Employment Law360
December 16, 2014

2014 has been a notable year for the U.S. Equal Employment Opportunity Commission. The agency has initiated historic litigation, issued significant new guidance and signaled increased scrutiny of background checks and employment-related technology. It has also faced harsh criticism from employer groups and members of Congress, discord among its commissioners and setbacks in court.

In its 2014 Performance and Accountability Report, the EEOC noted the filing of 5,000 fewer charges of discrimination. It also reported an increase in agency-initiated litigation, including litigation of systemic claims.

Severance Agreements

In its Strategic Enforcement Plan for FY 2013-2016, the EEOC noted its intent to target “... settlement provisions that prohibit filing charges with the EEOC or providing information to assist in the investigation or prosecution of claims of unlawful discrimination.”

In February 2014, in EEOC v. CVS Pharmacy Inc., the agency sued over what defendant CVS called “run of the mill” severance agreement provisions. The provisions that the EEOC challenged include:

• nondisparagement clauses that prevent employees from making negative statements about their former employer;

• “cooperation” terms that require employees to notify in-house counsel of contacts from investigators engaged in investigations of their former employer;

• nondisclosure clauses prohibiting disclosure of confidential information;

• “no pending action” language stating that the employee has not filed or initiated any complaint or lawsuit of any kind against the employer; and

• covenant not to sue provisions which, although they included a carve-out for making or assisting in the investigation of a claim with a government anti-discrimination agency, require the employee to pay the former employer’s attorneys’ fees in the event of a breach.

The CVS complaint asserts that these provisions deter the filing of charges and interfere with the agency’s ability to communicate with employees as necessary in investigations.

In April, a similar case was filed in Colorado. In EEOC v. CollegeAmerica Denver Inc., the agency made many of the same allegations, this time invoking the protections of the Age Discrimination in Employment Act rather than Title VII.

In October, a federal district court in Illinois dismissed the case against CVS, but did so because it found that the EEOC had failed to conciliate the matter before bringing suit, as is required by Title VII. The judge did not rule directly on the merits of the EEOC’s claims, but did note, in dicta, his skepticism about the agency’s position. On Dec. 2, the Colorado court ruled on CollegeAmerica Denver's motion to dismiss the EEOC’s suit against it. The motion to dismiss was granted in part and denied in part in a somewhat complex ruling that states, in part:

"...I conclude that CollegeAmerica has met its burden of demonstrating that there is no reasonable expectation that it will use the [Severance] Agreement to interfere with the ADEA rights of [the plaintiff] or the EEOC. To the extent that College America previous[ly] used the Agreement in this manner, any resulting effects have been eradicated by CollegeAmerica’s recent representations and assurances."

The court’s decision was also partially based on its conclusion that, as in CVS, the EEOC failed to conciliate the claim before bringing suit. The ruling leaves only a retaliation claim and eliminates the EEOC’s claims regarding the terms of the severance agreement.

Despite the dismissal of CVS and the severance agreement-related claims in CollegeAmerica Denver, reports of similar EEOC efforts around the country suggest that the agency will continue to look for opportunities to test and challenge severance agreements that it believes to be overbroad.

Health and Wellness

This year has seen significant EEOC focus on wellness programs and employer requests for employee health information.

In August and October, the EEOC initiated lawsuits against employers with wellness programs that, in the agency's view, impose heavy consequences for employees’ failure to participate in plan initiatives. Such initiatives, designed to reduce employer health insurance costs by improving overall employee health, include biometric testing and health risk assessments. Employees who participate pay lower health insurance premiums. The EEOC’s position in these cases is that the plans’ “incentives” — lower premiums — are actually significant penalties for employees who decline to participate. Such penalties, the EEOC asserts, make the wellness programs involuntary and violate the Americans with Disabilities Act. The EEOC also asserts that the collection of health history information in health risk assessments violates the Genetic Information Nondisclosure Act. 

In November, the EEOC took the extraordinary step of seeking a temporary restraining order against Honeywell International Inc.'s new wellness initiatives, set to begin in January 2015. The Honeywell program requires employees and their covered spouses to undergo biometric testing and complete health history questionnaires or face up to $2,500 in health insurance surcharges. The EEOC wanted Honeywell’s testing and data gathering to be suspended while it investigated whether the program was truly voluntary. Judge Ann Montgomery denied the EEOC’s motion, but the litigation continues.

The EEOC has also initiated actions this year based on employers’ requests for health information, including pre-employment medical examinations and health questionnaires. The agency asserts that the ADA and GINA prohibit employers from seeking information that is not job-related or consistent with business necessity. One case, brought against three agricultural employers, settled for equitable relief and $187,000.

