We blogged in February about two Seventh Circuit cases pending before the Supreme Court that would have given the Court the opportunity to provide guidance as to whether, and if so to what extent, the ADA requires employers to provide disabled employees who have exhausted their FMLA and other employer-provided leave with additional leave as a reasonable accommodation.  The Supreme Court recently denied review in both of those cases, so the issue will continue to percolate in the lower courts.  What does this mean for employers?  Given the unsettled state of the law, and as further explained in our prior blog, employers should continue to evaluate disabled employees’ requests for additional leave on a case-by-case basis.  The length of the leave request, whether the employee’s doctor can provide a reasonably certain return date, and the impact of the request on coworkers and operations are all relevant considerations.

We previously blogged about the requirements of Maryland’s new paid sick leave law, the Maryland Healthy Working Families Act. That law took effect on February 11, 2018, despite efforts by a number of lawmakers to delay it. As required by the law and in response to thousands of questions received, the Maryland Department of Labor recently issued a frequently asked questions document, three sample policies, and an employee notice poster available in English and Spanish.  The guidance provides information on topics such as how to count your employees to determine whether you meet the 15-employee threshold for mandatory paid leave (employers with fewer than 15 employees are required to provide only unpaid leave); how the law applies when you have part-time employees, or a collective bargaining agreement; and whether you can use a different method of leave accrual for different types of employees (the answer is yes).

The Department’s guidance should prove useful to employers in complying with Maryland’s new law. If you already have a sick leave policy in place, it should be carefully reviewed to ensure it meets all of the statutory requirements, and if it does not, you should amend it or add a new policy, accordingly. In addition, if you have other leave policies such as vacation leave, PTO, parental leave, or FMLA leave, your sick leave policy will need to be coordinated with your existing policies.  Employers should also bear in mind that the Department issued its guidance with the caveat that it is only preliminary; so continue to stay tuned for further developments, including potential regulations that may be promulgated by the Department.

In advance of the July 1, 2018 implementation of extensive amendments to the Massachusetts Equal Pay Act (“MEPA”), the Attorney General (“AG”) issued its Guidance on March 1, 2018. While the Guidance does not have regulatory effect, the state’s highest court, the Supreme Judicial Court, has generally afforded substantial deference to such statutory interpretations by enforcing authorities. Massachusetts was the first state in the country to pass an equal pay law and the 2018 amendments make MEPA one of the strongest pay equity laws in the country, intended to close the 84.3.% pay gap for working women in Massachusetts.

MEPA OVERVIEW

MEPA prohibits employers from paying different wages to employees of different genders who perform comparable work, unless variations are based on one or more of six statutory factors. MEPA defines “comparable work” as work that requires substantially similar skill, effort, and responsibility, and is performed under similar working conditions. An employer may not determine comparability based on job titles alone. Wages are defined as “all forms of remuneration for employment.”

MEPA also imposes three additional restrictions on employers. First, employers generally may not seek salary or wage history from prospective employees. Second, employers generally may not prohibit employees from discussing their pay or that of co-worker. Third, employers may not retaliate against any employee for an exercise of rights under MEPA. Further, salary history is not a defense to liability. Nor is intent to discriminate based on gender required to establish liability.

MEPA covers nearly all Massachusetts public and private employees and those with a primary place of work in the Commonwealth.

GUIDANCE HIGHLIGHTS

The Guidance sets forth and further defines the key terms for determining “comparable work” as follows:

  • “Skill” includes “such factors as experience, training, education, and ability required to perform the jobs.”
  • “Effort” is described as “the amount of physical or mental exertion needed to perform a job.”
  • “Responsibility” is explained as encompassing “the degree of discretion or accountability involved in performing the essential functions of a job, as well as the duties regularly required to be performed for the job.”
  • “Working conditions” mean “environmental and other similar circumstances customarily taken into account in setting salary or wages.” These can include physical surroundings and hazards. Working conditions may include the day or time of work, such as the types of scheduling differences that are taken into account in establishing shift differentials.

The Guidance defines that “substantially similar” means that skill, effort, and responsibility “are alike to a great or significant extent, but are not necessarily identical or alike in all respects.”

