Ryan Gibson
Ryan Gibson is an associate in the firm's Labor and Employment group and practices in the Portland office. He represents employers in litigation in state and federal courts and in administrative agency proceedings. He has experience involving all manner of employment-related issues including discrimination, harassment, retaliation, family leave, wage and hour, noncompetition agreements, and traditional labor law. Ryan is admitted to practice in Oregon.
Does Appointment of Plaintiffs' Class Action Attorney Jenny Yang to EEOC Signal Continued Focus On "Systemic" Cases?
Last Friday, the U.S. Senate confirmed President Obama's nomination of Plaintiffs' class action attorney Jenny Yang to serve as one of the Democratic Commissioners on the U.S. Equal Employment Opportunity Commission ("EEOC"). On the one hand, Ms Yang's confirmation likely does not herald a big change in the EEOC's philosophy or priorities; Ms Yang's appointment was of the relatively routine type that the President must make to fill many top positions at federal agencies. Further, Ms Yang replaces another Democratic Commissioner, Stuart Ishimaru, who resigned last year, so the five-person Commission will continue to consist of three Democrats (who tend to be more employee friendly) and two Republicans (who tend to be more employer friendly).
On another hand, though, Ms Yang's background may signal a renewed focus by the Obama Administration on aggressive EEOC enforcement, including through EEOC-initiated litigation. Ms. Yang is currently a partner at the plaintiff class action litigation law firm Cohen Milstein Sellers & Toll, which has represented plaintiffs in some of the biggest employment discrimination class action cases of recent years. For example, Ms. Yang represented plaintiffs in a large sex discrimination class action case against Boeing in Washington state, which reportedly settled for $72 million in 2005. Her firm also represented members of the putative class of 1.5 million female Wal-Mart employees in the blockbuster case Dukes v. Wal-Mart. While the U.S. Supreme Court ruled in 2011 that the Dukes plaintiffs were too numerous and different to be certified as a single, nation-wide class, the litigation has since continued as numerous "smaller" class action lawsuits in courts around the country.
Continue Reading...US Supreme Court Gives Green Light For Employers To Use Offers Of Judgment To Moot FLSA Collective Actions
Today the US Supreme Court issued its long-awaited opinion in Genesis Healthcare v. Symczk. In the case, the Court held that employers could effectively end collective action lawsuits under the Fair Labor Standards Act (FLSA) by agreeing to pay the named plaintiffs in those lawsuits whatever they claim they are owed. The Court held that because the named plaintiff was made completely whole by the employer’s offer her individual claim was moot, and because the named plaintiff’s claim was moot the entire collective action litigation was dismissed. This decision provides a helpful tactical weapon for employers that face the prospect of long and expensive collective action litigation.
How To “Pick Off” A Big FLSA Collective Action Lawsuit
Laura Symczk was employed as a nurse for Genesis, and was non-exempt under wage laws like the FLSA. She filed an FLSA “collective action” against Genesis claiming that it unlawfully failed to pay her and other nurses for meal breaks in which she had to work (the FLSA requires that employers pay employees for all their work time, including during meal breaks when the employee is not relieved of all work duties). Very early in the litigation, Genesis Healthcare issued what is called an “offer of judgment” under Federal Rule of Civil Procedure (FRCP) 68, offering to pay Symczk everything she claimed she was owed for her own unpaid work time (about $7,500, plus her attorney fees to date). The trial court then dismissed her entire collective action lawsuit, finding that because Symczk was made completely whole by Genesis’ offer and no others had yet joined the collective action, the case was “moot.”
Portland, OR May Soon Follow Seattle In Requiring Employers To Provide Paid Sick Leave
Last fall we told you about the new Paid Sick and Safe Time (PSST) ordinance passed by the city of Seattle that requires certain employers within that city to provide paid time off to employees. The Portland City Council is now considering a similar ordinance for employers with employees in Portland. The Council will consider the proposal on Thursday this week, and will likely vote on it in February.
