Employee’s Electronic Acknowledgement of Arbitration Agreement Sufficient

Although the Federal Arbitration Act (“FAA”) places arbitration agreements on the same footing as any other contract and generally precludes state laws banning mandatory arbitration, employers must ensure that their arbitration agreement are enforceable contracts – an issue governed by state law.

In Taylor v. Dolgencorp, LLC, an employer sought to compel arbitration of claims alleging disability and race discrimination. Plaintiff opposed the motion on the grounds that neither she nor the employer had signed the agreement. Instead, in the modern world of electronic communication, the employer utilized a website and unique login credentials as part of its hiring process, during which this worker clicked an electronic acceptance and typed her initials to acknowledge acceptance of the arbitration agreement.

The federal district court evaluated the plaintiff’s arguments under Missouri law, which has adopted the Uniform Electronic Transactions Act. That Act defines an electronic signature as “an electronic sound, symbol or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.” Following that definition, the Court held that the plaintiff’s actions — logging into a website with unique credentials, clicking an acceptance box and typing her initials — were sufficient to bind her to the arbitration agreement. The Court rejected the argument that the employer was required to sign or otherwise execute the agreement because the employer’s conduct was sufficient to show its intention to be bound.

Employers that use arbitration agreements should ensure that the process they use to communicate agreements to employees, and secure the employee’s acceptance of the agreement, results in a valid and provable contract under the laws of each state where the employer operates. Agreements also should define clearly whether the arbitrator or the court will evaluate unconscionability and other defenses to contractual enforcement.

The ADA Does Not Cover the Possibility of Future Disabilities

The Seventh Circuit Court of Appeals recently ruled that the American with Disabilities Act (“ADA”) does not protect an applicant who later may become impaired. In this instance, a worker applied for a position that would have required him to perform “safety-sensitive” tasks. After he was extended a conditional offer of employment, Plaintiff was required to pass a medical evaluation. Defendant, as a matter of course, does not hire applicants for safety-sensitive position if their body mass index (“BMI”) is over 40. Defendant reasoned that applicants who exceed BMI levels are at a substantially higher risk of developing certain conditions that can result in incapacitation on the job. Plaintiff’s BMI was 47.5.

Plaintiff filed suit asserting that the failure to hire him amounted to discrimination under the ADA on the basis of a perceived disability. The employer denied the allegations, arguing that the worker did not have a disability because “obesity” was not a qualifying impairment and, moreover, there is no evidence to suggest that he was regarded as being presently impaired. The District Court found Plaintiff’s allegations of “perceived disability” to be worthy of a trial, but the Seventh Circuit reversed, concluding that the employer did not perceive there was a current perception had an obesity-related impairment at the time of withdrawal of the offer.

This decision adds to the growing body of ADA related case-law and may add to the confusion as to when a perceived disability is protected. Interesting, the Genetic Information Nondiscrimination Act (“GINA”) is not discussed in the Court’s decision as BMI likely does not qualify as genetic information. However, employers should be aware of GINA in all employment decisions.

The Supreme Court Asks DOJ for Input on the Scope of Title VII

Recently, the United States Supreme Court invited the U.S. Solicitor General of the Department of Justice to weigh in on a petition to revive the discrimination case of Peterson v. Linear Controls Inc. David Peterson, a former Linear Controls electrician, asked the Supreme Court to overturn the Fifth Circuit decision that held more difficult working conditions alone were not enough to be covered as an “adverse employment action” under Title VII of the Civil Rights Act of 1964.

In this case, the former employee alleged race discrimination in regard to working conditions, not a discharge or other clearly adverse action. The suit alleges that Black employees were assigned to outdoor tasks in the heat without adequate water breaks, while Caucasian employees were assigned to indoor tasks. In February, the Fifth Circuit determined that an “ultimate employment decision,” which includes “hiring, granting leave, discharging, promoting or compensating,” was required to support a race bias claim under Title VII. Since none had occurred, the Fifth Circuit dismissed the Title VII claim. In doing so, the Fifth Circuit amplified a split among the Circuit Courts over the scope of Title VII, with the Third Circuit applying a similar precedent, but seven other Circuits interpreting more broadly the scope of Title VII. Where such a split exists, uncertainty results and Supreme Court guidance is needed.

