Avoiding Pretext - Job Descriptions and EEOC Responses

A federal court of appeals recently upheld a jury verdict for an employee in an age discrimination claim.  The decision shows what happens when an employer explains a hiring or promotion decision by relying on a criteria not mentioned in the vacancy announcement.

National American University was hiring a director of admissions for its Rapid City, South Dakota campus.  The employee worked for the university and sought the promotion.  She was one of three finalists but was not offered the job when the two preferred candidates declined it.  Instead, the university broadened its search ultimately offering the job to a substantially younger candidate.

At trial, the University explained its refusal to promote the plaintiff on the ground that she lacked management experience.  While a director of admissions would seemingly need "management experience" the position vacancy announcements failed to mention it.

Worse, in its EEOC response, the University asserted the employee had "struggled" with her performance and had received "mediocre" ratings.  Yet, at trial, the University abandoned this explanation and its witnesses praised the employee's performance.

The lessons from the decision are pretty basic.  Make sure hiring or promotion decisions can be and are explained by reference to criteria stated in the job description.  While employers are not rigidly bound by what is in the position vacancy, it is a mistake to explain a promotion decision by citing criteria that are not in the job description.

The decision also illustrates the importance of making sure the response to an EEOC charge will be the reason asserted at trial.  It is often tempting, in responding to an EEOC charge, to "embellish" by asserting problems the employer had with the employee, even if the problems were not considered in reaching the decision at issue. If that is what the University did here, it backfired

Silently Revisiting Gross v FBL - Does the "Causation Standard" Make a Difference

I'm back.  The press of work and other good causes prevented me from updating the blog.  For that I apologize.

I was prompted to write a post because of a Sixth Circuit decision that came out today.  A teacher at a high school in Michigan sued the school claiming he had been retaliated against under the first amendment for having filed a prior lawsuit alleging harassment of his daughter by another teacher.  (While constitutional retaliation clams are sometimes different than statutory retaliation claims, those differences are unimportant here.)

What caught my eye was the court's description of the causation standard.  In 1977, in a case called Mount Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274, 285–86 (1977), the Supreme Court said that constitutional retaliation claims required the plaintiff to establish that the improper motive played a "substantial" or "motivating" factor in the decision.  The Court didn't explain but cited to a companion case decided the same day, Arlington Heights v. Metropolitan Housing Dev. Corp., 429 U.S. 252 (1977), which explained, among other things, that the constitution did not require a "sole cause" showing but that the evidence in that case failed to show a racial bias motivated the decision.

Skipping forward to today, the Sixth Circuit set out the "substantial or motivating factor" standard from Mt. Healthy saying "we have interpreted this inquiry to mean that a motivating factor is essentially but-for cause—without which the action being challenged simply would not have been taken." (Quotations omitted.)

That caught my eye because  the 1991 amendments to Title VII - which said a plaintiff can prevail if he or she shows discrimination was a "motivating factor" - have led many to argue that "motivating factor" is a lower or lesser standard than "but for" causation.  Most court decisions simply assume that there is a difference.  (But see Harper, The Causation Standard in Federal Employment Law: Gross v. FBL Financial Services, Inc., and the Unfulfilled Promise of the Civil Rights Act of 1991, 58 Buffalo L. Rev. 69 (2010) (discussing difference but ultimately drawing unsupported conclusion that Congress must have  intended there to be a difference between a "motivating" and "substantial" factor).  The Supreme Court decision in Gross didn't help this by contrasting the Title VII language from the language in the ADEA: "Unlike Title VII, the ADEA's text does not provide that a plaintiff may establish a discrimination by showing that age was simply a motivating factor."  Gross v. FBL Financial Services, Inc., 557 U.S. ____ (2009).  Loose language read out of context is the bane of any jurist or lawyer.  Read in context, the Court seems to have been attempting to explain its holding - that the dual motive theory does not apply to the ADEA.


So what does this mean, practically? Anyone who thinks they can coherently explain the difference (or that there is a difference) between a "contributing", "motivating", "substantial", "causal" or "because of" / "but for" factor is trying to sell you the Brooklyn Bridge.  I've been practicing employment law for 20 plus years and would not begin to try and explain it.  Employers certainly shouldn't get way-laid by concerns over causation or motivation.

Claryfing FMLA Service and Benefit Rules

The Seventh Circuit in Chicago issued an interesting FMLA decision today.  The decision addressed how to calculate the 1,250 hours of service requirement and whether removal of absenteeism "points" is a benefit of employment.

