April 9, 2014

EEOC Issues Guidance on Religious Accommodations for Dress and Grooming in the Workplace

On March 6, 2014, the Equal Employment Opportunity Commission ("EEOC") issued additional Guidance on how the federal employment discrimination law (Title VII) applies to religious dress codes and grooming practices. More specifically, it addresses what, when and how religious accommodations need to be made. The Guidance is titled: "Religious Garb and Grooming in the Workplace: Rights and Responsibilities."

Title VII requires that an employer, once it is aware that a religious accommodation is needed, must accommodate an employee whose sincerely held religious belief, practice, or observance conflicts with a work requirement, unless doing so would pose an undue hardship. The employer must make an exception to allow the employee or applicant's religious practice unless doing so would place an undue hardship on the operation of the employer's business. Undue hardship for religious accommodations has been defined as "more than de minimis" cost or burden, which is a relatively low standard.

Even if a religious accommodation is made for one or several employees, the employer may still retain its dress or grooming policy and expectations for the rest of its employees. Employers are not required to give an exception for secular reasons or for jealousy or unhappiness of the other employees. Similarly, an employee's jealousy or unhappiness about an allowed religious accommodation for a co-worker is not considered undue hardship, and neither is customer preference.

The new Guidance from the EEOC provides over twenty examples of scenarios with explanations of the applicable law and guidance for what the employer should do when faced with these situations. Some scenarios include: a current employee's new religious practice or observance; assigning an employee to a "back room" because of religious dress or grooming practices; head coverings that pose security concerns; co-worker harassment based on religion; and more. It also provides answers to the most commonly asked questions that employers and employees have regarding the issue of religious accommodations for dress and grooming policies.

The full text of the Guidance can be found here: http://www.eeoc.gov/eeoc/publications/qa_religious_garb_grooming.cfm.

March 17, 2014

EEOC v. Founders Pavilion, Inc. Reaches Settlement

The Equal Employment Opportunity Commission ("EEOC") announced on January 13, 2014, that a settlement had been reached in the case of EEOC v. Founders Pavilion, Inc. The EEOC brought suit against the defendant, Founders Pavilion, a former nursing and rehabilitation center in Corning, New York, under the Genetic Information Nondiscrimination Act ("GINA"). Congress passed GINA to prevent employers from requesting genetic information or considering the genetic information in making employment decisions. The Founders Pavilion case is the third lawsuit that the EEOC has brought since the enactment of GINA in 2008.

The EEOC asserted that Founders Pavilion violated GINA in its practice of requesting family medical history as part of its pre-employment medical exam of its applicants who had already received conditional offers of employment. Additionally, the EEOC charged that Founders Pavilion violated the Americans with Disabilities Act in firing two employees based on the employer perceiving them to be disabled. There were also three instances alleged where Founders Pavilion made employment decisions based on the pregnancy of three women, which violated Title VII of the Civil Rights Act of 1964 ("Title VII").

The EEOC filed suit against Founders Pavilion, Inc. in the U.S. District Court for the Western District of New York and the suit was resolved by a five-year consent decree. As part of the decree, Founders Pavilion will provide a fund of $110,400 for distribution to the 138 individuals who were asked for their genetic information in violation of GINA. Also as part of the agreement, Founders Pavilion will have to pay a fine of $259,600 to the five individuals who the EEOC alleged were fired or denied hire in violation of the Americans with Disabilities Act or Title VII.

At the time of settlement, Founders Pavilion had already been sold to Pavilion Operations, LLC and the nursing and rehabilitation center had ceased operating. As part of the consent decree, if Founders Pavilion resumes conducting business, they must post notices and send a memo our to all employees regarding this lawsuit and the resulting five-year consent decree. Also, if they resume business they will be required to adopt a new anti-discrimination policy that will provide anti-discrimination training to all employees and will provide periodic reports to the EEOC regarding any internal discrimination complaints.

In response to this settlement, the EEOC General Counsel David Lopez, stated: "Employers need to be aware that GINA prohibits requesting family medical history. When illegal questions are required as part of the hiring process, the EEOC will be vigilant in ensuring that no one is denied employment opportunities on a prohibited basis." This case should serve as a warning to employers that under GINA, there are real consequences to asking applicants or employees about their family medical history.