Cincinnati and Boston to Ban Discrimination Against Natural Hair

In February 2019, the New York City Commission on Human Rights amended the New York City Human Rights Law to ban discrimination against natural hairstyles as part of the Law’s prohibition against race or color discrimination. This past July, California created the CROWN Act (“Create a Respectful and Open Workplace for Natural Hair” (SB 188)) proposed by Sen. Holly J. Mitchell (D-Calif.). CROWN prohibits policies that discriminate against natural hair and natural hairstyles associated with race. New York State quickly followed when Gov. Andrew Cuomo signed Assembly Bill 7797A, which expanded the definition of “race” in the New York State Human Rights Law to include, “traits historically associated with race, including but not limited to, hair texture and protective hairstyles.”   The New York law also defines “protective hairstyles” to include, but not be limited to, “such hairstyles as braids, locks, and twists.”

Now, Cincinnati and Boston are slated to become the next cities to ban discrimination against natural hair. Cincinnati City Councilman Chris Seelbach is set to propose that natural hair be added to the City’s anti-discrimination policy, making it illegal to ask someone to change their hair style for work. The proposed law would allow the city of Cincinnati to investigate complaints of discrimination and impose a fine of up to $1,000 – $100 per day – until the discriminatory practice is corrected. Similarly, the Boston City Council announced its support for a bill that amends the definition of race to include hair texture and style, so that “targeting a person’s natural hair and hairstyle” will be considered racial discrimination.

Employers should be aware of these proposals across the country that mirror the CROWN Act and should review policies such as, “dress codes and grooming” and “work appropriate appearance” to avoid liability.   These new protections extend already existing bans against discrimination on the basis of national origin, race and color.

Job Descriptions Must Accurately Reflect True Job Duties

A recent case from a federal court highlights the importance of accurate job descriptions. In Wiggins v. City of Montgomery, Plaintiff applied for a promotion to the position of Revenue Examiner on three occasions over an eight-year period, most recently in 2015, and was denied each time. At issue was the job description’s requirement of walking over rough terrain, which Plaintiff could not do because she uses a walker and cannot walk in rough terrain.

Plaintiff filed suit asserting, among other things, disability discrimination for failure to accommodate. In response, the employer explained that Plaintiff was not a “qualified” individual under the Americans with Disabilities Act because she could not perform the essential functions of the position with a reasonable accommodation. The Court, however, found the evidence suggested otherwise. The Court determined that “actually conducting site visits as a Revenue Examiner is not as ‘essential’ as Defendant’s job posting and job description seem to suggest.” Two of the individuals promoted to the position had not, in over 11 months, left the office for and were essentially working as “inside” Revenue Examiners – the accommodation Plaintiff requested. Therefore, the Court concluded Plaintiff could perform the essential functions of the position with a reasonable accommodation and denied Defendant’s motion for summary judgment on Plaintiff’s failure to accommodate claim.

This decision, and the analysis by the Court, emphasizes the importance of maintaining accurate job descriptions and verifying periodically the accuracy of the job description.

Second Circuit Issues Another Arbitration-Friendly Decision

On September 19, 2019, the Second Circuit issued a key pro-arbitration decision, which also decided issues of first impression about the Dodd-Frank Act (“DFA”) and the Sarbanes-Oxley Act (“SOX”). Daly v. Citigroup Inc. et al.

Plaintiff brought claims for gender discrimination and whistleblowing under multiple federal, state and local statutes, including Title VII, the Equal Pay Act, the DFA and SOX. As often happens, all of her claims arose out of the same core factual allegations. Plaintiff admitted that she entered into a valid arbitration agreement with her employer, which covered all employment-related disputes other than those statutorily exempt from arbitration. SOX claims are exempted by statute, whereas the DFA is silent on arbitration. The other statutes, like the DFA, do not prohibit pre-dispute arbitration agreements, and the courts have already ruled that those claims are arbitrable. Nevertheless, Plaintiff argued that DFA claims are not arbitrable. In addition, she argued that none of the claims could be arbitrated in this case, because they were factually intertwined with her SOX claim, which cannot be arbitrated.

The Second Circuit rejected these arguments. On the DFA claim, the Court looked to the statutory language of the DFA to conclude, for the first time, that such claims are arbitrable. It relied strongly on the fact that the DFA specifically amended SOX to include an anti-arbitration provision, but did not include similar language for DFA claims.

Regarding the interrelatedness between Plaintiff’s SOX claim and her other claims, the Court held that it did not matter if all of these claims were based on the same conduct. Rather, all that matters for arbitrability purposes is whether the claims at issue are covered by a valid arbitration agreement; if they are, a court must compel arbitration of all arbitrable claims.

