Employment Related Lawsuits Are on the Rise. Are You Covered?

Gilbert LLP Law FirmOn September 25, 2014, the Equal Employment Opportunity Commission (“EEOC”) filed the first two suits in its history challenging transgender discrimination under the 1964 Civil Rights Act.  As discrimination litigation evolves, it is important to know whether your insurance coverage is evolving with it.

Coverage for employee-related lawsuits has always been important, but the increase in suits brought by the EEOC over the last several years (and the last several decades) has made employment practices liability (“EPL”) insurance of particular importance to protecting your company.  Last year, the EEOC recovered a record-setting $372.1 million.

Now, the scope of EEOC suits is increasing as a result of the EEOC’s ongoing efforts to implement its Strategic Enforcement Plan (“SEP”), adopted in December of 2012.  As part of its SEP, the EEOC makes “coverage of lesbian, gay, bisexual and transgender individuals under Title VII’s sex discrimination provisions, as they may apply” a “top commission enforcement priority.”

Comprehensive general liability (“CGL”) policies, are a type of commercial third-party liability insurance.  Most businesses in the United States purchase CGL policies in order to protect against the risk of suits by third parties.  If a patron sues you for a slip and fall in your mom-and-pop shop, your CGL policy probably covers the suit.  Likewise, if you distribute across the entire country a product that allegedly causes bodily harm to thousands of people, your CGL policy probably covers the suits.

As broad as CGL coverage is, however, it is only one piece to a balanced insurance portfolio.  CGL policies typically exclude coverage for suits brought by employees of the company.  EPL polices step in to fill one part of the gap in coverage.  Other parts of the gap are filled by workman’s compensation policies and directors and officers liability policies.

A typical EPL policy may list a number of categories of protected classes covered by insurance, and then add coverage for “other protected classes.”  A policy may also protect against claims for “Discrimination,” and define that discrimination broadly to mean “any actual or alleged violation of any employment discrimination law.”  However, some polices offer more limited coverage.  For example, some carriers may restrict coverage to only sexual harassment.

Just as you protect your company from fire by installing sprinklers in your warehouses and doing regular safety inspections, it is imperative that you keep your employment practices up to date.  Educate your employees on proper workplace behavior, and try to think about ways to get ahead of the curve to minimize your liability for alleged workplace discriminations.

Just as discrimination litigation is evolving, other areas of litigation continue to evolve and create new risks for your company.  In addition, coverage law continues to evolve across the United States, on a state-by-state basis.  As coverage law evolves, it has a direct effect on the value of your insurance portfolio.

ARTICLE BY

OF

EEOC Part of Increasing Focus On LGBT Issues

Barnes Thornburg

We seem clearly to be in the midst of a shift towards greater employment protections for LGBT employees, evidenced both by discrimination legislation largely at a state and local level and less directly in the legal environment by developments such as greater acceptance of gay marriage including the Supreme Court’s recent refusal to consider lower court decisions invalidating state statutes prohibiting gay marriage.

EEOC Commissioner Chai Feldblum recently released thisinteresting summary of the EEOC’s activities and positions on LGBT issues. Highlights include:

  • Title VII prohibits discrimination on the basis of sex.  The EEOC interprets the law to provide protection on the basis of sexual orientation and gender identity.  This has not always been the case – in the 1970s the EEOC held that discrimination on the basis of gender identity (1974) and sexual orientation (1976) were not prohibited under Title VII.
  • Courts have not yet developed a clear position on this.  (And for lawyer readers, there are numerous case cites that provide a useful reference.)
  • The EEOC has accepted discrimination charges from LGBT individuals since January 2013 and reports that it is has received and resolved hundreds of them.
  • Commissioner Feldblum states that strong laws at all levels of government explicitly protecting LGBT workers are still necessary.

Anecdotally, more and more employers seem to be voluntarily extending to LGBT employees the protection they extend to employees in generally accepted protected classes.  In many cases, the employer is required to do so under the laws of some places it does business, and simply implements the protection uniformly.  Employers who choose not to do so voluntarily and are not yet required to do so in places where they do business should at least be thinking ahead on administering what seem like inevitable changes.

As always, regardless of what classes are protected in what jurisdictions, the best defense against discrimination liability are making good business decisions and being able to document that you have done so.

