Employment Law

To Accommodate or Not to Accommodate? U.S. Supreme Court Weighs in on Pregnant Employees

Why it matters

The U.S. Supreme Court decided the first of two major employment law cases this term when a 6-3 majority of the Court held that the McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), burden-shifting framework applies to a pregnant employee seeking to demonstrate disparate treatment through indirect evidence. The decision revives a suit brought by a former part-time driver for United Parcel Service (UPS) who claimed the company refused to let her work a light-duty job as an accommodation for her pregnancy. UPS pointed to a company policy to argue that the refusal was not discriminatory, and a federal district court and the Fourth Circuit Court of Appeals both agreed. But writing for the majority, Justice Stephen Breyer reversed, finding that the policy might violate the Pregnancy Discrimination Act (PDA) and that Young had established a prima facie case of discrimination, leaving the remaining McDonnell Douglas issues to the Fourth Circuit on remand. While all employers should review their policies and practices with regard to pregnancy accommodations in light of the decision, open questions remain. For example, the Court declined to take a position on the application of the updated Americans with Disabilities Act (ADA) with respect to its statutory analysis of the PDA. And the majority said employers are not per se required to provide light duty to pregnant employees simply because other workers are relieved of a heavier burden, but drew no clear line about where such a refusal becomes discriminatory. The decision will also have an impact on guidance issued by the Equal Employment Opportunity Commission (EEOC) released last year. Refusing to defer to the guidance, the Court wrote that the agency took a position (after the justices had granted cert in the case) about which the EEOC had previously been silent and inconsistent with positions for which the Government had long advocated.

Detailed discussion

After suffering multiple miscarriages, Peggy Young became pregnant in 2006. Her doctor advised her not to lift more than 20 pounds during the first 20 weeks of her pregnancy or more than 10 pounds thereafter. As a part-time driver for UPS, Young was required to lift parcels weighing up to 70 pounds.

She requested a light-duty job but her employer denied the accommodation. UPS policy permitted light duty for only certain employees: those injured while on the job, those who lost their Department of Transportation (DOT) certifications, and workers suffering from a disability covered by the ADA.

Young took an unpaid leave of absence for the remainder of her pregnancy. She then filed suit, alleging the company violated the PDA, which amended Title VII in 1978 to specify that the statute’s term “because of sex” includes “because of or on the basis of pregnancy, childbirth, or related medical conditions.”

A second clause in the PDA, Section 2000e(k)(2) added that “women affected by pregnancy, childbirth, or related medical conditions shall be treated the same for all employment-related purposes … as other persons not so affected but similar in their ability or inability to work….”

Because other drivers who were similar in their inability to work were accommodated and she was not, Young said UPS’s failure to accommodate constituted a statutory violation.

But Young did not fall into any of the categories of “other persons” accommodated by the company—those injured on the job or disabled under the ADA—so the employer had not discriminated against her, UPS told the court. A federal district court judge and the Fourth Circuit agreed, finding the company’s policy to be “pregnancy blind.”

Justice Stephen Breyer authored an opinion reversing summary judgment for UPS.

Focusing on the second clause of the PDA, the majority considered who the relevant “other persons” should be when a pregnant employee seeks accommodations.

Young (and the Solicitor General) argued that the statute mandates that an employer provide the same accommodations to workplace disabilities caused by pregnancy that are provided for workplace disabilities that have other causes but have a similar effect on the ability to work.

On the other end of the spectrum, UPS contended that courts should consider the accommodations provided to pregnant women as compared to the accommodations provided to others within a facially neutral category, like off-the-job injuries.

Rejecting both positions, the majority strove for something of a middle ground. Young’s view would establish a “most favored nation” status for pregnant women, while UPS’s stance limited the second clause to merely defining sex discrimination to include pregnancy discrimination, something already accomplished by the first clause.

Instead, “an individual pregnant worker who seeks to show disparate treatment through indirect evidence may do so through application of the McDonnell Douglas framework,” Justice Breyer wrote, first making out a prima facie case “that she belongs to the protected class, that she sought accommodation, that the employer did not accommodate her, and that the employer did accommodate others ‘similar in their ability or inability to work.’ ”

The burden then shifts to the employer to justify its refusal by relying on “legitimate, non-discriminatory” reasons for denying the accommodation. Here, the Court noted, “that reason normally cannot consist simply of a claim that it is more expensive or less convenient to add pregnant women to the category of those (‘similar in their ability or inability to work’) whom the employer accommodates.”

If the employer presents such reasons, the plaintiff must then show that the reasons are pretextual.

“We believe that the plaintiff may reach a jury on this issue by providing sufficient evidence that the employer’s policies impose a significant burden on pregnant workers, and that the employer’s ‘legitimate, nondiscriminatory’ reasons are not sufficiently strong to justify the burden, but rather—when considered along with the burden imposed—give rise to an inference of intentional discrimination,” the majority wrote.

Plaintiffs can present evidence that the employer accommodates a large percentage of nonpregnant workers and fails to accommodate a larger percentage of pregnant workers, the Court suggested. For example, in the case at hand, Young claimed UPS accommodates most nonpregnant employees with lifting limitations and refuses to accommodate pregnant employees with such limits.