February 21, 2014

Employment arbitration practice tip

As it becomes increasingly common for New York employers to be, or be affiliated with, foreign corporations, the likelihood also increases that arbitrations with their employees will be administered by the International Centre for Dispute Resolution (ICDR), which is the International Division of the American Arbitration Association. If the ICDR's rules are applied to the arbitration, then the potential for attorney's fee-shifting may - - unbeknownst to many attorneys - - arise. Article 3I of the ICDR Procedures authorizes the arbitrator to apportion "costs" among the parties, including "the reasonable costs for legal representation of a successful party." (emphasis added.)
By contrast, under the AAA Employment Rules, the arbitrator's ability to award attorney's fees is far more circumscribed: Rule 39(d) permits the arbitrator to award attorney's fees only "in accordance with applicable law," which essentially allows attorney's fees to prevailing employees only in statutory discrimination cases, or to the employer only if the discrimination case were found to be entirely frivolous.
The ICDR procedures will not necessarily govern in an ICDR-administered employment arbitration; which set of rules to apply is often, surprisingly, left up to the parties, if they are able to agree. If counsel have the opportunity to choose between the ICDR Rules and the AAA Employment Rules, they should consider whether the potential for broader attorney's fee-shifting under the ICDR rules would be advantageous, or possibly dangerous, for their clients.

February 7, 2014

New Tax Credit is Now in Effect for Eligible New York Employers of Student Employees Who Earn Minimum Wage

On January 1, 2014, the newly created minimum wage reimbursement tax credit went into effect and could result in significant tax reductions for some New York employers.  The tax credit allows eligible employers to receive a refundable credit on their New York state taxes for hours worked by student employees paid the minimum wage.  The credit is in effect from 2014 until 2019.  On December 30, 2013, the New York Department of Taxation and Finance released Technical Memorandum TSB-M-13(8)C, (7)I to provide guidance on the credit.  The Memorandum outlines who qualifies as an eligible employer and an eligible employee, the amount of the credit, and limitations on the credit.

Eligible Employers: An employer or business owner is eligible for the tax credit if the employer is "a corporation (including a New York S corporation), a sole proprietorship, a limited liability company, or a partnership" and the employer or owner is subject to one of the following taxes: franchise tax on agricultural corporations organized and operated on a cooperative basis (Article 9 § 185); franchise tax on business corporations (Article 9-A); personal income tax (Article 22); franchise tax on banking corporations (Article 32), or franchise taxes on insurance corporations (Article 33).  

Eligible Employees: An employee's work hours may count toward the tax credit if the employee is (1) employed in New York by an eligible employer; (2) paid at the New York minimum wage rate by the eligible employer for at least part of the tax year; (3) at least 16 but under 20 years of age; and (4) a student during the period of time they are paid at the minimum wage rate.

"Students" include employees that are attending secondary school and most post-secondary schools located inside or outside New York State.  Qualifying schools include "any institution that offers a program of training to prepare students for gainful employment in a recognized occupation such as trade, technical, and vocational schools" but not "correspondence schools, schools offering courses only through the Internet, or on-the-job training courses."  Work done during scheduled school breaks still qualifies for the credit if the employee will return to school. 

Importantly, employers are required to obtain documentation of student status and be prepared to make the documentation available to the New York Tax Department upon request.  Adequate documentation could be "a student's identification card, a student's current or future course schedule issued by the school, a letter from the student's school verifying his or her current or future enrollment, or working papers" issued by the New York Department of Labor.

Credit Amount: Eligible employers and owners can take a tax credit at the rate of $0.75 per hour worked at the minimum wage rate by eligible employees for tax years starting in 2014.  The rate goes up to $1.31 for tax years starting in 2015 and $1.35 for tax years starting in 2016-2018.  However, these amounts will be reduced "if the federal minimum wage is increased to more than 85% of New York's minimum wage...to an amount equal to the difference  between New York's minimum wage and the federal minimum wage."

Limitations: The credit cannot reduce the tax below the minimum tax listed for taxpayers under Article 9 § 185, Article 9-A, Article 32, or Article 33.  But, for Article 22 taxpayers (personal income tax), the tax due may be reduced to zero.

Employers should note that this tax credit is not available if an ineligible employee is fired solely so the employer can hire an eligible employee.  Employers cannot use the same eligible employee as the basis for the minimum wage tax credit and another tax credit.  The minimum wage reimbursement tax credit is refundable, with any excess credit treated as a tax overpayment to be either credited or refunded without interest.

This post was authored by Matt Lampe, Emilie Hendee, and Laura Jean Eichten of Jones Day.  The views and opinions expressed herein are those of the authors and do not necessarily reflect the views of Jones Day or the New York State Bar Association.

