Employment Law

EEOC Touts ‘Significant Progress’ in FY 2017 Report

Why it matters

The Equal Employment Opportunity Commission commended itself in the agency’s annual Performance and Accountability Report, highlighting “significant progress” in managing the pending inventory of Fiscal Year 2017 charges with the lowest number of cases in the past decade. The report—documenting the agency’s activity from Oct. 1, 2016, through Sept. 30, 2017—shares statistics on the number of charges filed, lawsuits resolved and monetary relief obtained, as well as information about outreach efforts and the launch of the new EEOC Public Portal.

Detailed discussion

In FY 2017, the Equal Employment Opportunity Commission resolved 99,109 charges and reduced the charge workload by 16.2 percent to 61,621 (a ten-year low), handling more than 540,000 calls and 155,000 contacts about possible charge filings along the way, resulting in 84,254 charges being filed.

Victims of employment discrimination benefited from $484 million, including $355.6 million in monetary relief obtained through mediation, conciliation and other administrative enforcement, along with another $42.4 million secured through litigation. “Importantly, in each of these categories, the agency obtained substantial changes to discriminatory practices to remedy violations of equal employment opportunity laws and prevent future discriminatory conduct,” the EEOC noted.

In the courtroom, FY 2017 saw 184 merits lawsuits filed by the agency—more than double the 86 suits filed in FY 2016—with 124 on behalf of individuals, 30 non-systemic suits with multiple victims and another 30 systemic cases. A total of 109 merits lawsuits were resolved, with “a favorable result” in 91 percent of all district court resolutions, the EEOC said.

For federal employees, the agency secured $72.7 million in relief and resolved 6,661 hearings complaints. An additional 4,284 appeals of agency decisions or federal sector complaints were also resolved (a 14 percent increase over the prior year), with almost half decided within 180 days of receipt, yielding $13.3 million in relief. Overall, the pending inventory for the federal program was reduced by 11 percent to 3,658—the lowest level in nine years.

The report also highlighted the agency’s outreach programs. More than 4,000 no-cost educational, training and outreach events reached approximately 317,000 individuals, the EEOC said. Technology was a major focus in FY 2017, with the completion of a pilot program in five EEOC offices that allowed individuals to submit inquiries online, schedule interviews, and submit and receive charge information digitally. With the pilot deemed a success, the agency launched the EEOC Public Portal nationwide in November.

To explain the drop in numbers, Acting Chair Victoria A. Lipnic pointed to new strategies deployed by the agency “to more efficiently prioritize charges with merit and more quickly resolve investigations” as well as improvements with digital systems.

“The pending inventory of private sector charges (the backlog) has been a longstanding issue for the EEOC and the public it serves,” Lipnic said in a statement. “Early in the calendar year, we made addressing the backlog a priority. A primary point of this effort was to share strategies among our offices that have been particularly effective in dealing with the pending inventory, while ensuring we are capturing charges with merit.”

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Despite ‘Grunt Work’ Claims, Court Classifies Individual as Intern

Why it matters

Applying the test set forth in Glatt v. Fox, the U.S. Court of Appeals for the Second Circuit found that a plaintiff was an intern and not an employee. A part-time student in the Master of Social Work program at Long Island University, Tracey Sandler was placed in an internship at Bayview Manor. After she complained about the quality of the internship and was dismissed, she sued for wages, claiming that she performed only “grunt work” and “secretarial tasks” and received no educational value for the yearlong experience. The district court sided with the defendant and found Sandler was an intern not entitled to payment under the statute. The federal appellate panel agreed. Applying the factors of the primary beneficiary test found in Glatt, the court said the plaintiff was an intern with no expectation of compensation who—contrary to her contentions—did receive educational value from the internship, as she was assigned to an individual client at Bayview and wrote weekly “process recordings” to describe her experience.

