On March 20, 2017, the United States District Court for the Central District of California granted Defendant Domino’s Pizza LLC’s (“Domino’s”) motion to dismiss an Americans with Disabilities Act (“ADA”) claim related to the accessibility of Domino’s website and mobile application. See Robles v. Domino’s Pizza, LLC, Case 2:16-cv-06599. The District Court ruled that it would violate Domino’s due process rights to allow the claim to proceed, since the Department of Justice (“DOJ”) had failed to promulgate any accessibility regulations governing websites or mobile applications. Click here to read the full client alert.

Stillwater PlaceThe annual Frantz Ward Labor & Employment Seminar is consistently a great learning experience for both clients and guests and for the presenters from our Labor & Employment Practice Group. This year’s program, at the new Stillwater Place facility at the Cleveland Metroparks Zoo, was no exception. Our audience of HR professionals, business owners, and attorneys heard not only from our lawyers, but also from experts in fields such as medical marijuana and managing a premier metropolitan park system. The participants also provided feedback on some important current issues in the human resources world. We asked formal questions to the over 300 guests and received responses through Poll Everywhere software. While the invitations were not based upon a scientific selection of the HR universe, the number of responses was valid as reflective of the group that was in attendance.

The subjects of the polling were pre-employment background checks under the Fair Credit Reporting Act (“FCRA”), inquiries on past criminal history, and pre-employment questions on prior salary history. It may be interesting to know what the responses were.

Pre-Employment Background Checks

The FCRA has a number of non-intuitive requirements that may create problems for employers who fail to follow the requirements exactly. For example, the FCRA requires that subjects of background checks be provided with a disclosure that consists of the disclosure and nothing else (except in some cases the permission from the applicant may be in the same document.) Permissions contained in the general application forms, for example, may not be proper. Waivers of claims against the prospective employer included within disclosure forms have created liability for a number of businesses. The polling revealed that many employers do include authorizations for background checks within their application forms.

Many employers also include waivers within their permission forms.

Criminal History

With many more working age individuals having some criminal history, the general approach of employers is to ask about relevant criminal conviction history and then make individualized judgments about the suitability of the employee in the particular circumstances of the employer.

Employer experience with hiring people having felonies on their records is much the same as with people with “clean” records.

Salary History

Philadelphia, New York City, and other jurisdictions are attempting to prohibit employers from even asking about salary history. The theory is that females generally have had lower pay in the past, and if their salary at hire is based on that lower prior pay rate, they will start out behind and likely stay there. If employers are prohibited from asking for the information, they will not be able to justify lower pay for females upon their previous pay. The vast majority of employers ask about prior pay rates and find the information very useful.

Despite asking for and using the data on pay rates, most employers recognize that paying new employees based upon prior rates (plus an increase) does perpetuate inequality in pay between men and women.

Conclusion

The takeaways from this brief survey are:

  1. Employers do not have sufficient awareness of the specific, non-intuitive and unnecessary requirements of the FCRA.
  2. Employers are very willing to hire felons who demonstrate rehabilitation and qualifications for the job, but they do want to have the ability to know about the past criminal history.
  3. Employers use, and want to continue to use, prior pay history in setting initial pay for new employees, but are aware of the potential impact on pay equity. They are therefore willing to be flexible.

Embattled House Republicans were able to muster enough votes on May 4, 2017 to push their health care reform bill, known as the American Health Care Act (H.R. 1628), to the Senate. The passage marks a recovery for party leaders after they jettisoned a previous bill to repeal and replace the Affordable Care Act for lack of support. Click here to read the full client alert

imagesRepresentative Tom MacArthur (R-NJ), a leader of the so-called “Tuesday Group” of moderate Republicans, introduced an amendment to the American Health Care Act (“AHCA”) (Kaiser Family Foundation summary) after negotiations with the Freedom Caucus, the group of conservative House Republicans. The MacArthur Amendment does several things designed to obtain conservative support for the AHCA. Because some of these measures would impact employers, it is worth discussing them briefly.

