Obesity is one of the greatest health challenges worldwide. During the last decade, the population that is overweight in the European Union (EU) Member States has increased significantly, which has resulted in more than half of the EU population being overweight or obese.1 According to a recent study published in The Lancet, more than one-third of the population worldwide is overweight or obese, of which 36.9 percent are men and 38 percent are women.2 The aforementioned development has led to a growing discussion on how to deal with obese (severe overweight) employees in the workplace. That discussion includes the question whether obesity is a ground for unlawful discrimination.
In 2013, the European Court of Justice (ECJ) was asked in a preliminary ruling in a Danish case – for the first time – which provisions of EU law, if any, apply to discrimination based on obesity. The ruling of the ECJ is expected at the end of 2014. Meanwhile the Advocate General (AG) delivered his opinion on the matter on 17 July 2014.3 The AG’s opinion basically revolved around two questions:
- can obesity be considered as a self-standing ground of unlawful discrimination under EU law?
- does obesity fall within the scope of the notion of disability as referred to in the Equal Treatment Framework Directive (Directive)?4
The aforementioned Directive has the objective of creating a level playing field, where equality in employment and occupation in both the public and the private sectors are concerned.5 Based on recent case law, the ECJ appears to have adopted, following the approach of the UN Convention, a social and not a (purely) medical model of disability.6
In this respect, it is important to understand that the Directive provides for minimum rules to be implemented by EU Member States with regard to their national laws. Member States are free to implement and execute provisions more favorable than the Directive so long as they are in line with the Directive, specifically and and EU law, in general. As a result, there are a variety of laws in place in the respective EU Member States regarding this topic, among many others, in combination with general EU law.
Given these developments, the topic of obesity in the context of employment discrimination is receiving greater scrutiny, and thus, the Danish case being closely watched by the employment law community in Europe. Indeed, obesity might be the next frontier in employment discrimination law.
This article is intended to highlight the most relevant aspects of the Danish case. It is likely that some of the issues will seem surprising to readers in the United States, inasmuch as, since the 2008 amendments to the Americans with Disabilities Act, the Equal Employment Opportunity Commission and the courts have already begun to rule that severe or morbid obesity is a disability regardless of whether or not it was caused by a psychological disorder.7
An employee, Mr. Kaltoft, has been employed since 1996 as a childminder (taking care of other peoples´ children in their own homes) in the Municipality of Billund, Denmark. Mr. Kaltoft has been obese during the entirety of his employment. Although he performed his job to everyone’s satisfaction, he was dismissed in 2010. According to the notice of dismissal, the termination was due to a decline in the number of children to be taken care of.
The dismissal followed an internal hearing in which the obesity of Mr. Kaltoft was discussed. The parties disagree as to whether and if so, how, his obesity constituted part of the basis for the dismissal. Mr. Kaltoft argued that his employment was terminated due to his obesity, and that this amounted to discrimination based on obesity.
Obesity as a self-standing ground of unlawful discrimination?
Mr. Kaltoft basically argued that the open-ended nature of certain provisions in the European Charter of Human Rights (ECHR), Protocol 12 of the ECHR and the EU Charter of Fundamental Rights of the European Union (EU Charter) as well as other general EU law principles, requires the conclusion that any form of discrimination should be protected.
The AG disagrees. In his analysis, he asserts that EU legislation prohibiting discrimination addresses specific grounds of discrimination within specific subject areas without an existing general prohibition on discrimination. Thus, since obesity is not specifically mentioned as a prohibited ground of discrimination in the EU treaties, nor in any EU legislation, it cannot be seen as a self-standing ground of unlawful discrimination. If at all, according to the AG, obesity discrimination could only be grounded on Article 21 of the EU Charter, which prohibits ‘discrimination based on any ground such as (…).’ On this particular wording (such as) it might be argued that there is a general principle of non-discrimination in EU law covering grounds of discrimination not explicitly mentioned in the Charter. In this respect, the AG refers to an ECJ ruling in a previous case where the ECJ ruled that the discrimination within the scope of Directive 2000/78 should not be extended by analogy beyond those grounds listed- exhaustively – in Article 1 of the Directive.8 Therefore, the AG concludes that there is no general principle of EU law prohibiting discrimination in the labor market that would cover discrimination on grounds of obesity as a self-standing ground of unlawful discrimination.
