conditions, employers must exercise caution and should not march to the beat of a different drum.

What if I Don’t Think an Employee is Ready to Return from Leave?

Under the Family and Medical Leave Act (FMLA), when an employee’s physician certifies that  the employee can return to work from leave, the employer must return the employee to work. However, if the certification is incomplete or insufficient, the employer can give the employee a written notice stating what additional information is necessary.

Alternatively, as discussed by the California Court of Appeal in White v. County of Los Angeles, once the employee has returned to work from FMLA-protected leave, an employer can request an examination consistent with the ADA.

Under California’s FEHA, an employer may require an employee to undergo a medical examination to certify an employee’s fitness for duty upon the employee’s return from a non-FMLA medical leave of absence if there are reasonable safety concerns regarding the employee’s ability to perform the essential job functions. The examination must be job-related and a business necessity under the specific circumstances.

Can I Require a Fitness for Duty Examination when there are Safety Concerns?

An employer may require an employee to submit to a medical examination and obtain a fitness for duty certification if the employer has a reasonable belief based on objective evidence that the employee’s ability to perform essential job functions will be impaired by a medical condition, or that the employee will pose a direct threat due to a medical condition. If a medical examination and fitness for duty certification is sought under those circumstances, the examination must be job-related and consistent with business necessity.

Employers must have a “genuine reason to doubt” an employee’s ability to perform job-related functions. So, when considering a fitness for duty examination, it is instrumental to have evidence to drum up support for your reason to doubt the employee’s fitness. Excessive absenteeism, difficulty performing essential functions of the job, or poor productivity (particularly where outside of the employee’s usual patterns or character) may all be “cymbal-ic” of an employee being “unfit for duty.” These situations are highly fact specific and employers will have to play it by ear to see if a fitness for duty examination is appropriate in a particular circumstance.

What Can a Fitness for Duty Examination Tell Me?

Under California’s Confidentiality of Medical Information Act (CMIA), unless the employee provides written authorization, an employer can only know whether the employee is able to perform the essential functions of the job. In other words, the employer cannot be told the diagnosis or cause of an employee’s inability to perform—it is simply a pass/fail examination. However, if an employee would be able to perform the essential functions of the job with a reasonable accommodation, the employer is entitled to know the medical restrictions of the employee’s fitness for duty, such as lifting or standing restrictions, or needing an alternative schedule. Of course, if there is any doubt as to the accommodations needed, an employer can request that the employee provide additional clarification.

Workplace Solutions: Fitness for duty examinations are a useful instrument for employers, but be wary of playing solo. Your favorite Seyfarth attorney can chime in to make sure you land on the right note.

Edited by Coby Turner and Elizabeth Levy

By Andrew S. Boutros, Michael D. Wexler, Alex Meier, Daniel P. Hart, Robert B. Milligan

Seyfarth Synopsis:  On June 24, 2019, the Supreme Court issued its decision in Food Marketing Institute v. Argus Leader Media and resolved fractured circuit splits about the parameters for when the government may withhold information from a Freedom of Information Act (“FOIA”) request based on responsive information being confidential or a trade secret.

Earlier this year, we reported on this case when the Supreme Court granted certiorari and predicted that the case would have significant ramifications for the protections given to sensitive information submitted by companies to the government.

And it has. The Court did away with the former requirement that the company requesting confidential treatment demonstrate it would suffer “substantial competitive harm,” which, in practice, could be quite costly to prove up and, as a practical matter, required the company to prove harm based on the occurrence of a hypothetical event. Now, an entity seeking shelter under FOIA’s confidentiality exemption, Exemption 4, need only show that (1) the commercial or financial information is customarily and actually treated as private by its owner; and (2) that the information was provided to the government under an assurance of privacy. The decision creates a far more accommodating framework for entities seeking to protect information as confidential under FOIA Exemption 4.

FOIA Exemption 4

FOIA Exemption 4 protects “trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential.” Prior to the FMI decision, the Supreme Court had never weighed in on what that meant, leaving a wide range of circuit-level decisions. In early decisions, the courts adhered to the ordinary, everyday usage of the term “confidential,” viewing it as commercial or financial information that the person would not want in the public sphere. A company’s price lists would be one such example. This interpretation generally comports with the understanding of what constitutes “confidential information” for purposes of non-disclosure agreements.

But, in National Parks & Conservation Association v. Morton (1974), the D.C. Circuit adopted a much different and somewhat counterintuitive test, holding that the government may invoke FOIA Exemption 4 and refuse disclosure of so-called confidential information requested under FOIA only if the disclosure is likely either to (1) impair the government’s ability to obtain necessary information in the future (“impairment”); or (2) cause substantial harm to the competitive position of the person from whom the information was originally obtained (“competitive harm”).

Most circuits adopted this test or something very similar to it, even though lower courts and litigants generally criticized the test as unmoored from any ordinary understanding of what qualified as confidential information. Although the Supreme Court had previously declined to grant certiorari in cases where the test was challenged, that changed when it agreed to hear the FMI case.

The Food Marketing Institute Case

The Argus Leader, a South Dakota newspaper, submitted a FOIA request to the United States Department of Agriculture (“USDA”) seeking the name, unique identifier, address, store type and the yearly Supplemental Nutrition Assistance Program (“SNAP”) sales figures for every store in the United States. The USDA produced all the data requested, except for the yearly revenue, which it withheld under Exemption 4. After exhausting its administrative remedies, Argus sued the USDA in district court.

