On October 9th, the Equal Employment Opportunity Commission (“EEOC”) filed an amicus brief with the Seventh Circuit Court of Appeals in Chicago seeking reconsideration of the court’s decision to affirm the dismissal of a plaintiff’s sexual orientation discrimination/harassment claim under Title VII of the Civil Rights Act of 1964. The court had dismissed the plaintiff’s Title VII claim because Title VII prohibits sex/gender discrimination, not sexual-orientation discrimination. The EEOC is arguing that Title VII prohibits sexual orientation discrimination when the discrimination is “grounded in sex-based norms, preferences, expectations, or stereotypes.” In arguing for its expansive interpretation of Title VII, the EEOC explains in its brief that “[p]urposeful discrimination against straight, gay, lesbian or bi-sexual people may often be animated by stereotypes about sex-specific roles related to sexual relations and/or romantic relationships.”

The day after filing this amicus brief, an EEOC representative explained at a Title VII symposium that the EEOC’s filing “lays out…the broad view of the gender-stereotyping theory” that the EEOC has developed in federal sector cases and will now presumably seek to enforce in private sector cases. This new emphasis by the EEOC on sexual orientation/identity discrimination also was evident in two September 2014 lawsuits filed by the EEOC on behalf of private sector, transgender employees.

Private sector employers should expect the EEOC to now prioritize accepting and pursuing charges of discrimination on the basis of sexual orientation. Employers should take into account the EEOC’s expansive view of Title VII’s prohibition of sex/gender discrimination with respect to all current policies, practices, and workplace decisions.

Is Your Business Owed a Refund?

The parties have reached a proposed settlement in the San Allen, Inc., et al. v. Ohio Bureau of Workers’ Compensation case. This class action case, which began back in December 2007 and included a class of approximately 270,000 Ohio businesses, arose out of allegations that the Ohio Bureau of Workers’ Compensation (“BWC”) had overcharged state-fund Ohio employers that were not group-rated between the years 2001 and 2008.

Pursuant to the proposed settlement, the BWC has agreed to create a Settlement Fund in the gross amount of $420,000,000. After deductions for attorneys’ fees and other associated costs and expenses, the remainder of the fund will be paid on a pro rata basis to qualifying Class Members who file timely claims. The Court will consider the proposed settlement at a Final Approval Hearing on November 19, 2014.

Are you a member of the class?

The plaintiff class consists of employers who, in one or more policy years from 2001-2008:

  1. subscribed to the state workers’ compensation fund;
  2. were not group-rated; and
  3. reported payroll and paid premiums in job classifications for which the non-group effective base rate was “inflated” due to application of the group experience rating plan.

How do I know if I qualify for a refund?

If you are a class member, you should have received a “Notice of Class Action and Proposed Settlement” (“Notice”). A few items to note, however. You may not be entitled to a refund if you were group-rated during several of the policy years and the savings you received during those years offset any harm you incurred during the years you were not eligible for group-rating. If the amount you overpaid is not completely offset by the amount you saved while you were group-rated, then you may still be eligible for a refund.

What should I do if I believe my company qualifies for a refund?

Attached to the Notice is a “Sworn Proof of Claim” that needs to be completed and postmarked no later than October 22, 2014. Each Proof of Claim has its own unique identifying number, which corresponds to a BWC policy number, and only one Proof of Claim can be submitted for any given BWC policy number. Please note that the Proof of Claim must be notarized and submitted with a completed IRS Form W-9. A Certificate of Good Standing from the Ohio Secretary of State must also be submitted (see below for information regarding dissolved or bankrupt companies). The Proof of Claim form should be submitted to:

San Allen Inc. v. Ohio Bureau of Workers’ Compensation, c/o GCG

P.O. Box 10107

Dublin, Ohio 43017-3107

Incomplete or late claims will not be paid. If you did not receive a Notice or Proof of Claim, you can call 1-844-322-8230 for more information. Be sure to have your BWC Policy Number available.

My company dissolved or filed for bankruptcy. Is the company still eligible for a refund?

Yes, your company may still be eligible for a refund. You will need to provide documentation, in the form of a statement, indicating that the company is no longer in operation and has been dissolved or is bankrupt, and further, that the person signing the Proof of Claim is the authorized representative of the dissolved company or the bankruptcy trustee of the bankrupt company.

How can I tell if the effort is worth it?

To find out how much your payment could be, go to www.OhioBWCLawsuit.com. Click on “Online Policy Information Portal” and enter both your BWC Policy Number and your claim number (taken from the Proof of Claim). The resulting number is the gross amount of your overpayment as calculated by the parties to the court case. This number will likely be your maximum recovery.

Are there any other options?

If you disagree with the Settlement, you can file objections with the Court. All objections must be filed by October 22, 2014.