The Guidance sets forth and further explains the six statutory factors that employers may use to explain wage differentials between employees of different genders who perform comparable work:

  1. a seniority system;
  2. a merit system;
  3. a system which measures earnings by quantity or quality of production, sales, or revenue;
  4. the geographic location in which a job is performed;
  5. education, training or experience to the extent those factors are reasonably related to the job; or
  6. travel, if the travel is a regular and necessary condition of the job.

The Guidance explains MEPA’s statutory Affirmative Defense for “Good Faith” Self-Evaluation. A “complete defense” exists for employers have, within three years of a claim, conducted a legally sufficient self-audit of their pay practices, provided that the self-audit is reasonable in detail and scope, and the employer establishes that it has made reasonable progress towards eliminating any prescribed gender-based wage variations discovered in the audit. Even deficient self-audits done in good faith can prevent liability for double damages, but will not provide a complete defense to MEPA.

The Guidance explains that whether an evaluation is “reasonable in detail and scope” depends on the “size and complexity of an employer’s workforce,” in light of factors including “whether the evaluation includes a reasonable number of jobs and employees,” and is “reasonably sophisticated.” If disparities are not yet eliminated, the employer must show that they will be “in a reasonable amount of time.”

The Guidance includes resources for employers in appendices including 1) a guide for conducting self-evaluations, 2) a pay calculation tool, and 3) a checklist to consult when assessing whether existing policies and practices comply with MEPA. Employers should consult with counsel before conducting any self-evaluation which may be discoverable in litigation or in government investigations.

The Guidance can be found at:

https://www.mass.gov/files/…/03/…/AGO%20Equal%20Pay%20Act%20Guidance.pdf

 

Most employers are required to post the familiar EEO Is the Law poster.  This is a friendly reminder that the OFCCP (Office of Federal Contract Compliance Programs) also requires federal contractors and subcontractors subject to Executive Order 11246 to post two other posters in addition to the EEO Is the Law poster: the EEO Is The Law Poster Supplement, which, among other things, advises employees and job applicants that Executive Order 11246 now prohibits discrimination based on sexual orientation and gender identity; and the Pay Transparency Nondiscrimination Provision, which generally states that employees and applicants may not be discriminated against for discussing, disclosing, or inquiring about compensation.

All three posters need to be physically posted where they can be readily seen by employees and applicants, and they must be made accessible to individuals with disabilities. If you recruit job applicants online, you must include the posters electronically with each electronic job application, or include a prominent link to the posters with each electronic application, including a brief explanation of what the link connects to, so it is conspicuous to applicants.  For employees who work remotely and have computer access, you can also make all three posters available electronically, for example by posting them on your company intranet.

Remember that in addition to these posting requirements, the OFCCP’s regulations also require that the Pay Transparency Nondiscrimination Provision be incorporated into your employee handbook or manual.  Your handbook or manual must include the precise language prescribed by OFCCP.

During a Congressional hearing on March 6th, Labor Secretary Alexander Acosta unveiled a six-month pilot program intended to encourage employers to self-audit and self-report accidental violations of the Fair Labor Standards Act (“FLSA”). Under the program, called Payroll Audit Independent Determination (PAID), the Wage and Hour Division (WHD) of the U.S. Department of Labor will attempt to facilitate settlement agreements between employers who self-report and affected employees.  Employers who qualify for PAID and agree to pay back wages due will not be subject to liquidated damages or civil penalties and attorneys’ fees (all of which an employee could get if he or she files a lawsuit) under the FLSA.  Affected employees will have the right to choose whether to accept back payment in exchange for a release of claims.

There are several open questions about PAID that employers should keep in mind at this time. First, what effect, if any, will an employer’s participation in PAID have on potential claims under applicable state and local law, even if a settlement is reached?  Second, will employees apprised of potential violations by WHD be inclined to accept a settlement agreement that does not include liquidated damages or interest?  Third, is there anything preventing such employees from using the information gleaned from a self-reporting employer to file a lawsuit?  Fourth, will the information and data employers provide to the WHD be discoverable and deemed an admission in future lawsuits, especially by employees who choose not to participate?  Finally, it is not clear whether and to what extent WHD will examine a self-reporting employer’s records for violations in addition to what is self-reported, and whether employers should open themselves up to that scrutiny.