The ordinance would require employers that have employees within the city with more than six employees to provide 40 hours, or five work days, of paid sick time per year to employees who work more than 240 hours per year. Employers with five or fewer employees must also provide sick leave, but it can be unpaid. Employees will be able to bank one hour of sick time for every 30 hours worked. Employers that already have a paid time off policy that provides the same or better benefits will already comply with the new ordinance, and would not be required to provide additional paid time off.
The law would prohibit covered employers from denying employees leave, or retaliating against them for requesting and taking it. Aggrieved employees can file a charge with the Oregon Bureau of Labor and Industry (BOLI) or file a lawsuit "for damages and such other remedies as may be appropriate."
We'll continue to monitor this proposal and keep you updated, especially of course if it passes. If that happens, it would become effective in January 2014.
11th Circuit Disagrees With NLRB And Finds Nurses Are "Supervisors" In Lakeland Health Care Decision
Several weeks ago the U.S. Court of Appeals for the 11th Circuit weighed in on the ongoing debate in labor law over the definition of who is a “supervisor,” and therefore not eligible to join a union, under the federal National Labor Relations Act (“NLRA”). The opinion, Lakeland Health Care Associates , is but the latest installment in an area of labor law that has been evolving over at least the past decade. While this line of cases, including Lakeland Health Care, are specific to the “supervisor” status of nurses working in the residential care industry, the relevant legal tests are the same for all industries. Employers who may wish to oppose unionization efforts among employees it believes are supervisors will therefore want to continue to pay close attention to these cases to see what could be done to maximize the chance that the National Labor Relations Board (“NLRB” or “Board”) would also find those employees are supervisors.
LPNs Supervise Other Employees, But Are They “Supervisors” Under The NLRA?
As with many things in labor law, determining who is a “supervisor” is rarely straightforward: simply giving someone the title of “supervisor” is never enough. In many cases employees may have only partial supervisory authority—the issue in cases like Lakeland Health Care is whether the employees had enough supervisory authority to be “supervisors” under the NLRA.
Continue Reading...U.S. Supreme Court Swats Case Back To Arbitration
In a terse per curium opinion issued today in Nitro-Lift Technologies v. Howard, the U.S. Supreme Court sent a very clear reminder to lower courts, and especially state courts, that once arbitration agreements are found enforceable, arbitrators, and not judges, are to decide everything else in the case involving interpretation of an arbitration agreement. In so holding the Court reasserted that the Federal Arbitration Act ("FAA") and any Court opinions interpreting that law preempt any conflicting state law rules that disfavor private arbitration, including in the employment context.
The Rub: Who Gets To Decide Legal Issues?
The case involved two employees who left Nitro-Lift, an oil company, to work for a competitor. Nitro-Lift invoked arbitration pursuant to an arbitration clause in the employees' employment contract, because it believed the employees had violated a noncompete agreement. The employees filed a lawsuit asking the trial court to declare the noncompete agreement invalid under Oklahoma law. The trial court dismissed the employees' case and referred the case to arbitration. On appeal, the Oklahoma Supreme Court agreed with the trial court that the arbitration agreement was enforceable, but then went on to find that the company's noncompete provision in the agreement was invalid under Oklahoma law. The Oklahoma Supreme Court specifically held that the arbitration agreement did not preclude it from deciding questions of state law, including interpreting the Oklahoma state statute that it believed invalidated the noncompete agreement.
The narrow question before the U.S. Supreme Court was about who gets to decide legal issues related to the underlying contract claims in the dispute, after it has already been determined that the case belongs in private arbitration per a valid arbitration clause in that agreement. Specifically, the issue was whether the judge, as opposed to the arbitrator, can can rule on the merits of the noncompete claim, including whether the noncompete provision in the agreement at issue was enforceable under state law. The Court answered that question with a very solid "no"--once a judge finds that an arbitration agreement is enforceable and refers the case to arbitration, under the FAA the arbitrator, and not the court, will decide all other legal issues related to interpretation of the agreement, including legal interpretations of state contract law.
