This week, the 9th Circuit issued a decision that many say represents a sea change in how employers may defend against Equal Pay Claims. The decision in Rizo v. Yovino issued on April 9, 2018 overturned decades of interpretation of the Equal Pay Act and held that prior salary history may not be considered by employers.  However, there is some language in the ruling that appears to muddy the general rule announced by the Court.

Under the Equal Pay Act, it is illegal for employers to pay men and women different salaries for substantially similar work.  However, an employer may defeat an Equal Pay Act claim by proving that there were legitimate, non-discriminatory reasons for the salary differential.  Traditionally, courts have found that one of those legitimate, non-discriminatory reasons might be that the employer based the salary on the compensation the employee received at a prior job.

Indeed, many employers routinely ask what salaries applicants are currently making.  In that way, employers understand applicants’ salary expectations but also have an awareness of where to set the salary being offered to the applicant.

In recent times, some jurisdictions have passed laws prohibiting employers from asking about prior salary history.  The stated reason for these laws is that it perpetuates prior gender pay discrimination.  Basically, if an employee was subjected to a discriminatory wage rate at a prior employer, using that salary at the new employer would set the employee’s salary lower than other employees and, even if the new employer is not overtly acting in a discriminatory manner, would continue the past discriminatory practice.

Right now, the number of jurisdictions with such laws is limited.  However, the Rizo decision may change that.

Rizo, a school teacher, was hired by Fresno County as a math consultant.  Fresno County had a standard operating procedure that set ten salary steps.  When a teacher was hired, salary was set based on taking the teacher’s former salary and adding 5%.  Once the salary was calculated, the teacher was placed in the appropriate step of the pay scale.  After her hire, Rizo discovered that male math consultants had been hired at higher salary steps.  For its part, Fresno County claimed that the use of prior salary was a long-recognized legitimate factor and that if salaries were reviewed as a whole, more women were placed at higher salary steps than men.

The Ninth Circuit heard the case en banc in order to clarify the law as to whether prior salary history alone or in combination with other factors could be a legitimate factor “other than sex” that justified the salary differential.

The Ninth Circuit held that prior salary alone cannot be a legitimate factor other than sex. It then went even further, which caught most people off guard, and said that prior salary is never a legitimate business factor even if taken into consideration with other factors. The Court did say that there might be individualized cases where salary was negotiated and past salary came into play  and that it took no position on whether prior salary could be considered in those cases.

This ruling is contradictory and employers should not consider this language a safe harbor.  Given the other language in the opinion that repeatedly states that asking about prior salary frustrates the entire purposes of the Equal Pay Act and should never be considered, employers should not bank on the fact that there might be some conceivable fact pattern that allows employers to consider prior salary history.  This is true, despite the very valid points brought out in the concurring opinions, that there are times that prior salary history has nothing to do with gender.  For example, prior salary may have been set based on cost of living or demand for particular jobs.

Based on this ruling, the safest course of action would be for employers within the Ninth Circuit to never ask about prior salary history.  However, what happens if the applicant volunteers it while trying to negotiate terms and conditions of the new job?  This decision doesn’t really answer that question.

At this point, there are other circuits that allow for the consideration of prior salary history in combination with other factors.  It will be interesting to see if the Supreme Court decides to take up the split.

 

Volvo Group North America, LLC will pay $70,000 and institute a three-year consent decree to resolve a federal disability discrimination suit brought by the U.S. Equal Opportunity Employment Commission (EEOC).

According to the suit, Volvo made a conditional job offer to a qualified applicant for a laborer position at its Hagerstown, Maryland facility.  The applicant, a recovering drug addict enrolled in a supervised medication-assisted treatment program, disclosed during his post-offer physical that he was taking medically prescribed suboxone.  When he arrived for his first day of work, a human resources representative told the applicant that Volvo could not hire him because of his suboxone use, the EEOC said.

The EEOC filed suit (EEOC v. Volvo Group North America, LLC, Civil Action No. 1:17-cv-02889) alleging that Volvo violated Americans with Disabilities Act by failing to conduct an individualized assessment to determine what effect, if any, the suboxone had on the applicant’s ability to perform the job.