The district court initially granted summary judgment in the government’s favor. The Eighth Circuit reversed and instructed the district court to consider whether releasing store-level SNAP data would likely result in substantial harm to the stores that submitted the data.

After a two-day bench trial, the district court ruled in favor of Argus and in support of the data’s release. The USDA made known that it intended to release the data to Argus, which in turn caused Food Marketing Institute (“FMI”) to obtain leave to intervene and then file an appeal.

Now on appeal for the second time, the Eighth Circuit affirmed the district court’s judgment. The circuit court found that, although the SNAP data could be commercially useful, that was not enough to show that FMI’s members, retail food stores that participate in SNAP, and others would experience a substantial likelihood of competitive harm.

FMI then filed for certiorari and asked the Supreme Court to abandon the competitive harm test or, alternatively, apply the test and find that the district court and circuit court erred. FMI urged the Court to reject the D.C. Circuit’s National Parks test and instead apply the plain meaning of the term “confidential,” as the D.C. Circuit had done when determining what constituted “commercial or financial” information. FMI objected to National Parks’ focus on whether the information’s release would cause “substantial competitive harm,” which represents a reversal of the test when assessing whether information is confidential or a trade secret: whether the information provides a competitive advantage by virtue of the information not being broadly known.

The Supreme Court Reverses the Eighth Circuit

In a 6-3 decision, the Supreme Court reversed the Eighth Circuit, holding that the National Parks test grafted requirements onto Exemption 4 that lacked any textual support. After quickly finding standing, the majority turned to the “ordinary, contemporary, common meaning” for the undefined term “confidential.” From dictionary definitions, the Court viewed the core aspects of confidentiality as requiring that the information be “customarily kept private” or “closely held” and that the receiving party provide some assurance that it will remain secret.

The Court did not find any indication that confidentiality required the disclosing party to demonstrate that, if the information were shared, that some harm would result from the disclosure. Rather, the Court criticized National Park’s introduction of the “substantial competitive harm” test as a “relic from a ‘bygone era of statutory construction’” that resulted from elevating legislative history over the statute’s text and structure. The Court also found significant that subsequent cases had actually created two definitions of what qualified as “confidential” based on whether the disclosure was voluntary or involuntary. The Court did not address whether a party could disclose information to the government without requiring the government to keep it confidential and then later assert that it is confidential information protected under Exemption 4.

The three dissenting Justices agreed with the outcome and that the National Parks test had gone too far in requiring the disclosing party to prove harm but were of the view that the majority went too far in jettisoning from the test any harm requirement. The dissent advocated for the test to incorporate an additional element: whether release of the information “will cause genuine harm to an owner’s economic or business interests.” The dissent considered this requirement to be more accommodating than National Parks while still preserving FOIA’s preference for disclosure and narrow construction of its exemptions.

The Key Takeaways

The Court’s decision has significant ramifications for industries that provide important, valuable data to the government, particularly where the confidential information is subject to a mandatory reporting or disclosure obligation. The decision also generally supports the proposition that companies can maintain property rights in their confidential information through written agreements (such as those used with employees and third parties) and that courts should give effect to those agreements.

As a result of this decision, government contractors will likely be able to protect more information that is disclosed to the government. In contrast, government contractors that regularly seek such information through FOIA requests may receive much less information in response.

Prior to disclosing confidential information, entities faced with a government request to disclose information should clearly identify and label confidential information as confidential and also seek to obtain written assurances from the government that such information will be treated as such. Entities should also review their internal policies and procedures to proactively identify materials that warrant confidential treatment and to establish procedures for how such materials should be handled when distributed to the government or other third parties. Of course, once implemented, all such policies should be vigilantly enforced so that such policies are not used as evidence of a company’s non-compliance with its own procedures.

Andrew S. Boutros and Michael Wexler are partners in Seyfarth’s Chicago office, Alex Meier is an associate and Daniel P. Hart is a partner in Seyfarth’s Atlanta office, and Robert B. Milligan is a partner is Seyfarth’s Los Angeles office.  If you have any questions, please contact Andrew S. Boutros at aboutros@seyfarth.com, Michael Wexler at mwexler@seyfarth.com, Alex Meier at ameier@seyfarth.com, Daniel P. Hart at dhart@seyfarth.com, or Robert B. Milligan at rmilligan@seyfarth.com.

By David J. Rowland and Danielle R. Rabie

Seyfarth Synopsis: In a 2-1 decision in Bilinsky v American Airlines, Inc., 2019 WL 2610944 (7th Cir. June 26, 2019), the Seventh Circuit recently affirmed American Airlines’ summary judgment win against a former employee who alleged American violated the ADA by failing to allow her to continue to work remotely after the American/US Airways merger. In doing, the majority made clear – as a “note of caution to future ADA litigants” – that employers must analyze what is reasonable under the ADA based upon current technological capabilities, not what was possible decades ago. The case also highlights the importance of having and updating job descriptions in the face of changed work circumstances. American survived its close call without one, but the next employer may not.