More State Flexibility.  The MacArthur Amendment allows states, with permission from the Department of Health and Human Services, to go without certain of the “essential health benefits” provided for under the Affordable Care Act (“ACA”). To obtain the waiver, a state will have to show that it will lower premiums and encourage more individuals to become insured. States could also provide greater leeway for charging higher premiums for those with pre-existing health conditions who do not maintain continuous coverage, as discussed in more detail below. Employers in the small group market or who obtain coverage in the individual market in waiver states may need to check more carefully to ensure that desired benefits are part of their plans.

Easing of Pre-Existing Condition Restrictions on Insurers.  The essential bargain of the ACA was that everyone could get insurance no matter how sick they were or expensive their care was, but everyone would have to buy insurance no matter how healthy they were. The individual mandate was the means to enforce that second part of the bargain. It turned out to be very ineffective. Sick people got their coverage at community rates and healthy people stayed uninsured unless or until something bad happened. The predictable result has been rising community rates and insurers exiting markets. The AHCA would eliminate the individual mandate, making the adverse selection problem even worse. The MacArthur Amendment addresses this issue by allowing insurers to charge higher premiums for those with pre-existing conditions who do not maintain continuous coverage or who, upon losing coverage, do not obtain new insurance within sixty days.

In order for this to occur in a state, though, that state would have to provide some protection of the sick individuals who might otherwise be priced out of the “market.” This can be done by the creation of a high risk pool where individuals with expensive conditions can be covered with government subsidies, or by a so-called “invisible high risk pool,” which protects the carriers. This can be thought of as similar to a reinsurance program.

The MacArthur Amendment would not prevent individuals with expensive health conditions from obtaining or keeping coverage. Such persons would not be locked into their employer’s coverage if they preferred to go to another employer or start their own business.

Implications of the MacArthur Amendment.  It is difficult to see how the MacArthur Amendment would reduce premiums, unless the high risk pool provisions work much better than anticipated. It is also hard to think of a way that selling across state lines (a concept embraced by many business groups) would work if the states are operating under a patchwork of waivers and conditions agreed upon to obtain those waivers.

Politically, the Freedom Caucus has indicated that its members will now support the AHCA. Some moderates may drop their support. No Democrats are likely to vote for the amended AHCA, so its fate rests with the Republican majority holding itself together to repeal the ACA and replace it with the AHCA. Once through the House, the AHCA faces strong headwinds in the Senate. Even under the filibuster-proof procedures of budget reconciliation, the AHCA currently lacks support of fifty Republican Senators, and the MacArthur Amendment is unlikely to change that.

Yes, federal law prohibits employers from discriminating against employees and applicants based on their sexual orientation. Yes, employers who allow discrimination or harassment based on sexual orientation can be forced to pay a full range of damages, including punitive damages.

Employment and civil rights lawyers have struggled to find clear answers to these questions for years, and until last week, no federal court of appeals had ever answered them in the affirmative. That all changed, however, when the U.S Court of Appeals for the Seventh Circuit issued its decision on April 4 in Hively v. Ivy Tech Community College of Indiana.

Although the Hively decision is 69 pages long and discusses a number of important legal issues, the key holding is a simple one – Title VII of the Civil Rights Act of 1964 prohibits employment discrimination based on sexual orientation. The decision is being lauded as a “gamechanger” by civil rights and LGBT advocates, and is being characterized as judicial overreach by others. Regardless of which side is correct, the underlying issue will almost certainly end up before the U.S Supreme Court sometime in the foreseeable future due to the fact that two other federal appeals courts have ruled against Title VII coverage for sexual orientation discrimination.

Although some media commentators have been quick to attack the Seventh Circuit’s decision because its author, Chief Circuit Judge Diane Wood, was appointed by President Clinton, the decision was supported by strongly worded concurring opinions written by Circuit Judge Richard Posner and Circuit Judge Joel Flaum, both President Reagan appointees. In fact, Judge Posner went so far as to write that “The position of a woman discriminated against on account of being a lesbian is thus analogous to a woman’s being discriminated against on account of being a woman. That woman didn’t choose to be a woman; the lesbian didn’t choose to be a lesbian.”

