In This Issue:

  • Same-Sex Harassment Suits Yield Sizable Settlements

  • NLRB Reverses Employer Liability for Comments About Facebook

  • EEOC, FTC Collaborate on Background-Check Guidance

  • U.S. Supreme Court Expands SOX Whistle-Blower Protections

  • Employees Can Reject FMLA Leave, 9th Circuit Concludes

Same-Sex Harassment Suits Yield Sizable Settlements

Why it matters: Same-sex sexual harassment made headlines recently after the Equal Employment Opportunity Commission reached settlements with two different employers. In a closely watched case out of Louisiana, the agency accused Boh Brothers Construction of turning a blind eye to gay slurs and taunting gestures by a supervisor targeting an ironworker. A federal jury found the construction company liable. On appeal, the en banc Fifth U.S. Circuit Court of Appeals issued a 68-page decision with multiple dissents affirming the liability finding and holding that gender stereotyping could form the basis of a sexual harassment claim. The parties then reached a $100,000 deal. In the second case, Washington-based Roy Farms refused to admit liability for allegations that a supervisor made inappropriate comments and touched orchard workers sexually. The company did agree to pay $85,000. For employers, the lesson is clear: regardless of the sex of the parties involved, sexual harassment violates Title VII and can lead to serious liability.

Detailed Discussion
An ironworker on a project near New Orleans, Kerry Woods reported to the EEOC that he was subjected to harassment by a male supervisor, from verbal abuse to sexual gestures to having the man expose himself.

Although Woods is heterosexual, the supervisor testified at trial that he thought the worker was “feminine” and failed to conform to gender stereotypes of “rough iron workers.” A jury sided with Woods on his Title VII hostile work environment sexual harassment claim and awarded a total of $450,000, including $250,000 in punitives. The federal court judge reduced the award but upheld the liability determination.

On the first appeal to the Fifth Circuit, a three-judge panel of the court reversed the jury’s liability finding. But sitting en banc, the court held in a 10-to-6 opinion that both the law and evidence supported the liability finding because gender stereotypes could form the basis of a Title VII sexual harassment claim.

In light of the September ruling, the parties reached a deal. Boh Brothers agreed to pay $125,000 in compensatory damages to Woods pursuant to a consent judgment. The settlement ends the high-profile litigation.

A second case reminding employers to be cognizant of same-sex harassment in the workplace occurred at a hops farm in Moxee, Washington. There, according to the EEOC, an orchard supervisor engaged in a two-year campaign of harassment against male workers. The agency said the supervisor used vulgar terminology to express his interest in having sex with the workers and made physical contact by caressing their faces, backs, and buttocks.

Despite the workers reporting the conduct, nothing was done, the EEOC claimed. Fearing for his safety, the complaint alleged that one of the workers quit.

After conducting a conciliation process and filing suit, the parties were able to agree upon a settlement. Although Roy Farms declined to admit wrongdoing for the conduct of the orchard supervisor, the company will pay four workers a total of $85,000.

The farm also promised to provide equal employment opportunity policies to its workers (in both English and Spanish), update the company’s complaint procedures to increase accessibility, provide training to managers, who will then be held accountable for harassment by their workers, and report any harassment complaints to the EEOC for a three-year period.

To read the consent judgment in EEOC v. Boh Brothers Construction, click here.

To read the consent decree in EEOC v. Roy Farms, click here.

NLRB Reverses Employer Liability for Comments About Facebook

Why it matters: It is no secret that the National Labor Relations Board has been vigilant in its efforts to uphold the National Labor Relations Act in recent months, from striking down a confidentiality provision in an employment agreement to frowning upon an employer’s social media policy as violative of employee rights. But in a recent decision from a three-member panel of the Board, the agency reversed an administrative law judge’s imposition of liability where a supervisor criticized an employee’s Facebook comments and intimated they were the reason behind his shift transfer. Although the decision noted that employers could very well be liable under Section 8(a)(1) for impacting employee rights on social media, the panel refused to infer that the posts constituted protected concerted activity absent sufficient evidence.

Detailed Discussion
John Vollene, a member of the union’s negotiating committee at Nevada-based World Color Corp., a subsidiary of Quad Graphics, responded to another individual’s post on Facebook with comments criticizing World Color over a six-month period. Vollene was Facebook friends with several coworkers, including his shift supervisor.