All of these open issues will likely limit the amount of employers who voluntarily self-report wage and hour violations during the six-month pilot period. After PAID’s six-month pilot period is complete, the Labor Department will evaluate the program’s effectiveness and determine whether to continue with the program in its current form, make necessary changes or end the program entirely.

Hogan Lovells invites you to a panel discussion focused on best practices for addressing workplace sexual harassment allegations.

Most companies have anti-harassment policies, but do employees and managers know what these policies really mean? Are these policies enforced consistently across the organization? What are the employer’s obligations when the allegation involves a high-ranking manager or executive? And what if the allegations are true?

Join our labor & employment and internal investigation attorneys as they answer these and other thorny questions on this important topic. In addition, our panelists will discuss the following:

    • When to, how to, and who should conduct an internal investigation
    • Legal liability and other consequences for both the company and the harasser, including the potential impact on separation, settlement and non-disclosure agreements
    • Public relations considerations and the impact of social media in the current climate of harassment
    • International implications, including complications relating to foreign employees and U.S. employees abroad

The panel will take place on March 22, 2018 from 5:00 – 6:00 p.m. in the Hogan Lovells’ New York office. Registration begins at 4:30 p.m. CLE credit is pending. A reception with light food and refreshments will follow the discussion.

Kindly RSVP here.

We look forward to hosting you.

Agenda
4:30 p.m. – 5:00 p.m. Registration
5:00 p.m. – 6:00 p.m. Panel Discussion
6:00 p.m. – 7:00 p.m. Reception

Contact

Matthew Rimi
matthew.rimi@hoganlovells.com

As we previously reported, the National Labor Relations Board (Board) on December 14, 2017 issued a decision in Hy-Brand Industrial Contractors scrapping a broad and controversial “joint employer” standard in favor of a narrowed test that made it more difficult to link affiliated business as joint employers.   Recently, however, the Board unanimously vacated Hy-Brand because of ethics questions raised by member William Emanuel’s participation in that case.

For now, the Board’s broad Browning-Ferris test for determining joint employment is once again the applicable standard. Employers may recall that under Browning-Ferris, a company could be required to bargain with another employer’s union and/or face liability under the National Labor Relations Act if the company merely reserved the right to exert control over those employees’ terms and conditions of employment, however attenuated or indirect the right may be.

It is not clear how long Browning-Ferris will remain in place.  The original Browning-Ferris decision had been appealed to the U.S. Court of Appeals for the D.C. Circuit, but that court sent the case back to the Board for further consideration in light of Hy-Brand.  On March 1, the Board’s General Counsel asked the Court of Appeals to take Browning-Ferris back under review.  Thus, the future of the Browning-Ferris doctrine remains uncertain.

The Hogan Lovells Employment Team will continue to monitor the situation and provide updates as they develop. For more information or for any other employment matter impacting your business, please contact the authors of this article or the attorney you regularly work with at Hogan Lovells.

On February 26, 2018, in a landmark decision continuing the expansion of Title VII’s protection, the Second Circuit Court of Appeals became the second federal appeals court to hold that Title VII prohibits discrimination on the basis of sexual orientation in the workplace. The decision in Zarda v. Altitude Express, Inc. aligns the Second Circuit with the Seventh Circuit in the ongoing evolution of Title VII and its application to sexual orientation discrimination. Both cases involved en banc decisions by the entire court.

Donald Zarda was a former skydiving instructor who alleged that he was fired due to his sexual orientation. He filed an EEOC charge claiming that his discharge was on account of his sexual orientation and gender in violation of Title VII, and repeated the claim in federal court, claiming that he was discharged because his behavior did not conform to gender stereotypes.  Zarda sometimes disclosed to his female clients that he was gay as he prepared them for tandem skydiving jumps during which he would be strapped in tightly to the client.  Although Zarda thought that approach would ease concerns about any inappropriate behavior, one of his clients and her boyfriend complained to his former employer.  The company fired Zarda shortly thereafter.