The Hively decision technically only applies to employers within the Seventh Circuit, which covers Indiana, Illinois and Wisconsin. Nonetheless, employers elsewhere will be wise to take steps to protect their employees from discrimination on the basis of sexual orientation because the EEOC has made it clear that it will use the Hively decision to support its long-standing position that sexual orientation discrimination is a form of sex discrimination and is therefore illegal. Employers in many jurisdictions are also covered by state and local laws that already prohibit sexual orientation discrimination.

The Hively decision provides a good reminder to employers that they should review and update their anti-discrimination and anti-harassment policies with the employment counsel on a regular basis.

On March 27, 2017, President Donald Trump signed a resolution that permanently blocked an executive order previously issued by President Obama, which had required federal contractors to disclose labor law violations.

The Fair Pay and Safe Workplaces executive order signed by President Obama in 2014 had been called the “blacklisting” order by those in the business sector, as it required federal contractors  and subcontractors bidding on large ($500,000) contracts to report violations of certain federal and state labor and employment laws that occurred in the last 3 years, and to update those disclosures every six months, as well as track the compliance by subcontractors, regardless of whether the violations had been finalized.

In order for the resolution to get to President Trump’s desk, it had to pass both the House and Senate, which it did by narrow margins.  A significant aspect of the resolution is that it was passed by Congress under the Congressional Review Act (CRA), which was part of the 1996 Contract with America that was enacted under then House Speaker Newt Gingrich.  By passing the resolution under the CRA, this means that a federal agency cannot create a substantially similar rule in the future without Congressional approval.

The “blacklisting” rules were widely criticized by federal contractors as being costly, requiring companies to report mere allegations that had not been fully adjudicated, and as duplicating existing debarment procedures.

A similar rule to President Obama’s “blacklisting” order had been issued by President Clinton near the end of his term, but that rule was quickly repealed by President Bush.  This action by President Trump renders moot an action pending in the Eastern District of Texas, wherein a federal judge had temporarily blocked implementation of portions of the rule last fall.

imagesBefore the expiration of the extended deadline last week, the U.S. Equal Employment Opportunity Commission received over 100 comments to its proposed Enforcement Guidance (“Proposed Guidance”) on workplace harassment. The revised guidance is the first revision to the EEOC’s workplace harassment guidance since the 1990s and the result of the July 2016 report by the EEOC’s Select Task Force, which notes that “During the course of fiscal year 2015, EEOC received approximately 28,000 charges alleging harassment from employees … This is almost a full third of the approximately 90,000 charges of employment discrimination the EEOC received that year.” See report here.

In addition to other aspects of the Proposed Guidance, certain commentators such as The Employment Law Alliance (“ELA”), the U.S. Chamber of Commerce (“The Chamber”), and The Society for Human Resources Management (“SHRM”) were particularly critical of the EEOC’s position on sexual orientation bias and harassment as inconsistent with existing law and outside the scope of the legislative intent of the statute.

The Proposed Guidance confirms the EEOC’s position that harassment based on gender identity and sexual orientation is prohibited under Title VII, and defines the two terms as follows:

Gender identity: Sex-based harassment includes harassment based on gender identity. This includes harassment based on an individuals’ transgender status or the individual’s intent to transition. It also includes using a name or pronoun inconsistent with the individuals’ gender identity in a persistent or offensive manner.

Sexual orientation: Sex-based harassment includes harassment because an individual is lesbian, gay, bisexual, or heterosexual.

Each of these definitions is accompanied in the Proposed Guidance by a footnote. As The Chamber noted in its comment, however, the single case referenced by the EEOC in its gender identity footnote is a case issued by the EEOC itself, not a Court. The EEOC’s footnote to its sexual orientation definition also highlights one of its own cases and contains an arguably one-sided and misleading representation of support for its own position.  As The Chamber notes, the Proposed Guidance fails to include several Court-issued rulings that explicitly reject the EEOC’s position. SHRM’s comment to the Proposed Guidance also expressed concern that the EEOC failed to clearly communicate in the body of the Proposed Guidance that its position is opposed to established law, as the EEOC did in other areas of the Proposed Guidance. The ELA similarly observed that the EEOC’s inclusion of “gender identity,” “transgender status,” an “individual’s intent to transition” and “sexual orientation” is beyond the plain language of Title VII and “reflects the commission’s impermissible trespassing into legislative rulemaking.”