Technology

The EEOC admits that it is trying to keep up with the pace and volume of new workplace technology. From hand-scanning to telecommuting technology to social media, the agency has been busy keeping track of what’s out there and how the laws it enforces relate to technology use.

In a religious accommodation case currently being litigated, the agency is seeking summary judgment against an employer for its refusal to modify its use of hand-scanning technology to monitor employee time and attendance. An employee’s religious beliefs prohibited the scan of his hand, but the employer declined to allow the employee to use different time-tracking methods. In another technology-based case, the EEOC contended that telecommuting was a reasonable accommodation. The Sixth Circuit originally held for the EEOC in that case, but the decision has since been vacated and will be reconsidered by the Sixth Circuit sitting en banc. 

Social media’s role in the employer-employee relationship is another focus of EEOC attention, although agency representatives have provided only limited guidance on the subject during 2014. Commissioner Chai Feldblum, among others, has stated that employers face no Title VII risk simply because they research applicants or employees on social media, they will be held responsible for any discriminatory impact resulting from the use of social media or other forms of technology.

Pregnancy Accommodation Guidance

In July, the EEOC published its first Pregnancy Discrimination Act guidance since 1983. Invoking provisions of the PDA and the ADA, the guidance set forth the EEOC’s position that employers are required to make reasonable accommodations for female employees who are attempting to get pregnant, are pregnant or are breastfeeding.

The publication of the guidance was not without controversy, including critiques by two of the agency’s commissioners. Commissioners Constance Barker and Victoria Lipnic voiced their opposition to the timing of the publication, given the U.S. Supreme Court’s pending review of Young v. United Parcel Services Inc., which deals directly with the reasonable accommodation issue addressed in the guidance. Barker and Lipnic also stated that the guidance purports to make new law, expanding the right to reasonable accommodation to circumstances in which, in their opinion, no disability exists. 

Religious Discrimination Guidance

In March, the EEOC published new guidance on religious garb and grooming in the workplace. The guidance is intended to cover all religions, even those that are new or uncommon, or are only followed by a few. The guidance states that there are no “magic words” that an employee must use to make a request for accommodation and a request may not even be necessary when the religious practice involved is “obvious.”

With respect to its position that a request is not always necessary, the guidance is contrary to the Tenth Circuit decision in EEOC v. Abercrombie & Fitch, which is now pending before the Supreme Court. In Abercrombie, the Tenth Circuit held that forcing employers to infer that an accommodation is needed is too burdensome. Instead, the panel held, the applicant or employee must actually make a reasonable accommodation request before the employer is required to act on it. It seems likely that the Supreme Court will ultimately determine whether the Tenth Circuit or the EEOC has correctly interpreted Title VII.

Background Checks

Acting jointly with the Federal Trade Commission, the EEOC issued guidance to employers and employees in February on the use of applicant and employee background checks. The guidance outlines the EEOC’s position that employers cannot use information revealed in background checks if such use results in a disparate impact on a particular protected class. 

The new, combined FTC/EEOC guidance follows the EEOC’s 2012 enforcement guidance on the same topic. That 2012 guidance was criticized by some commentators and members of Congress who believe it altered the law on the use of criminal background checks. In June 2014, the House Subcommittee on Workforce Protections held a hearing at which the EEOC’s stance came under harsh scrutiny for its failure to provide a “safe harbor” for employers subject to state laws that require background checks. It was also criticized based on the administrative impact compliance will have on small employers.

While the EEOC prepared its new guidance, related litigation with BMW Manufacturing Co. LLC heated up in South Carolina federal district court. Back in 2013, the EEOC brought suit against BMW for its use of conviction records in its hiring decisions. In September, BMW brought a motion to compel the EEOC to produce information on the agency’s use of conviction records in hiring. On Dec. 9, the EEOC was ordered to produce that information. Although it isn’t clear whether or not the information BMW obtains will be disclosed to the public or have any impact on the outcome of the litigation, the ruling will likely result in attempts by other defendants to spotlight the EEOC’s internal practices.

Transgender Employees

In September, the EEOC filed two lawsuits alleging that transgender employees had been fired in violation of Title VII. The suits, which are the first of their kind for the EEOC, are consistent with a 2012 agency ruling and with its strategic enforcement plan, which states that gender identity, transgender status and gender transition are included in the definition of sex under the law. 

The lawsuits allege that the employees were fired because they did not conform to the employers’ expected gender norms.  The EEOC’s allegations are consistent with several courts’ decisions which have held that gender stereotyping may be the basis of a sex discrimination claim under Title VII. In November, however, a federal court in Texas took a narrower view, holding that if no evidence of gender stereotyping existed, a transgender employee could not sustain a claim. We expect the EEOC to press this issue in courts around the country.