Category Archives: Discrimination

Employer’s Prompt Actions Defeat Harassment Claim

Discrimination, Employee Rights, Personnel Policies, , , ,

As an employer with at least 15 names on your payroll, you should take any claim of sexual, racial or other illegal harassment seriously and work quickly to determine the validity of the claim, to put a stop to the offending behavior, and to deal with the offender.

The necessity of quick action was confirmed in Williams-Boldware v. Denton County. In that case, the Fifth Circuit Court of Appeals decided that an employer’s “prompt remedial action” stopped the offending behavior, so that the claims of racial harassment and hostile work environment were defeated.

The key word here is “prompt”. In this case, within 24 hours of a racial harassment complaint being made, the supervisor had reported the claim to Human Resources, which began investigating. The co-worker who had made racially inappropriate comments immediately issued a written apology and the employer met with the complainant to discuss the claim, letting her know they took the matter very seriously, and they even asked for her input in deciding the best course of action to take. This included reprimanding the co-worker, requiring him to attend diversity training, and transferring the complainant to another department so there would be no more contact between them.

The best way to prevent racial, sexual, or other illegal harassment from ever becoming an issue is to make sure that your employees are aware of company policies regarding harassment in the workplace. You should have a written policy in place that clearly states what behavior is expected of your employees, what is not tolerated, and what the consequences will be for violating company policy. In addition, you should take serious and immediate steps to investigate and stop the harassment when a complaint is made.

Counting Consequences

Benefits, Discrimination, Management,

One of the things I admire most about many of my clients in the Texas Panhandle is their entrepreneurial spirit. Many of them have created and nurtured several businesses to success. But there is a downside to owning many businesses: your employment headaches increase.

For example, if you have one employee who works for two of your businesses, such as a receptionist at your main office, you might be paying that employee out of two business accounts and not realizing that you have overtime obligations to that employee. Your two businesses may be “joint employers” of this receptionist if there are common officers or directors of the companies and/or there are common insurance, pension or payroll systems. If so, you must take the hours that receptionist works at all of your businesses into account when determining whether that employee should be paid overtime for working more than 40 hours in any one workweek.

Another consequence of owning more than one business is that the number of employees working at all of your businesses may need to be combined when deciding whether you have to comply with various federal employment laws, such as Title VII (which goes into effect when you employ 15 employees), the Americans with Disabilities Act (which requires 15 employees), the Age Discrimination in Employment Act (which requires 20 employees), the Family and Medical Leave Act, which requires that you provide up to 12 weeks of unpaid leave to your employees if you have 50 names on the payroll, or the Affordable Care Act, which mandates that employers with 50 or more full-time equivalent employees provide health insurance to their employees beginning in 2015 or face substantial penalties.

The Department of Labor and the EEOC will apply an “integrated employer” test to determine whether separate but related businesses are deemed to be a single entity for counting the number of employees (names on the payroll) to determine whether you are liable for discrimination under Title VII, the ADA, the ADEA or the FMLA. This test looks at four factors: common management of the two companies, interrelation between the operations of the companies, central operation of labor relations and some degree of common ownership or financial control. If your companies are integrated, you need to count names on all of your payrolls to determine if you need to be complying with these federal laws.

The Affordable Care Act counts employees a little differently and combines related companies differently also. The ACA requires that related entities count employees as if they were employed by one business to determine if you employ at least 50 full-time equivalent employees (and remember that the definition of “full-time” under the ACA is 30 hours per week). If your related companies all together employ 50 FTEs or more, you will have to provide your employees with health insurance beginning in 2015 or be ready to pay the penalties imposed on employers who do not comply. The ACA combines into one employer related entities such as parents and their subsidiaries, brother/sister companies where the same five people or entities own the equity in two or more companies, and affiliated service groups such as law firms, accounting firms, civic organizations and temporary staffing companies that are linked by at least some ownership (the statute refers to a 10% threshold) and closely collaborate in the services they provide.

Accurately counting the number of employees you employ when you own more than one business can be much more complicated than it initially appears. But getting that accurate count is essential to operating your businesses legally.

Employers Face Obesity Discrimination Issues

Discrimination, Employee Rights, Hiring, Medical, , , ,

In June, the AMA recognized obesity as a disease, instead of just an issue of poor judgment. As an employer, you now have to think about obesity in terms of the Americans with Disabilities Act (“ADA”). To be protected under the ADA, an employer must have a physical or mental impairment that affects a major life activity, such as walking or bending, or affects a major bodily function, such as the cardiovascular system. In addition, the ADA protects people who are “regarded as” having a disability, even if they don’t.