Remanding the case to the Fourth Circuit Court of Appeals, Justice Breyer said Young had already established her prima facie case, shifting the burden to UPS to provide a reason for refusing her accommodation.

Justice Samuel Alito authored a concurring opinion, joining Chief Justice John Roberts and Justices Breyer, Ruth Bader Ginsburg, Sonia Sotomayor, and Elena Kagan in the majority. Two dissenting opinions were filed, one written by Justice Antonin Scalia and joined by Justices Anthony Kennedy and Clarence Thomas, with Justice Kennedy adding a second dissent.

Calling the majority opinion “wrong from the start,” Justice Scalia said the correct reading of the second clause of the PDA “prohibits practices that discriminate against pregnant women relative to workers of similar ability or inability. It does not prohibit denying pregnant women accommodations, or any other benefit for that matter, on the basis of an evenhanded policy.”

To read the opinion in Young v. UPS, click here.

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SEC Blows the Whistle on Employer Confidentiality Agreements

Why it matters

The Securities and Exchange Commission (SEC) has filed—and settled—the agency’s first enforcement action against an employer based on a confidentiality agreement that allegedly violated an agency rule issued pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act. After the statute established the SEC’s whistleblower program, the agency promulgated a rule that prohibits employers from impeding employees from reporting possible violations of securities law, including by use of a confidentiality agreement. As part of the SEC’s stepped-up enforcement of whistleblower protections, the agency said a confidentiality agreement used by a technology and engineering firm ran afoul of the rule because it instructed employees not to discuss the workings of an internal investigation without prior authorization by the law department. To settle the suit, the employer agreed to contact all employees who signed the agreement over the prior four years to clarify their rights, pay a $130,000 penalty, and amend its confidentiality agreement to comply with the SEC rule going forward. Employers are on notice that the agency will take action based on employer contracts and agreements that appear to discourage whistleblower activity separate and alone from a preexisting case and should consider a review of any materials that could trigger SEC scrutiny, as the agency promised continued enforcement. “SEC rules prohibit employers from taking measures through confidentiality, employment, severance, or other type of agreements that may silence potential whistleblowers before they can reach out to the SEC. We will vigorously enforce this provision,” Andrew J. Ceresney, director of the SEC’s Division of Enforcement, said in a statement.

Detailed discussion

The Dodd-Frank Wall Street Reform and Consumer Protection Act established a whistleblower program for the financial services industry overseen by the SEC in 2010.

Regulations promulgated by the agency prohibit companies from interfering with or restricting employees from reporting potential violations to the agency. SEC Rule 21F-17 makes it a separate violation of law to “take any action to impede an individual from communicating directly with the Commission staff about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement.”

Recent news stories reported that the SEC had sent letters to companies requesting copies of various documents—including employment contracts, corporate training materials on confidentiality, nondisclosure agreements, confidentiality agreements, severance agreements, and settlement agreements reached with employees since Dodd-Frank went into effect—in an effort to ensure that employers were not impeding whistleblowers’ rights.

The news reports became a reality when the SEC announced a consent order reached with Texas-based KBR, Inc., a technology and engineering firm the agency said violated Rule 21F-17 with a confidentiality agreement.

KBR received complaints and allegations from employees of potentially illegal or unethical conduct by the company and its workers. As part of its compliance program, the company conducted internal investigations of such allegations, which typically included interviews of KBR employees, including the individual who originally lodged the complaint.

Interviewees were provided with a form confidentiality statement by KBR. The agreement was not required by company policy but was included in the Code of Business Conduct Investigation Procedures Manual and investigators had witnesses sign the statement at the start of an interview, the SEC said. The form was used both prior to the promulgation of Rule 21F-17 and after.

The agreement included the following provision:

“I understand that in order to protect the integrity of this review, I am prohibited from discussing any particulars regarding this interview and the subject matter discussed during the interview, without the prior authorization of the Law Department. I understand that the unauthorized disclosure of information may be grounds for disciplinary action up to and including termination of employment.”

Such language potentially discouraged employees from reporting securities violations in contravention of Rule 21F-17, the SEC alleged.

“Though the Commission is unaware of any instances in which (i) a KBR employee was in fact prevented from communicating directly with Commission Staff about potential securities law violations, or (ii) KBR took action to enforce the form confidentiality agreement or otherwise prevent such communications, the language found in the form confidentiality statement impedes such communications by prohibiting employees from discussing the substance of their interview without clearance from KBR’s law department under penalty of disciplinary action including termination of employment. This language undermines the purpose of Section 21F and Rule 21F-17(a), which is to ‘encourage[e] individuals to report to the Commission,’ ” according to the SEC’s order.

To settle the charges, KBR—which did not admit or deny the allegations—agreed to pay a $130,000 penalty to the SEC and amended its confidentiality agreement with a new clause:

“Nothing in this Confidentiality Statement prohibits me from reporting possible violations of federal law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation. I do not need the prior authorization of the Law Department to make any such reports or disclosures and I am not required to notify the company that I have made such reports or disclosures.”