New Reporting Requirements:

OSHA has issued a final rule that modifies recordkeeping and reporting requirements for employers. The most significant change requires an employer to notify OSHA within twenty-four (24) hours of when an employee suffers a work-related, in-patient hospitalization, amputation, or loss of an eye.  Under the prior rule, employers were only required to report in-patient hospitalizations of three employees or more. OSHA had not previously required employers to report amputations or losses of an eye. It should be noted that “amputations” include partial amputations, such as the loss of a fingertip, as well as medical amputations resulting from irreparable damage to a body part.

Employers are still required to report any fatality to OSHA within eight (8) hours of learning of the fatality. Employers also are required to report any death that occurs within thirty (30) days of a work-related injury, regardless of whether the death was a direct result of the injury.

Employers can report fatalities, in-patient hospitalizations, amputations, or losses of an eye in any of the following ways:

  1. by telephone or in person to the OSHA Area Office nearest the site of the incident;
  2. by telephone to the OSHA toll-free central telephone number, 1-800-321-OSHA (1-800-321-6742); or
  3. by electronic submission using the fatality/injury/illness reporting application located on OSHA’s public website at https://www.osha.gov/.

All employers, even those exempt from keeping injury and illness records, are subject to the reporting requirements described above.

New Recordkeeping Requirements for Certain Industries:

OSHA also updated the list of industries that are exempt from the requirement to routinely keep injury and illness records. The previous list of exempt industries was based on the Standard Industrial Classification system (“SIC”). The new list is based on the North American Industry Classification System (“NAICS”).

This update will result in recordkeeping requirements for many previously exempt employers. For example, the following industries will now be required to keep injury and illness records: bakeries; automobile dealers; automotive parts, accessories and tire stores; lessors of real estate; consumer goods rental; commercial and industrial machinery and equipment rental and leasing; ambulatory heath care services, community food and housing and emergency/other relief services; museums and similar institutions; and performing arts companies.

For a complete list of industries that are no longer exempt from the record-keeping requirements, please visit OSHA’s website here.

Recently, President Barack Obama signed an Executive Order entitled “Fair Pay and Safe Workplaces,” which will affect approximately 24,000 businesses. Businesses seeking to obtain federal procurement contracts for goods and services, including construction, valued at over $500,000 (“federal contractors”) must comply with a number of new requirements.

Likely most significant is that covered federal contractors must disclose any labor law violations rendered against them or their subcontractors in the prior three years. For subcontracts valued at over $500,000, the prime federal contractor must require that each subcontractor disclose labor law violations and then determine whether the subcontractor is a responsible source. According to the Order, a labor law violation is an “administrative merits determination, arbitral award or decision, or civil judgment” rendered for violating any of 15 enumerated laws and executive orders, such as the Fair Labor Standards Act, National Labor Relations Act, Title VII, and their state equivalents. Once a contract is awarded, federal contractors have a continuing obligation to update information regarding labor law violations every six months. Although the Order designates a website as the method for reporting, it is silent concerning the confidentiality of these reports.

The labor law violations disclosed by contractors can result in the denial or termination of government contracts, effectively imposing an additional penalty on employers beyond underlying administrative or civil adjudication. Each federal agency must now designate a senior official to serve as a Labor Compliance Advisor, who will assist contracting officers in assessing whether a federal contractor is a responsible source with a “satisfactory record of integrity and business ethics.” The Labor Compliance Advisor will further assist in determining whether a contractor’s disclosed labor and employment law violations rise to the level of “serious, repeated, willful, or pervasive violations,” and the appropriate action to be taken in response. The potential for barring contractors from obtaining federal procurement contracts based upon their “labor law” violations is significant. These provisions may be used to pressure employers to settle labor and employment matters that they might otherwise fight due to fear of disclosing an adverse judgment.

The Order also mandates that federal contractors and their subcontractors must provide employees with specific information regarding “hours worked, overtime hours, pay, and any additions to or deductions made from pay” for each pay period. Additionally, contractors are required to notify, in writing, any individual the contractor treats as an independent contractor rather than an employee that they are treating the individual as an independent contractor. These “paycheck transparency” requirements are expected to lead to increased wage and hour disputes.

Finally, contractors seeking federal contracts valued at over $1 million are now prohibited by this Executive Order from requiring their employees to agree to arbitrate disputes arising under Title VII or any tort relating to sexual assault or harassment before the dispute arises. The decision to arbitrate is permissible only with the voluntary consent of employees or independent contractors after the dispute has arisen. This provision does not apply to contracts for “commercial items or commercially available off the shelf items” or to those employees covered by a collective bargaining agreement. This requirement will likely result in decreased use of arbitration agreements which can save both employers and employees time and resources.