With the AMA’s decision as ammunition, you as an employer are now in the crosshairs of many more disability claims because the Centers for Disease Control says 35.9% of American adults over 20 are obese. We don’t know all the ramifications yet, but it is reasonable to assume that the AMA’s label will eventually change your legal obligations.

As an employer, you are going to need address the obesity of your employees in three ways:

  1. You must not discriminate against obese applicants or employees by treating them adversely in hiring, promotions, discharge, compensation, job training, or other terms and conditions of employment. Appearance discrimination hasn’t found much support in the courts before the AMA’s decision, but this could give that kind of claim new life. This means that the overweight applicant who you fear will have absenteeism problems because of health issues cannot be excluded on that basis from hiring consideration. Also, that obese employee who you have consistently passed over for a promotion because you think he is lazy, or the fat assistant who wants to go into sales but you don’t believe she presents a professional image, may have a discrimination claim against you either because he/she is disabled by obesity or is regarded as such. Finally, when you are firing an employee, you’ll need to have well-documented reasons if obesity could be a claim.
  2. You will have to accommodate an obese employee’s reasonable requests for bigger, more comfortable furniture, more doctor’s visits or additional time to perform certain physical functions at work. As with any disability, you will have to handle these requests with discretion and sensitivity. I imagine that public theaters, airplanes and stadiums will also have to address this issue of whether they will have to provide larger seats.
  3. You must prevent harassment based on a person’s disability. That means that fat jokes will have to be tamped down just as you would racial or religious slurs to prevent a hostile work environment.

At a time when some parts of the federal government (HHS, DOL and IRS) are promoting wellness programs under Obamacare and encouraging employers to adopt programs that reward employees who stop smoking, lower their cholesterol or their BMI, the federal discrimination enforcement agency, the EEOC, is going to be scrutinizing wellness programs that may stigmatize obese employees. As an employer, you are going to need to walk a fine line with your wellness incentives. Heck, just having a motivation poster glorifying skinny people climbing to the top of a mountain may imply a negative stereotype of disabled obese employees.

There are no easy answers to this new issue. The AMA’s decision, by itself, doesn’t carry any legal weight. But it could influence the courts and accelerate the EEOC’s efforts to make appearance a protected class. My advice is to avoid becoming the test case on this issue and just use some care and common sense when dealing with obese employees.

 

Gay Marriage Affects Texas Employers

Benefits, Discrimination, Employee Rights, Personnel Policies

 

Regardless of your political beliefs about gay marriage, you are going to need to start dealing with the legal implications in your business. The U.S. Supreme Court’s two decisions regarding gay marriage, issued June 26, will leave you as an employer with more questions than answers right now. Even though Texas doesn’t recognize same-sex marriages, there are going to be issues raised by your employees about the application of benefits and employment laws to same sex couples even within the 37 states that don’t yet allow gay marriages. As Justice Antonin Scalia wrote in his dissent:

Imagine a pair of women who marry in Albany and then move to Alabama, which does not “recognize as valid any marriage of parties of the same sex.” Ala. Code §30–1–19(e) (2011). When the couple files their next federal tax return, may it be a joint one? Which State’s law controls, for federal-law purposes: their State of celebration (which recognizes the marriage) or their State of domicile (which does not)? (Does the answer depend on whether they were just visiting in Albany?) Are these questions to be answered as a matter of federal common law, or perhaps by borrowing a State’s choice-of-law rules? If so, which State’s?

Justice Scalia could have continued with questions such as: Must an employer offer COBRA continuation coverage of health insurance to a same-sex spouse, since COBRA is federally regulated, not a state issue? Does an employer in Texas have to provide Family and Medical Leave for an employee to provide his same-sex spouse (who legally married elsewhere) with care for a serious medical condition? Again, FMLA is a federal law, not a state one. There is some speculation among lawyers that President Obama will direct federal agencies such as the Department of Labor, when interpreting federal statutes such as FMLA or COBRA, to treat the “State of celebration”, as Scalia called it, as the state that matters, not the state of residence. This could mean that you as a Texas employer could be liable under FMLA, for example, even though gay marriage isn’t allowed in Texas.

In addition, many employee handbooks define “immediate family” for purposes of bereavement leave, personal leave, nepotism and health insurance benefits and include just the word “spouse” without a definition. Are you going to make a distinction in your business that the “spouse” must be an opposite-sex spouse? And if you do, will you at some point face a federal lawsuit for discrimination?