Disability under Directive 2000/78
According to Article 1 of the Directive, discrimination on the grounds of disability is prohibited. The term ‘disability’ is not defined by the Directive, but a ‘notion’ of disability is being developed via case-law. This case-law is consistent with the concept of disability as laid down in Article 1 of the United Nations Convention on the Rights of Persons with Disabilities (U.N. Convention), which is an evolving concept, and the U.N. Convention’s case-law. The U.N. Convention has been approved by the EU in its Decision 2010/48 and as a result the provisions of the U.N. Convention are an integral part of the European Union legal order.9 This means that EU legislation, such as directives, have to be interpreted, as far as possible, in a manner that is consistent with the U.N. Convention.
According to the ECJ, this notion of disability must be understood as referring to a limitation which results, in particular, from (i) long-term (ii) physical, mental or psychological impairments (iii) which in interaction with various barriers (iv) may hinder (v) the full and effective participation of the person in professional life (vi) on an equal basis with other workers.10
As to the scope of the term “disability,” the ECJ has held that disability cannot be defined by reference to the source of the impairment, because that would run against the very aim of the Directive, which is to implement equal treatment.11 Therefore, the notion of disability does not depend on whether the disability is self-inflicted or not. Disability can also include an illness, if the illness entails a limitation as described in the foregoing paragraph.12 In this respect it should be noted that an illness requiring particular attention, continuous medication and control may be a psychological or psychosocial burden to the person concerned, but that in itself does not necessarily hinder participation on an equal basis in professional life in general.13 Moreover, the protected disability may even be that not of the employee, but of a person in the care of the employee who seeks to rely on the Directive.14 The latter situation is described as ‘associative discrimination.’
According to the AG, it is sufficient that a long term condition causes limitations in full and effective participation in professional life in general on equal terms with persons not having that condition. No link has to be made between the specific work concerned and the disability in issue as a precondition to application of the Directive.
With regard to the Danish case at issue here, one should note that the Municipality of Billund argued that it cannot be contended that Mr. Kaltoft’s obesity entails a limitation that may hinder his full and effective participation in professional life on an equal basis with other workers because he had already worked for 15 years as a childminder with the Municipality, and had participated in professional life on an equal footing with other childminders in the Municipality’s employ. In other words, the Municipality asserts, Mr. Kaltoft’s obesity cannot be deemed to have impeded his work as a childminder. On the other hand, in light of the AG’s position, as set forth above, an employee such as Mr. Kaltoft could assert that it does not matter whether he could carry on his work as a childminder before he asserts a claim under the Directive; rather, if the disability, here obesity, causes limitations on his ability to participate in professional life generally, he can assert a claim of disability discrimination pursuant to the Directive. Further, the notion of disability must be understood as referring to a hindrance to the exercise of professional activity, not only the impossibility of exercising such activity.15
Does obesity amount to a disability?
In addressing the question of whether obesity amounts to a disability, the AG refers to the Body Mass Index (BMI) classification of the World Health Organization.16 According to that measurement, persons can be divided in three categories: Obese class I (BMI of 30.00-34.99), Obese class II (BMI of 35.00 to 39.99) and Obese class III (BMI over 40.00). The latter category is also called ‘morbid obesity.’17 Although obesity is classified as an illness by the WHO, as set out above, an illness does not per se amount to a ‘disability’ as described in the Directive.18 With these categories in mind, the AG is of the opinion that most probably only WHO class III obesity (referred to by the AG as severe obesity) will create limitations that amount to a disability under the Directive and only when the situation fulfils all of the criteria set out in the ECJ’s case-law on the notion of disability. It is for the national Court to verify whether this is the case with respect to Mr. Kaltoft.19
Will the outcome matter for the Netherlands and the other EU Member States?