While the EEOC has been similarly chastised by multiple other sources during the recent past for “legislating” and not regulating, the EEOC has continued to actively pursue its position on LBGT and gender identity issues and it is unlikely to take steps to substantially revise its position or the final Guidance.

White HouseThe Office of Management and Budget released President Trump’s “America First” budget blueprint for discretionary spending earlier this morning. Overall, it increases spending on defense, veterans’ health, immigration enforcement and combatting opioid abuse while decreasing civilian discretionary spending. Hardest hit are programs such as the National Endowment for the Arts, the Legal Services Corporation, The Corporation for Public Broadcasting, which were cut completely from the budget. The Environmental Protection Agency and State Department received deep cuts, which will reduce foreign aid. The Department of Labor will have its budget reduced by about one-fifth.

The Budget document provides the following introduction to the DOL appropriation request:

The Department of Labor fosters the welfare of wage earners, job seekers, and retirees by safeguarding their working conditions, benefits, and wages. With the need to rebuild the Nation’s military without increasing the deficit, this Budget focuses the Department of Labor on its highest priority functions and disinvests in activities that are duplicative, unnecessary, unproven, or ineffective.

The President’s 2018 Budget requests $9.6 billion for the Department of Labor, a $2.5 billion or 21 percent decrease from the 2017 annualized CR level.

The President would totally eliminate the Senior Community Service Employment Program (SCSEP), which retrains unemployed older workers for unsubsidized private sector jobs on the basis that it is ineffective. It closes underperforming Job Corps Centers, although it does not specify which ones. The budget would limit the Department’s International activity to ensuring that American Workers are protected under trade arrangements. While reducing federal subsidies for job training and employment service grants to states (in favor of greater reliance on state and local government and employer funding), it increases support for “evidence-based” apprenticeship programs to prepare individuals for jobs. Finally, it eliminates OSHA training grants, so that the agency can focus on its core mission of worker safety.

Overall, the cuts do not appear to drastically reduce the ability of the DOL to conduct its investigation and enforcement activities as much as might have been expected. There is much yet to be determined, however, and the budget process is likely to lead to substantial changes in the budget.  It is clear, however, that the Trump Administration is prepared to make major cuts in civilian discretionary spending in order to increase funding for border security and military capacity.

Government and US FlagRepublican leaders in the U.S. House of Representatives have introduced a bill intended to replace certain key provisions contained within the Affordable Care Act (commonly referred to as “Obamacare”). The Republican-sponsored legislation is named The American Health Care Act (“AHCA”). President Donald J. Trump has placed his support behind the bill.

Republicans revealed the proposed language of the AHCA to the public last week. And, late last week, the bill overcame its first major hurdle by passing through two House committees on party-line votes. The future of the AHCA, as currently written, however, remains uncertain. Most, if not all, Democrats in Congress are expected to oppose the bill. Meanwhile, Republicans are experiencing difficulties in obtaining the support of different factions of their Congressional membership. Some Republicans argue that the AHCA does not go far enough to dismantle the ACA, while other Republicans are concerned about the effects that the AHCA will have on those with lower incomes. Despite Republican control of Congress, the bill will not become law without the support of many of these Republicans.

House Republican leaders created the AHCA under the budget reconciliation process, and, therefore, its scope is limited to amending certain tax provisions in the ACA. Other aspects of the ACA would have to be amended or repealed through alternative legislative measures. Nevertheless, employers should be aware of a couple of the effects that the AHCA would have on them, if enacted:

  • First, the AHCA would effectively eliminate the tax penalties on employers for failing to provide, and on individuals for failing to maintain, minimum essential coverage, as currently required under the ACA. Although the bill would not dispose of the insurance coverage requirements, without the corresponding tax penalties, they would not have their desired effects. Because the employer mandate would technically remain, employers would have to continue to follow the cumbersome ACA reporting requirements, at least for now.
  • Second, the AHCA would leave the 40-percent excise tax on high-cost employer-sponsored health insurance plans in place. This excise tax is commonly referred to as the “Cadillac Tax,” and this aspect of the ACA has been of particular interest to unionized employers whose union employees have negotiated for strong health insurance coverage. Under the AHCA, the Cadillac Tax would now take effect in 2025, instead of 2020. Unlike previous iterations of the bill, however, there are no caps on tax exclusions for such plans.