To be eligible for FMLA leave, an employee must have worked 1,250 hours in the preceding 12 months. The employee argued that the employer should have given her credit toward the 1,250 hours for the time she was on a prior FMLA leave.  Without these hours, she didn't have enough for her second leave to qualify for FMLA protection.  The court disagreed:

There is no basis for such a contortion of the statute—no hint in the statute or elsewhere that Congress envisaged and approved such a circumvention of the requirement that an applicant for FMLA leave have worked 1,250 hours in the preceding 12 months.

The second issue addressed in the decision was more interesting.  It takes a little explaining but it is worth it.  Employers commonly have absenteeism policies that accrue points for employees per absence.  Points are then  removed when the employee has worked a defined period of time.  The Seventh Circuit decision, the absenteeism policy provided for termination when the employee reached 8 absenteeism points in the preceding 12 months.  A point is then removed 12 months after it is imposed.  The 12 months period, however, excluded time spent on leave so that if an employee took a two month leave during the 12 months, the employee would have to avoid accruing 8 points over a 14 month period.  This practice has considerable  logical appeal.  If an employer cannot count the period an employee is on FMLA leave toward the absenteeism point system then it makes sense to exclude that period from the period counted.  It is crucial, of course, that the policy apply to all leaves not just FMLA leaves.

The employee argued that expanding the 12 month period for while she was on FMLA leave denied her a benefit and the FMLA provides that taking FMLA leave “shall not result in the loss of any employment benefit accrued prior to the date on which the leave commenced.” 29 U.S.C. § 2614(a)(2).  

The court agreed that removing points after 12 months was an employment benefit protected by the FMLA but ultimately ruled the employer had not retaliated against the employee by extending the 12 month period.  

The FMLA prohibits loss of benefits only when those benefits have "accrued prior to the date on which the leave commenced." 29 U.S.C. § 2614(a)(2) and the FMLA further provides that it does not entitle an employee to "the accrual of any  . . . employment benefits during any period of leave."  So, the court explained:

If removal of absenteeism points. . . is an employment benefit, it is one that accrues 12 months after an absence. Until then the employee has no right to have an absenteeism point removed. An employee who worked for 11 months and was on leave the other month (say he began work on January 1 and was still employed on December 31, but was on leave during the month of July) cannot add the month that he was on leave in order to obtain a benefit available to an employee who  worked for 12 months rather than 11, because the employee is not entitled to “the accrual of any . . . employment benefits during any period of leave."

While the decision upholds the employer's practice it also demonstrates that employers must be careful when  designing a "no fault" absenteeism program so that it does not run afoul of the FMLA.

Will Congress Extend Premium Assistance for COBRA Benefits Again?

As the law currently provides, the COBRA premium assistance program expires on March 31, 2010.  That is, any employee involuntarily terminated after March 31, 2010, must still be offered COBRA coverage but the employee will not be able to pay only the 35% and have the federal government reimburse the rest through a payroll tax credit.

There is, however, a bill pending in Congress that would extend the COBRA premium assistance program to cover involuntary terminations that occur on or before April 30, 2010.  The bill passed the house but a final vote in the Senate was filibustered and no vote is expected before March 31, 2010.

The Senate is, in fact, in recess and isn't expect to consider the bill until April 12, 2010, so neither employers nor employees will know until mid-month whether the COBRA premium assistance program will apply to involuntary terminations that happen in April 2010.  Should the program be extended, which seems probable, expect it to apply retroactively, to all involuntary terminations during April 2010.

A prior post addressed the COBRA notices employers will need to send out to affected employees.  Expect something similar to be required if the COBRA premium assistance program gets extended in mid-April.

DOL Changes its Position FLSA Exemption for Mortgage Loan Officers

Today, the DOL issued its first wage and hour opinion of the current administration.  The DOL has historically issued a number of opinion letters each year and the absence of any new opinion letters has been puzzling.  The DOL has decided to change how it issues official pronouncements.  In an email notice sent out today, the DOL explained:

In order to provide meaningful and comprehensive guidance and outreach to the broadest number of employers and employees, the Wage and Hour Administrator will issue Administrator Interpretations when determined, in the Administrator’s discretion, that further clarity regarding the proper interpretation of a statutory or regulatory issue is appropriate. Administrator Interpretations will set forth a general interpretation of the law and regulations, applicable across-the-board to all those affected by the provision in issue. Guidance in this form will be useful in clarifying the law as it relates to an entire industry, a category of employees, or to all employees. The Wage and Hour Division believes that this will be a much more efficient and productive use of resources than attempting to provide definitive opinion letters in response to fact-specific requests submitted by individuals and organizations, where a slight difference in the assumed facts may result in a different outcome. Requests for opinion letters generally will be responded to by providing references to statutes, regulations, interpretations and cases that are relevant to the specific request but without an analysis of the specific facts presented. In addition, requests for opinion letters will be retained for purposes of the Administrator’s ongoing assessment of what issues might need further interpretive guidance.

(Sorry for the long quote but for some of us, knowing the process is as important as the result.)

The first "Administrator Interpretation" takes the position that the typical duties of a Mortgage Loan Officer does not qualify the employee as being in an administrative exempt position.  In a lengthy, eight page analysis,  the DOL explained that "mortgage loan officers typically have the primary duty of making sales on behalf of their employer; as such, their primary duty is not directly related to the management or general business operations of their employer or their employer’s customers."  

The DOL did not take a position on whether Mortgage Loan Officers might be exempt under a different exemption.  It noted that employers had argued loan officers are exempt as commissioned employees but cautioned that the employer would need to qualify as a "retail or service establishment."

Perhaps what is more interesting about this administrative interpretation is that it "withdraws" (legalese for "rejects") a 2006 DOL ruling which had concluded mortgage loan officers could qualify for the administrative exemption if their primary duties were not "sales."  The difference in positions (between the 2006 and 2010 rulings) seems to be that the 2006 ruling had permitted officers who were making loans to individuals in their personal capacity to qualify as exempt.  The 2010 ruling explained:

work for an employer’s customers does not qualify for the administrative exemption where the customers are individuals seeking advice for their personal needs, such as people seeking mortgages for their homes. Individuals acting in a purely personal capacity do not have “management or general business operations” within the meaning of this exemption. However, if the customer is a business seeking advice about, for example, a mortgage to purchase land for a new manufacturing plant, to buy a building for office space, or to acquire a warehouse for storage of finished goods, the advice regarding such decisions might qualify under the administrative exemption.

Employers who have relied upon the 2006 ruling need to understand that they can no longer rely upon the 2006 ruling to establish that they made a good faith attempt to comply with the FLSA.  That doesn't mean an employer is now liable because they relied in the past on the 2006 ruling.  It simply means that they will have to re-evaluate their position in light of today's ruling.

DOL Releases Updated COBRA Notice For Recovery Act Extension

The DOL has released several model COBRA notices that employers may use when providing notices of the availability of premium reductions and additional election periods for health care continuation coverage.  The notices cover the March 2, 2010 premium assistance extension.

The DOL includes other model forms as well.  These are included in various packages the DOL has created to cover different situations.  The packages include the following disclosures:

• A summary of ARRA’s premium reduction provisions.
• A form to request the premium reduction.
• A form for plans (or issuers) that permit qualified beneficiaries to switch coverage options to use to satisfy ARRA’s requirement to give notice of this option.
• A form for an individual to use to satisfy ARRA’s requirement to notify the plan (or issuer) that the individual is eligible for other group health plan coverage or Medicare.

COBRA Premium Assistance Extended Again

Yesterday, Congress and the President extended COBRA premium assistance again.  The has updated the introduction on the COBRA webpage at http://www.dol.gov/COBRA to reflect the Temporary Extension Act of 2010. Hopefully, the DOL will soon release the new information as the TEA does more than simply extend the premium assistance period for a month.  I add links to the updated the fact sheet, FAQs and other materials when the DOL updates its COBRA webpage.

Religious Practices that Discriminate Because of Gender

Consider the following scenario:

You have recently hired a male employee.  When you are introducing him to his co-workers, an African-American co-worker offered her hand to greet him but he refused to shake hands. The new employee explained that he did not touch women because of his Muslim religion. When a human resources manager spoke with him about the incident, the new employee said that it was the co-worker’s female gender, not her race, which prompted his response.

What do you do?  You have an obligation to accommodate the new employee's religious practices but you also have to make sure that his religious practices do not create a hostile environment for women.

This scenario was presented to the EEOC for an opinion last year.  The EEOC's associate general counsel  responded by letter in an "informal" (non-binding) opinion.  Her answer was to say it depends on what is an undue hardship under the religious discrimination principles of Title VII:

• courts have found, and the Commission has stated, that encroaching on co-workers’ ability to perform their duties or subjecting or threatening to subject co-workers to a hostile work environment “will generally constitute undue hardship.
• a showing of undue hardship requires more than speculation about negative consequences or expressions of discomfort, irritation, or annoyance by co-workers.

What if the newly hired employee is a sales person?  Can the employer consider customer offense in deciding whether the new employee's refusal to shake hands with a woman is an undue hardship?

• The courts also are inclined to find undue hardship if the employee’s religious expression can be perceived by customers as the employer’s own message.

The employer, the EEOC said, should evaluate the actual impact the new employee has.  If he "conveys negativity about women" (or conveys "an intent to demean based on gender") then the employer can take action but if he get along fine with women, they should not.  The same rule would apply to interactions with co-workers.  

When an employer is faced with what we can call the "no win" scenario, there are at least two key points to remember.  

• I have never heard of a court criticizing or punishing an employer for providing appropriate training to its employees.  Bad training, of course, is a different story.
• It is far better to document observations than to make conclusory statements.  If you are like me, and don't well recall details, writing down what you observe ("just the facts") is crucial.  Getting in court and simply saying, to use this scenario as an example, the new guy didn't get along with women because of his religion, is only going to increase the fees you pay your attorney.

Impact of Gross on ADEA Claims

I cautioned earlier that the Supreme Court's decision in Gross v. FBL Financial shouldn't be taken by employers as dramatically making it harder for employees to prove age discrimination.  I have also said that newspaper reports saying Gross requires employees to prove age was the "sole" cause are dead wrong.

A recent decision by the  federal court of appeals in Atlanta (deciding appeals from Florida, Georgia and Alabama) illustrates that Gross doesn't  immunize an employer from its stupid mistakes and loose statements nor does it require employees to prove age was the sole cause of their firing.

A non-profit employed an older worker as a fundraiser.  She was moved to a different job for poor performance (instead of being fired - no good deed goes unpunished).  She was shortly later fired for poor performance in the new job.  The employee fought back by putting on evidence that her boss made the following age statements:

• “I need someone younger I can pay less"
• "you are very old, you are very inept. What you should be doing is taking care of old people. They really need you. I need somebody younger that I can pay less and I can control.”
• “[Plaintiff] is too old to be working here anyway.”

The employer tried to argue that under Gross, it should win because it would have fired the employee for poor performance, even if the decision had age issues (he denied making the statements).  The court didn't buy it, saying the jury had to decide whether age was the reason for the firing.

EEOC Proposes Definition of "Reasonable Factor Other Than Age"

In light of recent Supreme Court decisions construing disparate impact liability under the ADEA, the EEOC has issued a proposed rule meant to define what is a "reasonable factor other than age" or RFOA.  (This is one of the potential rules I mentioned in December.)

The EEOC's definition won't have a significant impact on the routine age discrimination claim most employers face.  It could, however, result in an increase in the number of disparate impact claims asserted in ADEA lawsuits, particularly in IRIF claims.

The RFOA defense only applies when the proof establishes that the employer has engaged in conduct that is "otherwise prohibited" by the ADEA.  In an intentional discrimination claim it will be unusual (but not theoretically impossible) for an employer to be able to show that its conduct is intentionally discriminatory but yet reasonable.  (Some "reasonable" factors are hard wired  into the ADEA and implementing regulations, most relate to employment benefits, allowing employers to "discriminate" against older workers in end result where the cost of providing the benefit is equal to what it costs for a younger employee).

So, the RFOA defense will appear most in disparate impact claims, where the employer has a facially neutral practice that adversely affects older workers.

The EEOC says that "a reasonable factor is one that an employer exercising reasonable care to avoid limiting the employment opportunities of older persons would use."  To decide this you look to various criteria.  I won't go deep into these criteria here.  They can be summed up as follows: An employer taking action that adversely affects employees should (1) make sure it is aware of the effect of the decision on older workers (indeed, on all classes), (2) evaluate the severity of the impact on older workers, (3) consider whether there is some other, less harmful, means of achieving the same goal, and (4) conduct training of managers on how to avoid age-stereotyping.

I said at the outset that the RFOA defense will apply primarily in disparate impact cases.  But as I was reading through the EEOC's comments, what struck me was that this rule will have a significant impact on reduction in force litigation when older employees are disproportionately laid off.

Employers need to realize that disparate impact age claims can be brought (in the same complaint that alleges intentional age discrimination) to challenge the result of any "practice" the employer adopts, including "practices" the employer does not "officially" adopt.   If there is a statistical disparity, it won't be too hard for an employee to argue that there is a  "practice" that causes the skewed statistics.  (One practice can be, the EEOC says, where the employer gives "supervisors unchecked discretion to engage in subjective decision making.")

At that point, the employer will need to be able to show, in an IRIF case, that the criteria used to select employees to be laid off were  "reasonable" and based on some factor other than age.  While the employer does not have to adopt an employment practice that has the least severe impact on older workers,ignoring ways to lessen the impact will not look good.  Employers must also remember that under existing EEOC regulations (not modified by this proposed rule): "A differentiation based on the average cost of employing older employees as a group is unlawful" (with certain exceptions for benefit issues).

