In light of the many high-profile news stories involving sexual harassment, employers are cognizant of the need to update policies, improve investigation procedures, and conduct training. However, there is more going on than meets the eye.  Several states have proposed legislation that creates a path for victims to come forward.  In addition, the new federal tax law also impacts how an employer will evaluate sexual harassment claims.

In New York and South Carolina, proposed bills would prevent employers from requiring employees to bring sexual-harassment complaints to binding arbitration.  The bills aim to prevent employees from having to use a typically confidential arbitration process.  Another bill was introduced in New York that prevents harassment settlements from including a nondisclosure provision – stripping employers of the ability to keep issues confidential between the employer and employee.  Other proposed state legislation include:

  • New Jersey – A bill seeks to prevent employees from executing a release that waives the right to discuss workplace discrimination or harassment.
  • California – A bill proposes that would prevent nondisclosure agreements from being included in sexual harassment and sex discrimination settlements.
  • Pennsylvania – A bill would render unenforceable contracts barring victims from reporting harassment or naming a harasser.

Finally, the new federal Tax Cut and Jobs Act adds another layer onto an employer’s sexual harassment settlement considerations. Under the new law, any settlement or payment attributable to sexual harassment or sexual abuse – as well as the attorney fees related to such settlement or payment – are not deductible if the settlement is subject to a nondisclosure agreement.  An employer now must choose between a nondisclosure clause and tax deductibility when negotiating settlements of a sexual harassment or sexual abuse claims.  By putting pressure on employers to avoid nondisclosure clauses, Congress hopes that fewer claims will be kept silent thereby encouraging additional claims to be asserted.   And, this brings us back to where we started – increased awareness and training is critical.

Though still a year away, employee health plans are in for significant change beginning January 1, 2019.  This modification is the result of a longstanding argument about plan administration.  In October 2016, the AARP sued the Equal Employment Opportunity Commission (EEOC), arguing that the regulations interpreting the Americans With Disabilities Act and Genetic Information Nondiscrimination Act include financial incentives or penalties that are discriminatory and penalize employees who do not want to provide health-related information but are being compelled to do so (rather than disclosure being voluntary) by the incentives or penalties. The provisions currently allow employers to ask questions relating to medical history of employees and employees’ spouses, and potentially require employees to undergo medical exams to participate in the program.  The rules also allow employers to provide limited incentives to employees who choose to participate.   Under the current regulations, incentives are capped at thirty percent of the total cost for self-only coverage for employees who are enrolled in a wellness program, but alternatively allow a penalty of up to thirty percent for those who refuse to participate in the program.

In December 2017, U.S. District Court for the District of Columbia ordered the EEOC to eliminate the portion of these rules that included the use of these financial incentives and penalties in the wellness plans, effective January 1, 2019 (AARP v. U.S. Equal Emp’t Opportunity Comm’n, Civ. No.: 16-2113).  According to the court, doing so in 2018 would cause mass disruption to the workplace, but leaves “plenty of time for employers to develop their 2019 wellness plans with knowledge that the Rules have been vacated.” Additionally, the Court encouraged the EEOC to draft new rules consistent with this ruling by August 2018.   In the meantime, employers should begin to review and adjust their current wellness plans, as the EEOC estimates that businesses will need at least six months to adjust to a change.

 

The Eleventh Circuit Court of Appeals recently vacated the lower court’s grant of summary judgment that dismissed a disability discrimination claim brought by a female police detective.  Years earlier, the detective suffered a “small heart attack” that the Police Department felt presented a significant risk if she suffered a Taser shock.  As part of the Taser usage and training policy, the Department required each officer to receive a five-second shock.  The plaintiff obtained a letter from her doctor asking for an exception due to her prior medical history.  Soon thereafter, the Department put her on leave and terminated her employment.   Although the trial court felt that dismissal was appropriate, the Circuit Court determined that a jury could conclude that the exposure to Taser shocks was not an essential function of the job.   A trial was deemed necessary because, in part, the “physical demands” section of the written job description did not mention that it was necessary for a detective to be exposed to a Taser shock.  Further, the “work environment” section of the job description stated a “detective must be willing to carry a firearm on and off the job and be mentally and physically capable of using deadly force, if justified.”  It did not state anything about Tasers or using a Taser. 