The Federal Acquisition Regulatory (FAR) Council is charged with proposing amendments to the Federal Acquisition Regulation to implement the Order. The public will have the opportunity to comment on the proposed rules and regulations before they become final, potentially in 2016.

The Department of Labor (“DOL”) has followed through on a directive given by President Obama earlier this year regarding the collection of compensation data by federal contractors and subcontractors. On April 8, 2014, President Obama issued a memorandum entitled Advancing Pay Equality Through Compensation Data Collection, which directed the DOL to propose, within 120 days of the date of the memorandum, a rule that would require federal contractors and subcontractors to submit to the DOL summary data on the compensation paid to their employees. Consistent with the Presidential memorandum, the DOL announced the proposed rule on August 6, 2014, and it was published officially in the Federal Register on August 8, 2014.

The proposed rule applies to federal contractors that are required to file EEO-1 reports, have more than 100 employees, and have a contract, subcontract, or purchase order amounting to $50,000 or more that covers a period of at least 30 days. Under the proposed rule, applicable contractors will be required to submit an annual “Equal Pay Report,” which will be in a format similar to EEO-1 reports but will contain summary information on compensation paid to employees, as contained in their W-2 forms, as well as hours worked and number of employees. The Equal Pay Report will present the summary compensation data by sex, as well as the same seven race/ethnicity categories used in EEO-1 reports. The Equal Pay Report will also use the same 10 job categories used in EEO-1 reports. A sample of the proposed Equal Pay Report form can be found here.

It is proposed that the Equal Pay Report will be submitted annually during a report filing window of January 1 to March 31 of the following year, in order to obtain W-2 compensation data for the full year. Unlike EEO-1 reports, which use a “snapshot” approach requiring employers to only include those employees from one pay period between the months of July and September of the current survey year, the proposed Equal Pay Report covers a full calendar year from January 1 through December 31.

The DOL also proposes to aggregate each contractor’s summary data with those of peer employers by industry to construct “objective” industry standards. The DOL proposes to compare each contractor’s summary statistics to the relevant objective industry standard and will be more likely to prioritize contractors for compliance evaluation with pay gaps that are greater than the standard. Furthermore, the aggregated compensation data will be made available to the public on an annual basis, although the DOL states that it will maintain the confidentiality of individual contractor summary data to the extent it is able.

The proposed rule will be open for comment until November 6, 2014, and will not become effective until 180 days after the final rule is issued.

Unions, in order to increase membership, are now attempting in some cases to represent employees in small “micro-units” as opposed to the traditional approach of representing employees throughout an employer’s facility. Micro-units come into existence when unions “pick off” employees in certain departments, and claim that these departments should be a bargaining unit apart from their co-workers. Unions have employed this strategy because it is generally easier to organize a small number of employees rather than an employer’s entire non-supervisory workforce. (To organize a 15 employee department in a 150 employee workplace, the union would need only 8 supporters instead of 76!) The strategy undermines the traditional criteria that governed whether a bargaining unit is appropriate by allowing unions to “slice up” a workplace by targeting only those workers who agree with them. It also exposes employers to dueling unions, each representing a different department.

Micro-units were first employed in the health care industry, but they now have moved to other industries. For example, on July 22, 2014, the NLRB ruled in Macy’s, Inc., 361 NLRB No. 4 (2014), that cosmetic and fragrance workers at a Macy’s store in Massachusetts were allowed to form a collective bargaining unit for their department alone.

A week later, in Neiman Marcus Group, Inc., 361 NLRB No. 11 (2014), the Board again approved the micro-unit concept generally, but ruled that a unit that was composed of all full-time and regular part-time female shoe associates in the second floor Designer Shoe Department and in the fifth floor Contemporary Shoe Department was not an appropriate unit, because the employees lacked a “community of interest.” Importantly, the NLRB noted that the boundaries for the proposed unit did not resemble any administrative or operational lines drawn by the employer. The sales associates on the second floor worked in their own department but the sales associates on the fifth floor were part of a larger Contemporary Sports Department.

Although the NLRB has clearly endorsed micro-units, employers are not powerless, and they can take steps if they wish to make it more difficult for unions to splinter small groups of employees. For example, employers can cross-train and encourage skill diversity so that employees are more interchangeable. Moreover, rather than having many small departments, employers can have fewer but larger departments with the same supervisors supervising more groups of employees.

Following last year’s issuance by the EEOC of controversial criminal background check guidelines, the EEOC has filed a number of lawsuits attempting to enforce these guidelines.  Late last week, Judge Roger Titus, United States District Court District of Maryland, dismissed the lawsuit EEOC filed against Freeman, holding that the EEOC failed to present a prima facie case of disparate impact. See Article from Yahoo!Finance.

In the Opinion, the Judge is critical of the EEOC’s overbroad background check guidelines, and even more critical of the statistical evidence that the EEOC proffered in support of its claims.  The EEOC had argued that Freeman’s criminal background check and credit check policy had a disparate impact on African American males.