After acknowledging that the EEOC has maintained since 2015 that sexual orientation discrimination is protected by Title VII and the Seventh Circuit’s same conclusion, the Second Circuit held that “sexual orientation discrimination is motivated, at least in part, by sex and is thus a subset of sex discrimination,” overturning is own prior decisions. The Court’s decision focused on three main factors.  First, the Court concluded that sexual orientation discrimination is a function of sex, comparable to sexual harassment and other perceived evils previously recognized as violating Title VII.  Second, “sexual orientation discrimination is predicated on assumptions about how persons of a certain sex can or should be.”  The Court held that Title VII has long been interpreted (including by the Supreme Court) as prohibiting employment decisions based on stereotypes.  Sexual orientation discrimination, the Court found, is grounded in the concept of gender stereotypes—“real men should date women”—and the Court therefore ruled such discrimination as a subset of sex discrimination.  Finally, sexual orientation discrimination is a form of associational discrimination that is in violation of Title VII, similar to anti-miscegenation policies.  According to the Court, an employee’s sexual orientation is rooted in his or her association with someone of the same sex, which is itself discrimination based on the employee’s own sex.

It is unclear at this time whether Zarda will be appealed to the Supreme Court.  As courts’ interpretation of Title VII continues to evolve, employers in jurisdictions that recognize a cause of action for sexual orientation discrimination should stay vigilant about ensuring that their employees are not subjected to such discrimination in the workplace.  This is especially true on the federal level for employers in states covered by the Second Circuit (New York, Vermont, and Connecticut) and Seventh Circuit (Illinois, Indiana, and Wisconsin) decisions.  And employers in these and other states should remain mindful of state and local laws that provide similar protections.  We encourage employers to review their policies and practices to ensure that they comply with federal, state and local laws in this emerging area of workplace law.

For more information or for any other employment matter impacting your business, please contact the authors of this article or the attorney you regularly work with at Hogan Lovells.

The United States Supreme Court just issued a decision in a highly anticipated whistleblower case, and unanimously held that the antiretaliation provision of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) applies only to employees who make reports of alleged violations of the securities laws to the Securities and Exchange Commission (“SEC”). Digital Realty Trust, Inc. v. Somers, No. 16-1276 (Feb. 21, 2018). In so doing, the Court rejected the view that an employee who complains to management, as opposed to the SEC, is protected under Dodd-Frank. The decision resolves a circuit split between the U.S. Courts of Appeals for the Second and Ninth Circuits—which held that internal reports to management are protected—and the Fifth Circuit—which held that they are not.

Dodd-Frank’s whistleblower protection provision defines a whistleblower as “any individual who provides . . . information relating to a violation of the securities laws to the [SEC].” 15 U.S.C. § 78u-6(a)(6). In the Somers case, Paul Somers, an employee of Digital Realty Trust, Inc. (“Digital Realty”), made complaints to upper management about suspected securities law violations by Digital Realty. When Digital Realty later terminated his employment, he brought a claim under Dodd-Frank, alleging whistleblower retaliation. Digital Realty moved to dismiss his claim, asserting that Mr. Somers failed to state a claim because he did not make a report to the SEC. The Northern District of California denied the motion and the Ninth Circuit affirmed. The Supreme Court reversed the decision below, reasoning that although the SEC had promulgated a rule indicating that reports to a supervisor were covered by Dodd-Frank’s antiretaliation provision, the rule contradicted “clear and conclusive” statutory language—i.e., that the report must be made “to the [SEC]”—and thus was entitled to no deference.

This decision is welcome news for employers facing actual or threatened litigation by employees under Dodd-Frank who allege that they have reported wrongdoing internally. It does not, however, suggest that employers should not take seriously internal reports of wrongdoing. There are many other federal and state laws, besides Dodd-Frank, that protect internal employee-reporters from retaliation. For example, the Somers decision explains that claims of retaliation under Sarbanes-Oxley can be made based on a complaint to a supervisor (although Sarbanes-Oxley has a shorter deadline for filing a claim—only 180 days—an administrative exhaustion requirement not present under Dodd-Frank, and does not permit the same financial recovery as Dodd-Frank). And among the other antiretaliation protections available to employees, employees who make internal complaints of sexual harassment or discrimination are protected from retaliation by Title VII of the Civil Rights Act. Whatever the statutory bases for recovery, it is also important to note that employees bringing claims against employers are increasingly likely to bring claims of retaliation. The Equal Employment Opportunity Commission (“EEOC”) reported in 2017 that nearly half of all charges filed with the EEOC contained claims of retaliation.