A downturn in the economy impacted the company and reassignments occurred for all shifts. Vollene was one of many of the reassigned press operators. He asked his supervisor about the reassignment and was told that “it wasn’t always about production that – he said the management knew about my posts on Facebook. He – he asked me a question. He said don’t you think that they know about what you posted on Facebook.”

Last July an administrative law judge found the supervisor’s statement violated Section 8(a)(1) of the NLRA. Specifically, the judge found that Vollene could have reasonably believed that his reassignment was retaliation for his Facebook posts, which constituted protected activity.

But the three-member panel disagreed. Acknowledging that the Board has found Facebook posts among employees about terms and conditions of employment to be protected concerted activity, the panel said “scant evidence” was presented about the actual content of Vollene’s posts – leaving a question about whether he engaged in protected activity.

“The testimony indicates only that Vollene posted unspecified criticisms of [World Color] and unspecified comments about the union over a period of 5 or 6 months, and that he responded to another person’s initial post,” according to the decision. Lacking stronger evidence – and an actual printout of the posts – the panel refused to infer that the posts amounted to protected activity. And the supervisor’s “statement impl[ying] that [World Color] had reacted adversely to critical posts is insufficient to bridge the evidentiary gap here.”

The panel took pains to note that employers can violate Section 8(a)(1) even where an employee has not engaged in protected concerted activity (with a rule that an employee could interpret as prohibiting his or her rights, for example).

But in Vollene’s case, there was insufficient evidence “to demonstrate that [the supervisor’s] statement was directed at, or in response to, either actual or suspected protected concerted activity by Vollene or that Vollene would reasonably understand [the] statement as interfering with, restraining, or coercing him from engaging in such activity.”

The decision wasn’t entirely in the employer’s favor, however. The panel upheld the ALJ’s determination that a rule about headwear violated the NLRA. World Color’s employee guidelines included the following rule: “. . .Baseball caps are prohibited except for Quad/Graphics baseball caps worn with the bill facing forward. . . .” Because World Color failed to demonstrate evidence of special circumstances that outweighed employee rights (like violence or interference with safety), the panel agreed that the hat policy violated Section 8(a)(1).

To read the decision in World Color Corp., click here.

EEOC, FTC Collaborate on Background-Check Guidance

Why it matters: In an effort to “explain the rights and responsibilities of the people on both sides of the desk,” the Equal Employment Opportunity Commission and the Federal Trade Commission copublished guides on employment background checks for both employers and employees. “Background Checks: What Employers Need to Know” discusses the regulatory and enforcement perspective of each agency, with the FTC focused on compliance with the Fair Credit Reporting Act, while the EEOC emphasized the need to comply with antidiscrimination laws like Title VII when using background information to make a hiring decision. As employers consider using information like credit history or criminal background checks for employment-related decisions – and the EEOC takes action against employers for allegedly using them illegally – employers would be well advised to review the new guidance.

Detailed Discussion
The EEOC and FTC jointly released two new documents: “Background Checks: What Employers Need to Know” and “Background Checks: What Job Applicants and Employees Need to Know.”

The employer guidance begins with a basic premise: absent certain exceptions (like medical and genetic information), employers may legally ask questions about an applicant’s or employee’s background or require a background check.

While research about education, financial history, or social media use may be legal, the agencies reminded employers that federal antidiscrimination law must be observed. “That includes discrimination based on race, color, national origin, sex, or religion; disability; genetic information (including family medical history); and age (40 or older),” the guidance explained, with enforcement of such laws falling under the EEOC’s purview.

Oversight by the FTC kicks in when an employer runs a background check through a company in the business of compiling background information, triggering the FCRA.

The agencies broke down the issue into three different time periods: before background information is collected, the use of such data, and how to safely dispose of it.

Prior to collecting background information, ensure that the request isn’t being made only to a certain race or those over a certain age, potentially triggering antidiscrimination laws, the EEOC said. And do not request genetic information or ask questions about medical history, which would trigger the protections of the Genetic Information Nondiscrimination Act (GINA).

If an employer intends to conduct a criminal or credit background check using a company in the business of compiling the necessary data, the FTC noted that the FCRA requires additional procedures. Most importantly, inform the applicant or employee about the potential to use such information in writing and preferably in a stand-alone format (not tucked away in an employment application) and get the individual’s written permission.