In addition to the $70,000 in monetary relief to the applicant, the consent decree prohibits Volvo from violating the ADA in the future. Additionally, Volvo will distribute to all employees at its Hagerstown facility an ADA policy explaining the right to a reasonable accommodation and will amend its policy on post-offer medical and drug evaluations to explain how it will assess whether an employee’s or applicant’s lawful use of prescription medication poses a threat under the ADA.  Volvo will also provide ADA training, report to the EEOC about its handling of future complaints of disability discrimination, and post a notice regarding the settlement.

 

This case is a good reminder to employers that the ADA protects recovering addicts who are not currently using illegal drugs and prohibits discrimination on the basis of past drug addiction. Of course, employers are allowed to hold such individuals to the performance standards applicable to their jobs, may prohibit the use of illegal drugs in the workplace, and may require that employees not be under the influence of illegal drugs in the workplace.  However, recovering addicts prescribed medication as part of a treatment program are likely entitled to full ADA protection, including the right to a reasonable accommodation that does not cause undue hardship to the employer.  This means that employers cannot simply dismiss individuals in such a treatment program as unfit for employment.  Instead, employers should routinely review their policies regarding the use of prescribed medications to ensure compliance with the ADA.

 

The California Assembly has passed Assembly Bill 1008, which would affect employers’ abilities to make pre-hire and personnel decisions based on a person’s criminal history.  Governor Jerry Brown has until October 15, 2017 to act on the bill and he is expected to sign it.

AB 1008 would apply to all employers in California with five or more employees. The bill would make it unlawful for California employers to:
• Include on any application for employment any question that seeks the disclosure of an applicant’s conviction history;
• Inquire into or consider the conviction history of an applicant before the applicant receives a conditional offer of employment; and
• Consider or even disclose information about any of the following in connection with any application for employment: (1) an arrest that did not result in a conviction, subject to the exceptions in Labor Code § 432.7(a)(1) and (f); (2) referral to or participation in a pretrial or posttrial diversion program; and (3) convictions that have been sealed, dismissed, expunged or statutorily erased pursuant to law.

Once a conditional offer has been made, employers are required to conduct an individualized assessment before rescinding an employment offer based upon a criminal history. The assessment must include an evaluation of the:
• The nature and gravity of the offense and conduct;
• The time that has passed since the offense or conduct and completion of the sentence; and
• The nature of the job held or sought.

If the employer makes a preliminary decision that the applicant’s conviction history is disqualifying, the employer must notify the applicant of this preliminary decision in writing. However, the employer is not required to explain to the applicant its reasoning for making the preliminary decision.

The notice requirements are similar to those under Fair Credit Reporting Act.  In short, employers must state which convictions are disqualifying, include a copy of the criminal history and advise that the applicant has at least 5 business days to challenge the accuracy of the report or to explain the circumstances of the conviction.

If the applicant timely notifies the employer in writing that he or she is disputing the conviction history and is taking steps to obtain evidence to support this, the employer must provide five (5) additional business days to respond to the notice. The employer must also consider any additional evidence or documents the applicant provides in response to the notice before making a final decision.

Once a final decision is made, an adverse action notice must be given to the applicant and the applicant must be advised that he or she has the right to file a complaint with the Department of Fair Employment and Housing.

We will keep an eye on this one since it will likely go into effect on January 1, 2018 if it is signed into law.

TSpring Cleaninghe equinox has come and went, meaning warm weather is thankfully approaching. This also means spring hiring season is here for many employers. However, caution is advised. Given the ease of un-vetted online job postings, many forget that these posts are legal minefields (and public too). Federal, state, and local agencies (as well as plaintiffs’ attorneys) can see job ads just as well as potential candidates. As you pack away the winter coats, make sure to dust off your job posts and remove any potential legal snares.

One of the most common issues we see regarding job ads is “preference” language. The Equal Employment Opportunity Commission (“EEOC”) explicitly states that it is “illegal for an employer to publish a job advertisement that shows a preference . . . because of his or her race, color, religion, sex (including gender identity, sexual orientation, and pregnancy), national origin, age (40 or older), disability or genetic information.” While this may seem obvious, inadvertent word usage that may show a preference for one protected category over another is often overlooked.