ARTICLE BY

OF

EEOC Loses on Procedural Grounds in Hotly Contested Case Challenging CVS Pharmacy Separation Agreement

SchiffHardin-logo_4c_LLP_www

Employers should continue to proceed with caution despite the recent pro-employer decision in EEOC v. CVS Pharmacy, Inc., a closely-watched case in which the EEOC alleged that CVS’ standard separation agreement interfered with the rights of former employees to file an EEOC charge or participate in an EEOC investigation. Although summary judgment was granted in favor of CVS by Judge John W. Darrah of the Northern District of Illinois, the court chose not to address the merits of the case, and instead dismissed the lawsuit on procedural grounds based on the EEOC’s failure to conciliate the case prior to filing its lawsuit.

This lawsuit was unique because there was no allegation that CVS had engaged in discrimination or retaliation under Title VII of the Civil Rights Act of 1964 (Title VII). Rather, the EEOC alleged that CVS’ mere use of its standard separation agreement constituted a “pattern or practice” of resistance under Section 707 of Title VII. Among several challenged provisions, the separation agreement required former employees to release all waivable claims against CVS, prohibited them from filing any lawsuits or claims against CVS, and required former employees to notify CVS if they participated in an agency investigation. A disclaimer expressly stated that execution of the separation agreement was not intended to interfere with the right to participate in an agency proceeding or from cooperating with such agency.

The court granted summary judgment to CVS due to the EEOC’s failure to conciliate prior to filing suit. Yet, this decision provides little comfort for employers that utilize separation agreements with similar terms. Although the issue of whether the agreement constitutes a “pattern or practice” violation of Title VII remains unsettled, a resolution may be forthcoming as the EEOC is currently pursuing a similar theory in a case pending in the District of Colorado.

The court’s opinion includes a footnote that may prove helpful to employers. Judge Darrah noted that it was unreasonable to interpret CVS’ separation agreement as prohibiting employees from filing an EEOC charge and that, even if the agreement did prohibit the filing of a charge, that provision would simply be unenforceable and “could not constitute resistance to [Title VII]” such that the agreement would violate Title VII. However, this comment is non-binding dicta and not precedential.

ARTICLE BY

OF

United States Supreme Court Round-Up: Key Opinions from 2013 to 2014 and Upcoming High-Profile Business Disputes

Andrews Kurth

The 2013–2014 term of the United States Supreme Court resulted in a wide range of decisions of importance to business. In this article, we highlight some of the key opinions and explore their likely impacts. We also preview a few of the high-profile business disputes the Supreme Court has agreed to hear next term.

Key Business Cases from the 2013–2014 Term

American Chemistry Council v. Environmental Protection Agency: Holding: The Environmental Protection Agency (EPA) reasonably interpreted the Clean Air Act to require sources that would need permits based on their emission of chemical pollutants to comply with “best available control technology” for greenhouse gases. Effect: The decision reinforces the Supreme Court’s previous recognition that the EPA has the power to regulate greenhouse gases as pollutants. However, portions of the decision strongly cautioned the EPA against overreach, stating that the agency may not “bring about an enormous and transformative expansion in [its] regulatory authority without clear congressional authorization.” These comments suggest that the Supreme Court may take a hard line when the Obama Administration’s other climate regulations eventually go to court.

Daimler AG v. Bauman: Holding: A foreign company doing business in a state cannot be sued in that state for injuries allegedly caused by conduct that took place entirely outside of the United States. Effect: Daimler makes it much harder for plaintiffs to establish general jurisdiction over foreign entities. The opinion re-characterizes general jurisdiction as requiring the defendant to be “at home” in the state, a circumstance that the Supreme Court suggested will generally be limited to the places where the defendant is incorporated or where it has its principal place of business. Moreover, the fact that a domestic subsidiary whose activities are imputed to the foreign parent may be “at home” in the state will not make the foreign parent “at home” in that locale for purposes of general jurisdiction.