Continue Reading...December 31, 2012 Deadline Looms Under Tax Code for Fixing Severance Agreements with Releases
Employers have until the end of the year to take advantage of relief from penalties under section 409A of the Internal Revenue Code for agreements that require employees to sign releases before severance benefits are paid. Section 409A was enacted in 2004 to regulate deferred compensation. Internal Revenue Service ("IRS") regulations made clear that it would affect not only traditional deferred compensation arrangements, but also arrangements previously not thought of as deferred compensation. Severance and change-in-control benefits are often subject to the section 409A requirements. Employees pay most of the price for mistakes that result in violations of section 409A, including a 20 percent tax penalty.
The IRS surprised many in early 2010 when it announced that agreements that require the employee to sign a release of claims (or non-competition or non-solicitation agreement) before severance or change-in-control payments start may run afoul of section 409A because they give the employee some control over when payments will start, sometimes allowing the employee to choose which year payments will be made. Industry push-back persuaded the IRS to provide transition relief, the last of which will end on December 31, 2012. This relief allows employers to modify agreements to deal with such release requirements to specify when payments will be made and what happens if a release is not signed on time. The transition relief allows correction of agreements with these problems – even if payments have already started – something not otherwise available. In addition, the employer is not forced to notify the employee of the documentary violation of section 409A and the employee does not have to attach a notice to the employee’s personal income tax return about the violation. After December 31, 2012, this relief will no longer be available.
If you are interested in a more detailed discussion of this relief and the required changes to employee releases, check out Stoel Rives' recent Client Alert on the subject.
Stoel Rives Presents Webinar On Employer Group Health Plans After U.S. Supreme Court Decision Upholding "Obamacare"
As everyone who was not on Mars this summer knows, the U.S. Supreme Court issued a surprising and historic decision upholding key provisions of President Obama's Affordable Care Act ("ACA"). To help employers navigate the requirements of the law now that it has the stamp of approval of the Supreme Court, and to provide other updates on developments in federal health care reform, members of the Stoel Rives employee benefit and employment groups have been touring the region with a 90-minute presentation entitled "Health Care Reform After the Supreme Court’s Decision: Group Health Plan Update 2012." The seminars were presented by Stoel Rives attorneys Howard Bye-Torre, Melanie Curtice, Bethany Bacci, Steve Woodland, Matthew Durham, Carolyn Walker, James Dale, Renae Saade, and Tony DeCristoforo in Portland, Seattle, Salt Lake City, Boise, and Anchorage during September and October.
Shameless Plug Alert! Webinar Presentation on October 25, 2012
If you missed the show when it came to your town or are just interested in learning about this complex and evolving area of employee benefits law, there is one more opportunity to attend the seminar via a webinar which will be conducted on Thursday, October 25 at noon, Pacific Time. To RSVP for the webinar and get instructions for attending, please click here.
What's Covered
The seminars reviewed the Supreme Court decision upholding the constitutionality of the Affordable Care Act (ACA), and also some of the ACA's impacts which have already been felt by group health plans and employers, such as the requirement to cover children through age 26. Regulatory developments planned for 2013 are also discussed, including:
- the requirement to report the cost of health care coverage on W-2s;
- the new disclosure document required by the ACA, the Summary of Benefits and Coverage (SBCs);
- required 100% coverage for FDA-approved contraceptive methods for women; and
- the reduction to $2,500 of the maximum amount that an employee can contribute to a health care flexible spending account.
The seminars also discussed the new two federal fees on group health plans for 2013-2018, the Patient-Centered Outcomes Research Institute fee and the transitional reinsurance program fee. The seminars concluded with a discussion of the ACA requirements for 2014, including
- the mandate for individuals to have health insurance coverage;
- employer pay-or-play penalties, including new IRS guidance on the definition of “full-time” employees for purposes of the penalties;
- recent IRS guidance on the 90-day maximum waiting period for health plans.
We look forward to seeing you online for the webinar on October 25.