The Directive was implemented in the Netherlands via the Equal Treatment Handicapped and Chronically Ill People Act (Act). According to this Act, discrimination on the grounds of handicap or chronical illness is prohibited. The terms ‘handicap’ and ‘chronical illness’ are not defined in the Act, and review of the legislative documents suggests that this omission was intentional, so as to be consistent with the Directive, which does not provide for a definition of ‘disability.’ Having said this, a handicap is considered to be irreversible and a chronical disease a long-term affliction.
As to the Dutch legal practice, it seems that the Act and the practice developed in the Netherlands are not completely in line with the ‘notion of disability’ in the sense of the Directive. There are elements that point in the direction of a wider scope, but there are also elements that seem to be narrower. The first (that is, a more expansive view) would be, as discussed earlier, permissible, while the latter (a narrower construct) would not. As an example, there are cases that seem to take the underlying (medical) cause into the equation in assessing whether the situation falls within the scope of a handicap or a chronic disease, which would seem to provide for analysis based on the source of the impairment, which, as described above, runs counter to the aim of the Directive.
Severe obesity is being interpreted as a chronic disease under Dutch case-law, by the Netherlands Institute for Human Rights (NIHR) as well as by the few courts that have rendered rulings on this topic so far. They all (directly or indirectly) refer to the aforementioned WHO classification regarding obesity and conclude that because morbid obesity is regarded as a chronical disease by the WHO it also qualifies as a handicap or chronical disease under the Act.20 Having said this, whether the outcome of the Danish case before the ECJ will change current practice will have to be seen, and may well depend on specific wording. If the ECJ rules in line with the AG’s opinion, the Dutch practice with regard to morbid obesity will not be affected; however, if the ECJ goes further, the ruling could broaden the nature of the protection.
Elsewhere in the EU
As described above, the EU Member States all have their own national legislation and in case of ECJ developments in this area, each will need to assess whether or not they fulfil the obligations that arise from the Directive and its case-law. By way of example, in the UK ‘disability’ is one of the protected characteristics under the Equality Act. There has been case-law, which held that while obesity is not a disability in itself, it may lead to an impairment which, if it meets the ‘disability’ test, would amount to a disability. If the ECJ rules that obesity per se amounts to a disability under the Directive, the UK courts may have to interpret ‘disability’ as including obesity or consider whether any changes to legislation are required.
Just to be clear, the Directive does not impose an obligation to maintain in employment an individual who is not competent to perform the essential functions of the position concerned, notwithstanding the obligation for the employer, as laid down in Article 5 of the Directive, to provide reasonable measures where needed in a particular case to enable a person with a disability to have access to, participate in, or advance in employment, unless such measures result in the imposition of a disproportionate burden on the employer.21 This also applies to impairments such as alcoholism and drug addiction where these conditions amount to an illness. An employer may expect employees suffering from obesity to take reasonable steps themselves to ensure that they carry out their work properly. If that is or might become a problem, both the employer and the employee should address this in a timely and adequate manner to improve the situation, which will be a joint responsibility. In this context, looking at EU case-law as it currently stands, it is advisable for employers to consider reasonable adjustments (e.g., ergonomics of the workplace) where obesity leads to an impairment having an impact on an individual’s ability to perform their job. Furthermore, employers may also want to ensure a safe environment, addressing (in)appropriate behaviors toward those who are obese, not only because harassment based on obesity may in the future qualify as discrimination on the grounds of a “disability,” but more importantly to ensure that the employees feel good about themselves and their working environment, which will enhance their commitment to their colleagues and their employer and hence will create better results for all involved. With the latter, and the previously cited statistics in mind, employers might want to consider creating a healthy working environment that goes further than the regular health and safety regulations by, for example providing for healthy (lunch) food, health club arrangements, awareness programs and well-being programs among their workforces.
1 According to: Eurostat, Statistics Explained: Overweight and obesity – BMI statistics (data from November 2011)
2 Global, regional, and national prevalence of overweight and obesity in children and adults during 1980-2013: a systematic analysis for the Global Burden of Disease Study 2013, The Lancet, Vol. 384, Iss. 9945, pages 766 – 781 (http://dx.doi.org/10.1016/S0140-6736(14)60460-8).
