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.
Seasons' Greetings From The California Legislature--New Laws That Apply To Employers In January 2012
The California legislature has done plenty this year to leave in employers' stockings for the holidays--new employment laws that will become effective January 1, 2012. In addition to the new California Transparency in Supply Chains Act we blogged about earlier, after some eggnog and holiday cheer, employers will need to be aware of new legal obligations that will kick in as we kick off 2012. Here are the highlights.
“Anti-Wage Theft” Law (AB 469). The Wage Theft Prevention Act of 2011 requires employers to provide non-exempt employees, at the time of hiring, a notice specifying the employee’s rate or rates of pay and the basis on which the employee’s wages are to be calculated (such as hourly, daily, piece, salary, commission, etc.). The notice must also include applicable overtime rates, allowances (if any) claimed as part of the minimum wage, the employer’s designated regular payday, the name of the employer (including any “doing business as” names), the employer’s physical and mailing addresses, and contact information for the employer’s workers’ compensation carrier. The Act also requires the employer to notify employees in writing of any changes made to any of this information within seven days of the implementation of such changes, unless the changes are reflected on a timely wage statement or other writing required by law. The Act adds an element of criminal liability by providing that any employer who willfully fails to pay wage-related Labor Commissioner orders or court judgments is guilty of a misdemeanor.
Independent Contractors (SB 459). This new law cracks down on employers who misclassify their employees as independent contractors by imposing a fine of between $5,000 and $25,000 for “willfully” misclassifying a worker as an independent contractor. “Willful misclassification” means avoiding employee status for an individual by voluntarily and knowingly misclassifying that individual as an independent contractor. The law also imposes joint and several liability for a non-attorney consultant to advise an employer to willfully misclassify someone as an independent contractor.
Background Checks (AB 22). This law prohibits most employers from obtaining or relying on consumer credit reports regarding employees or job applicants, except in certain specified limited circumstances. The law does not apply to financial institutions or entities required by law to perform credit checks. Under the new law, employers may still obtain and rely upon credit reports for managerial employees covered by the executive exemption.
Pregnancy Disability Leave (AB 592 and SB 299). This law expressly prohibits “interference” with the exercise of any right provided under the California Family Rights Act, or due to disability by pregnancy, childbirth or related medical conditions. In a provision that may prove to be preempted by ERISA, the law also requires employers to maintain and pay for health coverage under a group health plan for any eligible female employee who takes up to four months of leave due to pregnancy, childbirth or a related medical condition in a twelve month period.
Gender Identity and Expression (AB 887). Existing law prohibits discrimination and harassment based on gender. This law expands the definition of “gender” to include both gender identity (how the person sees him or herself) and gender expression (how other people view the person). Under the new law, an employee must be permitted to dress consistent with the employee’s gender identity and expression.
Genetic Information Discrimination (SB 559). Discrimination in hiring or employment based on genetic information is now unlawful under the Fair Employment and Housing Act. Genetic information is defined to include the individual employee’s genetic tests, the genetic tests of the employee’s family members, and the manifestation of a disease or disorder in the employee’s family members.
Commission Agreements (AB 1396). This law requires all contracts for employment involving commissions as a method of payment to be in writing and to set forth a method by which the commissions are required to be computed and paid. The employee must be given a signed copy, and the employer must obtain a signed receipt from each employee. This law does not take effect until January 1, 2013, so employers have a year to prepare for compliance.
Agricultural Labor Relations (SB 126). This law authorizes the California Agricultural Labor Relations Board to certify union elections when employer misconduct affects the outcomes.
Happy Holidays!