Finally, the Second Circuit dismissed the SOX claims for lack of subject matter jurisdiction, because Plaintiff failed to timely file a complaint with OSHA within 180 days of the date of the violation as required. It held that this failure permanently robs a court of the ability to hear a SOX claim.

This decision adds to the growing body of arbitration-friendly rulings and adds new arrows into an employer’s arsenal. Employers in the Second Circuit who have arbitration agreements should carefully examine them to ensure the widest application possible.

Illinois Expands State Human Rights Act to Include Employers with One or More Employees

Like other States (including New York) and many cities, Illinois has expanded the reach of its anti-discrimination statute to bring smaller employers within coverage of the Human Rights Act.  Even though such small employers may lack the in-house expertise to understand the nuances of complex laws, they must find a way to do so.  Our Firm’s recent article addressing this issue is available here.


Fired University Tennis Director Accused of Sexual Misconduct of Student-Athlete Allowed to Pursue his Gender Discrimination claims against the University

The obligations of educational institutions were elevated even higher in a recent ruling by the Second Circuit Court of Appeals, which held “When universities design and implement polices to ensure the security of their students, they facilitate their sacred mission of educating the next generation.  But when they distort and deviate from those policies, fearfully deferring to invidious stereotypes and crediting malicious accusations, they may violate the law….” In this particular case, a discharged tennis director, whose employment was terminated following allegations of sexual harassment, was allowed to proceed with his own claims of discrimination.

Citing a recent Title IX ruling, the Court held that when universities do not follow established investigative procedures in favor of one gender over another, that conduct may constitute discrimination. Relying on the Doe decision, the Court held that “once a university has promised procedural protections to employees, the disregard or abuse of those procedures may raise an inference of bias”.

This decision serves as a dramatic reminder that educational institutions should follow the proscriptions in their anti-harassment policies in a thorough and unbiased way. In effect, once procedural protections are announced, they should be followed.

New York’s Highest Court Finds College Abused Its Discretion By Failing To Grant Adjournment of Administrative Hearing

In a recent ruling, New York’s highest court recognized the right to counsel when a student is accused of serious misconduct. Matter of Bursch v. Purchase Coll. of the State Univ. of N.Y. In this instance, a college student was accused of multiple violations of the College’s code of conduct, including sexual assault. At the hearing addressing the complaints, the accused was given the right to representation by an “advisor” of his choice, which could be an attorney or parent. After unsuccessful attempts to contact the College to seek a brief adjournment, counsel for the alleged harasser requested a three-hour delay of the hearing due to a scheduling conflict. The College denied the request and proceeded with the hearing. Following the hearing, the disciplinary charges were upheld, and expulsion resulted.

To challenge the result, the expelled student sought judicial review. While unsuccessful at the first and second stages of appeal, New York’s highest court, the Court of Appeals, found the College abused its discretion as a matter of law and reversed and directed that the College hold a new disciplinary hearing at which representation by counsel is available. Simply stated, when such serious allegations are being adjudicated and grave penalties can result, there is a right to counsel at the hearing.

This case, coupled with the Department of Education’s proposed Title IX regulations and recent Circuit Courts’ split on student’s due process rights to cross-examination in Title IX matters, highlight the increasing scrutiny of the rights afforded those accused of sexual misconduct on college campuses.


Manager’s Observation of Harassment Places Liability on Employer

Under generally accepted Title VII principles, an employer can be held liable when a co-worker harasses a co-worker if a supervisor is aware of the harassment, but fails to take prompt corrective action. This principle was reiterated in EEOC v. Driven Fence, Inc., where an African American Plaintiff quit his job after being subjected to various racially derogatory remarks and being asked to put his head in a noose hanging from the ceiling. Although the misconduct was the acts of non-supervisory staff, the Court ruled the manager, who saw the noose, had “a duty to pass on the information to someone within the company who ha[d] the power to do something about it….”  Because the manager failed to report the conduct as required by the employer’s policies and case law, the Court denied summary judgment.

This decision serves as a significant reminder that employers must train their managers regarding their obligations to report potentially discriminatory/harassing conduct under both the employer’s policies, as well as applicable law.  Managers, in turn, must be mindful to be vigilant and observe and report any potential discriminatory or harassing conduct. Failure to do so can create liability to the employer simply because the manager failed to report.