Background

Plaintiff Bilinsky began working with American Airlines in 1991 as a “communications specialist.’’ Her job position had no formal description. Although the team Bilinsky worked with operated out of American’s Dallas headquarters, American allowed Bilinsky to work remotely from Chicago due to her multiple sclerosis. Multiple sclerosis is aggravated by heat which prevented Bilinsky from living in Dallas year-round. However, in 2013 American Airlines merged with US Airways and the merger caused American to restructure all of their departments. American found that the merger fundamentally changed the nature of Bilinsky’s position and that the new position required consistent, physical presence. Accordingly, American offered to relocate Bilinsky to the Dallas office, but Bilinsky refused. American then attempted to find other positions for Bilinsky. Unfortunately, Bilinsky either was not qualified for, or not interested in the positions American suggested. As a result, American terminated Bilinsky, and she then sued American under the Americans with Disabilities Act (“ADA”) for failing to accommodate her disability. On motion for summary judgment, the district court held that American acted lawfully when it terminated Bilinsky because she was no longer a qualified individual with a disability—she could not perform the essential function of the position in light of the changes in her job requirements. The question on appeal was: Did the district court act properly when it found that Bilinsky was no longer a “qualified individual?”

Majority’s Analysis

The ADA prohibits discrimination against individuals with disabilities who, with or without reasonable accommodations, can perform essential job functions. Typically, courts look at job descriptions to determine if something is truly an essential job function. However, Bilinsky’s position had no job description and required the Majority to determine the essential job functions in its absence.

In lieu of a job description, the majority (Judges Kanne and Easterbrook) analyzed statements from multiple American employees who attested to the major changes the merger brought. They all stated that the merger forced American to massively restructure its business operations across all departments. Put simply, the restructuring caused Bilinsky’s work to evolve from independent activities to team-centered crisis management activities. This switch necessarily required frequent face-to-face meetings that Bilinsky could not participate in. Consequently, the majority determined Bilinsky was no longer a qualified individual and could not perform the essential job functions while working remotely. In support, the Majority also cited Seventh Circuit precedent which states “[j]ust as an employer is not required to create a new position or strip a current job of essential functions [under the ADA], an employer is not required to maintain an existing position or structure that, for legitimate reasons, it no longer believes is appropriate.”

The majority stressed that its holding in this case was extremely fact specific and that it is confined to the unique facts and circumstances the merger presented. The majority reiterated that employers cannot simply rescind an accommodation because it is inconvenient or burdensome and, instead, must utilize all available technologies to reasonably accommodate employees who can otherwise perform essential job functions. In doing so, it acknowledged that the Seventh Circuit’s pronouncement from 24 years ago that working from home as an accommodation would only be required in the “extraordinary case” is less true now.

The Dissent

Judge David Hamilton dissented. Although Judge Hamilton agreed with much of the majority’s legal analysis, and applauded the majority’s recognition that prior holdings regarding “working from home as a reasonable accommodation require a fresh look today”, he would have found that there is a dispute of fact for a jury to resolve as to whether in-person presence was an essential job function after the merger. Judge Hamilton observed that the “unusual absence of a written job description position” should “raise our eyebrows”, and that courts should not simply take an employer’s claims about a job’s essential functions at face value.

Viewed in a light most friendly to Bilinsky, the evidence showed that while presence in the office might be preferred by American, it had not been shown to be essential. Judge Hamilton further noted that while it would certainly be easier for American if Bilinsky operated out of Dallas, that is not the standard of the ADA. The ADA requires employers make sacrifices in order to hire and retain workers with disabilities and Bilinsky’s accommodation was one of those sacrifices. As a result, Judge Hamilton would have held that a jury should decide whether physical presence is an essential job function of Bilinsky’s position.

Lessons Learned

American Airlines narrowly avoided a legal tailspin- i.e., a jury trial – in this case. The key takeaways for employers are:

  • Although they will assess other evidence, courts look heavily to job descriptions in determining essential job functions. Employers should keep these descriptions as accurate and up to date as possible.
  • Restructuring is a legitimate complication and can change the essential job functions for various employees. These changes should be reflected in new job descriptions.
  • The pace of technological advancement is dizzying. With that rapid change comes the need to consider technological solutions to barriers to employment for individuals with disabilities. Remote work arrangements are certainly more common and can be far more effective than they once were.

If you have any questions regarding this area or need assistance evaluating personnel decisions relating to employees’ requests for accommodations, please contact the authors, your Seyfarth Attorney, or any member of Seyfarth Shaw’s Absence Management and Accommodations.

By Erin Dougherty Foley and Craig B. Simonsen

Seyfarth Synopsis:  The U.S. Court of Appeals in the Seventh Circuit has recently decided a case involving an extremely obese bus driver and denied his claims under the Americans with Disabilities Act of 1990 (ADA), 42 U.S.C. §§ 12101–12213, as amended by the ADA Amendments Act of 2008 (ADAAA), Pub. L. No. 110-325, 122 Stat. 3553.  Richardson v Chicago Transit Authority, No 17-3508 & 18-2199 (7th Cir. June 12, 2019).

In this case a former Chicago Transit Authority (CTA) bus operator alleged that the CTA took adverse action against him because of his extreme obesity in violation of the ADA.  The district court disagreed, holding that “extreme obesity only qualifies as a disability under the ADA if it is caused by an underlying physiological disorder or condition,” and granted CTA’s motion for summary judgment because the Plaintiff offered no such evidence.

We have blogged previously about obesity in the workplace.  See for instance Obesity is a Disability. Wait: Is Obesity a Disability?, Failure to Investigate and Fat-Shaming Permit Employment Claims to Proceed, “Weight Watchers”—Weight Discrimination in the Workplace,  Obese Employees Gain Discrimination Protection, and “Weight” Of Authority Leads To Dismissal (And Sanctions) Based On “Frivolous” Disparate Impact Claim.