Halliburton v. Erica P. John Fund, Inc.: Holding: Plaintiffs in private securities fraud actions must prove that they relied on the defendants’ misrepresentations in choosing to buy stock. Basic v. Levinson’s holding that plaintiffs can satisfy this reliance requirement by invoking a presumption that the price of stock as traded in an efficient market reflects all public, material information, including material misstatements, remains viable. However, after Halliburton, defendants can defeat the presumption at the class certification stage by proving that the misrepresentation did not in fact affect the stock price. Effect: While investors will continue to pursue class actions following large dips in stock prices, the Halliburton decision helps to level the playing field by providing defendants a mechanism to stop such suits at the class certification stage.

Lawson v. FMR LLC: Holding: Employees of privately held contractors or subcontractors of a public company are protected by the anti-retaliation provision of the Sarbanes-Oxley Act of 2002 (SOX). Effect: Following Lawson, there will likely be an increase in SOX litigation against public and non-public companies. Because many of the issues concerning the scope and meaning of SOX have yet to be resolved, lower courts will continue to wrestle with defining the parameters of the law. Questions left unanswered byLawson include whether the whistleblower’s accusation must be related to work he or she performed for the company and whether the contract with the public company must have some relation to public accounting or securities compliance.

Chadbourne & Park LLP v. Troice: Holding: The Securities Litigation Uniform Standards Act of 1988 (SLUSA) does not preclude state-law class actions based on false representations that the uncovered securities that plaintiffs were purchasing were backed by covered securities. Effect: SLUSA bars the bringing of securities class actions “based upon statutory or common law of any state” in which the plaintiff alleges “a misrepresentation or omission of a material fact in connection with a purchase of sale of covered securities.” The statute defines “covered securities” to include only securities traded on a national securities exchange or those issued by investment companies.

U.S. v. Quality Stores: Holding: Severance payments to employees who are involuntarily terminated are taxable wages for purposes of the Federal Insurance Contributions Act. Effect: Employers should, under most circumstances, treat severance payments to involuntarily terminated employees as wages subject to FICA taxes. There are exceptions, however, and employers should therefore seek legal counsel to assist in determining the tax status of a particular severance arrangement.

Business Cases to Watch in the 2014–2015 Term

Integrity Staffing Solutions v. Busk: Whether time spent in security screenings is compensable under the Fair Labor Standards Act.

Mach Mining v. Equal Employment Opportunity Commission: Whether and to what extent a court may enforce the Equal Employment Opportunity Commission’s mandatory duty to conciliate discrimination claims before filing suit.

Omnicare v. Laborers District Council Construction Industry Pension Fund: Whether, for purposes of a claim under Section 11 of the Securities Act of 1933, a plaintiff may plead that a statement of opinion was untrue merely by alleging that the opinion itself was objectively wrong, or must the plaintiff also allege that the statement was subjectively false through allegations that the speaker’s actual opinion was different from the one expressed.

Young v. UPS: Whether, and in what circumstances, an employer that provides work accommodations to non-pregnant employees with work limitations must provide work accommodations to pregnant employees who are similar in their ability or inability to work.

As in recent years, the Supreme Court continues to grant review on more and more cases involving matters of concern to U.S. businesses. Andrews Kurth attorneys are available to provide further detail and guidance on the decisions highlighted here, and on any other issues of concern to your company that have reached the high court.

ARTICLE BY

OF

EEOC Sues Sushi at the Lake for Disability Discrimination

EEOCSeal

Cornelius Restaurant Unlawfully Refused to Hire Applicant Because of Amputated Arm, Federal Agency Charges

CHARLOTTE, N.C. – Greenhouse Enterprise, Inc., dba Sushi at the Lake, which operates a restaurant in Cornelius, N.C., violated federal law when it refused to hire a job applicant because of his disability, the U.S. Equal Employment Opportunity Commission (EEOC) charged in a lawsuit filed today.

According to the EEOC’s complaint, Matthew Botello’s left arm was amputated above his elbow around November 2010. On or about Oct. 4, 2013, Botello applied to work as a busboy (or “busser”) at Sushi at the Lake, and on Oct. 10, Botello was told to report to the restaurant to work the following day. Shortly after Botello arrived on Oct. 11, the restaurant’s owner saw that Botello’s left arm had been amputated. The EEOC said that the owner gestured at Botello’s left side and told Botello that he could not bus tables because he had only one arm. Although Botello told the owner that he had bussed tables at another restaurant, the owner told Botello he could not work and to leave Sushi at the Lake.

