This morning, at 10:20, in the East Room of the White House, President Obama signed the Lilly Ledbetter Fair Pay Act of 2009. Unlike some pundits and legislators, who naively proclaimed the bill would secure fair pay for all, the President's signing statement emphasized that this was "an important step -- a simple fix to ensure fundamental fairness for American workers" but that it was "only the beginning."
As I have explained, the bill changes how the statute of limitations operates when an employee alleged compensation discrimination. It doesn't change the statute of limitations as such. It changes how we have (under the Ledbetter decision) counted when the statute of limitations starts. So, any federal compensation discrimination claim must still (at least in Tennessee) be filed within 300 days of the "unlawful employment practice" (the words Title VII, the ADEA and ADA use). This bill redefines what constitutes the unlawful employment practice for pay discrimination claims. Whereas under Ledbetter, in a Title VII claim, the pay setting decision was the only unlawful employment practice, under this bill, the violation re-occurs with every check that includes a discriminatory payment.
That has long been how the statute of limitations worked under the Equal Pay Act ("EPA"), a statute I discussed in a post a vew days ago. Nothing in Ledbetter changed how the statute of limitations worked under the EPA nor does this bill. Employees can and do sue under the EPA and Title VII in the same suit.
So what will be the effect? If you, as I, believe heightened attention to an issue tends to generate lawsuits (the "lawyers are vultures" theory), then we will see an increase in compensation discrimination claims. And with the way the news media is focused on the economy right now, this bill may not generate any new litigation at all (I am being somewhat facetious).
As a practical matter, the statute of limitations for Title VII will roughly cover the same period of time already covered by the EPA statute of limitations. ("Roughly" is about the right word, too.) The ADEA and ADA changes, of course, are more pronounced but I can count on one hand the number of compensation discrimination claims I have read that are based upon age and disability.
As I previously mentioned, in Tennessee we have (and have had since 2006) a potentially unending statute of limitations for compensation discrimination claims. That hasn't seemed, so far as I have noticed, to lead to a flood of new discrimination lawsuits alleging pay disparites. So if Tennessee is a microcosm of the country, I lean toward being skeptical about the practical effect of this bill.
Of course, it won't hurt to be prepared. More on that later.
Thursday, January 29, 2009
Monday, January 26, 2009
Preparing for Fair Pay Legistation - Part 3A
The House has released its schedule for the week - sort of.
Today, at 5 pm, the House Rules Committee meets in an emergency session to set the rules for passage and debate of S.181, the Lilly Ledbetter Fair Pay Act of 2009. If you want to know more about the workings of the Committee on Rules, here is a description.
The House Majority Leader then expects to take up S.181 as early as Tuesday though the precise schedule is not state at this point.
Today, at 5 pm, the House Rules Committee meets in an emergency session to set the rules for passage and debate of S.181, the Lilly Ledbetter Fair Pay Act of 2009. If you want to know more about the workings of the Committee on Rules, here is a description.
The House Majority Leader then expects to take up S.181 as early as Tuesday though the precise schedule is not state at this point.
Even "Compelled" Statements During Harassment Investigation are Protected
The Supreme Court has issued its decision in Crawford v. Metropolitan Government of Nashville and Davidson County and not surprisingly held that Ms. Crawford's statements were protected by the "opposition" clause of Title VII. I previously discussed Crawford in a prior post so I won't say too much about it here.
Two points are noteworthy.
The Court generally held statements during an internal investigation that report harassing conduct are protected but the Court also observed: "It is true that one can imagine exceptions, like an employee’s description of a supervisor’s racist joke as hilarious, but these will be eccentric cases . . ."
The Court's decision rested solely on the opposition clause of Title VII. The Court did not address whether an employee's participation in an employer's harassment investigation was "participation" clause protected activity. That avoids at least one headache for employers.
Two points are noteworthy.
The Court generally held statements during an internal investigation that report harassing conduct are protected but the Court also observed: "It is true that one can imagine exceptions, like an employee’s description of a supervisor’s racist joke as hilarious, but these will be eccentric cases . . ."
The Court's decision rested solely on the opposition clause of Title VII. The Court did not address whether an employee's participation in an employer's harassment investigation was "participation" clause protected activity. That avoids at least one headache for employers.
Friday, January 23, 2009
Preparing for Fair Pay Legislation - Part 3
As this has made the national news and all the labor reports, I won't dwell again on the effect of S.181. I will simply amplify a few points some I made previously. S.181, officially titled the Lily Ledbetter Fair Pay Act of 2009 passed without amendments. That means several things.
Title II of HR 11, which would have changed the Equal Pay Act and dramtically affected pay setting decisions, was not voted on by the Senate. It wasn't even considered. (Don't assume that is the final word on this, however.) Before S.181 can be presented to the President (who has said he will sign it), the House must vote and approve S.181. Look for that to happen next week.
The Senate vote was pretty much along party lines with all Democrats present (Clinton having resigned without an appointed successor, Franken not being certified and Kennedy not being present) voting for and most Republicans, except for Hutchison, Snow and Murkoswski, voting against passage. Both Tennessee senators voted against passage.
I have already addressed the impact of S.181 (at least as it appeared in Title I of HR 11). It gives employees (not just females) the right to sue for discriminatory pay no matter when the actual pay setting decision was made. So long as one discriminatory pay setting decision was made that continues to affect an employee's compensation within the 300 day (as it is in Tennessee) limitation period for filing a charge, that pay setting decision can be challenged. As I said in a prior post, the employee's back pay recovery is limited to two years prior to the charge. But in theory (and the reality, as in Ledbetter's lawsuit) employers could be faced with defending pay decisions that are quite old and long since forgotten.
More importantly, the bill specifies that it "takes effect" on May 28, 2007, the day before the Supreme Court issued the Ledbetter decision and applies to claims pending on that date. (In Ledbetter's case (or any other person whose lawsuit was legally final) should she try to reopen it, that move raises very interesting constitutional problems.)
I should also mention one other point about S.181. It permits an employee to challege any "other practice" that causes discriminatory pay. In addition to the actual pay setting decision, if a performance appraisal has an effect on pay setting, the ratings on the appraisal could be challenged as well. The important point is that the phrase "other practice" doesn't actually mean any "other practice" can be challenged. In urging the Senate to reject an amendment that would strip the "other practice" language from S.181, Senator Mikulski (the floor sponsor of S.181) explained: "The bill specifically says that it is addressing ‘‘discrimination in compensation.’’ That limiting language means that it already only covers such claims—nothing more, nothing less."