The Court here found that “at bottom, Richardson does not present any evidence suggesting an underlying physiological disorder or condition caused his extreme obesity.  Without such evidence, we cannot call Richardson’s extreme obesity a physical impairment within the meaning of the ADA and the EEOC regulation.  Citing to Morriss v. BNSF Ry. Co., 817 F.3d 1104, 1112 (8th Cir. 2016) and EEOC v. Watkins Motor Lines, Inc., 463 F.3d 436, 443 (6th Cir. 2006).

As to the Plaintiffs’ perceived impairment, “Richardson must present sufficient evidence to permit a reasonable jury to infer that CTA perceived his extreme obesity was caused by an underlying physiological disorder or condition.  Richardson did not make this showing.”

The Court affirmed the lower court’s opinion.

Take Aways For Employers: While this case is a check in the “win” category for the defense bar, it is (and as all others are) unique on its facts.  As the Seventh Circuit also noted: “The ADA is an antidiscrimination — not a public health — statute, and Congress’s desires as it relates to the ADA do not necessarily align with those of the medical community.”  Having said that, employers should be cautious not to take this as a sign that all obesity cases will be ripe for dismissal in this jurisdiction.  With a different set of facts, or where an underlying disorder or condition does lead to an employee’s obesity condition, the ADA protections would still apply.  (Recall that with the amendment of the ADA, effective ten years ago(‼)) – “always attempt accommodation” is still a good rule of thumb for any covered employer.)

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

The Employment Law Lookout is taking a holiday break this week, but will resume delivering insightful discourse and updates on the day’s most pressing workplace issues next week.

In the meantime, we want to wish all of our readers, contributors, and editors a safe and happy Fourth of July holiday.  We hope you are able to spend time with family, friends, and loved ones and rest assured knowing that we’ll be on the lookout for more management insights to bring you soon.

Thank you and Happy Fourth.

By Jennifer L. Mora

Seyfarth Synopsis: The federal Drug Enforcement Agency (DEA) recently announced that drugs that include CBD (cannabidiol) with less than 0.1% of THC (tetrahydrocannabinols) are now considered Schedule V drugs provided they are approved by the federal Food and Drug Administration (FDA). The move marked the first time the DEA removed any form of cannabis from Schedule I and was due to the FDA’s approval of Epidiolex, a non-synthetic cannabis-derived medicine used to treat severe epilepsy. Yet, setting aside this very limited exception, marijuana and CBD remain illegal under federal law. And while CBD is projected to be a $22 billion industry by 2022, many employers remain hazy about this extremely popular product and the implications it has on their employees and businesses.

The Science Behind CBD

Hemp and marijuana are different strains of the cannabis sativa plant. Despite being derived from the same plant, there are differences between hemp and marijuana.

Hemp is a strain of cannabis that historically has been used to make industrial products, including cement, paper, clothing, and more. At present, hemp is no longer a Schedule I controlled substance but, instead, is now classified as an agricultural commodity provided its THC concentration does not exceed 0.3%, an amount generally viewed to be too low to produce a psychoactive effect.

Marijuana, on the other hand, has a higher THC concentration, the main ingredient that produces the psychoactive effect and makes people feel high. Marijuana has been listed as a Schedule I controlled substance since 1972. Being labeled a Schedule I drug means, according to the federal Controlled Substances Act, the drug has no currently accepted medical use and has a high potential for abuse. Additional Schedule I drugs include heroin, LSD, and ecstasy. Federal law considers marijuana to be more dangerous than cocaine, which presently is a Schedule II drug.

Marijuana and hemp both contain CBD, which is now being marketed and sold in a variety of forms, including oil (the most popular), health and beauty products, vapors, beverages, and infused edibles, such as chocolates and gummies. Pure CBD usually will not report a positive test result for marijuana because drug tests typically look for THC levels that are too high to be detected from pure CBD. For this reason, according to the National Institute on Drug Abuse, employees generally are not at risk of becoming intoxicated or impaired if they use pure CBD. However, if the CBD product contains a sufficient amount of THC, it is entirely possible the product could cause a positive drug test result for marijuana. Regardless, the DEA still considers CBD a Schedule I controlled substance and, thus, illegal under federal law.

A Product in Need of Regulatory Oversight?

A potential issue with CBD is that it remains unregulated and, thus, consumers, including employees, are left in dark about what they actually are ingesting. According to the National Organization for the Reform of Marijuana Laws (NORML), while some studies have shown that CBD can have therapeutic benefits, including anti-convulsant, anti-psychotic, analgesic, and anti-diabetic effects, it notes that some CBD products may not be living up to how they are being marketed in terms of both quality and safety. Specifically, NORML wrote, “in almost all instances, commercially available CBD products contain far lower quantities of CBD than are necessary to yield therapeutic effects in clinical trials.” And, some products that tout themselves as being either “THC-free” or pure CBD do, in fact, have THC or some other chemical or synthetic drug. In a recent study in Forensic Science International, researchers tested nine CBD oils and found that two of the oils had THC and four had 5-fluoro MDMB-PINACA (5F-ADB), a Schedule I controlled substance that is known on the street as “Spice.” This is important because in 2014, the DEA reported 2,311 incidents involving medical intervention or death relating to 5F-ADB.