Is your head spinning yet from these questions?

The courts and the administrative branch will eventually give us the answers to these questions, but as an employer, you have to deal with many of them now as best you can. My suggestion is that if any question involving same-sex marriage arises with your employees, you call an employment lawyer immediately to find out the very latest regulations on this issues.

Employer’s Liability for New Employees

Attendence, Discrimination, Termination,

Bob Smith started working for you four weeks ago. He has already missed two days of work, been tardy, left early one day and when he is at work, his production is mediocre. You have a 90-day probationary period in your employment policies and it is becoming clear to you that Bob is not going to make it through that probation. Can you fire this four-week employee without any unemployment or discrimination liability?

Unfortunately, the answer in Texas is “no”. As soon as Bob became your employee, he became your problem. This is one reason that the hiring process ought to be very demanding, including checks of all of his past employers, criminal records, drug screening, etc. to discover at least the most obvious problems before you put him on the payroll. But many past employers won’t tell you anything about Bob’s dependability, so it is not surprising that he got through the hiring hurdles.

So if you decide to fire him today, what kind of liability can you face as an employer? In Texas, you will probably be charged back for his unemployment benefits by seeing an increase in your unemployment tax rate on all of your employees for the next three years. That is a stiff price to pay. There is a chance you will get lucky and not get the charge back if Bob falls into a narrow category based on how much he worked before you hired him. The explanation for that can be found on the Texas Workforce Commission website (click here).

Assuming that you don’t get that lucky or you don’t want to count on luck, you can document Bob’s problems, give him a written warning and then fire him for misconduct as you would any longer-term employee so that you have a way to fight the unemployment claim. This will go better for you if your policy manual makes it clear that absenteeism during the probationary period is not allowed. There is nothing wrong with requiring your new employees to show up every day for the first three months. You would think that most new employees would want to do that just to prove themselves, but I am constantly amazed by the slackness that many new employees bring to the workplace.

What about discrimination? Surely you can’t be held liable for something that happens to a new employee in the first few weeks? Think again. The United States Sixth Circuit Court last year upheld a $1.2 million sexual harassment claim for an employee who had only worked for five weeks at the company. In her third week of employment, she complained to her trainer and supervisor about the comments, touching, whistles and lewd gestures she was receiving. The supervisor moved her, but unwisely said, “That’s just how they treat their women over there,” and requested that she not tell the human resources department.

After another two weeks without improvement, the new employee told the human resources manager about the problem. He promised to investigate, but didn’t, so she filed a charge with the EEOC and later, a lawsuit. The trial court and the appellate court found that the employer’s response to the employee’s sexual harassment complaints showed reckless indifference to the new employee’s federally protected rights, supporting not only a judgment against the employer, but also an award of punitive damages.

There are all kinds of problems with the supervisor and the human resources manager’s responses to the sexual harassment complaint that have been discussed in other entries on this blog, but suffice it to say here, the fact that the employee only worked five weeks did not insulate the employer from any liability in this case. Your responsibility as an employer to protect your employees from discrimination kicks in on their first day of work and continue throughout their employment.

There Are Better Ways to Enforce A Dress Code

Discrimination

Why do these kinds of cases only happen in Texas? In a head-scratching act of stupidity, the president of hatmaking company near Wichita Falls, Crowell Contract and Design, pulled a female employee’s pants down in front of her coworkers.

The Equal Employment Opportunity Commission was not amused. It sued on the female employee’s behalf, claiming that the president created a sexually hostile work environment. The company had to pay $21,500 to the employee to settle the case, as well as agreeing to provide training to all of its employees on preventing sexual harassment. The EEOC characterized the action of the president as an abuse of power.

I’m guessing that at the time of the incident, the president of the company probably thought of it as a prank, not an abuse of power. I know that I have been tempted to do the same thing when walking behind teenagers in the mall wearing baggy jeans that show their boxer shorts (I never thought I would be pleased to see tight, skinny jeans make a comeback)! But as an adult, I have always resisted following through on that temptation. That’s what responsible people do.

Although the reports of the Crowell settlement don’t explain the company president’s motivation, I’m guessing he thought his employee’s pants were too baggy. The reports do say that he had previously threatened several times to pull her pants down.

Maybe the president didn’t know that in Texas, employers are free to write dress codes and enforce them based on the company’s expectations of professionalism and community standards. If he didn’t like baggy pants, he could have prohibited his employees from wearing them. As long as your dress code doesn’t single out one gender or one race and discriminate against that group, it is not illegal.