To prevent and better defend claims, employers regularly should update job descriptions to ensure they accurately describe current essential functions. 

According to the U.S. Equal Employment Opportunity Commission’s annual Performance and Accountability Report (PAR), the EEOC filed more than double the number of discrimination lawsuits against employers in FY 2017 than in F^2016. The Agency filed 184 lawsuits in FY 2017 as compared to only 86 in FY 2016.  Thirty of these 184 cases involved allegations of systemic discrimination. EEOC also increased to 24.8% the number of systemic cases on its active litigation docket in FY 2017, thereby achieving its goal of reaching 22-24% by FY 2018.   In total, in FY 2017 the Agency secured approximately $484 million for alleged victims of discrimination, an increase from approximately $482 million in FY 2016.  At the same time, individual charges of discrimination filed with the Agency numbered 84,252 in FY 2017, down by approximately 7,000 from FY 2016.  This marks a change from the recent multi-year trend of increasing numbers of charges filed.  The Agency also reduced its backlog of pending charges by 16% in FY 2017.

While it remains to be seen what impact President Trump’s appointees to the EEOC will have on these trends in FY 2018, the PAR shows that at present the EEOC continues its focus on systemic based discrimination and will aggressively seek enforcement of such claims via federal court litigation.  In addition, it remains unclear if the lower number of charges filed is an anomaly or will continue in future years.

Holiday parties aren’t the only thing your employees are buzzing about this time of year – ‘tis the season for year-end performance evaluations! Performance evaluations, when used properly, are a powerful tool for constructive feedback and support for favorable and adverse personnel actions. Below are the tips employers should keep in mind when completing performance evaluations:

Honesty is the Best Policy

Supervisors should be honest in performance reviews and not simply rate an employee as “meets expectations” to avoid confrontation. If there is a performance area that needs improvement, the evaluator should take this opportunity to inform the employee and provide guidance on how to improve.  Sugar coating now leads to disagreements and disputes when the company later wants to terminate or deny promotion.

Be Specific

Evaluations should include specific examples of where the employee failed to expectations as well as how the employee excelled. For example, if an employee had issues completing work in a timely manner, the evaluation should include specific examples of deadlines the employee failed to meet.  Simple forms could identify “agrees of strength” and “areas for improvement” and explain each such rating.  If the review focuses solely on problems areas, it may be a “turn off” because the employee may view the review as “papering” the file.  Proposing how the employee can improve may result in noticeable change and can help support a defense later on that the company was trying to help, not discriminate.

Don’t Forget About The First Half of the Year

One of the most common mistakes supervisors make in the evaluation process is focusing on the most recent projects/events. An accurate evaluation, however, should evaluate performance during the entire review period. Be sure to look back at the employee’s work performance from the beginning of the year and include feedback that covers the full review-period.

This Is Not a Surprise Party

Supervisors should provide employees feedback throughout the year. Problematic behavior should be addressed at the time it occurs so the employee has the opportunity to correct any issue before it appears on the year-end performance evaluation.

In Munive v. Fairfax County School Board, the Fourth Circuit recently ruled that an employer’s refusal to rescind a disciplinary notice issued after claimant filed a discrimination charge with the Equal Employment Opportunity Commission, and the consequent loss of a promotion, could constitute an adverse action sufficient to create a bona fide retaliation claim.  As such, the Court denied a motion to dismiss and permitted pretrial discovery to continue

The case serves as a reminder to employers to evaluate all of the facts prior to taking (or refusing to take) any action against an employee who recently has engaged in protected activity, even if the action may not appear to result in a significant impact on the employee’s terms and conditions of employment.

Proving that non-economic damages and perhaps attorney’s fees are driving forces in litigation, constructive discharge clams were asserted and survived summary judgment in a federal district court action in Oregon. The Court’s ruling permitted a plaintiff’s retaliation claim to survive summary judgment even though the employer rescinded the termination and rehired plaintiff within 24 hours after termination.  (Aichele v. Blue Elephant Holdings, LLC dba Human Collective II, November 13, 2017).  Denying the dismissal motion, the Court ruled that even though the employee’s discharge was rescinded within 24 hours after it was implemented, and even though Plaintiff suffered no economic loss, she was deemed to have been subject to an actionable adverse employment action under Title VII.   In effect, the timing of the discharge soon after certain complaints was sufficient to permit a jury to determine if the company was liable.   Reinstatement within 24 hours may have a favorable impact on damages, but not on liability.