The FDA has these same concerns and recently held hearings to determine how best to regulate CBD products. The outgoing director of the FDA testified to Congress that it could take several years before the FDA will be in a position to regulate CBD given what he views will be a “highly novel rulemaking process.” More recently, the FDA noted while it “recognize[d] the potential benefits of CBD,” it remains concerned about public safety. For example, during its review of Epidiolex, it discovered that CBD can cause harm to the liver, a claim many dispute as being based on a flawed scientific methodology. The FDA also pointed to what they view to be “unsubstantiated therapeutic claims” that CBD can treat serious illnesses, which might result in consumers avoiding medical treatment in favor of a product with potentially limited medicinal value. How and when the FDA intends to address the issue remains to be seen.

What Should Employers Do?

While marijuana and CBD are illegal under federal law, the CBD trend is expected to get trendier. Forbes Magazine recently reported that CBD sales in the United States alone are expected to reach $22 billion by 2022. Beyond CBD, more than half of the states have enacted medical marijuana laws and more than 10 jurisdictions allow adults to use marijuana recreationally. And, states are getting in the business of legalizing and regulating CBD, including Florida, Georgia, Iowa, Texas, Wisconsin, and Wyoming, among others. There is every reason to believe that more states will follow suit.

Recreational marijuana laws still allow employers latitude in enforcing their drug and alcohol testing and substance abuse policies. On the other hand, how an employer treats a job applicant or employee using medical marijuana will vary by state. Employers in jurisdictions with pot friendly laws should carefully consider whether they can simply state that they follow federal law and, thus, any marijuana use is a violation of company policy. Of course, employers subject to the Department of Transportation’s drug and alcohol testing regulations (Part 40) cannot ignore a positive test for marijuana, even if used medicinally.

CBD presents the same challenges to employers as does medical marijuana with the potential for additional problems. Do applicants and employees really know what’s in their CBD product and the impact, if any, that such use might have on their employment? If an employee justifies a positive marijuana test result by their CBD use and presents the employer what appears to be a “CBD pure” product as proof, how will an employer know what caused the positive result – is the employee smoking recreational marijuana or using what they genuinely believe to be an unregulated “pure” CBD product that unfortunately is spiked with THC? In states that do not have medical marijuana laws, the burden falls squarely on the applicant or employee to prove they are not using marijuana. However, in medical marijuana states, the employer may (depending on the state at issue) have a duty to accommodate the underlying medical condition prompting CBD or medical marijuana use or may be restricted in its ability to take action based on solely a positive marijuana test result.

We continue to recommend that employers exercise caution when dealing with applicants and employees using medical marijuana. The same holds true for CBD. Before taking any action against medical marijuana or CBD users, employers should review the laws of the states in which they operate and work with employment counsel to help navigate this complex and rapidly evolving area of the law.

Employers also may need to consider:

  • revising their policies to address CBD use;
  • training their managers and supervisors on how to address situations where an employee defends a positive drug test by claiming use of CBD;
  • educating employees about CBD; and
  • having a conversation with their drug testing providers about CBD and the lab’s drug testing and reporting processes.

Seyfarth Shaw will continue to monitor legal developments at the federal and state level.

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

 

By David J. Rowland, Jennifer A. Riley, Uma Chandrasekaran, and Michael D. Jacobsen

Seyfarth Synopsis:  Google’s recent travails with simultaneous traditional and “reverse” discrimination claims signal a new era of dynamic employment discrimination risk. Employers will be wise to consider the push and pull legal effect of diversity and inclusion programs, pay equity reviews, and other well-intended efforts.

Although employment discrimination claims are a familiar risk to most employers, a growing wave of lawsuits alleging “reverse discrimination” is adding a layer of complexity in this area. The potential exposure arising from these lawsuits makes them just as much “bet-the-company” endeavors as many traditional discrimination claims. Moreover, they represent a way that well-intentioned efforts by employers to combat more traditional notions of discrimination can backfire. Meanwhile, traditional claims of discrimination are not going away. As a result, many of the most prudent and egalitarian employers may feel trapped in “no-win” situations.

To illustrate, we examine the issues that household-name and tech industry giant Google has faced in recent years. As Google’s story shows, it is crucial that businesses monitor and understand how to manage this swiftly emerging “dynamic discrimination risk,” which has already seen many companies get blindsided with innovative and eyebrow-raising lawsuits.

Understanding The Issue

“Reverse discrimination” refers to discrimination in the terms, conditions, and privileges of employment against members of “historically advantaged” groups on the basis of race, color, national origin, sex, religion, or other status protected under Title VII of the Civil Rights Act of 1964. Thus, while the commonly-used term “reverse discrimination” may suggest something else, the Equal Employment Opportunity Commission, takes the position, endorsed by most courts, that reverse discrimination is discrimination, plain and simple, and prosecutes claims for reverse discrimination under the same standards it uses to pursue discrimination claims brought on behalf of members of minority or historically disadvantaged groups. This is not a new phenomenon in the U.S. workplace. Private litigation alleging reverse discrimination claims has been expanding, however, over the past decade, garnering substantial damages awards against employers.

Google’s Gauntlet

On One Side…
In January 2017, the Office of Federal Contract Compliance Programs (“OFCCP”) filed a lawsuit against Google to compel the company to produce historical employee-compensation data as part of an affirmative action compliance audit. In justifying its need for the information, OFCCP disclosed that it had identified evidence of systematic pay disparities against Google’s female employees when examining salary information from 2015 and needed to dig further back in time to assess the claims. During the proceedings, OFCCP officials claimed that the apparent “discrimination against women in Google is quite extreme, even in this industry,” and stretched “pretty much across the entire workforce.” Google responded by pointing to its annual pay analysis, which it claimed revealed no gender pay gap.