Oregon Court of Appeals Upholds Enforceability of Employer Arbitration Agreement
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In the recent case Hatkoff v. Portland Adventist Medical Center, the Oregon Court of Appeals affirmed enforcement of a company arbitration provision in an employee handbook requiring that a former employee bring his employment discrimination claims in binding arbitration. The Court’s opinion offers a straight-forward application of the law regarding the enforceability of arbitration agreements, and the outcome is probably not surprising. Nevertheless, it contains a helpful and well-reasoned survey of the current state of Oregon law in this area, and provides another helpful case for Oregon employers interested in resolving employment disputes using arbitration or similar alternative dispute resolution (“ADR”) procedures.
Arbitration Agreements Are Upheld Where They Are Not “Unconscionable”
Arbitration is a form of private ADR in which the parties agree to waive the right to go to court and instead adjudicate disputes privately before an arbitrator. In the employment context, arbitration can be a cost-effective and quicker alternative to litigation. While the details of arbitration agreements can vary greatly, they may frequently be confidential (lawsuits are public proceedings), provide more limited procedures (especially with respect to discovery), require trial before a neutral arbitrator (not a jury), and provide a limited right to appeal. In general, Oregon courts, like most courts, uphold such employment arbitration agreements as long as they are not “unconscionable,” either procedurally (with respect to how the agreement was formed) or substantively (with respect to its terms).
The Oregon Court of Appeals applied this analysis to find Portland Adventist’s “Grievance and Arbitration Procedure” in an employee handbook was not unconscionable. It found the agreement was not substantively unconscionable, because while it did waive the right to a jury trial (like all arbitration agreements), it did not unreasonably limit the employee's rights or remedies that would be available in court. Interestingly, the Court specifically held that the fact the agreement required that employees file a complaint within 90 days of the complained-of employment action was not substantively unconscionable, even though the applicable statute of limitations was one year. The Court also went on to find the agreement was not procedurally unconscionable: the employee, a sales and marketing professional, signed multiple acknowledgments that he received the employee handbook containing the arbitration agreement and was aware of what he had signed.
Law On Arbitration Continues To Develop
Despite the fact that many cases come out similarly to Hatkoff and the law on arbitration agreements is generally favorable for employers, the enforceability of such agreements is routinely litigated in employment cases. For that reason, and also because the unconscionability analysis is very fact-specific and the outcome can be very different in each case, arbitration continues to be a “hot” and fluid area of employment law both in Oregon and around the country.
Sometimes that fluidity leads to conflicts in the law, such as between courts and legislatures. For example, since 2008 Oregon has had a statute, ORS 36.620(5), that prohibits employee arbitration agreements under certain circumstances where the agreement does not contain “magic words” provided in the statute, and where the employee does not have at least 72 hours advance written notice before starting work (the legislature lowered the advance notice requirement to 72 hours in 2011; it originally required 14 days). However, that Oregon statute itself may be unenforceable, because it may be preempted by a federal statute, the Federal Arbitration Act (“FAA”), that strongly endorses the use of arbitration and contains no such limitation. Several federal district courts in Oregon have found that ORS 36.620(5) is preempted by the FAA, and have enforced arbitration agreements that did not provide the advance notice required by that statute, although no Oregon state appellate court has yet considered the issue (the agreement in Hatkoff preceded the Oregon statute, so it was not a factor in the analysis in that case).
Other potential conflicts exist not between state and federal law, but between different parts of federal law. As we have blogged about previously , just such a conflict has been brewing between the U.S. Supreme Court and the National Labor Relations Board (“NLRB”) over whether arbitration agreements can include waivers of class action claims—the Supreme Court says they can; the NLRB says they violate federal labor laws allowing employees to engage in “concerted activity” relating to working conditions. We are waiting to see how the federal appellate courts resolve that conflict.
Ultimately, Hatkoff will likely stand, not as a departure from existing law, but instead as the latest in a series of federal and state cases over the past few years that are broadly supportive of employer efforts to utilize arbitration and ADR to resolve employment disputes. But, as we've said, this continues to be an evolving area of employment law, so employers will need to stay tuned to new developments.