Once the information is in hand, “apply the same standards to everyone,” the EEOC said, adding a warning to avoid potential disparate impact claims by taking “special care when basing employment decisions on background problems that may be more common among people” of a certain protected class, like race. The agency also suggested that employers should “be prepared to make exceptions for problems revealed during a background check that were caused by a disability,” and allow an individual to demonstrate his or her ability to do the job.

The FCRA imposes additional requirements if an employer takes adverse action based on background information obtained via a company, the FTC noted, like providing the applicant or employee a copy of the report and a pamphlet explaining the individual’s rights under the statute, such as the ability to dispute the accuracy or completeness of the report.

Finally, both agencies noted that the disposal of background information also requires action on the part of employers. Records must be preserved for at least a one-year period, the EEOC said, while the FTC cautioned that when disposal occurs, it must be undertaken securely. Options include “burning, pulverizing, or shredding paper documents and disposing of electronic information” so that it cannot be read or reconstructed.

To read “Background Checks: What Employers Need to Know,” click here.

U.S. Supreme Court Expands SOX Whistle-Blower Protections

Why it matters: Exposing a broad range of businesses to potential liability, a new decision from the U.S. Supreme Court expanded the scope of whistleblower protections under the Sarbanes-Oxley Act, holding that the statute applies to private contractors and subcontractors of public companies. Two employees of private companies contracted to manage mutual funds filed suit under SOX alleging retaliation after reporting concerns about possible securities fraud. In a 6-to-3 decision, the Court determined that Section 1514A shelters employees of private contractors and subcontractors, just as it shelters employees of the public company served by contractors and subcontractors.” Speaking on behalf of employers facing potential liability under the statute, a dissenting opinion said the decision gives SOX a “stunning reach” and could lead to hypothetical suits like “a cause of action against a small business that contracts to clean the local Starbucks (a public company) if an employee is demoted after reporting that another nonpublic company client has mailed the cleaning company a fraudulent invoice.”

Detailed Discussion
Jackie Lawson and Jonathan Zang both worked for subsidiaries of a private company that came to be known as FMR LLC. Lawson and Zang were responsible for advisory and management services to Fidelity mutual funds. Both alleged that after expressing concerns about possible securities fraud, they faced retaliation in the workplace.

A federal district court in Massachusetts declined to dismiss their Sarbanes-Oxley complaints. The First U.S. Circuit Court of Appeals reversed, dismissing the suits and holding that the statute did not apply to employees of private companies.

But in an opinion authored by Justice Ruth Bader Ginsburg, the Court reversed dismissal.

Section 1514A provides that “No [public] company. . ., or any officer, employee contractor, subcontractor, or agent of such company, may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of [whistleblowing or other protected activity].”

The majority looked to the history of SOX – specifically the Enron scandal – to emphasize Congress’s recognition that contractors and subcontractors who tried to report wrongdoing also faced retaliation.

“We hold, based on the text of Section 1514A, the mischief to which Congress was responding, and earlier legislation that Congress drew upon, that the provision shelters employees of private contractors and subcontractors, just as it shelters employees of the public company served by the contractors and subcontractors,” Justice Ginsburg wrote. “Given Congress’s concern about contractor conduct of the kind that contributed to Enron’s collapse, we regard with suspicion construction of Section 1514A to protect whistleblowers only when they are employed by a public company, and not when they work for the public company’s contractor.”

FMR’s interpretation of the text “requires insertion of ‘of a public company’ after ‘an employee,’” the Court said. But in other parts of the statute, Congress explicitly used the phrase “an employee of a public company,” demonstrating that lawmakers knew how to use the phrase when they wanted.

A contrary ruling would leave “a huge hole,” the majority added. “Contractors’ employees would be disarmed; they would be vulnerable to retaliation by their employers for blowing the whistle on a scheme to defraud the public company’s investors,” leaving mutual fund advisers and managers, as well as “legions” of accountants and lawyers, without the protections of Section 1514A.

Statutory headings – like “Whistleblower Protection for Employees of Publicly Traded Companies” – were not dispositive of the actual statutory text, Justice Ginsburg wrote, dismissing one of FMR’s contentions. She also said that the dissent’s concerns about personal employees of company officers bringing suit – like housekeepers or gardeners – were overstated and “more theoretical than real.” Such floodgates arguments could be tempered by “limiting principles” like a recognition that the term “contractor” does not extend to every fleeting business relationship, the Court added.