October 30, 2013

District Court: Unpaid Intern Cannot Bring Sexual Harassment Claim Under NYCHRL

The district court, in Wang v. Phoenix Satellite Television US, Inc., 13 Civ. 00218 (S.D.N.Y 10/3/13), dismissed an unpaid intern's sexual harassment claim brought pursuant to the New York City Human Rights Law ("NYCHRL"). Explaining this ruling, Judge Kevin Castel stated that plaintiff, as an unpaid intern, could not qualify as an "employee" within the meaning of the statute, and as such, its protections did not extend to her. Judge Castel reasoned that notwithstanding the broad construction due the NYCHRL, remuneration is nonetheless a threshold requirement for establishing the requisite employment relationship.


Jersey City Enacts Ordinance Requiring Paid Sick Leave

Under a recently enacted ordinance, businesses in Jersey City, New Jersey with ten or more employees will be required to provide paid sick leave effective January 24, 2014. Under the ordinance, private-sector employees will earn one hour of paid sick time for every thirty hours worked, up to forty hours per year. Sick leave accrual will begin on an employee's first day of work, but will not be available for use until the employee has completed ninety days of employment. Unused paid sick leave will be carried over from year to year. An employer, however, may cap the carry-over at forty hours and limit the usage of paid sick leave to forty hours per calendar year.

Paid leave offered under an employer's existing policy will be counted towards satisfying the requirements of this ordinance provided such paid leave may be used for the same purposes and under the same conditions as paid sick leave under the ordinance. Employees, under the ordinance, may use paid sick leave for their own health needs or those of a family member (i.e., spouse, civil union partner, domestic partner, child, parent, sibling, or grandparent). Paid sick leave may be used in the smaller of hourly increments or the smallest increment used by the employer's payroll system to account for absences or use of other time. Employees may not be compelled to find a replacement to cover their hours as a condition of taking paid sick leave. An employer may require medical verification for an absence of more than three days.

Employees of businesses with less than ten employees will accrue unpaid sick leave at the same rate and subject to the same terms as conditions of usage as applicable to the accrual of paid sick leave by employees at covered businesses.


October 4, 2013

Mayor Bloomberg Signs Law Expanding Protections for Pregnant Workers

On October 2, 2013, Mayor Bloomberg signed into law an amendment to the New York City Human Rights Law that expands protections for employees who need reasonable accommodations relating to pregnancy, childbirth, or related medical conditions (Bill No. 0974-2012), after the bill was unanimously approved by the New York City Council on September 24, 2013.  The law will take effect on January 30, 2014 (120 days after it was signed into law). 

The amended law will require most New York City employers to provide reasonable accommodations to pregnant women and those who suffer medical conditions related to pregnancy and childbirth.  The text of the amended law includes examples of reasonable accommodations that might be required, such as "bathroom breaks, leave for a period of disability arising from childbirth, breaks to facilitate increased water intake, periodic rest for those who stand for long periods of time, and assistance with manual labor."  Consistent with existing law, a reasonable accommodation does not include accommodations that would cause "undue hardship" to an employer's business.

The law will apply to all businesses with four or more workers, counting both employees and independent contractors, thereby expanding protections that are already available under existing federal, state and local laws.  Employees who believe they have been discriminated against will be able to file a complaint with the New York City Commission on Human Rights or bring an action in court against their employer.

Employers will be required to provide written notice in a form to be determined by the NYC Commission on Human Rights of the right to be free from discrimination in relation to pregnancy, childbirth, and related medical conditions.  The notice must be provided to: (1) new employees at the commencement of employment; and (2) existing employees within 120 days after the effective date of the new law.  Such notice may also be conspicuously posted at an employer's place of business in an area accessible to employees.  The commission will conduct ongoing public education efforts to inform employers, employees, employment agencies, and job applicants about their rights and responsibilities under this law.

This post was authored by Matt Lampe and Emilie Hendee of Jones Day.  The views and opinions expressed herein are those of the authors and do not necessarily reflect the views of Jones Day or the New York State Bar Association.