But the knives were out. As Seyfarth’s Pay Equity Group previously reported, later that year, Google was hit with a class action lawsuit claiming discrimination under the California Equal Pay Act. Citing to the OFCCP’s analysis, the complaint alleged that Google discriminated against its female employees by systematically paying them less than their male peers for performing substantially similar work under similar working conditions. The plaintiffs further alleged that Google assigned and kept women in job ladders and levels with lower compensation ceilings and advancement opportunities than those to which men with similar skills, experience, and duties were assigned, and that Google promoted fewer women – and promoted them more slowly – than similarly-qualified men. Currently, the case is approaching class certification briefing, with a putative class of approximately 8,300 women who have worked for Google in California since 2013.

Not long after, in early 2018, Google was hit with another gender discrimination suit in California Superior Court. This time, the plaintiff alleged that Google delayed in hiring her so that it could hire a white male for the position instead. Google was able to dispose of the lawsuit quickly, with the court granting a joint stipulation to dismiss the case just a couple of months after it was filed so that the parties could proceed to arbitration. However, the Company did not have any time to catch its breath, as it already was facing a new obstacle.

…And On The Other
In January 2018, while Google was dealing with these conventional legal woes, a pair of reverse discrimination lawsuits struck.

As Seyfarth reported in the first case, two former employees alleged that Google engaged in discrimination, except this time, the claim was that white, conservative males were impacted. Specifically, the plaintiffs alleged that employees who deviated from the “majority view” at Google regarding issues such as “‘diversity’ hiring policies, ‘bias sensitivity,’ or ‘social justice,’” were singled out, mistreated, and systematically punished and terminated from the Company. The plaintiffs further alleged that “open hostility” to conservative viewpoints resulted in race and gender-based discrimination in hiring, promotion, and termination decisions because of the “extreme” lengths to which Google went in considering race and/or gender as determinative hiring factors, all to the detriment of white males. The case was brought on behalf of proposed classes of all employees of Google who had been discriminated against due to their “male gender” and/or “Caucasian race,” as well as their “perceived conservative political views” in California at any time going as far back as 2014.

Perhaps most striking about the lawsuit was that the plaintiffs highlighted several of Google’s efforts to promote diversity within its workforce as evidence of alleged bias. For instance, the complaint recounted a “Diversity and Inclusion Summit” during which Google allegedly presented on some of its diversity policies and practices that included affording female and minority job applicants “extra interviews” and a “more welcoming environment based on their race or gender” followed by placing these job candidates into “high priority queues” to increase the likelihood and speed with which they would be hired. Additionally, the plaintiffs supported their allegations by pointing to an online and in-person “diversity training class” that addressed biases against women and “white male privilege” in the workplace.

In the second reverse discrimination action, filed just a few weeks after the first, the plaintiff had worked as a recruiter for Google’s YouTube “tech staffing” management team. The plaintiff alleged that for several years Google had “implemented clear and irrefutable policies . . . of systematically discriminating in favor of job applicants who are Hispanic, African American, or female, and against Caucasian and Asian men.” Notably, the plaintiff also claimed that these policies were designed “to manage public relations problems arising from the underrepresentation of women and certain minority groups in the Google workforce.” The plaintiff further alleged that Google’s policy documents declared that “only individuals who were ‘diverse’” would be hired for certain positions, and that Google not only “carefully track[ed] the race and gender of each applicant” and based its hiring decisions on those criteria but even went so far as to instruct its employees “to purge entirely any applications by non-diverse employees from the hiring pipeline.”

Currently, both of these lawsuits are stayed in whole or in part pending arbitration. However, on June 7, 2019, the court denied Google’s demurrer seeking to dismiss supplemental claims (that were not stayed) alleging that Google systematically discriminates against conservatives in its hiring practices. These back-to-back reverse discrimination actions – hitting at a time when Google was reporting that almost 70% of its workforce was male and 91% was Caucasian or Asian and already had two lawsuits and a OFCCP investigation alleging discrimination against women on its hands – are attention-grabbing to say the least.

Odd Numbers/New Problem

Google’s 2018 annual pay review also demonstrates the issues that can arise when evaluating complex pay practices. In January 2019, Google disclosed to its employees the findings of its pay study for 2018. In part, the analysis showed that Google had underpaid men for doing similar work as women in certain positions. The Company noted in its explanation that managers apparently had used discretionary funds to increase employee incomes more often for certain women employees, resulting in a pay differential for men in the same lower-level software engineering job category. To address these and other identified pay differences, Google publically announced that it had implemented a $9.7 million payout across 10,677 employees.

So far, there does not appear to have been any legal blowback against Google related to this revelation. However, $9.7 million is an expensive fix and, coming off of the recent reverse discrimination lawsuits, the timing is uncanny. Meanwhile, Google remains committed to evaluating its pay impacting practices , as Google also announced that it was undertaking a comprehensive review of its leveling, performance rating and promotion processes. To the extent Google continues its practice of publishing the results of its reviews, any announcements will undoubtedly will generate headlines, and may spur complaints, including reverse discrimination class actions, depending upon which group(s) appears disfavored.