Such alleged conduct violates the Americans with Disabilities Act (ADA), which protects applicants and employees from discrimination based on their disabilities. The EEOC filed suit in the U.S. District Court for the Western District of North Carolina Charlotte Division (EEOC v. Greenhouse Enterprise, Inc. d/b/a Sushi at the Lake, Civil Action No.3:14-cv-00569 after first attempting to reach a voluntary pre-litigation settlement through its conciliation process. The EEOC seeks back pay, compensatory damages, and punitive damages, as well as injunctive relief.

“Employers need to understand the importance of treating people equally despite whatever physical challenges they may face,” said Lynette A. Barnes, regional attorney for the EEOC’s Charlotte District Office. “In this case, we allege that Mr. Botello was not hired because of assumptions made about his abilities based on his arm amputation. Employers must be careful not to violate federal law by making assumptions about people with disabilities.”

ARTICLE BY

EEOC Sues Florida and Michigan Companies for Transgender Discrimination

McBrayer NEW logo 1-10-13

The Equal Employment Opportunity Commission (“EEOC”) has just filed suit against two companies for alleged discrimination against transgendered employees. The suits were filed separately in Florida and Michigan, against Lakeland Eye Clinic and G.R. Harris Funeral Homes, Inc., respectively. In both cases, employees alleged that they were fired after they disclosed they were undergoing gender transitions.

Title VII does not specifically protect against transgendered persons. In 2012, however, in Macy v. Dep’t of Justice, EEOC Appeal No. 0120120821 (April 20, 2012), the EEOC ruled that employment discrimination against employees because they are transgender, because of gender identity, and/or because they have transitioned (or intend to transition) is discrimination based on sex, and thus violates Title VII.

The EEOC identified “coverage of lesbian, gay, bisexual and transgender individuals under Title VII’s sex discrimination provisions” as one of their top enforcement priorities in its 2012 Strategic Enforcement Plan. Thus, these suits should not be surprising. Earlier this year, President Obama also issued an Executive Order prohibiting federal contractors from discrimination against lesbian, gay, bisexual and transgender workers.

In light of the recent emphasis on the protection of these individuals, employers should take extra precautions to ensure that no discriminatory practices are in force in the workplace. Further, all adverse employment decisions should be properly documented and managers and supervisors should be properly trained about what to do should a discrimination-related issue arises.

© 2014 by McBrayer, McGinnis, Leslie & Kirkland, PLLC. All rights reserved.
ARTICLE BY

OF

EEOC Signals Intent to Tighten Enforcement of Laws Prohibiting Pregnancy-Related Discrimination

Sills-Cummis-Gross-607x84

Noting that it continues to see “a significant number of charges alleging pregnancy discrimination,” and that its “investigations have revealed the persistence of overt pregnancy discrimination, as well as the emergence of more subtle discriminatory practices,” the U.S. Equal Employment Opportunity Commission (“EEOC”) recently issued Enforcement Guidance on Pregnancy Discrimination and Related Issues (“Enforcement Guidance”). The full text of the Enforcement Guidance is available here

The EEOC’s issuance of the Enforcement Guidance, which focuses primarily on the fundamental requirements of the Pregnancy Discrimination Act (“PDA”), while also touching on the pregnancy-related protections provided under the Americans with Disabilities Act (“ADA”), sends a strong signal to employers that their employment decisions and policies will now be more intently scrutinized for actionable pregnancy discrimination.1

The Enforcement Guidance focuses on the issue of equal access to benefits – in particular, to light duty, leave, and health insurance. With regard to light duty, employers may not treat employees whose capacity is limited by pregnancy, or a pregnancy-related condition, any differently than they do employees who are similarly limited, but for reasons unrelated to pregnancy.

As for leave, employers should be cognizant of the following. First, they may not force an employee to take leave because she is or has been pregnant, so long as she is able to perform her job. Second, the PDA mandates that employers permit women with pregnancy-related physical limitations to take leave on the same terms and conditions as employees who are similarly limited for other reasons. Finally, while leave related to pregnancy-related medical conditions will, necessarily, be limited to female employees, leave to bond with or care for a newborn must be extended to male and female employees on an equal basis.