In the meantime, here are a few things employers should keep in mind when crafting arbitration agreements to maximize the chance they will be enforceable:
- Make sure your arbitration agreement, whether a stand-alone agreement or part of a handbook, is clear, understandable, and well publicized. Include the "magic words" in ORS 36.620 to make it expressly clear to employees that arbitration involves waiving some legal rights, especially the right to a jury trial. Employees should sign acknowledgments that they have received and understand the agreement.
- If you have employees who don't speak English as a first language, have a translated version of the agreement to ensure it is understood.
- Give new employees the 72 hour advance written notice required by ORS 36.620 wherever possible. While some courts have found that statute is preempted and unenforceable, there's no guarantee every court will.
- Under ORS 36.620, current employees can only sign arbitration agreements at the time of "bona fide" promotion or advancement. Again, courts may find this requirement is also preempted and unenforceable, but if you can comply with it, all the better.
- Arbitrators are paid by the parties, unlike judges. While in theory the parties can split the cost, the agreement should not impose costs on employees unreasonably in excess of what they would pay to file a lawsuit in court. Many employers agree to pay a large portion, or even all, of the arbitration fees.
- Specify the rules and procedures that will apply. The American Arbitration Association's ("AAA") specific rules for employment arbitration are one option; other state or local arbitration forums are other (and sometimes cheaper) options.
Above all, work with your employment counsel in the crafting and implementation of the agreement. Many enforceability pitfalls can be easily avoided with careful planning, but the devil can be in the details. That is especially true for any state-specific rules or "gotchas," as arbitration agreements may be perfectly enforceable in some states but not in others.
EEOC's Multifaceted Effort To Aggressively Target Employer Policies Potentially Having "Disparate Impact"
As many of you know, the Equal Employment Opportunity Commission (EEOC) has been on an aggressive tear of late on a broad range of issues. In addition to upping its investigations of charges of individual “disparate treatment” discrimination, it is undertaking a number of new initiatives that show a renewed focus on facially neutral employer policies that may have a (frequently unintentional) “disparate impact” on protected classes of employees. Because of the EEOC’s renewed interest in disparate impact, it is prudent for employers to be thoroughly reviewing and auditing their policies and practices to ensure they are not having an unintentional disparate impact on protected categories of employees.
Below is a quick run-down of the EEOC’s recent efforts on this front. These and other topics were covered recently in a Stoel Rives Labor & Employment Breakfast Briefing: "Back to School with ‘Hot Topics’ In Employment Law,” by Stoel Rives attorneys Brenda Baumgart and Ryan Gibson, on Sept. 11, 2012 in Portland, OR.
EEOC 2012-16 Strategic Enforcement Plan Targets “Systemic” And Other Forms of Disparate Impact Discrimination
On September 4, 2012, the EEOC issued an updated version of its Strategic Enforcement Plan (“SEP”) for 2012-2016, in which it highlighted its enforcement priorities now and in the coming years. In addition to highlighting education and outreach efforts, the SEP shows a strong focus on disparate impact concerns, including:
- Preventing “Systemic” Discrimination. The EEOC is targeting general practices, handbooks, online applications and similar policies that may have disparate impacts on protected classes of employees such as racial minorities, older workers, or disabled employees. Examples identified by the EEOC include “exclusionary policies and practices, the channeling/steering of individuals into specific jobs due to their status in a particular group, restrictive application processes, and the use of screening tools (e.g., pre-employment tests, background screens, date of birth screens in online applications) that adversely impact groups protected under the law.”
- Protecting “vulnerable workers.” The EEOC’s efforts here are focused on immigrant, migrant, or seasonal employees who, due to language or other barriers may be unaware of rights or are reluctant to pursue them. Again, the EEOC is focusing largely on systemic, disparate impact concerns, such as job segregation, pay disparities, and the unintended impact of English fluency requirements for particular jobs where language skills may not really be necessary.
- “Emerging issues.” A decade ago, the EEOC identified discrimination against Muslim and Arabic employees in the wake of the 9/11 attacks as an “emerging issue” in employment law. Now, EEOC has identified a number of new “emerging issues” where it has shifted its efforts. Those include enforcement of the 2009 amendments to the ADA (ADAAA) and related regulations, and the EEOC's recently recognized protections for gay or transgendered employees under Title VII. They also include another “disparate impact” concern: accommodation issues specific to pregnant employees who may be forced to take unpaid leave in lieu of (paid) accommodations—such as temporary job restructuring, reduced schedule, temporary job transfers, or light duty assignments—offered to non-pregnant employees with similar short-term health restrictions.
