Category: Labor & Employment

But I’m in HR – What Do You Mean I Can Go to Jail?

Wage and hour laws.  Child labor laws.  OSHA laws.  Immigration laws.  When employers do not comply with these types of employment laws, civil charges and lawsuits are not the only things that can happen.  In what may come as an unwelcome surprise to employers, and to Human Resources, in particular, these laws have criminal penalties embedded in them too.

For example, willful violations of the Fair Labor Standards Act (FLSA) – the federal wage and hour law that also contains certain child labor provisions – may be prosecuted criminally, with violators subject to potential fines of up to $10,000.  Various states also have their own wage and hour laws, and many of them include criminal sanctions.

Although the Department of Justice and administrative agencies enforce laws like the FLSA less or more vigorously, depending on who is president, a case from 2013, during the Obama administration, is instructive.  In that FLSA matter, a company and its owner, plant manager, and office manager were all convicted of various felony counts.  The facts were extreme, including that the employer had a history of FLSA violations, submitted false payment evidence to the Department of Labor during its investigation, demanded kickbacks from workers while continuing to fail to pay overtime, and kept a second set of time records hidden from investigators.  These facts resulted in criminal convictions for the company and three of its management individuals.

The Department of Justice also enforces certain immigration laws that carry potential criminal penalties for employers.  These laws are especially noteworthy in today’s atmosphere of heightened immigration enforcement.  Employers who unlawfully employ persons who are not authorized to work in the United States could be subject to criminal prosecution.  Federal and state OSHA laws also contain criminal in addition to civil penalty provisions.

We know that Human Resources professionals can sometimes have a hard time convincing other leaders in an organization to listen to their suggestions.  It can be very frustrating, for example, when HR knows that certain employment policies need to be revised or certain payment methods may not comply with legal requirements, and yet other members of the management team will not make the changes.

One way HR can help guide managers who need to make decisions about certain employment policies – and to get their attention – is to point out that not only can failure to follow certain laws result in expensive civil lawsuits; but sometimes they can also result in criminal prosecution.  Though rare, these prosecutions and convictions do happen – something clearly all HR and all managers want to avoid.

Are you likely to go to jail as an HR professional under these laws?  Not likely.  Nonetheless, HR professionals should be aware of the possibilities and be prepared to discuss them when educating management.

© 2019 Foley & Lardner LLP
For more on employment matters, see the National Law Review Labor & Employment page.

NLRB Will No Longer Require Employers to Permit Union Organizers in “Public Space” on Employers’ Property

Overruling 38 years of precedent, the NLRB has determined employers have no duty to permit union organizers to use “public space” to solicit union support on their property.  UPMC and SEIU, 368 NLRB No. 2 (June 14, 2019).

UPMC is a hospital system based in western Pennsylvania.  SEIU organizers visited the hospital cafeteria and distributed organizing materials to employees over lunch discussing union organizing activity. The hospital maintained a no-solicitation practice that prohibited nonemployees from using the cafeteria for purposes of solicitation.  When the hospital learned of the union organizers’ presence and purpose, they were asked to leave the cafeteria by security guards, and when they refused, local police were summoned and escorted the organizers off the property.  The Union filed unfair labor practice charges, alleging that this act was illegal.

The NLRB disagreed. Since 1981, the NLRB has created an entitlement to union agents to obtain access to “public space” – or, space in an employer’s property open to the public – for the purpose of soliciting union support among employees.  Typically, the “public space” involved a cafeteria or a restaurant, and union agents were permitted to use the space in a manner consistent with its intended use as long as they were not disruptive.  Montgomery Ward & Co., 256 NLRB 800, 801 (1981).

“The Board’s approach has been soundly rejected by multiple circuit courts (of appeal).”  In support of this finding, the Board recited decisions from the circuit courts of appeal of the 6th, 4th and 8th circuits, concluding the “public space” exception was insupportable in light of the United States Supreme Court decisions that permit employers to prohibit union agents from entering an employer’s property for organizing activity if the union could appeal to employees through other means and if the employer does not discriminate against unions by permitting other persons or organizations from soliciting on its property.  NLRB v. Babcock & Wilcox, 351 U.S. 105, 112 (1956).  Even when those conditions exist, the United States Supreme Court has held both of these exceptions are “narrow” and unions have a “heavy” burden of proof to establish the exception.  Sears Roebuck & Co. v. San Diego District Council of Carpenters, 436 U.S. 180, 205 (1978).