The company also promised to make “reasonable efforts” to contact all KBR employees in the United States who signed the allegedly illegal agreement from August 21, 2011, to the present and provide them with a copy of the order and an explanation of their rights.

To read the SEC order in In the Matter of KBR, Inc., click here.

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NLRB: Profane Facebook Post Constitutes Protected Activity

Why it matters

An employer that terminated a worker after he posted profane and vulgar comments about a supervisor on Facebook violated the National Labor Relations Act (NLRA), a three-member panel of the National Labor Relations Board (NLRB) determined, with one member filing a dissent. Feeling that he had been addressed in a disrespectful manner, an employee at a catering business called his supervisor a “nasty mother f*#@!r” on Facebook, among other vulgar comments, some directed at the supervisor’s family. After being terminated for posting the comments in violation of company policy, the employee filed a complaint with the NLRB. Noting that vulgar language was rife in the workplace at issue and that such comments rarely resulted in discipline, the Board examined the comments in the context of an unhappy workforce that had recently presented a petition of complaints to management and scheduled an upcoming union election. Based on the totality of the circumstances, the panel found the comments constituted protected, concerted activity. In a dissenting opinion, one member bemoaned the majority’s tacit approval of such “vulgar and obscene” comments, writing that the post should have lost the Act’s protection. The decision continues the NLRB’s streak of siding with employees in disputes involving social media and serves as a reminder to employers to use caution when handling employee activity online.

Detailed discussion

Hernan Perez was a 13-year employee of Pier Sixty, a catering service company in New York. One night while working as a server at a fundraising event in Manhattan, a supervisor approached Perez and two other employees and instructed them to “Turn your head that way and stop chitchatting” in a loud voice. Later in the evening, the supervisor told them in a “raised, harsh tone” to “Spread out, move, move,” in a loud voice audible to the guests.

Upset at what he perceived to be rude treatment, Perez complained to his coworkers. One of them reminded him that an upcoming union election was just two days away and suggested he take a break. Perez did and used the time to make the following post to his Facebook page:

“Bob is such a NASTY MOTHER F*#@!R DON’T KNOW HOW TO TALK TO PEOPLE!!!! F*#k his mother and his entire f*#@!^g family!!!! What a LOSER!!!! Vote YES for the UNION!!!!!”

One of Perez’s Facebook friends reported the post to the employer, and he was terminated shortly after based on his violation of company policy. Perez filed a complaint.

An administrative law judge found that Perez’s termination violated the NLRA because the post constituted protected, concerted activity. The employer appealed but a three-member panel of the NLRB affirmed in a split decision.

Using a totality of the circumstances analysis, the majority emphasized that “vulgar language is rife in the [employer’s] workplace, among managers and employees alike,” citing several examples of profane exchanges that did not result in disciplinary action.

The Board also said that the catering service company was facing general unhappiness from its staff. A number of employees had expressed interest in union representation, “in part because of concerns that management repeatedly treated them disrespectfully and in an undignified manner.” After employees presented management with a petition listing complaints—including specifically identifying the supervisor at issue as having treated employees disrespectfully—an election had been scheduled.

“Perez clearly found [the supervisor’s] commands disrespectful and posted his Facebook comments in response to [the] remarks,” the majority wrote, and his “impulsive reaction” to the commands “reflected his exasperated frustration and stress after months of concertedly protesting disrespectful treatment by managers—activity protected by the Act.”

The Facebook post protested such mistreatment and also “exhorted employees to ‘Vote YES for the UNION,’ ” the NLRB added.

While the decision acknowledged the remarks were “distasteful,” the employer “tolerated the widespread use of profanity in the workplace, including the words ‘f*#k’ and ‘motherf*#@!r,’ ” the Board said. “Considered in this setting, Perez’s use of those words in his Facebook post would not cause him to lose the protection of the Act. Nor was Perez’s reference to [the supervisor’s] family beyond the Act’s protection. We agree with [the ALJ] that Perez’s comments were not a slur against [the supervisor’s] family but, rather, ‘an epithet directed to [the supervisor] himself.’ ”

Perez’s use of profanity was not qualitatively different from profanity regularly tolerated by the employer, the majority wrote, with only five written warnings issued to employees since 2005 based on obscene language and no evidence that discharge had ever occurred.

The Board affirmed that the employer violated Section 8(a)(1) and (3) of the NLRA, ordering the employer to reinstate Perez and make him whole for any lost wages, as well as cease and desist from future violations of the Act.

A dissenting member of the panel said the majority “recast an outrageous, individualized griping episode as protected activity,” refusing to conclude that “such blatantly uncivil and opprobrious behavior is within the Act’s protection.” The Facebook post was “qualitatively different” from the obscenity tolerated by the employer in the workplace, according to the dissent, and the post was far from impulsive—“Perez put in the time, thought, and coordination necessary to use capitalization and punctuation,” after taking a 10-minute break and accessing his Facebook account.

To read the decision and order in Pier Sixty, LLC, click here.

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