- Preserving Access to the Legal System. The EEOC is prioritizing investigation of retaliation charges, because they account for over 37% of all charges filed (the most common type), and because the EEOC believes retaliation amounts to a denial of justice by discouraging employees from exercising their rights. The EEOC also will focus on what it views as other “systemic” barriers to justice, including “overly broad waivers” and settlement agreements with releases that may unfairly discourage employees from exercising rights or pursuing claims.
EEOC Pilot Project To Directly Audit Employer Pay Practices Under Equal Pay Act
In mid-2012, the EEOC began a pilot program in three district offices (Phoenix, Chicago, and New York) pursuant to its authority to enforce the Equal Pay Act (“EPA”), a 1963 statute that prohibits paying female employees differently for the same work done by male employees. While gender-based pay discrepancies are also prohibited under Title VII, the EPA specifically empowers the EEOC to conduct “Directed Investigations,” or audits, of employer pay practices to search for gender-based pay disparities, without having to wait for a charge to be filed as is often required for it to investigate alleged Title VII violations. This has been characterized as a fairly “radical” departure for how the EEOC conducts enforcement, and it is. While the EEOC has provided few details about how the program will work, at the very least it may simply call or show up at an employer’s doorstep and request policies and information related to pay practices. If it finds that your pay practices may show a gender-based disparate impact, it may decide to take further enforcement action.
Yikes! These audits could essentially subject employers to a form of wage and hour class action against the EEOC. And who knows what else the EEOC may find as a result of its audit, including potential evidence of other “systemic” problems it may wish to investigate further.
Employers, especially in the regions where the pilot project has begun, are well advised to conduct internal audits of their pay practices to identify and remedy any unexplainable gender-based pay disparities that could be unlawful under the EPA. Practical pointer: it’s often a good idea to involve your in-house or outside counsel in these internal audits to maximize the chance that any (potentially bad) findings are resolved and the process for doing so is protected by the attorney client privilege.
EEOC Guidance Limits Employer Use of Criminal Background Checks
A few months ago, the EEOC issued its long-awaited “Enforcement Guidance” document on when using criminal background checks can be unlawful under Title VII. The guidance will likely require many employers to revise their hiring policies and requirements that rely heavily on criminal background checks to screen applicants.
The EEOC’s focus here is, again, the “disparate impact” that facially neutral policies may have on particular protected classes. With criminal background checks, the implicated protected class is usually race, particularly black and Hispanic men, who studies have shown are statistically and disproportionately more likely to have a criminal record than members of other races. While the EEOC recognizes that using criminal background screens are appropriate for some jobs, excessive use can have a disproportionate impact on members of certain race groups.
Under the new guidance, blanket policies barring employment because of any criminal conviction will be heavily disfavored. Instead, the EEOC directs employers to adopt “targeted screens” for particular types of jobs, and also conduct an “individualized assessment” for each applicant affected by a screen. In developing a targeted screen, the employer is to consider the actual requirements of each job and justify why convictions for specific types of offenses should bar employment in that job. Although the guidance offers few specifics, as an example it is probably appropriate to screen applicants for jobs working with children for child abuse or molestation convictions, for recent drunk or reckless driving convictions in jobs requiring operating vehicles, or for theft or embezzlement convictions in accounting positions or jobs requiring handling large amounts of cash.
In performing the individualized assessment, the employer is to look at the type, severity, date, and number of prior convictions, and any extenuating circumstances such as rehabilitation efforts or post-conviction work history, to determine whether an employee with a conviction could nevertheless be hired. Under this approach, an employer may have a difficult time justifying not hiring an applicant for a computer programming job who has worked successfully for a decade simply because he was convicted for being drunk and disorderly at a college frat party in the 1990s. Conversely, an employer may be more justified in denying employment to someone more recently convicted of violently assaulting a coworker, who violated parole, and had been fired from his last job after a short time for insubordination.