August 30, 2013

Sixth Circuit: Arbitration Agreement's Six-Month Limit on Claims Constitutes Invalid Waiver Under FLSA & Equal Pay Act

The Sixth Circuit, in Boaz v. FedEx Customer Information Services, Inc., No. 12-5319 (6th Cir. August 6, 2013), found unenforceable an arbitration agreement provision setting a six-month limitations period as applied to plaintiff's claims under the Fair Labor Standards Act (FLSA) and the Equal Pay Act (EPA). The court reasoned that the limitations provision was effectively an unsupervised waiver of plaintiff's statutory rights, which is barred under both the FLSA and EPA. See Jewell Ridge Coal Corp. v. Local No. 617, UMWA, 325 U.S. 161 (1945).

The court distinguished those cases cited by FedEx enforcing a shortened limitation period for clams arising under other statutes, such as Title VII. It explained that the policy considerations cited by the Supreme Court in prohibiting waivers under the FLSA, and by extension the EPA, are not applicable to clams under Title VII or any of the other referenced statutes. Id. at 167.


Second Circuit Holds Class Action Waiver in Arbitration Agreement Enforceable Against Plaintiff's FLSA Claims

The Second Circuit in Sutherland v. Ernst & Young, No. 12-304-cv (2nd Cir. August 9, 2013), concluded that as consequence of the Supreme Court's decision this term in American Express Co. v. Italian Colors Restaurant, 133 S. Ct. 2304 (2013), its so-called "effective vindication doctrine" as applied in In re American Express Merchant's Litigation, 554 F.3d 300 (2nd Cir. 2009) ("Amex"), is "no longer good law." Specifically, a showing that plaintiff has no economic incentive to pursue his/her statutory claims individually no longer provides a basis for invalidating a class-action waiver in an arbitration agreement. Instead, interpreting Italian Colors, the court instructed, arbitration agreements should be enforced according to their terms, including class-action waivers, absent a "contrary congressional command" in the statute governing the claim being brought. Finding no "contrary congressional command" in the Fair Labor Standards Act barring waiver of class arbitration, the court held that Sutherland must arbitrate her FLSA claims individually even though the ratio of her costs to potential recovery was approximately 100:1.

Quoting Italian Colors, the court noted that the "effective vindication doctrine" remains available to invalidate "'a provision in an arbitration agreement forbidding the assertion of certain statutory rights . . . . [and] would perhaps cover filing and administrative fees attached to arbitration that are so high as to make access to the forum impractical.'"


August 29, 2013

Third Circuit: Existence of Collective Bargaining Agreements Did Not Bar Plaintiffs From Pursuing FLSA Claims

The Third Circuit in Bell v. Southeastern Pennsylvania Transportation Authority, No. 12-4031 (3rd Cir. August 19, 2013), reversed the district court's dismissal of plaintiffs' claims under the Fair Labor Standards Act (FLSA). Plaintiffs, former and current bus drivers and trolley operators, brought an FLSA collective action to recover unpaid wages and overtime compensation relative to the pre-trip inspections to which they were subject prior to the start of their daily runs. In granting SEPTA's motion to dismiss, the district court concluded that the FLSA claims required interpretation of provisions of three collective bargaining agreements (CBA's) between SEPTA and the unions representing the plaintiffs, and, therefore, were subject to the grievance and arbitration provisions of those agreements.

In rejecting the district court's conclusion, Judge Barry explained that the plaintiffs do not contend that SEPTA violated any term of the CBA's, although each contained a provision addressing compensation for time worked prior to the start of the morning shift. Instead, plaintiffs assert that their FLSA claims exist independently of any rights they have under the applicable CBA's. As such, Judge Barry highlighted, resolution of these claims (i.e., failure to compensate for all time worked in performing pre-trip inspections; and exclusion of pre-trip responsibilities from calculation of overtime) do not require an interpretation of the CBA's. Rather, they require "a factual determination of the amount of time [plaintiffs] are required to work prior to their scheduled start and a legal determination regarding whether this time is (1) compensable and (2) subject to the overtime provisions of the FLSA."

Judge Barry distinguished the court's earlier ruling in Valdino v. A. Valey Engineers, 903 F.2d 253 (3rd Cir. 1990), on which the district court relied. In Valdino, the plaintiff, claiming he should have been compensated at the "journeyman" rate and not the "normal" rate under the CBA, alleged that the employer violated the FLSA by failing to pay his hours worked in excess forty per week at one and one-half times the journeyman rate. For this reason, Judge Barry noted that in contrast to the claims in this case, Valdino's FLSA claim was "tethered to the threshold question of whether or not he was entitled to the journeyman wages or normal wages under the governing CBA." In sum, the claim was derivative of his breach of contract claim and necessarily dependent on an interpretation of the CBA.