Implications For Employers

In sum, these very real workplace challenges do not appear to be going away anytime soon. This account of a high-profile company fighting discrimination claims on both fronts and, most recently, its unexpected discovery of a potential pay disparity impacting its male workforce, plus the costly course-correction that followed, serves as a warning shot to employers of any size that now is the time to evaluate hiring and compensation policies and procedures. As the example of Google shows, an era of rising reverse discrimination claims poses a growing risk and area of uncertainty for employers, underscoring the balancing act that employers face in implementing initiatives to promote fairness and opportunity among their existing employees and potential applicants.

Seyfarth Shaw attorneys in the Firm’s Complex Discrimination Litigation, Organizational Strategy & Analytics, and Workplace Counseling Solutions practice groups are at the forefront of successfully helping employers navigate, block, and tackle these complex, emerging risks. As the preeminent source of thought leadership in this space, over the next several months, our esteemed attorneys will publish blog posts on a number of critical related topics, including:

  • The balancing act of resourcing talent domestically and internationally;
  • Avoiding preferential recruiting and hiring traps;
  • Recognizing and investigating harassment and discrimination in the 21st Century workforce;
  • The dollars and sense of creating competitive and equitable compensation and promotions programs; and
  • Navigating identity issues in corporate social media.

The era of dynamic discrimination risk is upon us. Stay tuned to our blog for the latest updates.

By Linda Schoonmaker and John P. Phillips

Seyfarth Synopsis:  Employers in Austin, Dallas, and San Antonio expected the Texas Legislature to overturn their cities’ recent foray into city-specific paid sick leave laws.  However, the Texas Legislature recently wrapped-up its legislative session without passing a law curtailing city-specific paid sick leave laws—and the Legislature will not meet again until 2021.  In the meantime, Dallas’ and San Antonio’s paid sick leave laws are scheduled to go into effect on August 1, 2019.  (Austin’s ordinance is stayed pending an appeal to the Texas Supreme Court.)  As a result, unless the Texas Supreme Court rules that the laws are unconstitutional, employers in Dallas and San Antonio should begin preparing to comply with the paid sick leave requirements.

In recent years, many cities and other municipalities have enacted their own paid sick leave requirements.  These laws require employers in those jurisdictions to provide mandatory paid sick leave to their employees, and to provide their employees with specific paid time off throughout the year.

Although the majority of cities to pass such legislation are on either the Atlantic or Pacific coasts, Texas enjoys its share of city-specific paid sick leave requirements.  Specifically, Austin, Dallas, and San Antonio have all recently passed paid sick leave laws.  And while Austin’s ordinance has been stayed by the court system, Dallas’ and San Antonio’s ordnances are scheduled to go into effect on August 1, 2019.  Furthermore, the relief that many employers expected from the Texas Legislature failed to materialize.  Accordingly, employers in Dallas and San Antonio should begin preparing for compliance.

History of Paid Sick Leave in Texas

In February 2018, the City of Austin passed Texas’ first mandatory paid sick leave law.  Austin’s paid sick leave law was scheduled to go into effect on October 1, 2018, but the ordinance was challenged in court by business groups and the State of Texas.  The Austin Court of Appeals stayed the October implementation date, and in November 2018, the Court stayed the entire ordinance, finding that it conflicted with the Texas Minimum Wage Act and, accordingly, was unconstitutional under Texas law.  (The Texas Constitution prohibits city ordinances from conflicting with the general laws of the State of Texas.)  In March, the City of Austin filed a petition for review with the Texas Supreme Court, which has not yet decided whether it will take the case.  In the meantime, Austin’s paid sick leave law is not in effect.

In August 2018, while Austin’s law was being challenged, San Antonio passed its own mandatory paid sick leave ordinance.  Several months later, Dallas joined San Antonio and Austin, passing its mandatory paid sick leave ordinance in April.  Both the Dallas and San Antonio laws are scheduled to go into effect on August 1, 2019.  Neither have yet been challenged in court, but the same arguments lodged against the Austin ordinance likely apply equally to the Dallas and San Antonio statutes.

Until recently, Texas employers believed that the Texas Legislature would pass legislation blocking local jurisdictions from passing their own paid sick leave measures—and most commentators believed the Legislature would overturn the Austin, Dallas, and San Antonio laws.  Several such bills were introduced during the most recent legislature session, and the bills enjoyed strong support from Governor Abbott and many business organizations.  However, despite passing in the Senate, the bills died in the House and were not enacted into law.  As a result, Texas cities—including Dallas and San Antonio—are free to pass their own city-specific paid sick leave laws.  And because the Texas Legislature will not reconvene until January 2021, employers must begin preparing for paid sick leave laws in the Lone Star State.

Paid Sick Leave Requirements in Dallas and San Antonio

Both the Dallas and San Antonio ordinances are substantially similar.  Both laws require employers to provide employees with mandatory paid sick leave and both permit employees to accrue paid sick leave throughout the year, as follows:

  • Definition of Employer. Any person, company, corporation, firm, partnership, labor organization, non-profit organization, or association that pays an employee to perform work for an employer and exercises control over the employee’s wages, hours, and working conditions.
  • Definition of Employee. An individual who performs at least 80 hours of work in either Dallas or San Antonio in a year for an employer.
  • Accrual Rate and Cap. Employees accrue one hour of earned paid sick time for every 30 hours worked, up to 64 hours of earned paid sick time per year for most employers (or 48 hours per year for smaller employers).
  • Employees may carry over all available earned paid sick time up to the applicable yearly cap.  However, employers who frontload the earned paid sick time (i.e., provide either 64 or 48 hours at the beginning of the year) are not required to permit year-end carryover.
  • Usage Cap. Employees may take up to 8 days of paid sick leave per year (assuming they have accrued that much).
  • Reasons for Use. Employees may take paid sick time for the following reasons:  (1) the employee’s physical or mental illness, physical injury, preventative medical or health care, or health condition; (2) the employee’s need to care for their family member’s physical or mental illness, physical injury, preventative medical or health care, or health condition; and (3) certain safe time reasons relating to the employee’s or their family members’ status as a victim of domestic abuse, sexual assault, or stalking.