For example, the EEOC notes that the phrase “recent college graduates” may indicate a preference for younger employees, and may violate the law. In addition, historically gendered job titles are frequently used in the hospitality industry, such as “waitress,” “hostess,” or “delivery boy.” Government agencies will often argue that such terms indicate a preference for one sex, gender, or age over another, even if all sexes, genders, and ages were welcome to apply. Moreover, legitimate job requirements, such as “must be able to lift ‘x’ pounds,” must be evaluated with legal counsel to ensure that disability and accommodation laws are complied with, as well as to ensure no overtime exemption misclassification issues are created.

In addition, in some states and localities additional discrimination protections are offered above those available under federal law. The New York City Commission on Human Rights (“NYCCHR”) issued notable guidance in 2015 on the treatment of transgendered employees and applicants. The NYCCHR has since aggressively investigated offending job advertisements that indicate a proclivity toward traditional gender categories, among other problematic conduct. (More information on NYC’s transgender guidance is available here.)

However, remember that simply sanitizing one’s advertisements is not enough. Hiring practices matter too. The EEOC notes that “an employer’s reliance on word-of-mouth recruitment . . . may violate the law” where the newly hired employees mirror the current workforce.

In sum, it is critical to review all job advertisements for problematic language, and train human resources and hiring personnel to be aware of these issues. Discriminatory job language can cause unneeded headaches with federal, state, and local governmental agencies, or that job posting may be “Exhibit A” in your next lawsuit.

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A notable case caught our eye recently coming out of the United States District Court for the Middle District of Florida filed by the Equal Employment Opportunity Commission (“EEOC”). Namely, The EEOC sued CRST International, Inc. (“CRST”) claiming that it, among other things, violated the Americans with Disabilities Act (“ADA”) by failing to accommodate and retaliating against a prospective truck driver.

The new driver allegedly requested the use of a prescribed emotional support animal to mitigate post-traumatic stress and mood disorder. CRST purportedly told the new driver simply to leave his dog at home and refused to provide an accommodation, citing unbendable company policies, and effectively rescinded his employment offer. Unfortunately, usually these policies must bend, or at the very least the possibility explored.

While the CRST case is in its early stages, and no court decisions have yet been issued, this complaint serves as a great illustration of just how far reaching the disability discrimination laws are. Here many employers would scoff or summarily dismiss the seemingly unworkable request of having a service animal in a trucking business. However, the CRST complaint reminds us of the potential disability accommodations that employers must consider and make. Regardless of the nature of the requested accommodation, the employer is, at the very least, required to engage in the interactive process with the employee and determine what, if any, reasonable accommodations can be made. Otherwise, you may end up on the wrong side of an EEOC lawsuit alleging ADA retaliation and failure to accommodate.

Please remember that when an employee or prospective employee requests a workplace disability accommodation in order to perform his or her job, an employer generally must consider the accommodation and, if it can be implemented without undue hardship, it must be granted. Anytime an accommodation request is received, never dismiss the request out-of-hand. Make sure to talk to your in-house human resources department or legal department, or involve outside counsel if necessary, to determine your legal obligations. Also, note that your state or local laws may provide additional protections beyond the ADA.

Copyright: andreypopov / 123RF Stock Photo

As my colleague Raquel Gutierrez warned last year, proposed wage payment regulations were set to become effective March 7, 2017. These regulations, created by the New York Department of Labor (“NYDOL”), would have caused new compliance headaches for New York employers. The proposed regulations placed specific notice requirements on employers to inform employees in writing of the methods by which they can receive wages. The regulations also would have implemented various restrictions with respect to payroll debit cards and direct deposits, most notably prohibiting certain financial services fees and requiring local withdrawal access. For the time being, employers needn’t worry about these proposed changes.

The New York Industrial Board of Appeals (“IBA”)—the intermediate administrative appellate body that oversees the NYDOL—has blocked implementation of these regulations by issuing a decision invalidating these proposed restrictions. The IBA found that the Commissioner of Labor overstepped her authority by, among other things, attempting to regulate issues that were truly the province of financial services regulations. For the moment, this alleviates at least one new administrative burden for the New York employer community.