3 Karsten Kaltoft v. Municipality of Billund, Opinion of Advocate General Jääskinen 17 July 2014, Case C-354/13.
4 Directive 2000/78/EC of 27 November 2000.
5 ECJ 17 July 2008, Case C-303/06 (Coleman), EU:C:2008:415, par. 38 and 47.
6 ECJ 18 March 2014, Case C-363/12 (Z), EU:C:2014:159, par. 83-85.
7 Federal district courts in Louisiana and Mississippi and the Montana Supreme Court had already held that severe obesity not based on a physiological disorder can be deemed a protected disability (see EEOC v. Resources for Human Development, Inc., 827 F. Supp. 2d 688 (E.D.La. 2011); Lowe v. American Eurocoptor, LLC, 2010 U.S. Dist. LEXIS 133345 (N.D. Miss. Dec. 16, 2010); Feit v. BNSF Ry. Co., Op. 11-0436 (Mont. July 6, 2012).
8 ECJ 11 July 2006, Case C-13/05 (Chacón Navas), EU:C2006:456, par. 56.
9 Council Decision of 26 November 2009 concerning the conclusion, by the European Community, of the United Nations Convention on the Rights of Persons with Disabilities (2010/48/EC).
10 ECJ 11 April 2013, Joined Cases C-335/11 and C-337/11 (HK Danmark), EU:C:2013:222, par. 38 and 39.
11 HK Danmark, par. 41.
12 Kaltoft, par. 58.
13 Z, par 79 and 80.
14 Coleman, par. 56.
15 Z, par. 159.
16 Kaltoft, par. 50.
18 HK Danmark, par. 44.
19 Kaltoft, par. 56 and 60.
20 See for example NIHR 13 May 2011, 2011-78 (regarding a hiring and selection process).
21 Chacón Navas, par. 49 and 50
Staying Above The Political Fray – The RIA (Registered Investment Adviser) Political Contribution Rule
It is entirely understandable if after the recent hotly contested “mid-term” elections the general public would like to put political campaigns behind them– at least for the few months before the hype around the 2016 U.S. Presidential elections kicks into gear. For many folks in the U.S. financial services industry, however, political campaigns have to be kept in mind all year round, every year. This is thanks, foremost, to the U.S. Securities and Exchange Commission’s “pay-to-play” rules promulgated under the Investment Advisers Act of 1940 (the “Advisers Act”). The so-called “pay-to-play” rules can be found in Advisers Act Rule 206(4)-5 (the “Political Contribution Rules”) (which can be found on page 194 of this PDF). The Political Contribution Rule was first proposed in 2009, in the wake of the scintillating tales arising out of the unquestioned abuse of position by certain politicians at the pension plans for New York, California, Illinois and New Mexico, to name a few. The Political Contribution Rule was adopted in 2010 (and went effective in 2011) and has found its place into the compliance programs of RIAs across the US.
In brief (and the Political Contribution Rule should not be thought of in brief, as it is a very complicated rule, and far reaching), the Political Contribution Rule provides that it constitutes fraudulent activity for an SEC registered investment adviser to accept compensation for the provision of advisory services to a US public pension plan (other than a federal pension plan) if within the prior two years certain folks at the firm (or their family members) made non-de minimisdonations (roughly, in excess of $350 or $150 per campaign, depending) to any government official or candidate whose governmental position puts (or would put) them in a position to influence the decisions of a public pension plan. The express prohibition on “doing indirectly that which you are prohibited from doing directly” (see Rule 206(4)-5(d)) and coverage of political activity committees (PACs) make clear that the Political Contribution Rule is intended to capture a broad range of political giving. For this reason, an RIA compliance policy designed to avoid any issues with the Political Contribution Rule will pick up RIA staff (regardless of title – to avoid any inference of firm directed giving by senior staff), their immediate family members (including children) and, most conservatively, prohibit all political giving, entirely. Another reasonable response to the Political Contribution Rule is to simply not manage any money for or accept investments from public pension plans.