Detailed discussion

During the 2013–2014 academic year, Tracey Sandler was a part-time student in Long Island University’s Master of Social Work program. As part of the curriculum, the school placed her in an internship at Bayview Manor, a nursing and rehabilitation center. Sandler complained about the quality of the internship in February 2013 and was subsequently dismissed from Bayview and expelled from the school. Although she was later reinstated at LIU, she did not receive course credit for the internship.

Sandler filed suit, alleging violations of both New York Labor Law as well as the Fair Labor Standards Act. She claimed that she performed only “secretarial tasks” and “grunt work” such as filing, typing, photocopying, fetching food and wheeling patients, and received nearly nothing of educational value. Instead, Bayview Manor received the benefit of her services, which would have otherwise been performed by a paid employee, she said.

A district court dismissed the suit, and Sandler appealed the state law claims. But the U.S. Court of Appeals for the Second Circuit affirmed dismissal of the action.

The panel applied the “primary beneficiary” test as well as the six non-exhaustive factors found in the circuit’s seminal decision in Glatt v. Fox to conclude that Sandler was an intern, not an employee entitled to compensation.

The first, second and third Glatt factors all weighed in favor of the defendants. Sandler had no expectation of compensation, as LIU required all students to complete an unpaid internship, the court noted, and her pleadings contradicted her allegation that she received nothing of educational value in the experience.

“[S]he was assigned one individual client at Bayview Manor and received one group assignment; she participated in integrated coursework at LIU in the form of a ‘field work class’; and her internship responsibilities included writing three ‘process recordings’ per week that described her experiences as a social work intern,” the court said. If she had completed the internship in a satisfactory manner, she would have received academic credit toward her degree, the panel added.

Other factors also weighed in favor of finding that Sandler was an intern. The duration of Sandler’s internship coincided with and was limited to LIU’s academic calendar, and both parties understood that the internship was conducted without entitlement to a paid job at the conclusion—satisfying the fourth, fifth and seventh Glatt factors.

As for the sixth factor—the extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern—the court called it “a wash.” Sandler was required to perform the work of a secretary or assistant “but that is not dispositive,” the court noted. “Glatt specifically acknowledges that employers could receive an immediate advantage from unpaid interns.”

Sandler argued that dismissal was inappropriate because discovery was necessary to flesh out the facts of the case, such as the extent to which Bayview Manor received benefits from its relationship with LIU and how much the defendant would have expended to have an employee perform her work.

“However, so long ‘as the relationship at issue has the qualities of a bona fide internship, providing educational or vocational benefits in a real-world setting, the intern can be the primary beneficiary of the relationship even if her activities provide direct benefit to the employer,’” the court wrote.

Having weighed and balanced the totality of the circumstances, the panel affirmed dismissal of the plaintiff’s suit.

To read the decision in Sandler v. Benden, click here.

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Court Samples Conditional Certification for Costco Workers

Why it matters

Conditional certification was granted to a class of workers who handed out samples and performed demonstrations at Costco stores after a California federal court judge was satisfied the plaintiffs presented sufficient evidence of their misclassification as independent contractors—for now. The plaintiffs charged Costco and the companies it contracted with for sample sharing and in-store demonstrations of violating both state and federal law by treating them as independent contractors, paying them based solely on the number of products they sold. The court granted conditional certification, defining the class as all workers employed by the third-party companies to work at Costco warehouse locations across the country over the last three years. The plaintiffs presented “evidence that Costco, acting through [the third parties], retained the right to exert discipline over [the plaintiffs] to ensure that they did not perform in an ‘un-Costco way,’” the court wrote. However, the court cautioned the plaintiffs about the need to “marshal significant evidence to overcome the showing defendants offered in opposition to this motion at a future juncture,” indicating that although the “low threshold” for certification was satisfied, the plaintiffs face an uphill challenge.

Detailed discussion

Leona Marino filed a wage and hour complaint seeking minimum wage, overtime, meal and rest break penalties, late payment penalties, and reimbursement of expenses, arguing that she—along with similarly situated employees—was misclassified as an independent contractor and should have been treated as an employee.