The AHCA already underwent significant markup at the end of last week and will certainly experience further revisions, as other House Committees review the proposed legislation. The soonest that the AHCA could be placed before the full House is late March. The bill would then proceed to the Senate.

The U.S. Congressional Budget Office just released its report on the AHCA. According to the CBO, the AHCA would result in fewer insured Americans but would reduce the deficit and would eventually reduce insurance premiums, though not initially.

1283811-protests-1483480044-672-640x480Last week workers across the United States participated in a national protest aimed at President Trump’s immigration policies. Organized by advocacy groups and promoted largely through social media, “A Day Without Immigrants” involved an organized effort to urge workers to stay home in protest of the new administration’s immigration policies and actions, including recent enforcement raids, the proposed border wall, and the high-profile Executive Order on immigration and refugees. Employers’ reactions have ranged from closing their businesses in support of the protests to terminating employees for not coming to work.

This likely is not the end of such protests. On March 8, organizers of last month’s Women’s March on Washington plan to hold “A Day Without a Woman” protest, asking women to stay home from work in support of various issues that impact women. Other less publicized protests by different groups are also planned.

Impacted employers that seek to enforce their attendance rules and other workplace policies must carefully consider potential legal issues when reacting to employees who miss work in support of these protests. For example, the National Labor Relations Act (“NLRA”) protects both unionized and non-unionized workers who engage in protected concerted activity. Typically, this involves two or more workers acting together to improve or protest various terms and conditions of their employment, including protests related to pay, safety, hours of work, and other workplace issues. The discipline or discharge of employees who engage in protected concerted activity can result in charges of unfair labor practices before the National Labor Relations Board and potential liability. However, employee actions or protests that are purely political in nature, with no real connection to the workplace, are unlikely to qualify for protection under the NLRA.

The true objectives behind workers’ absences in supporting these causes can be unclear. The upcoming “A Day Without a Woman” protest identifies a number of diverse concerns, some of which arguably could relate to workplace issues, and some of which clearly do not. The organizers’ website poses the following questions in asking supporters to withhold their labor on March 8:

  1. Do businesses support our communities, or do they drain our communities?
  2. Do they strive for gender equity or do they support the policies and leaders that perpetuate oppression?
  3. Do they align with a sustainable environment or do they profit off destruction and steal the futures of our children?

Employers who choose to discipline or terminate employees who elect to miss work as part of these protests need to consider, on a case-by-case basis, whether an employee’s actions qualify as a protected protest related to workplace conditions, particularly when they can be linked to their own workplace, or are a more generalized expression of support for a political cause. Employees who explicitly tie their absences to issues in the workplace are far more likely to be protected under the NLRA.

Employers also must consider the potential applicability of both state and federal anti-discrimination laws, like Title VII, when reacting to employee absences. Both the “A Day Without Immigrants” and “A Day Without a Woman” protests potentially implicate protected classifications under the anti-discrimination laws – e.g., national origin and gender. Employers that choose to pursue discipline or termination may potentially face allegations of discrimination, either based upon assertions that the employer harbored animus towards a particular protected group (and its causes), and/or that the employer selectively enforced its policies to the detriment of the protected group. Employers should base any disciplinary or discharge actions on previously established and promulgated workplace policies, including attendance rules and no-call/no-show policies. Employers also should ensure that they have acted consistently with respect to past employee absences (like the parade in Cleveland after the Warriors blew a 3-1 lead in the 2016 NBA Finals). A prior, consistent history of discipline or discharge in similar situations will help protect against allegations of discrimination.