His “prank” appears to me as a passive/aggressive way of handling a pretty simple dress code problem. If the president of the company thought his employee was inappropriately dressed, he should have verbally warned her that her clothes violated the company dress code and sent her home to change clothes. If she continued to wear the baggy pants, he should have given her a written warning, a suspension and then fired her. That is the standard progressive discipline policy that every savvy employer in this country understands and enforces.

The president unwisely resorted to a fraternity prank instead of good management. It was an expensive decision. It reminds me of an incident a few years ago when a Dallas producer on the Barney show (purple singing dragon, remember?) decided that he would discipline a female employee by spanking her! Maybe he had worked in children’s television too long. That one resulted in a sexual harassment suit also.

Come on, Texas! We can do better.

What is the Maximum Leave an Employee Can Take?

Attendence, Discrimination, Medical

Sears Roebuck & Co. recently settled with the Equal Employment Opportunity Commission a class-action lawsuit for $6.2 million, the largest monetary award for a single Americans With Disabilities Act (“ADA”) suit in EEOC history.

The accusation against Sears was that the company discriminated against the disabled because it had an inflexible policy that allowed injured employees to take off of work for one year before they were automatically terminated for exhausting all leave. The EEOC said that this apparently neutral policy did not provide injured employees with reasonable accommodations in violation of their ADA rights.

With this suit, the EEOC is signaling an end to maximum leave policies. So if an employee has a serious health condition and uses all of his Family and Medical Leave but still cannot return to work, the employer now has to determine whether it would be a reasonable accommodation to allow the employee to miss more work. This is the EEOC position even though the courts have held that regular attendance is an essential function of most jobs and that indefinite, open-ended leave requests are not reasonable.

Texas courts have long held that maximum leave policies, neutrally applied regardless of whether the employee suffered an on-the-job injury, had a heart attack or wants to extend her maternity leave, are valid in Texas. The EEOC is undercutting those holdings in an attempt to impose a different standard (or no standard at all). From the settlement with Sears, the EEOC apparently wants all employers to follow these steps when an employee has been on leave and is unable to return at the prearranged time:

  • The employer must notify the employee 45 days in advance of the date her leave expires.
  • The employer must engage in the interactive process with the absent employee to determine whether part-time work, modified duties or a move to another position  would reasonably accommodate the employee and allow him to return to work.
  • If none of the previous options work, then the employer should consider offering additional leave beyond what the policy calls for.

What this means to even a small employer (15 or more names on the payroll) is that there will be no bright-line cutoff to an employee’s leave. If the EEOC’s position prevails, employers will have to hold all jobs open indefinitely for an employee who must take time off for an injury or illness.

At this point, my only advice is to wait and see how the courts react to the EEOC’s position. The Sears suit was a pretrial settlement, so we don’t know how this unreasonable position of the EEOC will hold up in court.

In Texas, it is still the law that an employer can enforce a neutral leave of absence policy by automatically terminating an employee who has exceeded the maximum leave offered. Just be aware that that law could change at any time if courts begin to side with the EEOC.

EEOC Ordered to Pay Employer’s Attorneys’ Fees

Compensation, Discrimination

Many employers have felt victimized by the federal government’s sometimes overzealous enforcement efforts on behalf of employees against the companies they work for. For example, the current trend regarding any compensation mistake by the employer is to label it “wage theft” and prosecute the employer like a common purse snatcher. (Click here for more information on “wage theft” enforcement efforts).

Obviously, some businesses do discriminate and some purposefully fail to pay required overtime. But the company is not always the bad guy and it is nice to know that occasionally a judge will side with the company instead of the government.

This happened recently in Iowa, where a trucking company had spent $8.5 million in attorneys’ fees, expenses and costs to defend itself against allegations by the Equal Employment Opportunity Commission that the company had a pattern and practice of sexual harassment. The federal judge dismissed the EEOC’s suit against trucking company after the company filed a motion for summary judgment. The female judge also issued scalding criticism of the EEOC’s pursuit of the case.

To punish the EEOC, the judge used her discretion to award money to the prevailing party to cover attorneys’ fees, which in this case was the trucking company. She ordered the EEOC to pay $4.56 million to the company to help with some of their legal fees.