In this case, Plaintiff had a documented history of lodging complaints about working conditions. While the employer considered its options and consulted with counsel, the employee lodged a sexual harassment complaint after a video was played in the workplace that contained sexually graphic content. After viewing the video, the employee shouted at her manager and refused to leave the premises when instructed to do so.  Several days thereafter, she emailed a formal sexual harassment complaint.  Soon thereafter she was discharged.  On the day following termination, the owner rescinded the termination decision and placed Plaintiff on paid administrative leave.  Although she was placed back on the schedule soon thereafter, she refused to return to work.   In sum, she suffered no loss of wages because the discharge was rescinded, but she resigned (claiming to have been constructively discharged).

Determining how long an employer must hold a position for an absent worker is a question that vexes Human resources Directors and Operations management. The Seventh Circuit recently ruled, in Severson v. Heartland Woodcraft, Inc., that an employee’s request for extended leave after having exhausted his Family Medical Leave Act (“FMLA”) entitlement is not a “reasonable accommodation” under the Americans with Disabilities Act (“ADA”).  This ruling is at odds with other federal rulings and many state court decisions requiring an employer to show that it would suffer an undue hardship by holding open the possibility of return from an unpaid leave (for an employee usually on COBRA).

In Severson, the plaintiff employee suffered from back pain that became increasingly worse, causing him to take a leave of absence under the FMLA.  On the last day of his FMLA covered leave, the employee had surgery.  As such, he could not return to work for several months thereafter.  Because the employee had exhausted FMLA leave, the employer terminated the employment (but invited him to reapply for a position once he had recovered and was medically cleared to work).  The employee filed suit under the ADA, arguing that the employer failed to provide him with a reasonable accommodation – specifically extended leave.

The Court found in favor of the employer, noting that “[t]he ADA is an antidiscrimination statute, not a medical-leave entitlement.” The Court noted that permitting intermittent time off or a short leave of absence “may, in appropriate circumstances” act as a reasonable accommodation.  However, it distinguished those situations from a lengthy month leave, during the employee is not available to perform the essential functions of his/her job.  Ultimately, the Court found that if extended leave were a reasonable accommodation, “the ADA is transformed into a medical-leave statute – in effect, an open-ended extension of the FMLA.  That’s an untenable interpretation of the term ‘reasonable accommodation.’”

Please keep in mind that the ruling is only binding upon courts within the Seventh Circuit (Illinois, Indiana, and Wisconsin) interpreting the ADA. Employers throughout the country should consider that in many jurisdictions a leave of several months may still be considered a reasonable accommodation under the ADA and should consult counsel accordingly.

It seems as if a report of workplace sexual harassment or sexual battery is published nearly daily. While the media focuses upon notable public figures, workplace harassment can occur at any company.  In many of those reports, it seems that the environment was not conducive to reporting the alleged misconduct or to obtaining an internal remedy.  Employers would be well advised to publish anti-harassment policies, conduct anti-harassment raining and to make available bona fide reporting and corrective protocols. Doing so is protective of the workforce and legally can serve as a shield to claims.  For example, in Morgan v. Triumph Aerostructures, LLC, the United States District Court for the Middle District of Tennessee gave credit to an employer’s proactive steps in addressing harassment by dismissing an employee’s claims for sex discrimination, retaliation, and hostile work environment under Title VII and the Tennessee Human Rights Act.

Summary judgment was appropriate because the employer established its entitlement to the Faragher/Ellerth affirmative defense by proving it had promulgated and enforced an anti-harassment policy.  Notably, the employer provided discrimination and harassment training, ensured that employees were aware of how to report harassment, fully investigated the complaints of the plaintiff, and engaged in remedial action thereafter. The importance of effective anti-harassment and anti-discrimination training should not be underestimated.  Employers should periodically review their policies and conduct regular training to ensure (a) that all employees know how to report harassment and (b) that supervising employees are equipped to properly investigate and intervene when a complaint has been made.

A Jackson Lewis webinar on this topic is slated for December 14. Details can be found by clicking here.