With regard to health insurance, employers should note that an employer-provided health insurance benefit plan must cover pregnancy-related costs to the same extent it covers medical costs unrelated to pregnancy. This required symmetry of coverage must extend to costs stemming from an insured employee’s pre-existing pregnancy. Additionally, an employer may be in violation of the PDA if the health insurance it provides does not cover prescription contraceptives, regardless of whether the contraceptives are prescribed for birth control or for medical purposes. The Enforcement Guidance does not address whether, in the wake of the U.S. Supreme Court’s Hobby Lobby decision, certain employers may be exempt from providing insurance coverage for contraceptives.

The guidance also addresses the obligations under the ADA to provide pregnant employees with reasonable accommodations to address pregnancy-related limitations. Such accommodations may include:

  • redistributing marginal or nonessential functions – such as occasional lifting – that a pregnant worker cannot perform;

  • modifying workplace policies, such as to afford a pregnant employee more frequent breaks; 

    • allowing a pregnant employee placed on bed rest to work remotely (where

      feasible); or

    • granting leave to a pregnant employee in excess of what the employer typically provides under its sick leave policy.

      The final section of the Enforcement Guidance provides “best practices” that employers can utilize to reduce their exposure to pregnancy-related liability under the PDA and ADA. The EEOC suggests, as a general matter, that employers should:

    • develop, disseminate and enforce a strong policy based on the requirements of the PDA and ADA;

    • train managers and employees regularly about their rights and responsibilities related to pregnancy, childbirth, and related medical conditions;

    • conduct employee surveys and review employment policies to identify and correct any policies or practices that may disadvantage women affected by pregnancy, childbirth, or related medical conditions, or that may perpetuate the effects of historical discrimination in the organization;

    • respond to pregnancy discrimination complaints efficiently and effectively; and

  • protect applicants and employees from retaliation.

    In light of the EEOC’s heightened emphasis on PDA and ADA enforcement, employers should consult counsel before undertaking employment actions that may implicate pregnancy-related protections under the PDA or ADA, and to evaluate whether revisions to existing employment policies are needed to limit exposure to pregnancy- related liability. 

ARTICLE BY

 
OF

Inflexible Leave Policies under the ADA since Hwang

Jackson Lewis Law firm

Since 2009, the EEOC has sued numerous employers who have terminated employeespursuant to an inflexible leave policy, a policy that provides a defined amount of leave and results in an employee’s termination once the employee exhausts that leave.  The EEOC argues that such policies are unlawful because they do not allow for additional leave to be provided as a reasonable accommodation.

And then along came Hwang.  Hwang had used all of the six months of leave under her employer’s inflexible leave policy. When her request for additional leave was denied, she sued, arguing that her employer needed to provide additional leave as a reasonable accommodation. The Tenth Circuit held that the very policy decried as blatantly unlawful by the EEOC was fair, lawful and actually protects employees with disabilities.  Hwang v. Kansas State University (10th Cir. May 29, 2014). “After all,” the court said, “reasonable accommodations … are all about enabling employees to work, not to not work.” (Emphasis added). See our Hwang post here.

What has happened since Hwang? One month after Hwang, on June 30, 2014, according to an EEOC press release, Princeton Health Care System settled an inflexible leave policy lawsuit brought by the EEOC by paying $1.35 million. The System also agreed, among other things, not to adopt an inflexible leave policy, i.e., that type of policy found lawful in Hwang.  PCHS had provided its employees up to 12 weeks of leave, the maximum amount provided by the FMLA, according to the EEOC.  The EEOC’s press release also notes that employers have paid more than $34 million to resolve lawsuits the EEOC has brought concerning leave and attendance policies.

More recently, on July 10, 2014, the EEOC sued Dialysis Clinic, Inc. for terminating a nurse who had exhausted her employer’s inflexible leave policy (four months of leave). EEOC v. Dialysis Clinic, Inc. (E.D.CA). At the time of termination, according to the EEOC press release, the employee had been “cleared by her doctor to return to work without restrictions in less than two months.”

The apparent conflict between Hwang and the EEOC’s view that inflexible leave policies are indefensible exacerbates the challenge facing employers in search of the answer to the most vexing ADA question–how much job-protected leave must an employer provide under the ADA?  More than three years have passed since the EEOC held a public hearing on leave as a reasonable accommodation under the ADA and suggested it might issue guidance on the topic. We posted previously that waiting for that guidance is like waiting for Beckett’s Godot, where those waiting come to the realization at the end of each day that he is not coming today, he might come tomorrow.  Employers continue to wait. In the words of Beckett’s Estragon, “such is life.”