The NLRB agreed with the judicial criticism of its previous precedent and held:

… to the extent that Board law created a “public space” exception that requires employers to permit nonemployees to engage in promotional or organizational activity in public cafeterias or restaurants absent evidence of inaccessibility or activity-based discrimination, we overrule those decisions.

While the NLRB decision stops short of rejecting the policy of “nonacquiescence” where the Board ignores circuit court precedent which refuses to enforce its orders, it is illustrative of a growing sensitivity to the maintenance of Board law that is inconsistent with the precedent of the United States’ courts which refuse to enforce flawed NLRB precedent.

© 2019 Dinsmore & Shohl LLP. All rights reserved.
This article was written by Mark A. Carter and Brian J. Moore from Dinsmore & Shohl LLP.
For more on Union matters, see the National Law Review Labor & Employment page.

UPDATE: NCAA Flexes Its Muscle in Response to California Fair Pay To Play Act

NCAA President Mark Emmert has predicted that it would become “impossible” for the NCAA to consider California colleges eligible to participate in national championship competitions should California pass the Fair Pay To Play Act (SB 206) and allow college athletes to maintain their amateur status while accepting pay for marketing their name, image and likeness (as discussed in our recent blog posts on March 4, 2019, and May 23, 2019).

Emmert stated this in a letter to Senator Nancy Skinner, the sponsor of the proposed legislation, and the Chairpersons of two California State Assembly Committees (the Arts Entertainment, Sports, Tourism and Internet Committee and the Higher Education Committee).

Emmert has requested the two committees postpone consideration of the proposed legislation while the NCAA convenes an investigatory working group of school presidents and athletics administrators who will be reviewing the current prohibition on NCAA athletes earning income from the use of their names, images, and likenesses. The working group, led by Big East Commissioner Val Ackerman and Ohio State University Athletic Director Gene Smith, is authorized to propose specific recommendations to potentially reform and modify current NCAA Bylaws.

In his letter, Emmert recognized the California legislature’s efforts in developing the bill, but noted, “when contrasted with current NCAA rules,

the bill threatens to alter materially the principles of intercollegiate athletics and create local differences that would make it impossible to host fair national championships.”

Emmert continued, “… it likely would have a negative impact on the exact students athletes it intends to assist.”

The timing of President Emmert’s request presents a dilemma for the California state legislature as the Ackerman and Smith-led NCAA group is not scheduled to update the NCAA Board of Governors until August and will not issue a final report until late-October, more than a month after the end of the current California legislative session considering SB 206.

SB 206 was just approved by the Committee on Arts without any formal opposition. The bill is now headed to the 12-member Committee on Higher Education, which must express its approval before July 11 and before the 61 Democratic members of the full 80-member California assembly will have an opportunity to consider the bill.

In its current form, the legislation would prohibit a California postsecondary educational institution, athletic association, conference, or any other organization with authority over intercollegiate athletics, from preventing student-athletes from earning compensation in connection with the use of the student-athlete’s name, image, or likeness. This would result in colleges, such as perennial sports powers like UCLA, USC, the University of California, and Stanford from being unable to stop their male and female student-athletes from signing endorsement deals or licensing contracts under the NCAA prohibition, circumventing the power and authority of the NCAA.

Senator Skinner responded to Emmert’s letter, saying, “It’s definitely a threat to colleges.”

She continued, “And this is what I think is so ironic: They are colleges. The NCAA is an association of colleges, and yet they’re threatening California colleges and saying that they would not allow them to participate in championships if my bill passes.”

Skinner reminded the public that if her bill were signed into law, it would not go into effect for another three years. She said the NCAA would have ample time to assess its own rules regarding student-athlete compensation. “Both the colleges and the NCAA have plenty of time to do the right thing,” she said.