As invasive and hard to read as the Political Contribution Rule is, the SEC staff stand ready to enforce the rule. In the first administrative proceeding brought under the rule, TL Ventures Inc. agreed to pay $295,000 to settle claims made by the SEC under the Political Contribution Rule. The SEC action against TL Ventures arose out of a pair of political contributions made in 2011 (the year the Political Contribution Rule went into effect) by a “covered associate” of TL Ventures, who donated $2,000 to the governor of the State of Pennsylvania and another $2,500 to a Philadelphia mayoral candidate. These donations resulted in a violation of the Political Contribution Rule when matched with the fact that TL Ventures had accepted investments by the Pennsylvania State Employees’ Retirement System in two TL Ventures venture funds formed in 1999 and 2000, as well as an investment by the Philadelphia Retirement Board in the TL Ventures venture fund formed in 2000. Although these fund investments were fairly dated by 2011, they were still generating fees to TL Ventures during their run off phase. The dates involved might suggest to a more sympathetic observer that the violation was an oversight, but (as is often the case) other issues that arose during the SEC exam of TL Ventures likely exhausted any willingness on the part of the staff to give TL Ventures the benefit of the doubt. The order describing and resolving the TL Ventures case presents an interesting set of facts, generally; you can read more about the TL Ventures settlement here.
However, and not without irony, political developments may draw the Political Contribution Rule out of the shadows of regulatory compliance and plop it squarely onto the political stump. The reason is that in the upcoming 2016 presidential campaign certain candidates for higher office might find themselves at a disadvantage with deep pocketed would-be campaign contributors (i.e., owners and employees of financial services firms) due to the Political Contribution Rule. A prime example would be New Jersey Governor Christopher Christie, who is widely expected to throw his hat into the ring for nomination as the presidential candidate for the Republican Party. As the sitting Governor of New Jersey, Chris Christie is an “official” under the Political Contribution Rule, and as governor of New Jersey holds sway over the approximately $81 billion New Jersey’s Public Employees’ Retirement System, through the Governor’s ability to make appointments to the New Jersey State Investment Council. The Political Contribution Rule does not apply to U.S. federal officials, but, as a sitting governor, any political contributions to Gov. Chris Christy’s presidential campaign would be picked up by the Political Contribution Rule. Thus, any contribution to a Christie presidential campaign by an owner or employee of a hedge or private equity fund (or other asset manager) would side line her or his advisory firm from managing investments for New Jersey state pension plans. And, of course, Governor Christie’s proximity to Wall Street and its deep pocketed financial services firms will make the issue that much more acute for him.
There may be no need to wait for the political fireworks to start popping on this issue. The New York and Tennessee state Republican parties have already brought a legal action against the SEC to invalidate the Political Contribution Rule. In that case, the plaintiffs allege that the SEC overstepped its authority because the Political Contribution Rule illegally attempts to regulate activity that is exclusively the responsibility of the Federal Election Commission. (Copy of the complaint). This is similar to the claims of the law suit that lead to the “Goldstein” decision, which saw the SEC’s initial attempt at forcing hedge fund managers to register with the SEC as investment advisers invalidated in 2006. However, on September 30, 2014, U.S. District Judge Beryl Howell dismissed the plaintiff’s challenge to the Political Contribution Rule, finding that the court lacked jurisdiction and that only the U.S. Court of Appeals for the District of Columbia Circuit had authority to hear the case. Presently, it remains to be seen whether the New York and Tennessee state Republican parties (or anyone else) will renew the complaint with the U.S. Court of Appeals for the District of Columbia.
The political winds seem to be blowing in such a way that the Political Contribution Rule may get blown out of RIA compliance programs. The SEC staff’s rationale for wanting to address the pay-to-play scandals of the recent and not so recent past are entirely understandable. But the breadth of the Political Contribution Rule does suggest that the behavior being targeted is best addressed by public pension plans, many of whom have already taken affirmative steps to address the SEC staff’s concerns about the temptations they present to fund manager (many or which are notably doing). The Political Contribution Rule is hard to implement, cuts too close to the right to political speech, and, ultimately, may hit too close to home for many politicians.