Article By:

Of:

 

EEOC Expands Reach of Pregnancy Discrimination Act

Michael Best Logo

On July 14, 2014 the Equal Employment Opportunity Commission (“EEOC”) issued its first “enforcement guidance” on the Pregnancy Discrimination Act (“PDA”) since 1983.  One of the more significant aspects of the Guidance is the EEOC’s view of an employer’s duty to accommodate pregnant workers under the Americans with Disabilities Act (ADA).

The EEOC now takes the position that employers must accommodate a pregnant employee’s work restrictions to the same extent it accommodates non-pregnant employees with similar restrictions.

This means, in the EEOC’s view, that employers who offer light duty work to individuals injured on the job must also offer light duty work to pregnant employees with work restrictions, regardless of the fact that the light duty policy only applies, by its terms, to those employees who have restrictions stemming from a work related injury.

The EEOC’s Enforcement Guidance is quite extensive.  The entire Guidance document can be found here.

The EEOC also issued a “Questions & Answers” document, found here.

As if that wasn’t enough summer reading, the EEOC also issued a “Fact Sheet” that summarizes the PDA’s requirements here.

Article By:

Of:

EEOC Sues Wal-Mart for Disability Discrimination – Equal Employment Opportunity Commission

EEOCSeal

Retailer Rescinded Accommodation, Then Fired Intellectually Disabled Employee, Federal Agency Charges

The U.S. Equal Employment Opportunity Commission (EEOC) filed a lawsuit here yesterday against Wal-Mart Stores, Inc., alleging that the giant retailer fired an intellectually disabled employee at a Rockford Walmart store after it rescinded his workplace accommodation.

“What our investigation indicated,” said John Rowe, the EEOC district director in Chicago, who managed the federal agency’s pre-suit administrative investigation, “is that Wal-Mart rescinded a long-standing practice of giving written job assignments to the employee, William Clark. That accommodation had been the key to permitting Clark to successfully perform his job during an 18 year career at Wal-Mart and to his meeting the company’s performance expectations. We determined that shortly after rescinding the accommodation, Wal-Mart began disciplining Mr. Clark for supposed performance issues, and that ultimately lead to his termination.”

The Wal-Mart where Clark was working at the time of his termination is located at 7219 Walton in Rockford, on the south side of the East State Street commercial corridor and between Interstate 90 and South Perryville Road.

The EEOC brought the suit under the Americans with Disabilities Act (ADA), which prohibits disability discrimination in employment, after first attempting to reach a pre-litigation settlement through its conciliation process. The case (EEOC v. Wal-Mart Stores, Inc., Civil Action No. 14-cv-50145) was filed in U.S. District Court for the Northern District of Illinois, Western Division on July 1, 2014. It has been assigned to U.S. District Judge Philip G. Reinhard.

John Hendrickson, regional attorney of the EEOC’s Chicago District Office, said, “The EEOC’s position in this case is that Wal-Mart just took away — with no good reason — an effective workplace accommodation of an intellectually disabled employee. That reversal fatally compromised the employee’s ability to continue doing a job he had done so well for many, many years, and ended up with him being fired.”

Hendrickson added, “It’s hard to fathom what drove Wal-Mart to this course of action, but the EEOC response will definitely not be a mystery. We intend to show that the company’s action was a particularly senseless violation of the Americans with Disabilities Act — an especially hurtful injustice — that Mr. Clark is entitled to full make whole relief and to punitive damages, and that the public interest requires strong injunctive measures to correct Wal-Mart’s practices.”

In March of this year, Wal-Mart Stores East, L.P. agreed to pay $363,419 to settle an EEOC sexual harassment and retaliation lawsuit. According to that suit, Wal-Mart violated federal law by allowing a co-worker to sexually harass an intellectually disabled employee at an Akron, Ohio Walmart store.

The EEOC’s Chicago District Office is responsible for processing charges of employment discrimination, administrative enforcement, and the conduct of agency litigation in Illinois, Wisconsin, Minnesota, Iowa and North and South Dakota, with Area Offices in Milwaukee and Minneapolis.