Jackson Lewis P.C. © 2019
For more on NCAA and other sports news see the National Law Review page on Entertainment, Art & Sports.

A Judge’s Tips for Keeping Trade Secrets “Secret”

Just because information is sufficiently sensitive and valuable that it can qualify as a “trade secret” does not mean that it will qualify unless the owner of the information takes adequate steps to protect its secrecy.

In a recent decision, Judge John J. Tharp, Jr., of the U.S. District Court for the Northern District of Illinois explained that “there are two basic elements to the analysis” of whether information qualifies as a “trade secret”: (1) the information “must have been sufficiently secret to impart economic value because of its relative secrecy” and (2) the owner “must have made reasonable efforts to maintain the secrecy of the information” (internal quotation marks omitted).[1]

According to Judge Tharp, some of those “reasonable efforts” that a company can take to maintain the secrecy of its information include:

  • using non-disclosure and confidentiality agreements with employees;
  • enacting a policy regarding the confidentiality of business information that is more detailed than a mere “vague, generalized admonition about not discussing [company] business outside of work”;
  • training “employees as to their obligation to keep certain categories of information confidential”;
  • asking departing employees whether they possess any confidential company information, and, if they do, instructing them to return or delete it;
  • adequately training IT personnel about data security practices;
  • restricting access to sensitive information on a need-to-know basis; and
  • as appropriate, labelling documents “proprietary” or “confidential.”

As Judge Tharp made clear, companies that fail to institute reasonable measures to protect sensitive information do so at their own peril.

[1] Abrasic 90 Inc. v. Weldcote Metals, Inc., No. 1:18-cv-05376 (N.D. Ill. Mar. 3, 2019) at 11.

 

©2019 Epstein Becker & Green, P.C. All rights reserved.
This article was written by Peter A. Steinmeyer and Erica McKinney from  Epstein Becker & Green, P.C.
For more on employer/employee relations see the National Law Review Labor & Employment page.

New York State Legislature Enacts Sweeping Changes to Combat Sexual Harassment

On June 19th, the New York State Senate and Assembly voted to pass omnibus legislation greatly strengthening protections against sexual harassment. While the bill, SB 6577, is still waiting for the Governor’s signature, Governor Cuomo supported the legislation and plans to sign the bill when it is sent to his desk. The legislation is the product of two legislative hearings that took place early this year, inspired by a group of former legislative staffers who have said they were victims of harassment while working in Albany, NY. The bill includes several provisions directly affecting private employers. These provisions include:

  1. The New York State Human Rights Law (“NYSHRL”) will expand the definition of an “employer” to include all employers in the State, including the State and its political subdivisions, regardless of size. Additionally, the definition of “private employer” will be amended to include any person, company, corporation, or labor organization except the State or any subdivision or agency thereof.
  2. Protections for certain groups in the workplace will also be expanded. While non-employees, such as independent contractors, vendors, and consultants, were previously protected from sexual harassment in an employer’s workplace, they will now be protected from all forms of unlawful discrimination where the employer knew or should have known the non-employee was subjected to unlawful discrimination in the workplace and failed to take immediate and appropriate corrective action. Similarly, harassment of domestic workers will now be prohibited with respect to all protected classes and will be governed under the harassment standard outlined in (3), below.
  3. The burden of proof for harassment claims will be greatly lowered. Any harassment based on a protected class, or for participating in protected activity, will be unlawful “regardless of whether such harassment would be considered severe or pervasive under precedent applied to harassment claims.” Unlawful harassment will include any activity that “subjects an individual to inferior terms, conditions or privileges of employment because of the individual’s membership in one or more of these protected categories.” Also, employees will no longer need to provide comparator evidence to prove a harassment, and, presumably, discrimination claim.
  4. The law will also alter the affirmative defenses available to employers accused of harassment. The Faragher/Ellerth defense, which allowed employers to avoid liability where the employee did not make a workplace complaint, will no longer be available for harassment claims under NYSHRL. However, an affirmative defense will be available where the harassment complained of “does not rise above the level of what a reasonable victim of discrimination with the same protected characteristic would consider petty slights or trivial inconveniences.”
  5. The statute of limitations to file a sexual harassment complaint with the New York State Division of Human Rights (the “Division”) will be lengthened from one year to three years.
  6. The amendments specify that they are to be construed liberally for remedial purposes, regardless of how federal laws have been construed.
  7. Courts and the Division will be required to award attorneys’ fees to all prevailing claimants or plaintiffs for employment discrimination claims and may award punitive damages in employment discrimination cases against private employers. Attorneys’ fees will only be available to a prevailing respondent or defendant if the claims brought against them were frivolous.
  8. Mandatory arbitration clauses will be prohibited for all discrimination claims.
  9. The use of non-disclosure agreements will be severely restricted. Non-disclosure agreements will be prohibited in any settlement for a claim of discrimination, unless: (1) it’s the complainant’s preference; (2) the agreement is provided in plain English and, if applicable, in the complainant’s primary language; (3) the complainant is given 21 days to consider the agreement; (4) if after 21 days, the complainant still prefers to enter into the agreement, such preference must be memorialized in an agreement signed by all parties; and (5) the complainant must be given seven days after execution of such agreement to revoke the agreement. The same rules apply to non-disclosure agreements within any judgment, stipulation, decree, or agreement of discontinuance. Any term or condition in a non-disclosure agreement is void if it prohibits the complainant from initiating or participating in an agency investigation or disclosing facts necessary to receive public benefits. Non-disclosure clauses in employment agreements are void as to future discrimination claims unless the clause notifies the employee that they are not prohibited from disclosure to law enforcement, the EEOC, the Division, any local commission on human rights, or their attorney. All terms and conditions in a non-disclosure agreement must be provided in writing to all parties, in plain English and, if applicable, the primary language of the complainant.
  10. Employers will be required to provide employees with their sexual harassment policies and sexual harassment training materials, in English and in each employee’s primary language, both at the time of hire and during each annual sexual harassment prevention training. Additionally, the Department of Labor and the Division will evaluate the impact of their model sexual harassment prevention policy and training materials every four years starting in 2022 and will update the model materials as needed.

The majority of these changes will take effect 60 days after the legislation is enacted, with the exception of the “employer” definition expansion, which will take effect after 180 days, and the extended statute of limitations, which will take effect after 1 year. In light of these changes, New York employers should alter their practices and policies to conform with these new requirements. We are monitoring this legislation and will provide updates as new information becomes available.

 

Copyright © 2019, Sheppard Mullin Richter & Hampton LLP.
Written by Sean J. Kirby and Danielle Thompson of Sheppard, Mullin, Richter & Hampton LLP.
*Myles Moran, a Sumer Associate in the New York office, assisted with the drafting of this blog.
For more on employment law, see the National Law Review page on Labor & Employment.

 

 

Esports Star Tfue Sues To Void His Contract With FaZe Clan

Fortnite player Turner Tenney, professionally known as “Tfue,” has sued to void his contract with Esports team, FaZe Clan, Inc. Tfue’s action, filed in Los Angeles Superior Court, alleges that the terms of the contract he signed to play for FaZe Clan’s Fortnite team are grossly oppressive, onerous, and one-sided and in violation of California law. His action could have a significant impact on the Esports industry and the players who participate in Esports as professional gamers.

Recognized as one of the world’s best Fortnite players, Tfue entered in an agreement with FaZe in April 2018.

The Complaint alleges that Tfue did not understand the terms of the agreement he signed and that he was exploited by FaZe. It further alleges that FaZe breached its fiduciary duty of loyalty by failing to share profits with him as mandated by the terms of his agreement and by rejecting a sponsorship deal and acting against his best interests. In addition,

Tfue alleges multiple violations of California law, including Section 16600 of the California Business and Professions Code, Section 17200 of the California Business and Professions Code, and California’s Talent Agency Act.