The EEOC’s new guidance is technically not a fundamental departure—the EEOC first articulated its position on criminal background checks in the 1980s, and courts have long held that the use of criminal history screens (or any facially neutral policy, for that matter) can be discriminatory under a disparate impact standard. But, consistent with its renewed focus on “systemic” discrimination, the EEOC now appears to take a stronger stand that employer policies that broadly rely on using criminal history to screen out applicants will be presumed to be discriminatory, and that employers have the burden to show the screen is justified.
Employers that use criminal history to screen applicants should review such policies, with a particular eye toward identifying any “blanket” screens (e.g., we don’t hire anyone with any criminal conviction ever). It may be prudent to then develop detailed written policies implementing the targeted screen and individualized assessment approach promulgated by the EEOC. Employers should also begin training managers and recruiters on the new standards.
In conclusion, it is important for employers to be aware of these areas of concern to the EEOC, and review policies or practices for potential "systemic" or "disparate impact" effects. And we will also be closely following any other new initiatives the EEOC may consider in the future.
Obama Jobs Bill Proposes To Ban Discrimination Against Unemployed
As almost everyone knows, last week President Obama presented a $447 billion jobs bill, called the American Jobs Act, to a joint session of Congress full of proposals designed to stimulate the lagging U.S. economy. What many people probably don't know is that, tucked into the bill, is a provision that would make it unlawful for employers to refuse to hire someone because that person is unemployed. This small part of the stimulus bill would create an entirely new protected class under federal discrimination law—the unemployed person. If enacted it could expose employers to a raft of new employment discrimination lawsuits.
What The Bill Says
Section 375 of the proposed bill actually has several anti-discrimination provisions. First, it prohibits employers and employment agencies from refusing to hire an individual “because of the individual’s status as unemployed,” including prohibiting employers from directing employment agencies to do so. It also contains a broad anti-retaliation provision prohibiting employers from interfering or refusing to hire someone because the person reports a violation of the Act. The Act will provide many of the same remedies available under Title VII of the Civil Rights Act—the same federal law that prohibits discrimination based on race, religion, or sex—including the right to file a charge with the Equal Employment Opportunity Commission (“EEOC”), or file a lawsuit to recover money damages and attorney fees.
The bill would also prohibit employers and employment agencies from expressly advertising in written job posts that unemployed persons are automatically disqualified from applying.
The Rub: Full Employment...For Employment Lawyers
While the bill expressly states that it is not intended to preclude employers from considering an individual’s employment history or even from “examining the reasons underlying an individual’s status as unemployed,” that subtle distinction will be a small comfort to employers. Employers routinely scrutinize employment history, and employment “gaps” on a resume have always been a red flag to hiring managers. Under this new law, however, employers would need to walk a very fine line between scrutinizing only the “reasons underlying” unemployment, while avoiding letting the fact the person is unemployed to begin with affect a hiring decision.
Those types of mental gymnastics are not only difficult for hiring managers to keep straight while reviewing job applicants, the distinction will be even harder to prove in court if the employer is later sued. As a practical matter, any unemployed person rejected from a job could demonstrate a prima facie claim for discrimination simply by showing he or she was unemployed and then didn’t get the job. Further, the cases will invariably turn on "yes you did, no I didn't" factual disputes about the hiring decision: did the employer make the decision because of reasons underlying the person's unemployment (lawful) or simply because the person was unemployed (unlawful)? Because of those subtle factual nuances, and procedural rules that presume the truth of a plaintiff's allegations until trial, it could be virtually impossible to get even baseless claims dismissed before trial, such as at summary judgment. That makes defending those cases much more difficult and expensive.
While much remains unsettled about the state of the U.S. economy, including whether Congress will even pass the American Jobs Act, one thing is very certain. If the current anti-discrimination provision in the American Jobs Act passes, employers will be seeing a lot more discrimination claims from a whole new protected class of protected people--the unhired unemployed.