If confronted by an employee’s internal or external complaint of wrongdoing, an employer should of course take the complaint seriously, both to ensure the absence of internal misconduct and to avoid liability. Moreover, if the employer is considering taking an adverse employment action against the employee (for example, if the employer is planning a reduction in force that impacts the employee), then it is important to consult counsel to understand what, if any, antiretaliation protections apply to the employee’s conduct in order to assess potential risk. As the Somers decision makes clear, this analysis should include a careful analysis of the applicable statutory text.

 

Suppose that an employee with cancer has exhausted 12 weeks of unpaid leave under the Family and Medical Leave Act (FMLA) but needs more time to recover from treatment before returning to work. Whether such an employee is entitled to additional unpaid leave as a reasonable accommodation under the Americans with Disabilities Act (ADA) is one of the thorny leave questions that employers confront—and one the Supreme Court may soon address, thanks to pending petitions for certiorari in two recent cases out of the Seventh Circuit.

The first case, Severson v. Heartland Woodcraft, Inc., 872 F.3d 476 (7th Cir. 2017), concerns a disabled employee who needed two or three months of leave beyond his FMLA leave to recover from back surgery. The Seventh Circuit held that the employer did not have to provide it. The whole point of ADA accommodations, the Court reasoned, is to allow disabled employees to perform the essential functions of their jobs, not to excuse them from working.  Thus, the Court adopted a per se rule that “[a] multimonth leave of absence is beyond the scope of a reasonable accommodation under the ADA.” Id. at 479.  In the second case, Golden v. Indianapolis Housing Agency, 698 F. App’x 835 (7th Cir. 2017), the Seventh Circuit applied this rule to deny a disabled employee’s claim for additional leave to recover from cancer surgery after FMLA and four weeks of additional employer-approved leave had expired.  The employee sought more leave pursuant to her employer’s policy permitting employees to request up to 6 months of unpaid leave when no other form of leave was available.  At the time of her request, her doctor had not provided an expected return-to-work date.  The Seventh Circuit held the employee’s additional leave request removed her from being a “qualified individual with a disability” under both the ADA and the Rehabilitation Act, which incorporates ADA standards.

The Seventh Circuit’s per se rule is at odds with the EEOC’s 2016 guidance on ADA leave, which requires employers to evaluate such requests on a case-by-case basis.  In the EEOC’s view, even a multimonth leave can be a reasonable accommodation in some circumstances if the end date is reasonably certain. The EEOC continues to apply this approach today.  In January 2018 alone the agency sued one North Carolina employer for denying a diabetic employee’s request for several weeks of additional leave following the period that had been approved initially to recover from surgery, and it announced settlements with employers in Michigan and Mississippi who denied requests for leave extensions.

Like the EEOC, other federal courts apply a fact-intensive approach to ADA leave questions. See, e.g., García-Ayala v. Lederle Parenterals, Inc., 212 F.3d 638 (1st Cir. 2000).  However, the Tenth Circuit, in an opinion by then Judge (now Justice) Gorsuch, seems to have drawn a bright line against requests for leave of more than 6 months. Hwang v. Kansas State Univ., 753 F.3d 1159, 1161 (10th Cir. 2014) (“It perhaps goes without saying that an employee who isn’t capable of working for so long isn’t an employee capable of performing a job’s essential functions—and that requiring an employer to keep a job open for so long doesn’t qualify as a reasonable accommodation.”)  Some courts have also ruled that employees determined to be disabled “indefinitely” after a period of initial leave are not qualified individuals entitled to accommodation under the ADA.   See, e.g., Minter v. District of Columbia, 809 F.3d 66 (D.C. Cir. 2015).

The Supreme Court could grant review in Severson or Golden, or both, in the upcoming months to provide some needed clarity on this issue.  Given the unsettled state of the law, it is prudent for employers to continue engaging disabled employees who cannot return to work at the end of an FMLA or other initial company-approved leave in an interactive process to determine whether additional leave (or some other accommodation) is reasonable.  The amount of leave the employee has already taken, the length of additional leave requested, whether the employee’s doctor is able to provide a reasonably specific return date, and the impact on the employee’s co-workers and the employer’s operations are among the relevant considerations.