The contract refers to Tfue as an independent contractor. It mandates that he play in tournaments and training sessions, perform three days a month of publicity and promotional services, and participate in the company’s social media campaigns. In addition, Tfue is required to wear clothing bearing FaZe logos and identification, as well as items associated with specific FaZe Clan sponsors.

In exchange for an initial monthly base pay of $2,000 for the first six months of the contract, FaZe had an option to extend its deal with Tfue for an additional three-year period (which the company exercised) and unilaterally increase or decrease his monthly by 25%. The agreement also entitles Tfue to 80% of cash prizes earned from playing in Fortnite tournaments and an equal split with FaZe Clan of income earned from in-game merchandise, appearances, and touring and sign-up bonuses. The agreement also provides finder’s fees for brand deals that feature Tfue that can result in as much as 80% of the deal being retained by FaZe. The contract also limit Tfue’s ability to sign with another esports company at the end of his contract in 2021.

Tfue also seeks repayment of his sponsorship, fees, and commissions, as well as additional compensatory damages and punitive damages. In addition, he seeks to enjoin FaZe Clan’s ongoing alleged violations of California law.

It is probable that the court venue will be challenged. The agreement between FaZe and Tfue contains a choice-of-law provision, which provides that the agreement “shall be governed and construed in accordance with the laws of the State of New York” and the parties “submit exclusively to the state or federal courts in New York, NY for any claim” arising from the contract.

This suit will be watched closely by the industry. The lack of industry regulation and unified structure, employment law issues appear ripe for litigation. Esports team owners should ensure their contracts with players comply with federal and state employment laws and the contract language clearly defines sponsorships and endorsements, compensation, arbitration clauses, hours of service, health insurance, non-competition, and anticipated event participation.

Jackson Lewis P.C. © 2019
More in video gaming legal concerns on the National Law Review Entertainment, Art & Sports page.

Is Next-Day Pay the Next Big Thing?

Among the hardest-to-find workers in America today are restaurant and retail workers. The current labor market is the tightest in 49 years, and for the past year, there have been roughly a million more open positions in the United States than people looking for work. The hospitality sector always has faced recruitment challenges, but the recently shrinking applicant pool has forced employers to look for creative ways to lure workers to jobs in the food service and retail industries.

“Expedited pay”—also known as “same day pay,” “next day pay,” or “daily pay”—provides employees with all or some portion of their wages without having to wait for the weekly or semi-monthly payroll cycle to conclude. While direct deposit, pay cards, and electronic fund transfers all have shortened the time that employees have to wait to access their funds, PayPal, Apple Pay, Venmo, and the like, in conjunction with Millennials’ and Generation Z’s expectation of seamless and immediate financial transactions, have upped the ante for immediate distribution of wages.

In an effort to address the challenges, several food-service groups are currently test marketing the next-day pay model. For example, Church’s Chicken and Bloomin’ Brands are offering forms of expedited pay in an effort to recruit and retain talent. The expedited process provides workers with almost immediate access to funds to bridge the gap between paydays for expenditures.

There are a variety of vendors and distribution methods for employers to consider. For example, Instant Financial provides immediate access to pay after a worker finishes his or her shift. PayActiv and FlexWage are app platforms through which employers may offer customized pay options to their employees.

Some vendors charge employers for their services while others deduct fees from employees’ pay. These fees vary, and employers will want to understand what they are being charged before either contracting with an app provider or making an app available through a payroll processing service. Similarly, employers may want to ensure that employees understand these fees as well. Additionally, employers may want to review state and local laws regarding whether passing along such fees to employees passes legal muster.

In determining whether to implement expedited pay, employers can ensure that all federal, state, and local minimum wage, overtime, and payday requirements will be met when deciding on a vendor or app for their workforce. Employers may also want to analyze the effectiveness of these expedited pay methods in assisting in recruitment efforts, employee engagement, and reducing turnover.

 

© 2019, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.
For more in employment news please see the National Law Review Labor & Employment page.

Mexico Mandates Protection From Workplace “Psychosocial Risks”

Globalization, technology developments, and the world’s economy, among other factors, have changed our day-to-day dynamics and have transformed the way we work. This means that employees must deal with emotions and circumstances that in the past were not significant but today are studied and classified by scientists as “psychosocial risks.”