However, please note that even though the NYDOL’s new regulations will not be implemented at this time, all existing laws and regulations regarding the payment of employee wages remain in effect. This includes, but is not limited to, requirements that employers obtain written authorization prior to paying employee wages by direct deposit or by payroll debit card, as well as restrictions on employers from charging fees or making deductions from wages. It is also possible that the NYDOL will submit alternate regulations in order to further its agenda.

As always, your friendly Fox Rothschild attorneys will monitor any new regulatory activity in this regard (or if the IBA’s decision is appealed further) and publish updates here or on our client alerts page.

37744565 - legislation blank list, business conceptEarlier this month, members of the New Jersey General Assembly introduced legislation to prohibit employers from seeking wage/salary histories from prospective employees.  Assembly Bill 4119 (“A-4119”) follows on the heels of other states that are looking to take action on this issue, as well as similar efforts at the federal level.

The public policy rationale often cited by legislatures in passing these kinds of bills is that they may help close the gender wage gap.  The substantive discussion of whether these efforts are effective is beyond the scope of this blog, so for our purposes, we are focusing solely on the effect this legislation would have on employers.

Specifically, A-4119 would make it an unlawful employment practice:

For any employer to seek the wage or salary history of a prospective employee, or require, as a condition of employment, that an employee disclose information about either the employee’s own wages, including benefits or other compensation, or about any other employee’s wages; and for any employer to require that a prospective employee’s prior wage or salary history meet any minimum or maximum criteria as a condition of being interviewed, or as a condition of continuing to be considered for an offer of employment. 

As far as such things go, this is a broad prohibition — and one that would subject employers to liability under New Jersey’s Law Against Discrimination.

In addition to the text above, there are three other provisions to note.  First, the bill also notes that it would not prohibit prospective employees from volunteering wage/salary history, as long as that disclosure was not coerced by the prospective employer.  Second, employers are only permitted to confirm (or permit the would-be employee to confirm) wage/salary history after making an offer of employment.  Third, A-4119 also includes an anti-retaliation provision.

As with all proposed legislation, standard disclaimers apply:  this is the bill in its current form, which may or may not ultimately be enacted, and which may or may not be amended to varying degrees if it is ultimately enacted.  We will continue to monitor this legislation and provide any relevant updates should it move in the New Jersey Legislature.

First, a disclaimer.  Let me assure you that the contributors to the Employment Discrimination Report run the full gamut of the political spectrum.  This is not a post about politics, it just so happens that our demonstrative example comes from the presidential race.

It is not uncommon for employers and employees to execute Non-Disclosure Agreements (NDAs) to govern the employment relationship following its conclusion.  To wit, one of the major presidential candidates made all campaign employees (and volunteers but that is a whole other can of worms) sign an NDA that governs all information of a “private, proprietary or confidential nature or that (the candidate) insists remain private or confidential.”  The NDA in question further prohibits former employees from making negative comments regarding the candidate or family members…in perpetuity.  It’s worth noting that the other major candidate also has asked campaign employees to execute an NDA, though the substance of it remains undisclosed.

Compensation on the Whisper

When executing NDAs with employees, be it at the end of the employment relationship or as part of a restrictive covenant at some earlier point, it’s important to do keep the scope reasonable so as not to be judicially struck later.  Here are some simple rules that were not followed above:

  1. Identify with specificity the information that must be kept private and confidential. Simply saying “confidential information” is a recipe for failure on this front, as the ambiguity as to what information is “confidential” will be read against the employer.
  2. Put a time frame on the responsibility. While it is not per se impossible to have an agreement enforced in perpetuity, the path of least resistance is put a time frame on the responsibility that bears some relationship to legitimate business necessity.
  3. Restrict Nondisparagement to Reasonable Topics. While nondisparagement clauses, the legal cousin of NDAs, are valid, they similarly need to be narrowed in scope to include only information for which there is a legitimate business purpose.

While keeping your corporate information in-house is a compelling aim, understand that there is no fool-proof way to keep information under wraps.  But adhering to simple rules of the road will help make sure that What Happens At Work, Stays at Work.