Marino worked as an in-store demonstrator (ISD) who performed demonstrations in Costco warehouse stores to encourage sales of CACafe’s coconut-infused coffees and teas. She alleged that the roughly 113 ISDs hired by CACafe between 2013 and 2016 were paid solely based on the number of jars of CACafe product sold in Costco’s stores on the days they performed product demonstrations.

To support her allegations, Marino explained that ISD duties did not vary depending on the location or time period and did not require any special skills. The ISDs were required to report before opening time to the store to which they were assigned; purchase coffee and supplies and set up a display in the area of the store assigned by Costco; take a picture of their demonstration area and send it to CACafe; submit to daily, in-person inspections by an event manager as well as maintain a “temperature log” throughout the day; make and provide samples of the coffee for shoppers; clean up the area and take down the display only after the store closed; and submit a “closing checklist” to Club Demonstration Services, Inc.

In addition, Costco dictated the conditions of the in-store demonstrations, the plaintiff alleged, which were in turn enforced by CACafe. For example, the ISDs were required to maintain a “uniform look” and prohibited from performing demonstrations in an “un-Costco way.”

Marino moved for conditional certification of a collective, opt-in action under the Fair Labor Standards Act (FLSA). Finding that the plaintiff satisfied the low burden for conditional certification under the statute, U.S. District Court Judge Yvonne Gonzalez Rogers granted the motion.

The definition of an “employee” for purposes of the FLSA has been interpreted broadly to effectuate the remedial purposes of the statute, the court noted, with factors such as the degree to which the alleged employer has a right to control the manner in which the work is to be performed, the degree of permanence of the working relationship, whether the service rendered requires no special skills, and the alleged employee’s opportunity for profit or loss dependent upon their own skill.

“Marino offers evidence from members of the proposed collective action, as well as evidence about defendants’ own policies and practices, to support the argument that ISDs were subject to uniform conditions of work and daily supervision,” Judge Rogers wrote. “Based on the evidence presented by Marino, conditional certification is appropriate since it meets the ‘modest factual showing’ threshold for initial certification under the FLSA and service of a notice of the opportunity to opt in to the action.”

The defendants countered that conditional certification should be denied because the plaintiff had yet to establish their relationship as joint employers. Again emphasizing the “low threshold” of evidence required at the early stage of litigation, the court found Marino’s showing was sufficient.

“Regardless of the ultimate merits of the action, the evidence submitted is sufficient to indicate that the members of the proposed collective action are similarly situated with respect to the alleged joint employer factors concerning the power to control the conditions of employment through the [policies] and [checklists],” the court said.

Conditional certification was granted to a class of “All persons who work or worked as CACafe in-store demonstrators in Costco warehouse store locations within the United States at any time within the last three years.”

Judge Rogers did warn Marino that she would need “to marshal significant evidence to overcome the showing defendants offered in opposition to this motion at a future junction,” reiterating the low threshold for conditional certification.

To read the order in Marino v. CACafe, Inc., click here.

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New York’s Highest Court Sets Standard for Punitive Damages

Why it matters

New York law permits punitive damages for workers who demonstrate that an employer violated antidiscrimination laws with gross negligence, the state’s highest court has ruled, answering a certified question from the U.S. Court of Appeals for the Second Circuit. Veronika Chauca, a physical therapy aide, alleged that Park Management Systems fired her while she was on maternity leave. A federal court judge denied her request to instruct the jury on punitive damages and Chauca—who was awarded more than $60,000 by jurors—appealed. The Second Circuit accepted the case but punted to the New York Court of Appeals after finding that the New York City Human Rights Law set no standard for awarding punitive damages. Tackling the issue, the court said punitives were available in circumstances of “willful or wanton negligence” or “a conscious disregard of the rights of others,” but refused to permit an award of punitive damages in every employment discrimination case. “Punitive damages represent punishment for wrongful conduct that goes beyond mere negligence and are warranted only where aggravating factors demonstrate an additional level of wrongful conduct,” the court wrote in a 6-to-1 decision.

Detailed discussion

A physical therapy aide, Veronika Chauca sued her former employer for sex and pregnancy discrimination under Title VII, the Family and Medical Leave Act, the New York State Human Rights Law and the New York City Human Rights Law (NYCHRL).

At trial, her attorney requested a jury instruction on punitive damages under the NYCHRL. The district court judge applied the standard for punitive damages found in Title VII—whether the plaintiff submitted evidence that her employer had intentionally discriminated against her with malice or reckless indifference to her protected rights. Finding no evidence in support of this standard, the court denied the instruction.

The jury awarded Chauca in excess of $60,000, but she appealed, arguing that the court erred by importing the Title VII standard for punitive damages. Considering the issue, the U.S. Court of Appeals for the Second Circuit found itself stumped as the NYCHRL “provides no specific guidance” on an applicable standard for punitive damages. The federal appellate panel certified the question to the New York Court of Appeals for an answer.

Pursuant to the NYCHRL, employers are prohibited from “refus[ing] to hire” or “discharg[ing] from employment” an individual because of his or her gender. Although the statute explicitly provides for punitive damages, “there is no provision in the NYCHRL setting a standard for imposing them,” New York’s highest court explained.

Chauca took the position that all plaintiffs should be entitled to a punitive damages charge upon any showing of liability, as the legislature has encouraged a liberal construction of the statute. On the other end of the spectrum, the defendants urged the court to stick with the application of the Title VII standard.

Instead, the court split the difference, ruling that punitive damages are not automatically available with a showing of liability but that plaintiffs do not need to meet the heightened standard set by Title VII.

“Punitive damages differ conceptually from compensatory damages and are intended to address ‘gross misbehavior’ or conduct that ‘willfully and wantonly causes hurt to another,’” the court wrote. “Punitive damages represent punishment for wrongful conduct that goes beyond mere negligence and are warranted only where aggravating factors demonstrate an additional level of wrongful conduct.”

The Title VII standard was repudiated by the City Council in 2005 when it passed the Restoration Act, amending the city’s Administrative Code “to ensure that ‘[t]he provisions of [the NYCHRL] shall be construed liberally … regardless of whether federal or New York State civil and human rights law … have been so construed,’” the court said.

At the time, lawmakers expressed concern that the NYCHRL was being interpreted too strictly, so the Restoration Act made clear that similarly worded state or federal statutes may be used as interpretive aids only to the extent that the counterpart provisions are viewed “as a floor below which the City’s Human Rights Law cannot fall, rather than a ceiling above which the local law cannot rise,” the court added.

“As a result, this Court has acknowledged that all provisions of the NYCHRL must be construed ‘broadly in favor of discrimination plaintiffs, to the extent that such construction is reasonably possible,’” the court said.

With this in mind, the court turned to the standard it articulated in Home Insurance Co. v. American Home Products Corp., which entitles a plaintiff “to punitive damages where the wrongdoer’s actions amount to willful or wanton negligence, or recklessness, or where there is ‘a conscious disregard of the rights of others or conduct so reckless as to amount to such disregard.’”

This standard represents “the lowest threshold, and the least stringent form, for the state of mind required to impose punitive damages,” the court wrote. “By implementing a lower degree of culpability and eschewing the knowledge requirement, applying this standard adheres to the City Council’s liberal construction mandate while remaining consistent with the language of the statute.”

It is also “properly reflective of the serious and destructive nature of the underlying discriminatory conduct and the goal of deterring ‘future reprehensible conduct,’” the court added, encouraging “nondiscriminatory behavior and the development and application of appropriate employment criteria. In sum, this approach is the most liberal construction of the statute that is ‘reasonably possible’ and furthers the purpose of the NYCHRL.”

One member of the state’s highest court dissented, siding with the plaintiff to argue that a punitive damages charge should be given whenever liability is proven, unless the employer has adopted and fully implemented the antidiscrimination programs, policies and procedures promulgated by the city’s Commission on Human Rights.

To read the opinion in Chauca v. Abraham, click here.

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