The World Health Organization (WHO) and the International Labour Organization (ILO) define psychosocial risks as the interactions within the work environment, content of the work, conditions of the organization and capacities, needs and culture of the employee, and personal considerations—external from work—based on perceptions and experience that can negatively influence health, performance at work, and labor satisfaction.

International organizations are trying to create a broad awareness of psychosocial risks and thereby prevent such risks from damaging employee health, both physical and psychological.

Mexico’s Regulation of Psychosocial Risks at Work

Mexico has taken a big step in the protection of employees with the amendment to the Federal Labor Law on November 30, 2012. This amendment incorporates into the law the concept of “decent and dignified work,” which encompasses respect for the human dignity of employees and, in consequence, the prevention of harm that employees may suffer because of the activities they perform at work.

The amendment and subsequent obligations agreed upon by the current federal government in its national development plan, as well as internationally, compelled the Mexican Ministry of Labor and Social Welfare to issue the Federal Regulation of Health and Safety at Work. Its goal is to establish health and safety provisions, which must be observed at the workplace, “in order to have the conditions to prevent risks, and as a consequence, guarantee employees their right to perform their activities in an environment that assures their lives and health, according to the Federal Labor Law.”

What to Expect in 2019 and 2020: The Psychosocial Risk Factors Standard

Based on the above and with the purpose of complying with current legislation, the Ministry of Labor and Social Welfare developed the Official Mexican Norm: NOM-035-STPS-2018 “Psychosocial Risk Factors at Work – Identification, Analysis and Prevention.” Its main objective is to “identify, analyze and prevent psychosocial risk factors, as well as to promote a favorable organizational environment at workplaces.”

Though the rule has been valid since October 23, 2018, the Ministry of Labor and Social Welfare will not review employers’ compliance with the rule until the October 2019 or October 2020, depending on the employer’s size. Since this matter requires specialist analysis and evaluation, employers may want to contact a specialist on psychosocial risks in order to achieve compliance.

The following are employers’ main obligations under the rule:

  • Establish, maintain, and disseminate among the employees a psychosocial risks prevention policy

  • Identify psychosocial risk factors and evaluate the organizational environment (applicable to work places with more than 50 employees)

  • Use questionnaires to identify psychosocial risk factors (applicable to work places with 16–50 employees)

  • Disseminate to employees the policy and measures adopted to reduce psychosocial risks

  • Identify the employees subject to psychosocial damages while working or derived from their work

  • Provide a registry where employees can learn about psychosocial risk factors and corrective actions taken

  • Maintain a confidential complaint system so the employees can inform the employer about psychosocial risk factors

  • Take actions to prevent psychosocial risk factors and corrective measures if psychosocial damage occurs

Co-Authored by Natalia Merino, a law clerk in the Mexico City office of Ogletree Deakins.

© 2019, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.
Learn more about International Legal issues on the National Law Review Global page.

Misidentification of Employer in Discrimination Charge Not Enough for Dismissal

The U.S. Court of Appeals for the Seventh Circuit recently gave an employee a pass in his age discrimination suit against his former employer, where he inaccurately identified his former employer in the charging document. Significantly, the Seventh Circuit forgave the technical defect in the plaintiff’s charge, where the plaintiff had acted diligently and the failure to provide notice to the employer rested almost entirely with the Equal Employment Opportunity Commission (EEOC).

Reversing the district court’s dismissal of the complaint for the plaintiff’s “minor error in stating the name of the employer,” the Seventh Circuit explained that “it is particularly inappropriate to undermine the effectiveness of [the Age Discrimination in Employment Act (ADEA)] by dismissing claims merely because the victim of the alleged discrimination failed to comply with the intricate technicalities of the statute.”

In Trujillo v. Rockledge Furniture LLC, d/b/a Ashley Furniture Homestore, the Seventh Circuit overturned a decision by the U.S. District Court for the Northern District of Illinois granting the defendant employer’s motion to dismiss. The plaintiff filed a charge of discrimination in May 2016, asserting age discrimination and retaliation. The plaintiff supplied the EEOC with the correct address and telephone number of his work location, but misidentified his employer as “Ashley Furniture Homestore.” His employer’s trade name was actually “Ashley Furniture HomeStore – Rockledge.”

Inexplicably, the EEOC did not contact the employer at the address or telephone number provided, but instead forwarded the charge to a Texas entity that operated Ashley Furniture stores in that state. When the EEOC informed the plaintiff’s counsel that the Texas entity had no record of his employment, the plaintiff’s counsel sent the EEOC a paystub listing the entity name and address for the defendant. However, the EEOC still did not contact the defendant. Instead it issued a right to sue letter, and the plaintiff brought suit in April 2017.

Given the plaintiff’s failure to precisely identify the defendant in his charge, the defendant moved to dismiss, arguing a failure to properly exhaust his administrative remedies. The district court granted the motion.

On appeal, the Seventh Circuit reversed for two reasons. First, it found that the plaintiff’s trivial naming error, akin to a misspelling, should not defeat his ability to pursue his claim. Second, and most significantly, the Seventh Circuit explained that, given the information provided to the EEOC, the plaintiff should not have been barred from pursuing his claims as a result of the EEOC’s failure to locate the correct employer.

Notably, the EEOC filed an amicus brief in support of plaintiff’s appeal, admitting its error and arguing that the focus should be on the information provided to the EEOC, not what the EEOC did with that information. The court agreed, stating that the information provided by the plaintiff should have been sufficient for the EEOC to investigate the plaintiff’s allegations and to attempt to eliminate the alleged unlawful practices – which is the purpose of the charge-filing requirement. According to the Seventh Circuit, penalizing the charging party plaintiff for the EEOC’s mistake would frustrate the purpose of charge filing.

The practical effect of this decision is that it narrows the grounds on which employers may obtain dismissal of discrimination suits based upon the plaintiff’s failure to exhaust administrative remedies. While the employer had no notice of the charge, and thus had no opportunity to attempt pre-litigation conciliation, the court gave plaintiff the benefit of the doubt – likely due in no small part to the EEOC admitting it dropped the ball.

Nevertheless, as we highlighted in our blog last week, where appropriate, employers facing discrimination litigation would still be wise to raise the exhaustion defense at the pleading stage, so as not to waive it. Facts may come to light that would permit an exhaustion defense later in the case.

© 2019 BARNES & THORNBURG LLP
More on employment discrimination issues on the National Law Review Labor & Employment page.

#MeToo-Inspired Laws Hit the Midwest: Illinois Passes Anti-harassment, Pay Equity, and Board Diversity Legislation

After ending 2018 with a slew of new employment laws, Illinois continues to enact legislation impacting employers. Following the example set by California, Washington, and other states recently, the Illinois legislature passed four new bills targeting equity, transparency, and discrimination last week, and Governor J. B. Pritzker is expected to sign them into law. This gives Illinois companies the opportunity to reevaluate their policies and practices with regard to sexual harassment, equity, and discrimination.

Illinois State Law Changes

  • Sexual Harassment (Senate Bill 75)

As the #MeToo movement continues to be a top priority of state legislatures throughout the country, Illinois joins several other states, such as Arizona, California, Delaware, Oregon, Louisiana, Maine, Maryland, New Jersey, New York, Tennessee, Vermont, and Washington, in passing proactive legislation on the topic. SB 75 contains several provisions designed to prevent harassment and discrimination in the workplace.

First, the law limits unilateral nondisclosure agreements and mandatory arbitration agreements relating to sexual harassment and employment discrimination claims. It remains to be seen whether, upon challenge, courts will find this law and others like it that prohibit arbitration agreements to be preempted by the Federal Arbitration Act.

The legislation also requires employers to disclose to the Illinois Department of Human Rights (IDHR) by July 1, 2020, and each July 1 thereafter, the total number of final adverse administrative rulings or judgments in the preceding year and whether any equitable relief was ordered. In addition, SB 75 requires employers to disclose to the IDHR during an investigation the total number of settlements entered into during the preceding five years that relate to any act of alleged sexual harassment or unlawful discrimination. However, the law prohibits the IDHR from relying on the existence of any settlement to support a finding of substantial evidence.

SB 75 also permits employees who are victims of gender-based violence to take unpaid leave and requires hotels and casinos to provide employees working in isolated spaces with panic buttons to prevent sexual harassment or assault.

Finally, under this law Illinois joins California, New York, Delaware, Connecticut, and Maine in requiring employers to hold annual sexual harassment training for all employees. Like New York’s law, SB 75 calls for the IDHR to produce a model sexual harassment training program, including a program specifically tailored to the restaurant and bar industry.

  • Equal Pay Act (House Bill 834)

HB 834, like recent legislation in Colorado, Washington, and Maine, prohibits employers from screening prospective employees based on salary histories and bars employers from requesting or requiring prospective employees to provide their salary history as a condition of being considered for employment. Importantly, the law expressly states that it does not apply to current employees applying for promotions or transfers with the same employer. The law also expressly permits discussions about an applicant’s expectations with respect to compensation and benefits.

HB 834 would ban employers from requiring employees to sign a contract or waiver that would forbid the employee from discussing compensation information (though human resources employees and supervisors may be prohibited from disclosing compensation information learned in their jobs).

This legislation amends Illinois’s Equal Pay Act of 2003. The law previously prohibited discrimination in pay among jobs that require “equal” skill, effort, and responsibility, but the new law will require employers to compare jobs that require “substantially similar” skill, effort, and responsibility. It also now requires that any factor that accounts for a pay differential must not be “based on or derived from a differential in compensation based on sex or another protected characteristic,” must be job related and consistent with business necessity, and must account for the entire differential. Employers that violate the law may be subject to compensatory or punitive damages. These changes to the Illinois Equal Pay Act may, therefore, call for a fresh look at an employer’s pay equity analysis.

  • Lower Threshold for “Employer” under the Illinois Human Rights Act (House Bill 252)

HB 252 amends the Illinois Human Rights Act (IHRA) and provides that “employer” includes any person employing one or more employees within Illinois during 20 or more calendar weeks within the calendar year of or preceding the alleged violation. This significantly expands the previous definition of employer, which included any person employing 15 or more employees in Illinois (matching Federal Title VII’s requirements).

  • Disclosure of Board Demographics (House Bill 3394)

HB 3394 requires publicly traded companies based in Illinois to report the demographics of their board and executives, including the self-identified gender and race of each member of its board. The University of Illinois will then publish an annual report card on Illinois companies’ diversity. Companies will also need to report on their policies and practices for promoting diversity. A previous version of the bill would have required companies to include at least one woman, one African-American, and one Latino on their boards, but these requirements were removed from the bill before it was passed by the state legislature.

Practical Takeaways for Employers

Employers should be acutely aware of how these legislative changes affect their workplaces. To prepare for the implementation of the laws above, employers doing business in Illinois may consider doing the following:

  • Ensuring their sexual harassment and discrimination policies comply with the requirements outlined in SB 75
  • Adopting annual sexual harassment trainings that cover the standards set forth in Illinois law and federal law and preparing for such trainings
  • For employers with under 15 employees that were previously not covered by the IHRA, reevaluating policies to ensure they are in compliance
  • Limiting the use of arbitration or nondisclosure agreements with respect to harassment claims where necessary, and revising all employment agreements to ensure their nondisclosure and arbitration clauses meet the standards set forth in SB 75
  • Adjusting hiring or recruitment processes to eliminate questions about salary history as required by HB 834
  • Conducting privileged pay equity audits to evaluate compliance with the amended Illinois Equal Pay Act

Although #MeToo has not changed the fundamentals of federal discrimination law, the cultural shift continues to place new obligations on employers.

© 2019, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.
This post was written by Kayla A. McCann and Sarah J. Platt at Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
More on Employment & Pay Equality on the National Law Review Labor & Employment page.