As my colleague Christina Stoneburner wrote earlier in the week, we aren’t even through summer 2016, yet the number of new employment laws and regulations enacted that employers must contend with are already piling up.  Massachusetts recently joined the fray, with Governor Baker signing into law earlier this month S.2119 (effective January 1, 2018), which addresses pay equity discrimination based on gender.  Notably, the new pay equity legislation reiterates what Massachusetts and federal law have long stated: pay disparities based on gender are unlawful.  However, this new law goes further, is more employee-friendly than ever, and specifically addresses neutral conduct that arguably affects gender pay equality.

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One unique and notable component of the new law is a first-of-its-kind “ban the box” type prohibition that makes it unlawful to inquire regarding the prior salary history of prospective employees (similar to the prohibition of criminal conviction questions that many jurisdictions have recently adopted). Questions about prior salaries are extremely common and can be found on most employment applications.  However, this practice must now be eliminated in Massachusetts.  The intent of the legislature is to root out historic pay discrimination by forcing pay decisions to be made based on the job and not prior salaries.  The law prohibits, any time prior to making an offer of employment (with salary offer), either directly requesting prior salary information from the prospective employee and/or his or her former employers, or indirectly researching the same.  Moreover, employees cannot be prohibited from discussing their wages amongst themselves (although such policies are already prohibited by current interpretations of the National Labor Relations Act).

In addition, the law reiterates that actual pay differences based on gender are expressly prohibited where employees are engaged in “comparable work,” which is defined as any job(s) (regardless of titles) that require “substantially similar skill, effort and responsibility . . . under similar working conditions.”  Moreover, the law clearly delineates the few bona fide non-discriminatory reasons allowed for neutral pay policies, namely: (i) seniority pay systems, (ii) merit pay systems, (iii) production or sales quality/quantity pay systems, (iv) geographic differences, (v) job relevant education, training, and/or experience, and (vi) job related travel.  Lastly, the statute contains an anti-retaliation provision that prohibits taking retaliatory action against employees or applicants that oppose practices prohibited by the law.

An action enforcing the statute may be brought within three years of any discriminatory act, either by the attorney general or through civil litigation by the affected employee(s) and/or applicant(s), including but not limited to by class action.  Damages recoverable include any owed or diminished wages and benefits, as well as additional “liquidated” damages (which doubles any owed compensation) and any reasonable attorneys’ fees and costs.

The one piece of good news for employers is that an affirmative defense is provided in the statute where an employer, within the prior three years, conducts a good faith self-evaluation of its pay practices in order to eliminate pay discrepancies based on gender. As a result, it is recommended that prior to the effective date of the act that employers conduct a thorough review of all employee handbooks, non-disclosure agreements, employment applications, and other new hire policies and forms, as well as review institutional pay structures and systems, to ensure compliance with the law.  As always, your friendly Fox Rothschild attorneys are here to help in this regard.

 

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We are honored to have been named by Working Mother Media and Flex-Time Lawyers as one of the 50 best law firms for women.  This is the fourth time we have been named to the list.

Our Firm works very hard to insure the advancement and retention of all attorneys, but we do have targeted initiatives, such as our Women’s Initiative, to focus on female attorneys. The Women’s Initiative, along with the Diversity Committee, serve as resources and advocates for minority lawyers at the Firm.

Diversity initiatives such as these can have many positive impacts on companies, including improving employee morale, decreasing discrimination charges, and reducing employee turnover. Studies have also shown that having a diversity program improves a companies bottom line and can increase customer-base as customers seek to find business partners whose work forces match theirs in terms of diversity.

Diversity programs are not without critics, however.

Employers who are thinking about setting up diversity initiatives do need to be careful that they are not exposing themselves to claims of reverse discrimination.  One of the keys to this is insuring that all employees, regardless of whether part of the majority or minority, understand the importance of these initiatives for the company as a whole.  Another key is to consult with employment counsel as to the lawful interest groups that can be established without violating discrimination laws.

Employers who are looking for some practical suggestions as to human resources policies that help manage diversity can also review the EEOC’s Best Practices of Private Sector Employers for suggestions.