For someone who always represents employers and who constantly has to tell them that the chance of getting reimbursed for attorneys’ fees is slim to none, I found this case as a small glimmer of hope that the small business owners whom I represent could receive justice in an egregious case like this one. However, I must point out that no matter how nice the $4.5 million judgment against the EEOC seems, there are two caveats to consider: (1) the company spent $8.5 million defending itself against these scurrilous claims and will only get half of that back; and (2) the EEOC has already said it will appeal the $4.5 million attorneys’ fee award, meaning the trucking company is not through spending money on legal proceedings yet.

For most of us small business owners, the idea of spending $8.5 million in defending our companies is laughable. Most of us couldn’t spend 1/100th of that on attorneys without bankrupting ourselves.  That’s why I harp so often on preventative measures that an employer can take to avoid employee litigation. It is far better to never be sued at all than to win a very costly victory like the Iowa trucking company did.

Women Still Hitting Heads on Glass Ceiling

Discrimination

At the end of 2009, the Equal Employment Opportunity Commission (EEOC) settled a class action lawsuit against Outback Steakhouse for $19 million. What kind of claim was worth so much money? It was an old-fashioned glass ceiling sex discrimination suit.

The EEOC said that Outback denied women equal opportunities to advance within the corporation’s restaurants, particularly denying them kitchen management experience, which was considered a requirement for a move into top management.

Thousands of women were affected by this discriminatory promotion practice, according to the EEOC. So as part of the settlement, Outback agreed to set up a new management hiring system, employ a new vice-president who will oversee human resources and hire an outside consultant to look over the company’s shoulder for the next two years and make sure that the discrimination has been corrected.

Last year, Dell Computer settled a similar suit alleging systemic discrimination against women attempting to advance at the computer company. Dell agreed to pay $9.1 million to settle the glass ceiling case and agreed to bring in an outside consultant to review its compensation, hiring and promotion practices and assure that the company is providing pay equity to women.

What I find interesting about these cases is that many women, particularly younger women, assume that the glass ceiling has been shattered and that they have an equal opportunity to advance if they want to. That’s why sex discrimination suits based on systemic discrimination seem so old-fashioned. Many women my age are a bit more skeptical, as is the EEOC, which claims, “There are still too many glass ceilings left to shatter in workplaces throughout corporate America. . . . Hopefully this major settlement will remind employers about the perils of perpetuating promotion practices that keep women from advancing at work.”

What about in your own workplace? Do you have women in top management positions? Are the women you employ paid as well as the men? If not, what are the reasons for that? A little self-analysis now could keep your company from facing a sex discrimination suit in the future.

2011 Budget Means More Enforcement Against Employers

Compensation, Discrimination, Training

I’ve been trying to get the word out to employers for the last several months that the executive branch of the federal government has employers who violate any of the federal employment laws in its sights (click here for an earlier blog post on enforcement efforts). Money for enforcement is pouring into federal agencies like OSHA, which enforces health and safety regulations, the Department of Labor, which enforces compensation requirements like the overtime and minimum wage laws, and the EEOC, which enforces the discrimination laws.

Within the 2011 fiscal year budget proposed by President Obama last week, there is money for the hiring of 358 more Department of Labor employees, including 177 investigators and other enforcement staff, bringing the total proposed DOL workforce to nearly 18,000.

OSHA will add 25 more employees to inspect workplaces for safety violations, meaning that 42250 businesses will be subject to these inspections in FY 2011. “Today’s budget affirms this administration’s strong commitment to vigorous enforcement,” U.S. Secretary of Labor Hilda Solis said. “We are sending a strong message throughout industry that we will not tolerate the endangerment of workers.”

The budget also supports a joint effort of the Treasury Department and the DOL to identify employers who hire “contract labor” in an effort to avoid payroll taxes and skirt the overtime and minimum wage laws. For years, employment lawyers like me have been trying to warn employers that “contract labor” is illegal and that there is a very difficult test for employers to prove that any worker is actually an independent contractor. Those employers who still misclassify employees as contract laborers could face increased possibilities of federal investigators reviewing their books, requiring repayment and charging the businesses large fines.

As an employer, it is your responsibility to assure that you are complying with all the federal laws that will be enforced even more stringently if the 2011 budget passes. You are taking a grave risk if you believe that you are in compliance just because your pay, safety or firing practices are the same as everyone else’s in your industry (who often are doing it wrong too), or if you believe you are proceeding correctly because “that is the way we have always done it,” or if you believe that your employees are not dissatisfied so you must be doing something right. Many of these laws are counter-intuitive, meaning you are probably doing them wrong even if you are using common sense! Don’t assume that you are operating within the bounds of federal employment law unless you have a legal opinion from an experienced employment attorney confirming that.