The Judge recognized that employers who use background checks “have a clear incentive to avoid hiring employees who have a proven tendency to defraud or steal from their employers, engage in workplace violence, or who otherwise appear to be untrustworthy and unreliable.”

The opinion contains a good summary and analysis of the disparate impact theory and the pitfalls of statistical evidence needed to support the theory.  In addition, the opinion provides a summary of the rather detailed process that this employer used in conducting background checks and determining whether offenses would disqualify employment.  The summary is helpful for employers to assess their own policies. 

The White House Office of Management & Budget has announced that it will be submitting a proposal to Congress to cap reimbursement levels for executives of federal contractors at  rates no higher than the salary of the President.  The current cap for calculating reimbursements is $763,000, and will need to be raised to $950,000 under the current formula, which is based upon surveys of pay of private sector CEO’s and other senior personnel.  While the release from OMB states that the measure, if adopted, would have the potential of saving taxpayers “hundreds of millions of dollars over what they would have to pay if the cap remains unchanged,” there are no actual statistics provided.  The OMB’s proposal brings to mind the response of Babe Ruth to a reporter’s statement that the salary of $80,000 he was demanding in 1930 was more than the President’s $75,000 pay: “I know, but I had a better year than Hoover.”

Earlier this week, the expansion of the federal Small Business Administration’s (SBA) Women Owned Small Business (WOSB) Program went into effect.  See link to federal register notice.  The regulatory change, effective May 7, 2013, removes contract award size caps from the WOSB program, as well as the related Economically Disadvantaged Women’s Owned Small Business Program (EDWOSB).  This means there should be a larger pool of federal contracting opportunities available for certified women-owned small businesses. 

The WOSB and EDWOSB programs were implemented in February 2011.  The program allows the contracting officers for federal government agencies seeking bids for services to set aside specific contracts for certified women owned small businesses to achieve a statutory goal of five percent of federal contracting dollars for these entities.    The programs have some similarities to set-aside programs for disadvantaged business enterprises (DBEs) currently used by the federal government for construction and other services, or to state and local government programs, often known as MBE, FBE or WBE programs. 

To qualify as a WOSB, a firm must be at least fifty-one percent owned and controlled by one or more women, and primarily managed by one or more women. The women must be U.S. citizens and the firm must be considered small according to SBA size standards. The size standards include personal net worth caps.  A female owner must manage and control the day-to-day business operations.  To be deemed “economically disadvantaged”, a firm’s owners must meet specific financial requirements set forth in the program regulations.

Businesses can either self-certify with the SBA or use an approved third-party certifier, such as National Women Business Owners Corporation, US Women’s Chamber of Commerce or Women’s Business Enterprise National Council (WBENC). 

Contract opportunities are provided in industries designated by the SBA in which women are underrepresented.  A list of covered industries by NAIS Code is linked here.  Federal contracting opportunities can be found at http://www.fbo.gov/.  Recent examples of contracting opportunities for WOSBs include HVAC installation and repair, waste disposal, interior renovation, and asbestos abatement.  

In a ruling on a motion to dismiss, U.S. District Judge Arthur Spiegel found that the Cincinnati Public Schools Could be forced to ignore a state law (H.B. 190, passed in 2007) that prohibited employment by schools of convicted felons and others convicted of drug offenses, no matter how long ago the offenses occurred. Cincinnati Board of Education Case 04-24-2013.pdf . One of the plaintiffs had been convicted of felonious assault and the other of acting as a go-between for the sale of a small amount of marijuana. Both were good employees, according to the school system, and would have been retained except for the state law.  There was no claim of intentional discrimination.  The district had to terminate ten employees under H.B. 190, and nine of them were African-American.

In these circumstances, Judge Spiegel ruled that the Board had no duty to follow H.B. 190, since “Title VII trumps state law.” He rejected the Board’s argument that state laws may only be disregarded if they “purport” to discriminate, as well as the contention that adverse impact had to be based on statewide statistics, not just on what had happened in one city. (In part, the reason for the statistical disparity in Cincinnati was that Cincinnati, unlike many other school districts, had been willing to hire minorities with criminal records.)

Because the ruling is on a motion to dismiss, it does not conclusively establish that the Public Schools discriminated, or that the plaintiffs are entitled to relief.  They still need to establish valid statistical evidence of a disparate impact and a lack of business necessity.  The outcome of those issues is fairly clearly foretold in Judge Spiegel’s order.  Employers in states where the legislators have passed laws limiting employment opportinities as collateral sanctions for criminal conduct will now have to worry whether they will be caught between state law and Title VII.  Whatever the outcome of a dispute over this issue, the employer will lose a great deal of time and money getting to any definite outcome.