Pending Tennessee Legislation Permitting Mandatory Direct Deposit - Debit Cards

Earlier this week, the Tennessee Senate Commerce, Labor & Agriculture Committee passed a bill (SB2633/HB 3095) that would amend Tenn. Code Ann. 50-2-103 so that employers could require employees to be paid by direct deposit or, if the employee does not want direct deposit, by a prepaid debit card.

 If a debit card is issued, it must permit the employee to make one no cost withdrawal from it (such as at an ATM within the network) for up to the full amount on the debit card.  That could pose problems for ATM withdrawals where there are daily limits on the amount that can be withdrawn.  The employee would then have to go into a bank and obtain the funds from a teller.

There would also be certain disclosure requirements for debit card use, namely, the employer must explain any fees the employee would have to pay for using the debit card.

Employers can do this now with the consent of the employee.  This bill - if it passes - would permit employers to require employees chose between direct deposit or debit cards instead of, as now, cash or checks.

The bill is being promoted by Visa.  Visa's lobbyist explained (the video of the committee meeting can be seen here) that over 20 other states have passed laws or adopted regulations of this nature.  Visa's interest, obviously, is in increasing the use of debit cards as they get a percentage (from the merchant) of every dollar spent.  I'm told by at least one bank that they do not charge an additional fee for obtaining a debit card over and above the fees charged for making direct deposits.

Must an Employer Provide Lodging as a Reasonable Accommodation

I'm always looking for unusual legal precedents.  I shouldn't be surprised when they come from unusual sources. I receive emails from the Government Accountability Office listing the Comptroller General decisions they issue.  The Comptroller General of the U.S. GAO issues legal decisions and legal opinions on appropriations law, bid protests, and other issues of federal law.  Agencies can ask the Comptroller General for advice on whether federal law permits a specific expenditure. 

Today's e-mail from the GAO addressed whether the Department of Housing and Urban Development, Office of Inspector General, could us appropriated funds to pay for a reasonable accommodation for an employee who wanted the IG's office to provide her with lodging closer to where she would be performing audits.  

The Comptroller General decision addresses an unusual accommodation request.  Federal employees, by statute, are paid lodging expenses when they are "away from the employee's designated post of duty."  The employee's need for lodging, however, was not away from her post of duty.  There was, in other words, no authorization for paying the employees lodging for these trips. 

The Comptroller then addressed whether the appropriated funds could be spent nonetheless, as part of a reasonable accommodation, and concluded they could not because the requested accommodation was not reasonable:

An employer, however, is not required to provide for accommodations that fall outside the scope of employment, like commuting. Laresca v. American Telephone and Telegraph, 161 F. Supp. 2d. 323 (D.N.J. 2001). In this case the employee's drive is akin to a commute, traveling from the employee's home to the work site. Reasonable accommodations are directed at enabling an employee to perform the essential functions of the job itself, 29 C.F.R. sect. 1630.2(o)(1)(ii), and federal courts have held that activities like commuting to and from the workplace fall outside the scope of a job. Consequently, an employer is not obligated to provide a reasonable accommodation for such activities.

The Comptroller General encouraged the IG's office to find some other accommodation that would be effective.

Sixth Circuit Clarifies Reduction in Force Standards

Today's decisions from the Sixth Circuit included a reduction in force age discrimination case, Harriet Schoonmaker v. Spartan Graphics Leasing, LLC, that helps to clarify the legal standards for RIFs and addresses other issues that commonly arise in RIF litigation.  The employer had between 50 and 75 employees and, as is not uncommon for employers of that size, did not have detailed RIF procedures.  When the employer decided to cut two employees because work was slow, they made a "consensus" decision to cut from the third shift because it was the least productive. One employee (not the plaintiff) was cut because she had been giving the job as a favor and was retiring soon. As to the 58 year old plaintiff, the employer chose a 29 year old because, as the decision says, plaintiff "was sometimes hard to work with" and the other employee was "the better team player." Both were equally qualified but the employer felt the other employee was "more productive" even though there were no work records to support this one way or the other.


Several parts of the decision are significant.  

• First, the court clarified that, in a RIF, the retaining a younger employee and laying off an older employee is not by itself enough to establish a prima facie case.  There had been some doubt about this because of loose language in a prior decision.
• Second, the court re-emphasized that an employee cannot show an employer's decision is discriminatory by arguing that she was more qualified or more productive than the employee retained.
• Third, the decision shows that minor discrepancies during a RIF do not necessarily amount to proof of discrimination.