Next Steps

As mentioned, both the Dallas and San Antonio paid sick leave ordinances go into effect on August 1, 2019.  (The Austin ordinance remains stayed pending appeal to the Texas Supreme Court.)  As a result, employers in Dallas and San Antonio should began taking steps to comply with their cities’ requirements, including:

  • Review existing sick leave policies (or implement new policies) to ensure that policies satisfy the Dallas or San Antonio ordinances.
  • Review policies on attendance, anti-retaliation, conduct, and discipline for compliance with the Dallas and San Antonio ordinances.
  • Provide training to managers and supervisors, to ensure that the management team is up-to-date on the new requirements and knows how to handle employee requests for paid sick leave.
  • Continue to monitor legal developments involving the Dallas, San Antonio, and Austin ordinances. It is possible that the laws may be delayed or even overturned via court order.  Or that a court will reinstate the Austin ordinance.

Paid sick leave laws will continue to proliferate across the country.  And because the Texas Legislature failed to pass any legislation dealing with city-specific paid sick leave laws,  the paid sick leave trend will continue to proliferate in Texas as well—unless our Supreme Court rules that such laws violate Texas law.  Accordingly, Texas employers must continue to monitor the legal developments and be prepared to comply as the laws go into effect.

If you have any questions regarding these issues, please contact the authors, your Seyfarth Attorney, or any member of Seyfarth Shaw’s Absence Management and Accommodations or Workplace Policies and Handbooks Teams.

 

By Erin Dougherty Foley and Grace Nickels

Seyfarth Synopsis: New decision from the Supreme Court ruled that Title VII’s requirement that plaintiffs file with the EEOC or other state agencies is a non-jurisdictional claim-processing rule, which means it can be forfeited if a defendant waits too long to raise the objection.

On June 3, 2019, the U.S. Supreme Court resolved an important question for job-bias claims: is Title VII’s mandatory charge-filing a jurisdictional prescription or a claim-processing rule that can be forfeited?  Don’t worry, the ruling did not nullify the Title VII requirement that claimants file charges with EEOC or other state agencies before going to court.  However, this case clarifies that if an employer waits too long to say that the claimant did not overcome the charge-filing barrier, the employer can lose the defense. See Fort Bend County, Texas v. Davis, U.S., No. 18-525 (June 3, 2019).

Facts of Fort Bend County

Lois Davis worked in information technology for Fort Bend County. In 2010, she claimed that her department director sexually harassed her.  Davis also alleged that her supervisor retaliated against her for reporting sexual harassment by limiting her work responsibilities.  While her EEOC charge was pending, Davis was told to come to work on an upcoming Sunday.  Davis told her supervisor that she could not make it because of a church requirement, and she did not show.  Fort Bend terminated Davis for failure to come in.

In an attempt to add to her charge, Davis handwrote “religion” on her intake questionnaire and checked the “discharge” and “reasonable accommodation” boxes on the form.  However, she made no change in the formal charge document.  She filed suit alleging both religious discrimination and retaliation for having made a complaint of sexual harassment.  The case proceeded through litigation, including a trip up and back to the Fifth Circuit Court of Appeals.   The Fifth Circuit dismissed the retaliation claim, but remanded the religious discrimination claim.  Back in the district court, Fort Bend moved to dismiss the religious discrimination claim because — according to them — Davis had not exhausted her administrative remedies as to that claim.  The district court held that she had not satisfied her charge-filing requirement, which was “jurisdictional,” making it nonforfeitable.

The Fifth Circuit, however, reversed, holding that the charge-filing requirement is not jurisdictional, but rather is a prudential perquisite to suit, forfeited in Davis’ case because Fort Bend waited “years into the litigation,” and did not raise this concern until after “an entire round of appeals all the way to the Supreme Court.”  The Supreme Court affirmed.

Why Does This Matter?

The Supreme Court held that a charge-filing requirement speaks only to a party’s procedural obligations.  If the Court had ruled that it was jurisdictional requirement, the case would have been dismissed with no exceptions.  However, since it is a non-jurisdictional claim-processing rule, a defendant must promptly raise the objection.  Basically, if an employer waits too long to raise an issue about the adequacy of a charge, it forfeits the opportunity to rely on the issue later down the road.  Indeed, the Supreme Court noted: “Title VII’s charge-filing requirement is a processing rule, albeit a mandatory one, not a jurisdictional prescription  …..”

What Should Employers Look Out For?

Employers and their attorneys should review EEOC and other state equivalent charges carefully to make sure that any claims asserted in a federal court are identical to claims at the administrative level.  Ask these questions:

  • Did the accuser file a charge with the EEOC or the state equivalent?
  • If so, did the employee assert the same claims in the lawsuit?
  • If not, an employer should move to dismiss or object to the complaint because the employee failed to exhaust administrative remedies.

Do not wait long to do this.  The Court stressed that any objection can be waived if the employer waits too long to raise the point.  Employers still have a valid defense, they just can’t forget to assert it!

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