I still intend to addres what employers can do, in light of S.181 (assuming it passes) and even if Title II of HR 11 were to pass, to help protect themselves from compensation discrimination claims (stale or otherwise). I will close this post, however, by quoting the no doubt, well-meant, but utterly naive statement by Senator Mikulski made in urging the Senate to reject an amendment by Senator Hutchison. "I say to the private and nonprofit sector: If you don’t want to be sued, don’t discriminate. That is the best way to go. If you don’t want to be sued, don’t discriminate."
If only it were so easy.
Title II of HR 11, which would have changed the Equal Pay Act and dramtically affected pay setting decisions, was not voted on by the Senate. It wasn't even considered. (Don't assume that is the final word on this, however.) Before S.181 can be presented to the President (who has said he will sign it), the House must vote and approve S.181. Look for that to happen next week.
The Senate vote was pretty much along party lines with all Democrats present (Clinton having resigned without an appointed successor, Franken not being certified and Kennedy not being present) voting for and most Republicans, except for Hutchison, Snow and Murkoswski, voting against passage. Both Tennessee senators voted against passage.
I have already addressed the impact of S.181 (at least as it appeared in Title I of HR 11). It gives employees (not just females) the right to sue for discriminatory pay no matter when the actual pay setting decision was made. So long as one discriminatory pay setting decision was made that continues to affect an employee's compensation within the 300 day (as it is in Tennessee) limitation period for filing a charge, that pay setting decision can be challenged. As I said in a prior post, the employee's back pay recovery is limited to two years prior to the charge. But in theory (and the reality, as in Ledbetter's lawsuit) employers could be faced with defending pay decisions that are quite old and long since forgotten.
More importantly, the bill specifies that it "takes effect" on May 28, 2007, the day before the Supreme Court issued the Ledbetter decision and applies to claims pending on that date. (In Ledbetter's case (or any other person whose lawsuit was legally final) should she try to reopen it, that move raises very interesting constitutional problems.)
I should also mention one other point about S.181. It permits an employee to challege any "other practice" that causes discriminatory pay. In addition to the actual pay setting decision, if a performance appraisal has an effect on pay setting, the ratings on the appraisal could be challenged as well. The important point is that the phrase "other practice" doesn't actually mean any "other practice" can be challenged. In urging the Senate to reject an amendment that would strip the "other practice" language from S.181, Senator Mikulski (the floor sponsor of S.181) explained: "The bill specifically says that it is addressing ‘‘discrimination in compensation.’’ That limiting language means that it already only covers such claims—nothing more, nothing less."
I still intend to addres what employers can do, in light of S.181 (assuming it passes) and even if Title II of HR 11 were to pass, to help protect themselves from compensation discrimination claims (stale or otherwise). I will close this post, however, by quoting the no doubt, well-meant, but utterly naive statement by Senator Mikulski made in urging the Senate to reject an amendment by Senator Hutchison. "I say to the private and nonprofit sector: If you don’t want to be sued, don’t discriminate. That is the best way to go. If you don’t want to be sued, don’t discriminate."
If only it were so easy.
An Employer Can't Prevent an EEOC Investigation by Settling with the Employee
I want to digress from the Title VII statute of limitations for a post and address today's Seventh Circuit decision in EEOC v. Watkins Motor Lines, Inc. The situation is somewhat unusual but worth mentioning shortly because it touches on a practice many employers don't necessarily understand.
Watkins had a problem no employer deserves to have - workplace violence of the worst kind. In a one shooting spree, two employees were killed, others injured, according to one industry magazine. In response, Watkins decided, the Seventh Circuit said, it would no longer hire anyone who had been convicted of a violent crime. Given the circumstances, one can hardly blame them even if legally it might arguably have been an over-reaction. (I will stress arguably here and leave it at that as that issue isn't germane to this post.)
The policy apparently led Watkins to refuse a job to a man named Jackson who filed an EEOC charge. Jackson and Watkins later settled, the decision doesn't spell out the terms other than the settlement required Jackson to withdraw his charge. He tried to do so but the EEOC refused. It wanted, apparently, to investigate whether Watkins policy caused a disparate impact on minorities. When Watkins refused to respond to an EEOC subpoena, the EEOC asked a district court to enforce the subpoena. After several years, the district court dismissed the subpoena, saying the EEOC lacked jurisdiction due to the settlement.
Watkins made an attractive target to the EEOC. Before FedEx purchased its assets in 2006, it employed over 10,000 in 42 states and 139 locations.
What the Seventh Circuit held, however, was that while the existence of a valid charge is a prerequisite to the EEOC's exercise of jurisdiction, the fact that the employer and applicant settled does not convert a valid charge into an invalid charge: "We know from Federal Express Corp. v. Holowecki, 128 S. Ct. 1147 (2008), that a document may be a 'charge' even if it lacks an appropriate caption and charging language. A piece of paper that alleges discrimination and asks the agency to take remedial action suffices."
So, settling a case pending before the EEOC won't necessarily resolve the litigation. Federal agencies such as the EEOC and the Department of Labor have the right in some instances to exercise independent jurisdiction particularly where the agency perceives an important policy or practice is at stake. If you want to end the litigation, always get the EEOC's buy in before paying out any money.
Also, the EEOC has the right to issue a subpoena to obtain information even where, such as here, the employer may have a perfectly good and defensible reason for adopting a particular practice. (Employers can object that the subpoena is unduly burdensome or otherwise inappropriate.) Watkins' former owners (who funded this litigation) stood on their principles. That is understandable given these circumstances but their "mistake," if it can be called that, was in completely refusing to cooperate with the EEOC in the first instance.
Watkins had a problem no employer deserves to have - workplace violence of the worst kind. In a one shooting spree, two employees were killed, others injured, according to one industry magazine. In response, Watkins decided, the Seventh Circuit said, it would no longer hire anyone who had been convicted of a violent crime. Given the circumstances, one can hardly blame them even if legally it might arguably have been an over-reaction. (I will stress arguably here and leave it at that as that issue isn't germane to this post.)
The policy apparently led Watkins to refuse a job to a man named Jackson who filed an EEOC charge. Jackson and Watkins later settled, the decision doesn't spell out the terms other than the settlement required Jackson to withdraw his charge. He tried to do so but the EEOC refused. It wanted, apparently, to investigate whether Watkins policy caused a disparate impact on minorities. When Watkins refused to respond to an EEOC subpoena, the EEOC asked a district court to enforce the subpoena. After several years, the district court dismissed the subpoena, saying the EEOC lacked jurisdiction due to the settlement.
Watkins made an attractive target to the EEOC. Before FedEx purchased its assets in 2006, it employed over 10,000 in 42 states and 139 locations.
What the Seventh Circuit held, however, was that while the existence of a valid charge is a prerequisite to the EEOC's exercise of jurisdiction, the fact that the employer and applicant settled does not convert a valid charge into an invalid charge: "We know from Federal Express Corp. v. Holowecki, 128 S. Ct. 1147 (2008), that a document may be a 'charge' even if it lacks an appropriate caption and charging language. A piece of paper that alleges discrimination and asks the agency to take remedial action suffices."
So, settling a case pending before the EEOC won't necessarily resolve the litigation. Federal agencies such as the EEOC and the Department of Labor have the right in some instances to exercise independent jurisdiction particularly where the agency perceives an important policy or practice is at stake. If you want to end the litigation, always get the EEOC's buy in before paying out any money.
Also, the EEOC has the right to issue a subpoena to obtain information even where, such as here, the employer may have a perfectly good and defensible reason for adopting a particular practice. (Employers can object that the subpoena is unduly burdensome or otherwise inappropriate.) Watkins' former owners (who funded this litigation) stood on their principles. That is understandable given these circumstances but their "mistake," if it can be called that, was in completely refusing to cooperate with the EEOC in the first instance.
Wednesday, January 21, 2009
Status of S.181
After several hours of debate on the Senate floor, Majority Leader Harry Reid, at 7:28 pm this evening postponed a vote on S.181, the bill that would change the Title VII statute of limitations at least for compensation discrimination claims.
Reid said he expects to finish tomorrow but that if "people need more time" Friday would be "fine with me too."
Reid said he expects to finish tomorrow but that if "people need more time" Friday would be "fine with me too."
The Problem with Relying on Legislative History
I made a mistake. The last post (which has been corrected) cited to a statutory provision that did not exist. It was an honest mistake but one I shouldn't have made.
The "provision" was 42 U.S.C. 2000e(0). Section 2000e is the statute that defines terms for the equal employment provisions in Title VII of the Civil Rights Act of 1964. So while 2000e does exist, subsection (o) - which I said defined "business necessity" does not, at least not in any reputable source I examined.
I was misled by statements in the legislative history (House Report 110-783, page 29) from the 110th Congress about HR 1338, the Paycheck Fairness Act (as it was called by the 110th Congress). HR 1338 is pretty much the same as Title II of the Lily Ledbetter Fair Pay Act (HR 181) that I discussed in the prior post. The legislative history quotes "42 U.S.C. 2000e(o)(1)(B) as being added as part of the Civil Rights Act of 1991. While the 1991 amendment certainly codified the idea that business necessity was part of the disparate impact analysis, it did not define "business necessity." In my own defense, I have never seen a published legislative history cite to a statute that does not exist.
I don't normally try to address my mistakes but the fundamental point I think this makes is that the current spate of well-intentioned laws that are supposed to redress compensation discrimination are not well-planned. Citing to a statute that does not exist is only one example of this. Not defining "business necessity" is another. It is quite sloppy to use a phrase ("business necessity") that is now part of Title VII (which is in a different title of the U.S. Code) and its caselaw without at least referring to Title VII or its cases to define the phrase. And it is an especially poor practice if the drafters think it is OK to rely upon legislative history from a prior Congress. That will only lead to confusion and frustration in trying to apply the new statute. No one, certainly not the persons the statute is designed to help, benefits from confusion.
Don't misunderstand me. Something needs to be done to address the pay disparity between the sexes and the races. I don't doubt that exists at some jobs. I doubt, however, whether the poorly-drafted pending legislation will help in erradicating it without also causing more problems than it resolves. This problem deserves a better solution.
Sorry for the mistake. I was fooled once. Not again.
The "provision" was 42 U.S.C. 2000e(0). Section 2000e is the statute that defines terms for the equal employment provisions in Title VII of the Civil Rights Act of 1964. So while 2000e does exist, subsection (o) - which I said defined "business necessity" does not, at least not in any reputable source I examined.
I was misled by statements in the legislative history (House Report 110-783, page 29) from the 110th Congress about HR 1338, the Paycheck Fairness Act (as it was called by the 110th Congress). HR 1338 is pretty much the same as Title II of the Lily Ledbetter Fair Pay Act (HR 181) that I discussed in the prior post. The legislative history quotes "42 U.S.C. 2000e(o)(1)(B) as being added as part of the Civil Rights Act of 1991. While the 1991 amendment certainly codified the idea that business necessity was part of the disparate impact analysis, it did not define "business necessity." In my own defense, I have never seen a published legislative history cite to a statute that does not exist.
I don't normally try to address my mistakes but the fundamental point I think this makes is that the current spate of well-intentioned laws that are supposed to redress compensation discrimination are not well-planned. Citing to a statute that does not exist is only one example of this. Not defining "business necessity" is another. It is quite sloppy to use a phrase ("business necessity") that is now part of Title VII (which is in a different title of the U.S. Code) and its caselaw without at least referring to Title VII or its cases to define the phrase. And it is an especially poor practice if the drafters think it is OK to rely upon legislative history from a prior Congress. That will only lead to confusion and frustration in trying to apply the new statute. No one, certainly not the persons the statute is designed to help, benefits from confusion.
Don't misunderstand me. Something needs to be done to address the pay disparity between the sexes and the races. I don't doubt that exists at some jobs. I doubt, however, whether the poorly-drafted pending legislation will help in erradicating it without also causing more problems than it resolves. This problem deserves a better solution.
Sorry for the mistake. I was fooled once. Not again.
Preparing for Fair Pay – Part 2
This is the second part of a discussion about expected changes in the compensation discrimination laws. The first post addressed how Congress will likely change the statute of limitations under Title VII for compensation discrimination claims. This post will focus on proposed changes to the Equal Pay Act. Unlike the statute of limitations legislation, these changes are not part of the Senate bill that is expected to be voted on this Wednesday (Jan. 21, 2009). It is part of the bill the House passed and sent to the Senate. Obviously, the final vote and conference, we won't know what, if anything, will be passed.
For these reasons, I will refer only to the House bill (HR 11).Part II of HR 11 would change the Equal Pay Act ("EPA"), a 45 year-old statute which regulates sex-discrimination in compensation. The Equal Pay Act was passed in 1963, a year before the Civil Rights Act of 1964 (which included what we now call "Title VII"). Because there was no then-existing provision, the EPA was added to and became part of the Fair Labor Standards Act ("FLSA") and the damages available for violations of the FLSA (lost backpay and liquidated damages) have been adopted to redress EPA violations.
To understand the changes HR 11 would make, understand how the law current works as it applies to Tennessee employers (so bear with me while I quote passages from court decisions). Under the EPA, an employee must demonstrate that an employer pays "different wages to employees of opposite sexes 'for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions.'" EEOC v. Romeo Cmty. Schs., 976 F.2d 985, 987 (6th Cir. 1992). The job functions of two individuals need not be identical to be considered "equal work," Beck-Wilson v. Principi, 441 F.3d 353, 359 (6th Cir. 2006), there need only be a "substantial equality of skill, effort, responsibility, and working conditions." Odomes v. Nucare, Inc., 653 F.2d 246, 250 (6th Cir. 1981)).
If an employee proves equal jobs and a pay difference (more on that in a later post), the employer must prove that the difference is justified by one of four affirmative defenses: (1) a seniority system; (2) a merit system; (3) a system that measures earnings by quantity or quality of production; or (4) any factor other than sex. The focus of the pending legislation is on the fourth defense so we can ignore the first three, for now. As the Sixth Circuit interprets it, the final defense "does not include literally any other factor, but a factor that, at a minimum, was adopted for a legitimate business reason." EEOC v. J.C. Penney Co., Inc., 843 F.2d 249, 253 (6th Cir. 1988). Much could be written about how the "legitimate business reason" came to be a requirement, but since one court has addressed this, I won't go into it further.
The beef Congress has with the fourth defense is that the way some courts (including the one linked to above) have interpreted it. These courts hold that the "'factors other than sex' need not be business-related or even related to the particular position in question" (at least according to what was said in legislative history from a prior Congress). This factor should, the same legislative history says, "be job-related, not derived or based upon a sex-based differential, and consistent with business necessity." The evil identified in the legislative history is when some court decisions interpret "any other factor other than sex" as letting employers base starting salaries on "market forces." That is bad, Congress concludes, because the "market" historically underpays females.
Market forces, the criticized decisions say, legally justifies a pay difference such as when employers hire a person into a job paying that person $X.XX whereas it paid (at some point) a person of the opposite sex $Y.YY (Y being less than X in this example). This perpetuates lower pay for females, concludes Congress, because: "While market forces may be a legitimate basis for determining pay, market forces tainted with sex discrimination are not."
So, to change the effect of these decisions, the legislation passed by the house would redefine the "any other factor other than sex" to apply "only if the employer demonstrates that such factor: (i) is not based upon or derived from a sex-based differential in compensation; (ii) is job-related with respect to the position in question; and (iii) is consistent with business necessity. Such defense shall not apply where the employee demonstrates that an alternative employment practice exists that would serve the same business purpose without producing such differential and that the employer has refused to adopt such alternative practice."
This change would not only adopt the "legitimate business reason" already imposed on Tennessee employers by the Sixth Circuit, it would require employers to go further and show the factor is "consistent with business necessity." This is very different from the "legitimate non-discriminatory business reason" employers are used to in the typical discrimination claim. It refers to a "business necessity" apparently meaning to have this phrase interpreted as it is used Title VII. To be sure, the legislative history from the prior Congress' thought "business necessity" meant that the practice (or factor) bears "a significant relationship to a business objective of the employer." The phrase, however, is not defined in the statute (or proposed statute) and the Supreme Court has not consistently defined the term (saying it meant "related to job performance" in one case and that it must be "necessary to safe and efficient job performance" in another).
So, far from simply adopting the Sixth Circuit standard, the pending bill would force employers to re-evaluate every factor used in pay setting or pay increase decisions. To give an example of the kind of concerns this would raise, look at a decision criticized by the legislative history. There, the employer paid males higher wages because they worked in the more profitable men's clothing department. The court held this legitimate, a decision criticized because "the products sold by the women were of lesser quality and cost less than the goods sold in the men's department." So, any factor, even a neutral one, that can be identified as causing – even in part - a sex-based pay difference will need to be examined to ensure it will not lead to EPA liability. Several suggestions on how to do this will be addressed in later posts.
The EPA is sort of a statute lost in the weeds of other, more "popular" discrimination statutes. To some, the EPA serves a different purpose from Title VII because the EPA does not require a showing of discriminatory intent. In practice, however (at least around here), courts make no meaningful distinctions between Title VII and EPA claims and Title VII already prohibits "unintentional" discrimination (disparate impact). Given that Title VII already prohibits sex-based disparate impacts including those affecting compensation, a legitimate argument could be made that the EPA even as amended merely duplicates existing statutes and should be repealed to eliminate confusion for both employees and employers. That would be, of course, politically inopportune to say the least so don't count on it happening.
The next post will focus on other changes HR 11 would make to EPA claims. Those changes are designed to make EPA claims much more financially attractive to those who want to bring a lawsuit over perceived pay differences.
For these reasons, I will refer only to the House bill (HR 11).Part II of HR 11 would change the Equal Pay Act ("EPA"), a 45 year-old statute which regulates sex-discrimination in compensation. The Equal Pay Act was passed in 1963, a year before the Civil Rights Act of 1964 (which included what we now call "Title VII"). Because there was no then-existing provision, the EPA was added to and became part of the Fair Labor Standards Act ("FLSA") and the damages available for violations of the FLSA (lost backpay and liquidated damages) have been adopted to redress EPA violations.
To understand the changes HR 11 would make, understand how the law current works as it applies to Tennessee employers (so bear with me while I quote passages from court decisions). Under the EPA, an employee must demonstrate that an employer pays "different wages to employees of opposite sexes 'for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions.'" EEOC v. Romeo Cmty. Schs., 976 F.2d 985, 987 (6th Cir. 1992). The job functions of two individuals need not be identical to be considered "equal work," Beck-Wilson v. Principi, 441 F.3d 353, 359 (6th Cir. 2006), there need only be a "substantial equality of skill, effort, responsibility, and working conditions." Odomes v. Nucare, Inc., 653 F.2d 246, 250 (6th Cir. 1981)).
If an employee proves equal jobs and a pay difference (more on that in a later post), the employer must prove that the difference is justified by one of four affirmative defenses: (1) a seniority system; (2) a merit system; (3) a system that measures earnings by quantity or quality of production; or (4) any factor other than sex. The focus of the pending legislation is on the fourth defense so we can ignore the first three, for now. As the Sixth Circuit interprets it, the final defense "does not include literally any other factor, but a factor that, at a minimum, was adopted for a legitimate business reason." EEOC v. J.C. Penney Co., Inc., 843 F.2d 249, 253 (6th Cir. 1988). Much could be written about how the "legitimate business reason" came to be a requirement, but since one court has addressed this, I won't go into it further.
The beef Congress has with the fourth defense is that the way some courts (including the one linked to above) have interpreted it. These courts hold that the "'factors other than sex' need not be business-related or even related to the particular position in question" (at least according to what was said in legislative history from a prior Congress). This factor should, the same legislative history says, "be job-related, not derived or based upon a sex-based differential, and consistent with business necessity." The evil identified in the legislative history is when some court decisions interpret "any other factor other than sex" as letting employers base starting salaries on "market forces." That is bad, Congress concludes, because the "market" historically underpays females.
Market forces, the criticized decisions say, legally justifies a pay difference such as when employers hire a person into a job paying that person $X.XX whereas it paid (at some point) a person of the opposite sex $Y.YY (Y being less than X in this example). This perpetuates lower pay for females, concludes Congress, because: "While market forces may be a legitimate basis for determining pay, market forces tainted with sex discrimination are not."
So, to change the effect of these decisions, the legislation passed by the house would redefine the "any other factor other than sex" to apply "only if the employer demonstrates that such factor: (i) is not based upon or derived from a sex-based differential in compensation; (ii) is job-related with respect to the position in question; and (iii) is consistent with business necessity. Such defense shall not apply where the employee demonstrates that an alternative employment practice exists that would serve the same business purpose without producing such differential and that the employer has refused to adopt such alternative practice."
This change would not only adopt the "legitimate business reason" already imposed on Tennessee employers by the Sixth Circuit, it would require employers to go further and show the factor is "consistent with business necessity." This is very different from the "legitimate non-discriminatory business reason" employers are used to in the typical discrimination claim. It refers to a "business necessity" apparently meaning to have this phrase interpreted as it is used Title VII. To be sure, the legislative history from the prior Congress' thought "business necessity" meant that the practice (or factor) bears "a significant relationship to a business objective of the employer." The phrase, however, is not defined in the statute (or proposed statute) and the Supreme Court has not consistently defined the term (saying it meant "related to job performance" in one case and that it must be "necessary to safe and efficient job performance" in another).
So, far from simply adopting the Sixth Circuit standard, the pending bill would force employers to re-evaluate every factor used in pay setting or pay increase decisions. To give an example of the kind of concerns this would raise, look at a decision criticized by the legislative history. There, the employer paid males higher wages because they worked in the more profitable men's clothing department. The court held this legitimate, a decision criticized because "the products sold by the women were of lesser quality and cost less than the goods sold in the men's department." So, any factor, even a neutral one, that can be identified as causing – even in part - a sex-based pay difference will need to be examined to ensure it will not lead to EPA liability. Several suggestions on how to do this will be addressed in later posts.
The EPA is sort of a statute lost in the weeds of other, more "popular" discrimination statutes. To some, the EPA serves a different purpose from Title VII because the EPA does not require a showing of discriminatory intent. In practice, however (at least around here), courts make no meaningful distinctions between Title VII and EPA claims and Title VII already prohibits "unintentional" discrimination (disparate impact). Given that Title VII already prohibits sex-based disparate impacts including those affecting compensation, a legitimate argument could be made that the EPA even as amended merely duplicates existing statutes and should be repealed to eliminate confusion for both employees and employers. That would be, of course, politically inopportune to say the least so don't count on it happening.
The next post will focus on other changes HR 11 would make to EPA claims. Those changes are designed to make EPA claims much more financially attractive to those who want to bring a lawsuit over perceived pay differences.
Sunday, January 18, 2009
Preparing for Fair Pay Legislation - Part 1
With Congress on the brink of passing legislation that would make significant changing to the Equal Pay Act and Title VII's Compensation Discrimination case law, I thought it would help to post several blogs explaining the changes and how Tennessee employers can be prepared for the changes that seem likely. Of course, until legislation is finally enacted, this is tentative.
Most of Congress wants to change two aspects of compensation discrimination law. First, they want to overturn the perceived effect of Ledbetter v Goodyear Tire & Rubber Co. Inc. which had held an employee's claim was filed too late because she could not (and made no effort to) show that a discriminatory decision was made within the limitations period. Second, Congress would amend the Equal Pay Act to change what an employer must show to prove a factor other that sex was the reason for a pay difference. This bill would also increase the damages and penalties an employee would receive if pay discrimination is proven.
I could write much on how Congress perceives inequities. There are significant faults in the rationale members of Congress and the supporters of this legislation give as the necessity for these bills (especially the part that would change the effect of Ledbetter). This is not really the place for having an extended discussion of those faults.
The better and more interesting discussion would be whether the changes Congress seems poised to make will help in solving the problems they have identified. Study after study, as reported in the media and the Internet, proclaim that women are paid less than men for the same work. (So says a GAO Report from 2004 - reporting from 1983 to 2000, women earned 21 percent less, a figure the GAO said was diminishing. The worst "studies" are those, such as one reported last year in Crane's which draws conclusions based upon whether people perceive themselves to be underpaid.) Broadly defined statistics that cover multiple jobs in different companies are unreliable in forecasting whether individual employers permit pay disparities. Since I have no empirical basis for disputing that (and am not so naive as to think that all pay disparities everywhere have been eradicated), I take it as a given for purposes of the present discussion.
Pending now are two bills (HR 11 and S.181). HR 11 passed the House on January 9, 2009. It consists of two parts (each part responds to one of the concerns listed previously).
Part I would change the outcome in Ledbetter and let employees sue for pay discrimination (if the difference is caused by sex, race, age, disability, national origin or religion) for as long as the disparity in pay continues. Backpay would, however, be capped at two years prior to the filing of the charge (a cap that currently exists). So, where Ledbetter held a discriminatory pay decision made decades earlier could not be a timely discriminatory act, the intent of this legislation would be to let the lower paid employee sue and recover for a few years of the disparity so long as the improperly motivated pay disparity continues to exist. The employee could also recover other damages as already allowed by Title VII and the ADA (but the ADEA does not authorize compensatory or punitive damages).
The Senate will probably vote on its bill (S.181) as early as Wednesday, January 21, 2009, though several Republican senators (including both from Tennessee) have sponsored an amendment which, to my thinking, could be worse, as it would create uncertainty as to when the time for filing a charge (on any action, not just compensation claims) starts and eliminate the existing requirement that employees must act diligently in determining whether they have been discriminated against. Right now, S.181, only addresses the effect of the Ledbetter decision.
How would these changes affect Tennessee employers? Depending on what is passed, they might not notice much of a change at all. A few years ago, the Tennessee Supreme Court held employees could sue for present and past damages so long as the employee can show they are presently being paid less than their peers and the reason for the difference is prohibited (the THRA, of course, prohibits much the same things as Title VII, the ADEA and ADA). Tennessee law thus, in this way, goes further than what Congress would authorize.
How can an employer protect themselves from suits over decisions made years earlier? One change was sanctioned by a 2004 Sixth Circuit decision which held that employers and employees may contract for shorter (or longer) time periods in which to sue than allowed by law. An employer that does this, should observe several precautions designed to increase the chance the clause will hold up in court:
Most of Congress wants to change two aspects of compensation discrimination law. First, they want to overturn the perceived effect of Ledbetter v Goodyear Tire & Rubber Co. Inc. which had held an employee's claim was filed too late because she could not (and made no effort to) show that a discriminatory decision was made within the limitations period. Second, Congress would amend the Equal Pay Act to change what an employer must show to prove a factor other that sex was the reason for a pay difference. This bill would also increase the damages and penalties an employee would receive if pay discrimination is proven.
I could write much on how Congress perceives inequities. There are significant faults in the rationale members of Congress and the supporters of this legislation give as the necessity for these bills (especially the part that would change the effect of Ledbetter). This is not really the place for having an extended discussion of those faults.
The better and more interesting discussion would be whether the changes Congress seems poised to make will help in solving the problems they have identified. Study after study, as reported in the media and the Internet, proclaim that women are paid less than men for the same work. (So says a GAO Report from 2004 - reporting from 1983 to 2000, women earned 21 percent less, a figure the GAO said was diminishing. The worst "studies" are those, such as one reported last year in Crane's which draws conclusions based upon whether people perceive themselves to be underpaid.) Broadly defined statistics that cover multiple jobs in different companies are unreliable in forecasting whether individual employers permit pay disparities. Since I have no empirical basis for disputing that (and am not so naive as to think that all pay disparities everywhere have been eradicated), I take it as a given for purposes of the present discussion.
Pending now are two bills (HR 11 and S.181). HR 11 passed the House on January 9, 2009. It consists of two parts (each part responds to one of the concerns listed previously).
Part I would change the outcome in Ledbetter and let employees sue for pay discrimination (if the difference is caused by sex, race, age, disability, national origin or religion) for as long as the disparity in pay continues. Backpay would, however, be capped at two years prior to the filing of the charge (a cap that currently exists). So, where Ledbetter held a discriminatory pay decision made decades earlier could not be a timely discriminatory act, the intent of this legislation would be to let the lower paid employee sue and recover for a few years of the disparity so long as the improperly motivated pay disparity continues to exist. The employee could also recover other damages as already allowed by Title VII and the ADA (but the ADEA does not authorize compensatory or punitive damages).
The Senate will probably vote on its bill (S.181) as early as Wednesday, January 21, 2009, though several Republican senators (including both from Tennessee) have sponsored an amendment which, to my thinking, could be worse, as it would create uncertainty as to when the time for filing a charge (on any action, not just compensation claims) starts and eliminate the existing requirement that employees must act diligently in determining whether they have been discriminated against. Right now, S.181, only addresses the effect of the Ledbetter decision.
How would these changes affect Tennessee employers? Depending on what is passed, they might not notice much of a change at all. A few years ago, the Tennessee Supreme Court held employees could sue for present and past damages so long as the employee can show they are presently being paid less than their peers and the reason for the difference is prohibited (the THRA, of course, prohibits much the same things as Title VII, the ADEA and ADA). Tennessee law thus, in this way, goes further than what Congress would authorize.
How can an employer protect themselves from suits over decisions made years earlier? One change was sanctioned by a 2004 Sixth Circuit decision which held that employers and employees may contract for shorter (or longer) time periods in which to sue than allowed by law. An employer that does this, should observe several precautions designed to increase the chance the clause will hold up in court:
- Have the employee sign the document or application in which the limitation exists. The Sixth Circuit decision and other similar decisions are based upon principles of contract law, and the failure of the employee to sign may result in a missing element of a contract -- mutuality or mutual assent (that is, a signature showing agreement to the terms).
- Make sure the time period to which the limitation has been reduced is reasonable. It is strongly suggested that any reduced limitations period not be less than six months in the employment context.
- Do not attempt to limit an employee’s right to file suit against the company, file a charge of discrimination with any federal or state agency, or to limit the type of actions that an employee may bring. Prospective waivers of substantive rights are not only frowned upon they are invalid. Worse still, you could end up being sued by the EEOC which takes the position that Title VII (ADEA, ADA etc.) is violated if an employer merely presents an employee with a contract that limits the employee's ability to participate in commission proceedings, though on this last point, it lost the lawsuit because the employee never signed and the employer never enforced the document in question.
These are not the only changes an employer can (and should) make. Limiting the time for suit only goes so far. In coming posts, I will address other practices an employer can adopt that would help identify and eliminate unexplainable pay disparities that might lead to a lawsuit.
For procedural reasons, even if the Senate adopts S.181, as it presently exists, the differences with HR.11 would have to be resolved before any bill could be presented to the President. Those differences (right now) are primarily how the "Fair Pay Act" (Part II of HR.11) would amend the Equal Pay Act. In the next post, I'll focus on those changes, though if Congress adopts one of the Republican Amendments, I would necessarily devote the post to explaining more about that.
For procedural reasons, even if the Senate adopts S.181, as it presently exists, the differences with HR.11 would have to be resolved before any bill could be presented to the President. Those differences (right now) are primarily how the "Fair Pay Act" (Part II of HR.11) would amend the Equal Pay Act. In the next post, I'll focus on those changes, though if Congress adopts one of the Republican Amendments, I would necessarily devote the post to explaining more about that.
Wednesday, January 14, 2009
Retaliation, Honest Beliefs and Employer Investigation
Taking a risk that I am harping on it too much, today's Sixth Circuit dismissal of a retaliation claim again confirms the value to an employer of conducting an investigation.
Understand my point of view: when my partners and I defend a lawsuit for an employer, we work hard to get the claims dismissed prior to a trial. (It isn't that we don't like trials, some of us do, but it is much more efficient and less risky for the client to get the claims dismissed early on.) With few exceptions, we have to show that even if the evidence were as the plaintiff says it is, our client should still win.
The decision today concerned a lady who alleged she had been harassed and then fired because she complained of harassment. Understand the timing, the employee complained about racial and sexual remarks by a co-worker, filed an EEOC charge, and was then terminated because, the employer asserted, she had filed a false injury report.
The employee claimed she had injured her back when a co-worker (the person she had accused of making harassing remarks) moved a truck while she was standing in its flatbed. The employer investigated even to the point of conducting a hearing where it received testimony (while the decision doesn't explain why a hearing was held, it was likely to satisfy some provision in the union contract). The co-worker and four other employees said they didn't see her in the bed of the truck and that she was, in fact, standing beside the truck when it was started. At the hearing, and at trial, the employee adhered to her story, saying the four witnesses were lying to protect the co-worker.
In dismissing her claim, the court avoided addressing the temporal proximity issue (or the more interesting question about the filing of an EEOC charge over the harassment claim after the employee had been suspended pending an investigation into the making of a false report. Rather, the court held that even if the employee had not filed a false report (as she continued to assert) and even if the four witnesses were lying to support their co-worker, the employer's investigation was sufficient justification for firing the employee. As I said earlier, when an employer is faced with competing versions of events, "there is probably no practical step an employer can take beyond independently investigating the misconduct charges that will reduce the chances of an employee's racism influencing its behavior." Brewer v. Bd. of Trs. of Univ. of Ill., 479 F.3d 908, 920 (7th Cir.), cert. denied, 128 S. Ct. 357 (2007).
Why is this so important? At the start I said employers benefit from early dismissals of lawsuits and to get them dismissed we have to show the material facts are not disputed. Here, there was a factual dispute - was the employee in the bed of the truck when it was started - but the employer's investigation resolved that fully and fairly. The investigation made the factual dispute immaterial because the focus was then on the honesty of the employer's decision, not on whether or not the employee had in fact filed a false report. Had the investigation not occurred (such as had the employer promptly fired the employee based solely upon the co-worker's story), or had it been slipshod, the court could have held a jury needed to determine whether the employer retaliated against the employee.
Understand my point of view: when my partners and I defend a lawsuit for an employer, we work hard to get the claims dismissed prior to a trial. (It isn't that we don't like trials, some of us do, but it is much more efficient and less risky for the client to get the claims dismissed early on.) With few exceptions, we have to show that even if the evidence were as the plaintiff says it is, our client should still win.
The decision today concerned a lady who alleged she had been harassed and then fired because she complained of harassment. Understand the timing, the employee complained about racial and sexual remarks by a co-worker, filed an EEOC charge, and was then terminated because, the employer asserted, she had filed a false injury report.
The employee claimed she had injured her back when a co-worker (the person she had accused of making harassing remarks) moved a truck while she was standing in its flatbed. The employer investigated even to the point of conducting a hearing where it received testimony (while the decision doesn't explain why a hearing was held, it was likely to satisfy some provision in the union contract). The co-worker and four other employees said they didn't see her in the bed of the truck and that she was, in fact, standing beside the truck when it was started. At the hearing, and at trial, the employee adhered to her story, saying the four witnesses were lying to protect the co-worker.
In dismissing her claim, the court avoided addressing the temporal proximity issue (or the more interesting question about the filing of an EEOC charge over the harassment claim after the employee had been suspended pending an investigation into the making of a false report. Rather, the court held that even if the employee had not filed a false report (as she continued to assert) and even if the four witnesses were lying to support their co-worker, the employer's investigation was sufficient justification for firing the employee. As I said earlier, when an employer is faced with competing versions of events, "there is probably no practical step an employer can take beyond independently investigating the misconduct charges that will reduce the chances of an employee's racism influencing its behavior." Brewer v. Bd. of Trs. of Univ. of Ill., 479 F.3d 908, 920 (7th Cir.), cert. denied, 128 S. Ct. 357 (2007).
Why is this so important? At the start I said employers benefit from early dismissals of lawsuits and to get them dismissed we have to show the material facts are not disputed. Here, there was a factual dispute - was the employee in the bed of the truck when it was started - but the employer's investigation resolved that fully and fairly. The investigation made the factual dispute immaterial because the focus was then on the honesty of the employer's decision, not on whether or not the employee had in fact filed a false report. Had the investigation not occurred (such as had the employer promptly fired the employee based solely upon the co-worker's story), or had it been slipshod, the court could have held a jury needed to determine whether the employer retaliated against the employee.
Monday, January 5, 2009
Probable Cause and Malicious Prosecution in the Computer Age
One of the less frequent issues an employer might encounter is a malicious prosecution suit. Malicious prosecution suits can occur whenever someone sues or prosecutes criminally another without reasonable (what the courts call "probable" cause). Such suits are rare but they happen and when successful are typically costly. After all, if you were maliciously and wrongly accused of a criminal act and spent a few nights in jail, wouldn't you want a lot of money in recompense?
There are several defenses to such suits, though the details vary from state to state. A common one is the requirement that the prior suit or prosecution be terminated in the suing party's (in the second suit) favor. The Seventh Circuit spent some time recently discussing some quirks (I suppose) of Illinois law on this point but (like the court) I see no need to discuss that in detail here. What was of more interest was how the court resolved another defense, when an employer has probable cause to complain about an employee's criminal misconduct.
Probable cause is not a difficult concept though it should not be confused with "reasonable suspicion," the standard (of information) employers must have before requiring an employee take a lie detector test nor should it be confused with the employment discrimination context of "honest belief."
The legal definition of probable cause is “exist[s] where the known facts and circumstances are sufficient to warrant a man of reasonable prudence in the belief that contraband or evidence of a crime will be found,” Ornelas v. United States, 517 U.S. 690, 696 (1996); Illinois v. Gates, 462 U.S. 213, 238 (1983). That doesn't really say much in the employment context (but it is a start). Here is what happened.
Yuming Deng worked for Sears Roebuck as a statistical modeler compiling computer data for financial purposes. After a heated performance appraisal dispute, Deng took leave claiming he was disabled. He nevertheless kept showing up at work even though he was on leave and Sears policy prohibited this. Each time, Sears told him to go home. On one visit, Deng deleted some of the data he had compiled (there appeared to be no dispute about who deleted the data). Sears asked Illinois to prosecute (for tampering with computer files without permission) but the prosecution was dismissed (the court concluded) in Deng's favor.
Sears won, however, because, the court found, it had probable cause to ask Illinois to prosecute Deng on the basis that Deng deleted the data without asking, he was on leave at the time he deleted the data, and shortly after the criminal case started, Deng fled Illinois. Deng argued he thought he had the right to delete the data because it was not needed but the court said that was rediculous, given that Sears had spent $40,000 to recover it.
What intrigued me was how the court incorporated the fact that Deng was on leave at the time he deleted the data. Being on leave, Deng could not possibly known whether or not Sears needed the deleted data so all of his arguments missed the point. As the court said, "A person’s ability to explain away seemingly damning facts does not negate the existence of probable cause, even though it might provide a good defense should the case go to trial."
Deng's malicious prosecution suit suffered a fate many such suits suffer - dismissal prior to a trial. Employers that make rational decisions based upon the observed facts will probably also be able to get similar suits dismissed.
Also, Sears aided the outcome by enforcing its "don't come to work while on leave" policy. Realistically, I expect few employees want to come to work while on leave but in today's computerized workplace, the lines between when an employee is "at work" tend to get blurred. Suppose Deng had had remote computer access to his data?
So, clearly define your rules on when an employee may work (perhaps requiring advance approval) and may not work while on leave and then avoid the temptation to overlook them. Also, if the employee is on an FMLA leave, then err on the side of taking a hands off approach altogether.
There are several defenses to such suits, though the details vary from state to state. A common one is the requirement that the prior suit or prosecution be terminated in the suing party's (in the second suit) favor. The Seventh Circuit spent some time recently discussing some quirks (I suppose) of Illinois law on this point but (like the court) I see no need to discuss that in detail here. What was of more interest was how the court resolved another defense, when an employer has probable cause to complain about an employee's criminal misconduct.
Probable cause is not a difficult concept though it should not be confused with "reasonable suspicion," the standard (of information) employers must have before requiring an employee take a lie detector test nor should it be confused with the employment discrimination context of "honest belief."
The legal definition of probable cause is “exist[s] where the known facts and circumstances are sufficient to warrant a man of reasonable prudence in the belief that contraband or evidence of a crime will be found,” Ornelas v. United States, 517 U.S. 690, 696 (1996); Illinois v. Gates, 462 U.S. 213, 238 (1983). That doesn't really say much in the employment context (but it is a start). Here is what happened.
Yuming Deng worked for Sears Roebuck as a statistical modeler compiling computer data for financial purposes. After a heated performance appraisal dispute, Deng took leave claiming he was disabled. He nevertheless kept showing up at work even though he was on leave and Sears policy prohibited this. Each time, Sears told him to go home. On one visit, Deng deleted some of the data he had compiled (there appeared to be no dispute about who deleted the data). Sears asked Illinois to prosecute (for tampering with computer files without permission) but the prosecution was dismissed (the court concluded) in Deng's favor.
Sears won, however, because, the court found, it had probable cause to ask Illinois to prosecute Deng on the basis that Deng deleted the data without asking, he was on leave at the time he deleted the data, and shortly after the criminal case started, Deng fled Illinois. Deng argued he thought he had the right to delete the data because it was not needed but the court said that was rediculous, given that Sears had spent $40,000 to recover it.
What intrigued me was how the court incorporated the fact that Deng was on leave at the time he deleted the data. Being on leave, Deng could not possibly known whether or not Sears needed the deleted data so all of his arguments missed the point. As the court said, "A person’s ability to explain away seemingly damning facts does not negate the existence of probable cause, even though it might provide a good defense should the case go to trial."
Deng's malicious prosecution suit suffered a fate many such suits suffer - dismissal prior to a trial. Employers that make rational decisions based upon the observed facts will probably also be able to get similar suits dismissed.
Also, Sears aided the outcome by enforcing its "don't come to work while on leave" policy. Realistically, I expect few employees want to come to work while on leave but in today's computerized workplace, the lines between when an employee is "at work" tend to get blurred. Suppose Deng had had remote computer access to his data?
So, clearly define your rules on when an employee may work (perhaps requiring advance approval) and may not work while on leave and then avoid the temptation to overlook them. Also, if the employee is on an FMLA leave, then err on the side of taking a hands off approach altogether.
Friday, January 2, 2009
New Year’s Resolutions for Employers
If you are the sort of person that makes New Year's resolutions, perhaps you might want some hints as to some of the ways you, as a Tennessee employer, can help make 2009 less risky, from an employment litigation perspective.
Everyone's New Year's wish would be to avoid being sued but in today's climate, that is unrealistic. It takes very little money ($350.00, currently) to file a federal court lawsuit - much less in most Tennessee courts - and there are a good number of attorneys who will front that cost for an employee. In some instances, the only thing between you and a lawsuit is the retainer many attorneys charge before filing a suit. Pretty much any adverse employment action can be the basis for some kind of discrimination or retaliation claim even if it is not ultimately meritorious. It isn't as if there is some magical screening device to make sure only potentially valid suits get filed.
Now that I have your attention, what I tell folks is that while you can't always prevent a lawsuit, there are things that can be done to help increase the likelihood of getting the lawsuit dismissed early in the litigation process. Best of all, most of these things won't cost you anything (and if they do it is money well spent). So, here are a few resolution suggestions with links to several "best practices" my partners and I put together to give employers some things to think about. I am not going into important details here because that is supplied on the linked pages.
Have an employee handbook that accurately reflects your employment practices. Employees should acknowledge receipt of the handbook in writing and this page should include a statement where the employee acknowledges employment is "at will" and that the handbook is not a contract of employment for a definite term.
Have a policy (in your handbook) prohibiting harassment of any kind. Train all your employees about your harassment policies.
If you receive a complaint about sexual harassment or other illegal harassment, investigate it immediately.
If you get sued or if you receive a charge from the EEOC or THRC, place a "litigation hold" on your relevant documentation and electronic information.
Have sound hiring practices which rely upon accurate job descriptions, train you hiring managers, use structured interviews and document the reason for every decision (including for employees who are not hired).
Establish and follow a written compensation policy that addresses all the factors that go into a pay increase (or decrease) decision, which compares (and only compares) employees in similar or the same jobs, and includes a contractually imposed limitations period.
Have an Employee Technology Use policy that addresses all devices, tells employees you have the right to monitor use, forbid illegal activity, and ensure employees observe confidentiality requirements of customers.
Properly manage employee absenteeism and tardiness. Have a sound policy, keep careful notes, know which laws you must observe (i.e., based upon employee numbers) and retain all correspondence from employees and physicians relating to absences.
Take simple steps to avoid entanglement with Employee Benefit (ERISA) problems.
As I said, following these resolutions won't necessarily keep you out of court or avoid the EEOC altogether but if followed, they will help ease the financial pain such an encounter normally causes.
And finally, have a Happy New Year.
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