In her dissent, Justice Sonia Sotomayor, joined by Justices Anthony Kennedy and Samuel Alito, said the majority failed to recognize that Section 1514A “is deeply ambiguous” and therefore should be read narrowly to avoid “absurd results” and “impose costly litigation burdens on any private business that happens to have an ongoing contract with a public company.”

To read the opinion in Lawson v. FMR LLC, click here.

Employees Can Reject FMLA Leave, 9th Circuit Concludes

Why it matters: Can an employee affirmatively reject the use of Family and Medical Leave Act leave even where her reason for time off triggered statutory coverage? Yes, the Ninth U.S. Circuit Court of Appeals recently concluded, holding that circumstances can exist where an employee may seek time off but intend not to exercise his or her FMLA rights in order to save the protected leave for a later date. The decision alleviates employers from what could have been a significant burden had the court reached a contrary holding, making the refusal to exercise FMLA rights “legally impossible.”

Detailed Discussion
Maria Escriba worked at a Foster Poultry Farms processing plant in California. An 18-year employee, she met with her immediate supervisor to request time off to care for her sick father who lived in Guatemala.

Escriba claimed that she asked for time off, stating, “Linda, please for me, Linda, for me, vacation” because her “father is no good.” The supervisor agreed to two weeks of vacation. Escriba later said she asked for an additional week or two of unpaid leave that was rejected.

With an interpreter, Escriba again spoke with her supervisor, who confirmed she was only taking two weeks of leave as vacation time. Escriba was not instructed on her rights and obligations under the FMLA or Foster Farms did not take any steps to designate her time off as FMLA leave. Escriba left for Guatemala, where she stayed longer than her two weeks of vacation. She was terminated for failing to comply with Foster Farms’ “three day no-show, no-call rule.” She then filed suit under the FMLA and its California equivalent.

After a six-day trial, a jury returned a verdict in favor of Foster Farms.

Escriba appealed. She argued that by informing her supervisors of her reason for taking leave, her FMLA rights were triggered and she was automatically entitled to the statutory protections. Foster Farms was required to designate her leave as FMLA-protected, she told the Ninth Circuit, regardless of whether she expressly declined such a designation.

The federal appellate panel rejected Escriba’s position that refusing to exercise FMLA rights is “legally impossible.” Although the statute itself does not state whether an employee may defer the exercise of FMLA rights, regulations from the Department of Labor offered some guidance to the court.

Employers must ascertain “whether FMLA leave is being sought,” according to the DOL, which “strongly suggests that there are circumstances in which an employee might seek time off but intend not to exercise his or her rights under the FMLA,” the court said.

“Holding that simply referencing an FMLA-qualifying reason triggers FMLA protections would place employers like Foster Farms in an untenable situation if the employee’s stated desire is not to take FMLA leave,” the panel wrote. “The employer could find itself open to liability for forcing FMLA leave on the unwilling employee. We thus conclude that an employee can affirmatively decline to use FMLA leave, even if the underlying reason for seeking the leave would have invoked FMLA protection.”

Affirmatively declining the use of FMLA is not the same as waiving it, the Ninth Circuit added. An employee does not relinquish her rights, but preserves them for the future.

Turning to Escriba, the panel affirmed the jury’s verdict for Foster Farms, based on “substantial evidence” that Escriba elected not to take FMLA leave. In addition to specifically requesting vacation multiple times, she was no stranger to requesting FMLA leave, having requested it on 15 prior occasions. “A reasonable inference from this evidence is that, if Escriba had desired to take FMLA leave, she would have arranged for such leave,” the court said.

And Foster Farms provided evidence as to why Escriba could have elected not to take her leave. By taking vacation first, Escriba satisfied the company’s policy that paid vacation must be exhausted before using FMLA leave, essentially adding two more weeks of protected leave.

To read the opinion in Escriba v. Foster Poultry Farms, click here.

Topics:  Compliance, Contractors, EEOC, Employer Liability Issues, FMLA, FMR LLC, FTC, Harassment, Lawson v FMR, NLRB, Sarbanes-Oxley, SCOTUS, Sexual Harassment, Subcontractors, Whistleblower Protection Policies, Whistleblowers

Published In: Civil Rights Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Manatt, Phelps & Phillips, LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »