Employment Law

NLRB Affirms New Standard on Employee Email Use

Why it matters

A divided National Labor Relations Board (NLRB) affirmed that if an employer provides employees with access to the email system, then employee use of email for statutorily protected communications on nonworking time is presumptively permitted. This standard, set forth by the Board the first time it considered Purple Communications, Inc., was applied on remand to the employer’s communications policy that prohibited workers from engaging in activities on behalf of organizations or persons with no professional or business affiliation with the company, or sending uninvited email of a personal nature. A union seeking to organize the company’s workers objected to the policy, arguing that it interfered with their freedom of choice in the union election. An administrative law judge (ALJ) initially found the policy lawful but the NLRB reversed in Purple Communications I. The Board established a new standard that “employee use of email for statutorily protected communications on nonworking time must presumptively be permitted by employers who have chosen to give employees access to their email systems.” On remand, an ALJ applied the new standard and found the employer’s policy unlawful. The Board affirmed in a 2-to-1 vote. Although a dissent filed by the Acting Chair characterized the new standard as “incorrect” and “unworkable,” employers are stuck with it for the time being.

Detailed discussion

Purple Communications provides real-time sign language interpretation during video calls at 16 call centers across the United States. Each interpreter is assigned to an individual email account, which can be accessed both at a workstation and from home computers and personal smartphones. Since 2012, the employer has maintained a handbook policy that prohibits employees from using the company email system for nonbusiness purposes.

Specifically, the policy banned use of “the computer, internet, voicemail and email systems, and other Company equipment in connection with any of the following activities: … Engaging in activities on behalf of organizations or persons with no professional or business affiliation with the Company. … Sending uninvited email of a personal nature.”

When workers at some of the call centers attempted to organize a union, they filed a charge with the National Labor Relations Board (NLRB) that the policy interfered with employees’ National Labor Relations Act (NLRA) Section 7 rights in violation of Section 8(a)(1). An administrative law judge (ALJ) initially upheld the policy, finding that employees’ rights were not violated.

But upon review, the NLRB established a new standard with regard to employee use of an employer’s email system, ruling that “employee use of email for statutorily protected communications on nonworking time must presumptively be permitted by employers who have chosen to give employees access to their email systems.”

The Board noted that an “employer may rebut the presumption by demonstrating that special circumstances necessary to maintain production or discipline justify restricting its employees’ rights,” and remanded the case for the ALJ to consider the lawfulness of Purple Communication’s electronic communication policy under the new standard.

On remand, the employer notified the judge it would not contend that special circumstances existed justifying the policy; instead, Purple Communications argued that Purple I was wrongly decided and should be reconsidered. Having been tasked with a mandate from the Board, the ALJ applied the new standard and found that the employer’s policy violated Section 8(a)(1) “by maintaining an overly broad electronic communications policy that unlawfully restricts employees’ use of the … email system for Section 7 purposes.”

Purple Communications appealed to the NLRB. A majority of the Board affirmed the ALJ’s decision and the use of the new standard, adopting an order to have the employer rescind the policy.

Acting Chair Philip Miscimarra dissented, writing that the new standard is “incorrect and unworkable.” He raised several objections, including that the new standard fails to properly balance the right of employees to self-organize with the right of employers to maintain discipline in their establishments.

Restricting use of an employer’s email system to business-related purposes does not create an unreasonable impediment to self-organization, he said, “notwithstanding the widespread availability of multiple digital platforms (e.g., social media, text messaging, and personal email accounts)—not to mention old-fashioned face-to-face conversation—through which employees may engage in NLRA-protected communications separately and apart from their employer’s email system.”

In addition, the Purple Communications standard fails to accommodate employers’ property rights in their information technology resources and makes it “enormously” difficult for employers to enforce a valid rule prohibiting solicitation during working time, Miscimarra wrote, not to mention the creation of an exception that will create uncertainty for employers. “[W]hat qualifies as a ‘special circumstance will only be determined after the fact and case by case, following potentially years of Board and court litigation,” he said.

To read the decision and order in Purple Communications, Inc., click here.

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Seventh Circuit: Title VII Prohibits Sexual Orientation Discrimination

Why it matters

Likely setting the stage for U.S. Supreme Court review, the en banc U.S. Court of Appeals for the Seventh Circuit ruled that Title VII prohibits discrimination on the basis of sexual orientation as a form of sex discrimination. Kimberly Hively sued Ivy Tech Community College after her contract was terminated in 2014, alleging the school denied her a full-time position because she is a lesbian. A district court tossed the suit, ruling that Title VII does not protect against sexual orientation discrimination and a panel of the Seventh Circuit affirmed last summer, albeit reluctantly. After agreeing to hear the case en banc, the Seventh Circuit reversed itself, describing the plaintiff’s claim as “paradigmatic sex discrimination.” “A policy that discriminates on the basis of sexual orientation does not affect every woman, or every man, but it is based on assumptions about the proper behavior for someone of a given sex,” the majority wrote. “The discriminatory behavior does not exist without taking the victim’s biological sex (either as observed at birth or as modified, in the case of transsexuals) into account.” Three members of the panel dissented. With recent contrary authority from the Eleventh Circuit, the issue could soon be before the justices.

Detailed discussion

Kimberly Hively began teaching as a part-time adjunct professor at Ivy Tech Community College in 2000. In 2013, she filed a charge with the Equal Employment Opportunity Commission (EEOC), claiming that she had been discriminated against on the basis of sexual orientation. She alleged that, although she had the necessary qualifications for full-time employment and had never received a negative evaluation, the college refused to even interview her for any of the six positions for which she applied and then failed to renew her contract.

The college told the court that Hively had made a claim for which there was no legal remedy because Title VII does not apply to claims of sexual orientation discrimination. A federal district court agreed and granted the employer’s motion to dismiss. With much consternation, the U.S. Court of Appeals for the Seventh Circuit affirmed.

Hively sought review by the en banc Seventh Circuit, which reversed in an 8-to-3 opinion.

“For many years, the courts of appeals of this country understood the prohibition against sex discrimination to exclude discrimination on the basis of a person’s sexual orientation,” the majority wrote. “The Supreme Court, however, has never spoken to that question. In this case, we have been asked to take a fresh look at our position in light of developments at the Supreme Court extending over two decades. We have done so, and we conclude today that discrimination on the basis of sexual orientation is a form of sex discrimination.”

For support, the Seventh Circuit relied on the comparative method as well as a line of cases from the Supreme Court protecting an individual’s right to associate, dating back to Loving v. Virginia.

Using the comparative method, the court asked: holding all other things constant and changing only her sex, would Hively have been treated the same way? No, the court concluded, because if she had been a man married to a woman (or living with a woman, or dating a woman) and everything else stayed the same, Ivy Tech would not have refused to promote her and would not have fired her. “This describes paradigmatic sex discrimination,” the court wrote. “Ivy Tech is disadvantaging her because she is a woman.”

Finding that no line exists between a gender nonconformity claim and one based on sexual orientation, the court said “Hively represents the ultimate case of failure to conform to the female stereotype (at least as understood in a place such as modern America, which views heterosexuality as the norm and other forms of sexuality as exceptional): she is not heterosexual.”

“Any discomfort, disapproval, or job decision based on the fact that the complainant—woman or man—dresses differently, speaks differently, or dates or marries a same-sex partner, is a reaction purely and simply based on sex,” the court said. “That means it falls within Title VII’s prohibition against sex discrimination, if it affects employment in one of the specified ways.”

Using the associational theory, the Seventh Circuit reached the same conclusion, relying on a line of decisions dating back to Loving. In that case, “[c]hanging the race of one partner made a difference in determining the legality of the conduct, and so the law rested on ‘distinctions drawn according to race,’ which were unjustifiable and racially discriminatory,’” the court explained. “So too, here. If we were to change the sex of one partner in a lesbian relationship, the outcome would be different. This reveals that the discrimination rests on distinctions drawn according to sex.”

The court was not persuaded by Ivy Tech’s argument that Congress has frequently considered amending Title VII to add the words “sexual orientation” to the list of prohibited characteristics but has never done so. “In our view … it is simply too difficult to draw a reliable inference from these truncated legislative initiatives to rest our opinion on them,” the court said. “The goalposts have been moving over the years, as the Supreme Court has shed more light on the scope of the language that already is in the statute: no sex discrimination.”

Further, it is “neither here nor there” that the Congress that enacted the Civil Rights Act in 1964 may not have realized or understood the full scope of the words it chose, the court added. In the years since enactment, “Title VII has been understood to cover far more than the simple decision of an employer not to hire a woman for Job A, or a man for Job B,” with the Supreme Court recognizing that the prohibition against sex discrimination reaches sexual harassment—including same-sex workplace harassment—as well as discrimination based on a person’s failure to conform to a certain set of gender stereotypes.

The court also emphasized the changing societal acceptance and recognition by courts of sexual orientation discrimination. Many district courts have similarly found that Title VII protects against such discrimination, the EEOC has also adopted this position, and the Supreme Court has repeatedly protected the rights of gay and lesbian individuals, albeit outside of the workplace, in cases such as Romer v. Evans and United States v. Windsor.

“The logic of the Supreme Court’s decisions, as well as the common-sense reality that it is actually impossible to discriminate on the basis of sexual orientation without discriminating on the basis of sex, persuade us that the time has come to overrule our previous cases that have endeavored to find and observe that line,” the court wrote.

Judge Richard Posner filed a concurring opinion, advocating for an “alternative approach” that would recognize the court’s interpretation was “a fresh meaning to a statement … that infuses the statement with vitality and significance today.”

“Statutes and constitutional provisions frequently are interpreted on the basis of present need and present understanding rather than original meaning,” he wrote, citing the changing interpretation of the Sherman Antitrust Act, enacted in 1890. “Title VII of the Civil Rights Act of 1964, now more than half a century old, invites an interpretation that will update it to the present, a present that differs markedly from the era in which the Act was enacted.”

This “judicial interpretive updating” presupposes “a lengthy interval between enactment and (re)interpretation,” he added. “A statute when passed has an understood meaning: it takes years, often many years, for a shift in the political and cultural environment to change the understanding of the statute.”

Hively’s case was an appropriate vehicle for use of such updating, Judge Posner wrote, as “the concept of sex discrimination has since broadened in light of the recognition, which barely existed in 1964, that there are significant numbers of both men and women who have a sexual orientation that sets them apart from the heterosexual members of their genetic sex (male or female), and that while they constitute a minority their sexual orientation is not evil and does not threaten our society.”

A trio of judges filed a lengthy dissenting opinion, bemoaning the majority’s “judge-empowering, common-law decision that leaves a great deal of room for judicial discretion,” with the result of “a statutory amendment courtesy of unelected judges.” The dissent emphasized that none of the other circuits have found sexual orientation discrimination synonymous with sex discrimination and that Congress knows how to legislate against sexual orientation discrimination and has not done so.

“If Kimberly Hively was denied a job because of her sexual orientation, she was treated unjustly,” the dissent said. “But Title VII does not provide a remedy for this kind of discrimination. The argument that it should must be addressed to Congress.”

To read the opinion in Hively v. Ivy Tech Community College of Indiana, click here.

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EEOC Subpoena Requests Reviewed De Novo, Supreme Court Holds

Why it matters

Setting the standard for judicial review of an Equal Employment Opportunity Commission (EEOC) subpoena request, the U.S. Supreme Court declared that whether or not to enforce or quash an agency subpoena should be reviewed for abuse of discretion, not de novo review. The dispute began when an employee at McLane Company filed a charge of sex discrimination with the agency, launching an investigation. McLane provided the EEOC with basic information about its evaluation system as well as some information about employees. Based on this data, the agency expanded its investigation nationwide and added consideration of potential age discrimination, issuing two subpoenas for more information. When the employer balked, the EEOC filed actions in federal court to enforce the subpoenas. The district court declined to enforce them but, after reviewing the lower court’s decision de novo, the U.S. Court of Appeals for the Ninth Circuit reversed. In an opinion by Justice Sonia Sotomayor, the Court said the Ninth Circuit applied the wrong standard for review. District courts have “considerable experience” making similar decisions, the justices said, and should be reviewed using an abuse of discretion standard.

Detailed discussion

The job of a “cigarette selector” at McLane Company is demanding one, with workers required to lift, pack and move large bins containing products. Both new employees and those returning from medical leave are required to take a physical evaluation that tests range of motion, resistance and speed.

In 2007, Damiana Ochoa took three months of maternity leave from her position as a cigarette selector at McLane. When she tried to return to work, she was asked to take the evaluation. After failing the test three times, she was terminated. Ochoa filed a charge of discrimination with the EEOC, alleging that she had been fired on the basis of her gender.

The agency opened an investigation and McLane provided, upon request, basic information about the physical evaluation as well as a list of anonymous employees that the employer had asked to take it. The list included each employee’s gender, role at the company, evaluation score, and the reason asked to take the evaluation.

When the EEOC learned that McLane used the physical evaluation nationwide, the agency expanded the scope of its investigation, both geographically—to focus on all locations—and substantively, looking into whether McLane had discriminated against employees on the basis of age. As a result, the EEOC issued two subpoenas requesting “pedigree information”: the names, Social Security numbers, last known addresses and telephone numbers of the employees who had been asked to take the evaluation.

McLane refused. The agency filed two actions in Arizona federal court, but the judge declined to enforce the subpoenas with regard to the pedigree information. The U.S. Court of Appeals for the Ninth Circuit reversed, reviewing the lower court’s decision de novo and concluding it erred by finding the pedigree information irrelevant. However, the panel questioned in a footnote why de novo review applied as every other federal Circuit reviewed such issues for abuse of discretion.

The U.S. Supreme Court granted certiorari to resolve this question, finding that both of the factors considered by the justices—whether the history of appellate practice yielded an answer and whether one judicial actor is better positioned than another to decide the issue—pointed toward the abuse of discretion review.

“First, the longstanding practice of the courts of appeals in reviewing a district court’s decision to enforce or quash an administrative subpoena is to review that decision for abuse of discretion,” Justice Sonia Sotomayor wrote, a practice that predates even Title VII itself. Every Circuit except the Ninth applies this deferential standard to review a district court’s decision as to whether to enforce an EEOC subpoena, with the Ninth Circuit alone applying a more searching form of review.

“To be sure, the inquiry into the appropriate standard of review cannot be resolved by a head-counting exercise,” the justices said. “But the ‘long history of appellate practice’ here carries significant weight.”

Second, “basic principles of institutional capacity” counseled in favor of deferential review, the Court held. “The decision whether to enforce an EEOC subpoena is a case-specific one that turns not on ‘a neat set of legal rules,’ but instead on the application of broad standards to ‘multifarious, fleeting, special, narrow facts that utterly resist generalization.’ In the mine run of cases, the district court’s decision whether to enforce a subpoena will turn on whether the evidence sought is relevant to the specific charge before it or whether the subpoena is unduly burdensome in light of the circumstances. Both tasks are well suited to a district judge’s expertise.”

District courts have “considerable experience” in other contexts making similar decisions, Justice Sotomayor noted, such as deciding whether evidence is relevant at trial and whether pretrial criminal subpoenas are unreasonable in scope. While not the same as weighing whether to enforce an EEOC administrative subpoena, “they are similar enough to give the district court the ‘institutional advantag[e],’” the justices said.

Further, deferential review streamlines “the litigation process by freeing appellate courts from the duty of reweighing evidence and reconsidering facts already weighed and considered by the district court,” the Court wrote.

The justices remanded the case to the Ninth Circuit to review the district court’s decision under the appropriate standard.

Justice Ruth Bader Ginsburg filed a separate opinion, concurring in the holding that abuse of discretion is the proper review standard, but dissenting as she would have affirmed the Ninth Circuit’s judgment because the district court rested its decision on a legal error.

To read the opinion in McLane Co., Inc. v. EEOC, click here.

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Parties Take a Seat With $700,000 Settlement

Why it matters

The latest development in California’s suitable seating litigation: a $700,000 deal cut by Abercrombie & Fitch with sales representatives. Amber Echavez sued the national retailer in October 2011 and sought to certify a class of 10,000 workers over a lack of seating at the retail stores. During pre-trial wrangling, a federal court rejected her class allegations and limited the suit to a Private Attorneys General Act (PAGA) claim; the court also denied Abercrombie’s motion for summary judgment. Once the California Supreme Court issued its seminal seating decision in Kilby v. CVS Pharmacy last year, the parties reached an agreement. Abercrombie will pay $340,000 in PAGA penalties ($255,000 to the state labor agency and $85,000 to Echavez) and $360,000 for attorney’s fees and costs. The employer also agreed to modify its seating policies to conform to Kilby. While the total falls “significantly” below the maximum relief available under the statute (north of $880,000, as estimated by the judge), the court granted final approval to the deal given the lack of case law post-Kilby putting a value on such cases.

Detailed discussion

Originally styled as a representative action in California state court, Amber Echavez’s suit against Abercrombie & Fitch evolved into a single-count complaint pursuant to the PAGA alleging violations of the state’s Wage Order 7-2001 by failing to provide suitable seating to employees.

The parties engaged in extensive discovery and battled over summary judgment, with Echavez appealing the district court’s ruling in favor of Abercrombie. While her appeal was pending before the U.S. Court of Appeals for the Ninth Circuit, the California Supreme Court agreed to answer certified questions on the Wage Order and the Ninth Circuit stayed Echavez’s action pending the decision in Kilby v. CVS Pharmacy.

In that case, the state’s highest court ruled that seats should be provided to employees if the “nature of the work” reasonably permits, using a totality of the circumstances test that includes consideration of the employer’s business judgment and the tasks performed by the employee.

The Ninth Circuit lifted the stay, remanded the case to district court so the parties could negotiate a settlement, and Echavez filed an unopposed motion for preliminary approval of the deal. The district court invited the Labor and Workforce Development Agency (LWDA) to weigh in on the agreement but the agency did not file a response.

Pursuant to the agreement, Abercrombie would pay a total of $700,000—$360,000 in PAGA penalties ($255,000 to the LWDA and $85,000 to Echavez) plus $260,000 in attorney’s fees and costs to her counsel. The employer also avowed that its seating policies have already been changed, consistent with the Kilby decision.

U.S. District Court Judge Virginia A. Phillips grappled with whether the settlement total was reasonable and fair, particularly given the dearth of comparative cases. The court looked to the formula set forth by statute to calculate civil PAGA penalties, with $100 assessed for each aggrieved employee per pay period for the initial violation and $200 for each subsequent violation.

During discovery, Abercrombie put the number of aggrieved employees at 8,818 while Echavez rounded up to 10,000. The court said no evidence existed to demonstrate over how many pay periods the alleged violations spanned and whether they were initial or both initial and subsequent, triggering the higher penalty.

“Even if the violation took place over one pay period and would have been classified as only an initial violation, using Defendants’ lower number of 8,818 aggrieved employees, the total statutory penalty would be $881,800,” the court said. “Accordingly, using either Defendants’ or Plaintiff’s number of ‘aggrieved employees,’ it appears the proposed $340,000 PAGA penalty is significantly less than the statutory maximum PAGA penalty that could be assessed here.”

However, the court still found that the deal passed muster, noting that the parties reached the settlement agreement as to the proposed penalty after months of negotiations, including an all-day mediation session. The parties faced a real challenge given that Kilby was only recently decided, with no body of verdicts or settlements to refer to for comparison, the court added, and the LWDA elected not to file any objection or opposition to the deal, a move the court inferred was tantamount to consent to the terms.

“Although the proposed PAGA penalty is less than the statutory maximum penalty, the Court finds it reasonable and fair,” Judge Phillips wrote. “The primary purpose of PAGA, i.e., the empowerment of aggrieved employees to act as private attorneys general to collect civil penalties from their employers for Labor Code violations, is served by the proposed PAGA penalty in the parties’ settlement agreement.”

To read the order in Echavez v. Abercrombie & Fitch Co., click here.

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Wellness Program Gets Even Better With EEOC Deal

Why it matters

To settle charges from the Equal Employment Opportunity Commission (EEOC) of operating a wellness program in violation of the Americans with Disabilities Act (ADA), Orion Energy Systems Inc. has agreed to pay $100,000 and tweak the program. In one of a handful of suits challenging employer wellness programs filed by the agency in 2014, the EEOC said Orion ran afoul of the statute by requiring employees to disclose their medical history, submit to blood tests and perform certain exercises on a range-of-motion machine, and then fired employee Wendy Schobert after she refused to take part. Orion argued the program was voluntary and therefore in compliance with federal law. A district court judge agreed the program was voluntary but found a factual issue remained with the treatment of Schobert. The parties then reached a settlement agreement. Pursuant to a three-year consent decree, Orion will be prohibited from maintaining a program that poses disability-related inquiries or seeks a medical examination that is not voluntary and will pay Schobert $100,000.

Detailed discussion

In 2014, the EEOC filed several lawsuits against employers, asserting that their wellness programs violated the ADA. The first suit targeted Wisconsin-based Orion Energy Systems Inc., with the agency alleging the company instituted an involuntary program that required employees to disclose their medical history, submit to blood tests and perform certain exercises on a range-of-motion machine.

When employee Wendy Schobert refused to take part, the employer “threatened and coerced her” and then terminated her in retaliation for her objections, the EEOC claimed.

The parties filed cross motions for summary judgment and U.S. District Court Judge William C. Griesbach issued a split decision. While he agreed with Orion that the wellness program was voluntary and not in violation of the ADA, he found that genuine issues of disputed fact remained on the EEOC’s retaliation and interference claims with respect to Schobert.

Facing continued litigation, the parties reached an agreement.

For a term of three years, Orion will be enjoined from maintaining any wellness program that poses “disability-related inquiries or seeks a medical examination” that is not voluntary within the meaning of the ADA and its regulations. The employer is further prohibited from maintaining a wellness program that imposes an incentive upon employees of more than 30% of the premium cost for self-only insurance (or the premium-replacement cost if Orion is self-insured) for participation, or as otherwise set forth in EEOC regulations.

Any form of retaliation, “including interference or threats” against any employee because the individual raised objections or concerns as to whether Orion’s wellness program complies with the ADA, is also banned under the consent decree.

Orion agreed to conduct a special training for its executives on the provisions of the decree as well as launch an annual training for employees on the prohibitions against retaliation and interference under the ADA, with an “emphasis” on Orion’s commitment to equal employment opportunity.

The employer will pay Schobert a total of $100,000 as a settlement payment, with $25,000 characterized as payment for attorney’s fees, $60,000 slated for compensatory damages (including pecuniary losses), and $15,000 as back pay.

To read the consent decree in EEOC v. Orion Energy Systems, click here.

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