The Legal Line

Addressing Sexual Harassment in the Workplace

posted Dec 21, 2017, 11:23 AM by Adam Chandler

Guess what?  Just when you think you know somebody at work, you might learn something monstrous about them.  Denial is not the answer.  O’Reilly, Weinstein, Spacey, Rose, Lauer – over the past couple of months the news has been filled with stories of sexual harassment and assault in the workplace.  While these cases have arisen out of the realms of politics, journalism, and entertainment, sexual harassment can and does happen in every industry.  These and other very public examples serve to shine a light on a widespread problem.  Now, more than ever, employers need to be vigilant against such conduct in the workplace.

Combating sexual harassment in the workplace begins with a culture of respect and responsibility.  How do  you build that kind of culture?  You get what you incentivize, and it starts with strong anti-harassment policy and training.  But it does not end there.  Such policies can provide employers with good coverage against harassment claims, so long as the harassment was not committed by or known by someone with supervisory authority.  You can be sure, however, that Fox, CBS, and NBC had such policies in place, and the alleged perpetrators likely attended multiple harassment training sessions over their long careers.  In the end, policies and training alone cannot set the tone in the workplace.  Rather, it is the employer’s reaction to allegations of sexual harassment that sets the tone and determines the workplace’s culture.  Will your company be permissive of sexual transgressions, particularly where the accused is a valued employee?  Or will your company take every complaint seriously, investigate it thoroughly, take appropriate actions in response, and protect the alleged victim from retaliation?

What follows is a brief primer on the steps employers should take when they receive a complaint of sexual harassment, or otherwise learn of such conduct in the workplace:

Set the Tone Early by Acting Quickly.  No one wants a rush to judgment, however, immediate initiation of an investigation demonstrates the seriousness of the issue and also allows for a thorough investigation and timely resolution.  A slow response defeats each of these goals.

Select the Right People for the Investigation.  The investigation should be led by someone who will be unbiased and thorough.  You should eliminate from consideration friends of either the accuser or the accused, as well as individuals with direct authority over either.  Often, your HR professionals or outside legal counsel are the most appropriate individuals for conducting such an investigation.  To ensure that complaints of harassment actually get reported, provide multiple points of contact in your company for employees to report such complaints in the event that, for example, an employee’s supervisor is the harasser.

Conduct a Fact Specific Investigation.  Every sexual harassment investigation is different.  The particular allegations help to determine the precise scope of the investigation.  At a minimum, a harassment investigation involves interviewing the accuser and the accused.  Potentially other witnesses and people believed to have relevant knowledge may also need to be interviewed, and documents, such as emails or text messages that corroborate or contradict the allegations, should be collected and reviewed as well.  

Respect Confidentiality without Making Assurances.  Investigations into allegations of sexual harassment often involve intensely personal, sometimes demeaning scenarios.  To avoid humiliation of the victim or the alleged harasser, keep the investigation and the facts learned in the investigation as confidential as possible.  Inform interviewees not to discuss the investigation with co-workers.  Communicate information about the investigation only to those that need to know about it, but do not promise absolute witness confidentiality to the complainant, the accused, or witnesses, as such a promise could obstruct the investigation and is difficult to enforce.

Communicate the Expectation of No Retaliation. A person who complains about sexual harassment (and those who cooperate with the investigation) cannot face adverse employment action.  If they do, it could result in a separate legal claim for retaliation, which often succeeds in court even if the initial, underlying sexual harassment claim does not.  To avoid this, inform interviewees that you will not tolerate retaliation against a complainant or others who cooperate in the investigation.  Make sure that all managers understand that they cannot make any change to the terms and conditions of employment or do anything that could be perceived as punishing the accuser or any witnesses because of their involvement in the sexual harassment investigation.
Consider Interim Measures.  While the investigation is happening, evaluate whether it is appropriate to take some preliminary action to avoid ongoing contact between the alleged victim and harasser.  Consider separating the complainant and alleged harasser to minimize the chance of continued harassment or retaliation during the investigation, but always ensure that the measures themselves do not constitute retaliation against the accuser.  Typically this means that the accused, and not the victim, should be the party to face the adverse interim consequence.  Unless the victim asked for time off (which should be considered), the party accused of harassment, and not the accuser, should be the one who is transferred to a different department, assigned to a different shift, or suspended to avoid contact with the alleged victim.  Be sure to monitor the efficacy of interim measures taken throughout the investigation to make sure that the accuser feels safe in the workplace.

Memorialize the Conclusion.  It is good practice to prepare a written report documenting the findings of a sexual harassment investigation.  Detail the steps taken in examining the allegations, including interviews conducted and documents reviewed, and explain any conclusions.  Inform the complainant and alleged harasser of your findings and the corrective actions you will take.  If sexual harassment is found, take action to end it and prevent it in the future.  Regardless of the findings, make follow up inquiries to ensure conduct has not resumed and that retaliation against the complainant or witnesses has not occurred.

Corrective Action Should be Fair and Consistent.  Ultimately, you must make a business decision concerning corrective action based upon the outcome of your investigation.  That decision could have a major impact not only on the alleged victim and the accused, but also on your workplace morale and culture.  In  reaching this decision, you must weigh the credibility of the witnesses interviewed, the seriousness and frequency of the alleged conduct, the alleged victim and harasser’s employment record, and the company’s history of disciplining similar prior cases.  

In short, enforce a culture of respect and responsibility.  Develop anti-harassment policies and train on them.  When a complaint arises, take it seriously, be thorough in response to it, and be fair in your resolution.  Do not assume any person “could never do something like that.”  No one should be considered “untouchable” and everyone needs to know they must be accountable.  That said, do not react in a panic and respond to a complaint without an investigation.  Firing someone without a fair and thorough investigative process could subject you to claims from the accused that could involve discrimination or wrongful termination as well. Certainly, you should be sure to treat people the same based on facts and not react based on assumptions that could be founded on prejudgments rather than evidence.  So, if you take the complaint seriously, be thorough in response, be fair in your resolution based on facts, you will do the right thing.  In the end, you will have the culture that you enforce, not just the culture that you preach.  

Chris Vrountas Recognized for Service to the Hospitality Industry

posted Oct 19, 2017, 3:11 PM by Allison Ayer

On October 19, the New Hampshire Lodging & Restaurant Association named Chris Vrountas as its Business Partner of the Year.  The NHLRA is the trade association representing business interests for the hospitality, restaurant and tourism industry in New Hampshire.  Chris has been the preferred provider of legal services for the NHLRA for nearly a decade, providing legal counsel and guidance to both the Association and its constituent members.  Chris is honored to receive this recognition.

Allison Ayer and Adam Chandler Published in URMIA Journal

posted Oct 19, 2017, 3:09 PM by Allison Ayer

Allison Ayer and Adam Chandler were recently published in the 2017 edition of the University Risk Management and Insurance Association Journal.  URMIA is non-profit educational association serving colleges and universities to promote effective risk management practices in higher education.  Its members include insurance professionals, risk managers, and other business people, as well individuals from more than 600 institutions across the country.  Their article, “Preparing for the Worst: A Guide for Active Shooter Response Plans that Mitigate the Risk of Liability and Save Lives” addresses both the legal risks to institutions presented by an active shooter situation, as well as offering practical advice for developing response plans that could ultimately save lives.  A copy of the article can be accessed here.

Obama-Era Overtime Rule Officially Dead

posted Sep 19, 2017, 9:58 AM by Adam Chandler

On August 31, 2017, the U.S. District Court for the Eastern District of Texas put what is likely to be the final nail in the coffin of the Obama-era Department of Labor’s regulation that would more than double the salary required to exempt executive, administrative, or professional employees from the FLSA’s overtime rules.  The DOL estimated that this rule would render approximately 4.2 million additional workers eligible for overtime.

The Court in State of Nevada, et al. v. U.S. Dept. of Labor had granted the plaintiffs, which were comprised of business groups and state governments from across the nation, a preliminary injunction last November to prevent the regulation from going into effect.  Last Thursday, the same Court granted the plaintiffs’ summary judgment motion, thereby ending the case and striking down the rule permanently.  While the DOL could appeal this judgment, the consensus is that the current administration is unlikely to do so.

In reaching its decision, the Court reasoned that, in order for an employee to meet the exemption at issue, an employee must: (1) be salaried; (2) be paid above a minimum salary level; and (3) perform executive, administrative, or professional capacity duties.  At the current salary threshold ($23,660.00), the minimum salary requirements acts to screen out those employees who are not performing bona fide executive, administrative, or professional duties.  Such a steep raise in the minimum salary test (to $47,476.00) would effectively eliminate the duties test for a large number of employees who were performing such duties previously, merely because their salaries did not meet this new threshold.  Thus, in the Court’s eyes, the duties test would be rendered meaningless.

During confirmation hearings, DOL Secretary Acosta indicated that he would consider some raise in the minimum salary test, but that he would not go so far as the previous Secretary.  Thus, it is possible that this issue will come up again in the next few years, but it is unlikely that any change proposed will be as dramatic as the prior, struck-down rule.

You can read the decision here.  If you have any questions regarding this ruling or the FLSA overtime exemptions, give us a call.

Massachusetts Enacts Pregnancy Protections

posted Sep 19, 2017, 9:56 AM by Adam Chandler

On July 27, 2017, Massachusetts Governor Charlie Baker signed into law the Pregnant Workers Fairness Act.  This new law, which goes into effect on April 1, 2018, provides pregnant women and new mothers with more comprehensive job protections and accommodation rights than those that previously existed under federal and state laws.  Currently, under M.G.L. c. 151B, pregnancy discrimination has been recognized by the courts.  In order to make out such a claim, however, an employee would have to shoehorn her pregnancy discrimination claim into a claim for sex or disability discrimination.  This resulted in sometime unclear and incomplete protections for pregnant workers.  The new law aims to close those gaps and make clear, for employees and employers, the exact protections available to pregnant workers.

The new law expressly recognizes pregnancy, childbirth, and related conditions, such as nursing and the expression of breast milk, as protected statuses under M.G.L. c. 151B.  The law specifically prohibits employers from:
  • Denying a reasonable accommodation for pregnancy, childbirth, or related conditions, unless the employer demonstrates that the accommodation creates an undue hardship;
  • Taking adverse employment action against an employee who requests or uses a reasonable accommodation, which includes failure to reinstate an employee, with seniority, when the need for the accommodation ceases;
  • Denying employment opportunities based upon the need for a reasonable accommodation;
  • Forcing an employee to accept an accommodation that an employee does not accept and is unnecessary to allow the employee to perform essential job functions;
  • Forcing an employee to take a leave of absence when another accommodation may be provided without undue hardship to the employer; and
  • Refusing to hire a pregnant woman because of her pregnancy or a related condition, provided the individual is able to perform essential job functions with reasonable accommodations.
The new law also defines “reasonable accommodations” and “undue hardship,” as well as setting forth an interactive process for determining reasonable accommodations, in a similar manner as the current Massachusetts disability discrimination laws, with a few key differences.

For example, the Pregnant Workers Fairness Act specifically states several accommodations that “shall” be included in the definition of “reasonable accommodations.”  These include: “more frequent or longer breaks, time off to recover from childbirth, acquisition or modification of equipment, seating, temporary transfer to a less strenuous or hazardous position, job restructuring, light duty, break time and private non-bathroom space for expressing breast milk, assistance with manual labor, or modified work schedules.”  Despite this long list, the Act does not require the creation of new positions or the transfer to a position with more seniority or for which the employee is not qualified.

Like the preexisting law, the burden to demonstrate that a proposed accommodation would create an undue hardship for the employer rests with the employer.  Factors to determine hardship are expressly stated in the act to include: “(i) the nature and cost of the accommodation; (ii) the overall financial resources of the employer; the overall size of the business of the employer with respect to the number of employees, and the number, type, and location of its facilities; (iii) the effect on expenses and resources or the impact otherwise of such accommodation upon the operation of the employer.”

Finally, as stated above, employers must engage in an interactive process with pregnant employees to determine the existence of reasonable accommodations.  While employers may request documentation from medical providers regarding many requested accommodations, an employer may not require documentation for: (1) increased restroom, food, or water breaks; (2) seating; and (3) lifting limitations over 20 pounds.

Requirements are also in place requiring notification of these new rights to existing employees and new employees, as well as employees who notify employers of their pregnancy or related conditions. 

Because pregnancy discrimination was, in many ways, prohibited prior to the Act, these changes should not require vast changes in the current practices of employers who were already compliant with Massachusetts law.  Policies and handbooks should be reviewed in light of these changes, and managers should be retrained, specifically on areas where the new law differs from the interpretation of the current law.

DOL Seeks Public Feedback for Revisions to Rule for Overtime Eligibility

posted Aug 1, 2017, 12:53 PM by Christopher Vrountas

On Tuesday, July 25, 2017, the United States Department of Labor (“DOL”) issued a press release announcing that it intended to publish a Request for Information (“RFI”) concerning the Fair Labor Standards Act (“FLSA”) overtime rule. In general, the RFI provides an opportunity for the public to comment on issues related to the potential revision of the FLSA regulations concerning minimum wage and overtime by posing specific questions to which the public can respond. 

The RFI is the latest response by the Trump administration to the DOL overtime rules published in 2016 during President Obama’s term.  Under the 2016 Final Rule, the DOL increased the salary that would make a person exempt from overtime from $455 per week to $913 per week.  It also established a mechanism for automatic updates of the salary level every 3 years.  No changes were made to the standard duties test.  The DOL published the 2016 Final Rule on May 23, 2016, with an effective date of December 1, 2016.  But it never took effect because it was challenged in Court. 

As noted in the new RFI, many employers have expressed concerned that the standard salary level set in the 2016 Final Rule was too high.  Employers claimed that the heightened salary level inappropriately excluded from exemption too many workers who pass the standard duties test.  Employers were also concerned about the financial impact on their business of having to comply with the new rules given that it would have to pay significantly more overtime or raise the salaries of many workers to avoid the implications of the rule.  Indeed, as noted in the RFI, it was estimated that 4.2 million salaried white collar workers would, without some intervening action by their employers, change from exempt to non-exempt status.

As anticipated by many, the new RFI indicates a desire on the part of the DOL to reverse the 2016 overtime rules.  The questions in the RFI relate to among other things, the salary test for overtime and highly compensated employees, the duties test, and the relationship between at a region’s particular cost of living may have on the salary test.  The RFI also asks whether updating the salary level for inflation would be appropriate.  This is consistent with many people’s expectation that the DOL may well raise the salary level, just not as much as the 2016 rule did.  But the questions in the RFI asks questions concerning a variety of other matters related to overtime pay and qualifications for the exemption.  The RIF seeks feedback on the possibility of setting different pay levels based on geographic area, as well as nixing the salary test altogether.  In that way, the RFI indicates that the DOL may be considering a variety of ways to determine which workers are entitled to overtime pay.  The complete RFI and all questions can be found here:  Stay tuned!



Title VII Extends to Sexual Orientation, 7th Cir. Rules

posted Apr 5, 2017, 7:29 AM by Adam Chandler

On April 4, 2017, the Seventh Circuit Court of Appeals became the first federal appeals court to rule that Title VII protects private employees from discrimination on account of sexual orientation.  The decision in Hively v. Ivy Tech Community College of Indiana marks a departure from a long line of cases in both the Seventh Circuit and almost every other circuit ruling that Title VII protections applied only to "sex" and not sexual orientation.  Because of this departure from prior precedent, the case was heard en banc by the entire Seventh Circuit, and decided 8-3 in favor of extending federal protection to gay and lesbian individuals.  The full text of the opinion can be found here

In reaching its decision, the Court relied upon a wide range of Supreme Court cases, arising in and out of the employment discrimination context, to find that today's concept of discrimination on the basis of "sex" must also include sexual orientation.  These included Price Waterhouse v. Hopkins, 490 U.S. 228 (1989), which held that the practice of gender stereotyping falls within Title VII's prohibition against sex discrimination.  The Court reasoned that it is difficult "to extricate the gender conformity claims from the sexual orientation claims," since traditional gender stereotypes favor heterosexual relationships.  In Oncale v. Sundowner Offshore Servs., Inc., 523 U.S. 75 (1998), the Supreme Court held that Title VII protections extended to same-sex sexual harassment because such harassment is still based on "sex" regardless of the sex of the harasser.  The Seventh Circuit also relied upon the Supreme Court's recent recognition that the Due Process and Equal Protection Clauses of the Constitution protect a same-sex couples' right to marry in Obergefell v. Hodges, 135 S.Ct. 2584 (2015).  Following Obergefell, a ruling that Title VII did not extend to sexual orientation claims would create "a paradoxical legal landscape in which a person can be married on Saturday and then fired on Monday for just that act."  Finally, the Seventh Circuit relied upon a line of cases ruling that discrimination based upon the protected characteristic of the person or persons with whom the employee associates violates Title VII.  In Loving v. Virginia, 388 U.S. 1 (1967), the Supreme Court found that discrimination based upon an employee's interracial marriage violated Title VII.  The Seventh Circuit extended this protection to discrimination based upon the sex of persons with whom the employee associates or enters into relationships.

While considered a landmark decision, Hively will not have a tremendous impact on employers based in New England.  First, the decision is only binding on courts in the Seventh Circuit, which is comprised of Illinois, Indiana, and Wisconsin.  It is likely, however, that this decision will be the stepping stone to more courts adopting this position, until the issue is eventually decided by the Supreme Court.  Second, and perhaps more important, more than twenty states have already enacted laws that protect employees against discrimination based on sexual orientation.  These states include all of New England, New York, New Jersey, Delaware, Maryland, and many states on the West Coast and in the Midwest.  Thus, current employment policies should already address and prohibit sexual orientation discrimination.


posted Mar 21, 2017, 1:28 PM by Adam Chandler   [ updated Mar 22, 2017, 1:54 PM ]

By Christopher Vrountas and Sarah Willey

Elections matter, and so do nominees to the United States Supreme Court.  President Trump’s nomination of Neil Gorsuch to the Court may have a substantial impact on federal employment law. 

This year the US Supreme Court is set to hear cases on touching a on variety of employer hot-button topics, including, one we’ve previously blogged about regarding an employer’s right to require employees to agree to never join a class action and, separately, to arbitrate any claims against the employer (by-passing the courthouse).  In addition, two other cases, not directly affecting private employers, will lay the path for future cases falling under Title VII’s protections for employees against discrimination and Title II’s public accommodation requirements.   

President Trump nominated Gorsuch to replace Antonin Scalia who died on February 13, 2016.  Scalia was appointed by Ronald Regan and sat the nation’s highest bench for 30 years.  Absent being hit by a bus, Gorsuch, turning 50 in August, will leave his mark for decades.

Gorsuch comes to the US Supreme Court from the 10th Circuit Court of Appeals.  The 10th Circuit covers Colorado, Kansas, New Mexico, Oklahoma, Wyoming and Utah.  He’s authored some notable opinions from which we can attempt to glean where his vote will take the Court.  He is the author of the book “The Future of Assisted Suicide and Euthanasia” (2006, Princeton University Press); and authored the concurrence in the Hobby Lobby case.

Given the above, one can see patterns that may help predict the future path of the Court.  Wherever that path may go, it will likely affect all employers.

First, let’s consider the likely impacts on the federal anti-discrimination laws.  Title VII of the Civil Rights Act of 1964 prohibits discrimination in employment.  Title II of the Civil Rights Act prohibits discrimination in places of public accommodation (think, customers coming to your business or seeking your services).  Up for oral argument on March 28th is Gloucester County School Board v. G. G., by His Next Friend and Mother, Deirdre Grimm.  While this case does not involve either Title VII or Title II, its outcome will undoubtedly have far reaching effects because it results from agency an opinion letter issued by the U.S. Dept. of Education, Office of Civil Rights.  Opinion Letters of the sort the Gloucester case involves are similarly issued by the DOL and relied upon by employers and businesses in interpreting their obligations under Title VII and Title II.

Gloucester involves a transgendered minor, Gavin Grimm who identifies as male and wishes to use the bathroom corresponding to his identification.  The School Board adopted a policy requiring students (and presumably adults) to use the bathroom corresponding the gender of birth after it learned that Grimm. had been using the bathroom of his gender preference for nearly two months without conflict.  Soon, after, the U.S. Department of Education published an opinion letter requiring schools to permit students to use the bathrooms consistent with the student’s gender identity.  Grimm’s suit against the Board followed.  Two questions are before the Supreme Court involve the first, is what deference should be extended to an unpublished agency opinion letter, and second, whether the agency’s interpretation of law be given effect?

With a Justice Gorsuch on the Supreme Court, there may well be less deference applied to agency interpretation.  As we’ve previously blogged, Gorsuch has criticized the Chevron Doctrine under which the federal courts give deference to agency interpretations of ambiguous statutes.  This deference is at the heart of what is at issue in Gloucester. The Gloucester case may give Gorsuch the opportunity to overturn Chevron, and he’ll also get a second bite at Chevron as well when the court hears the three consolidated cases coming out of the 5th, 7th and 9th Circuits which directly confront the validity of class action waivers in the employment context. (National Labor Relations Board v. Murphy Oil USA (No. 16-307), Epic Systems Corp. v. Lewis (No. 16-285), and Ernst & Young LLP v. Morris (No. 16-300).

With respect to the impact on the Title VII and Title II, Gorsuch’s concurrence in the Hobby Lobby case is also enlightening as to how the Court may proceed with a vote from a Justice Gorsuch.  Hobby Lobby, is a closely-held, family owned, corporation employing thousands.  Hobby Lobby’s owners refused to follow the Affordable Care Act’s mandate requiring that employer sponsored health insurance cover provide health insurance coverage for abortion-inducing drugs and devices, as well as related education and counseling, as the same violated their own sincerely held religious beliefs.  In his concurring opinion, Gorsuch wrote, “All of us must answer for ourselves whether and to what degree we are willing to be involved in the wrongdoing of others. For some, religion provides an essential source of guidance both about what constitutes wrongful conduct and the degree to which those who assist others in committing wrongful conduct themselves bear moral culpability.”  He also wrote, “And as we have seen, it is not for secular courts to rewrite the religious complaint of a faithful adherent, or to decide whether a religious teaching about complicity imposes ‘too much’ moral disapproval on those only ‘indirectly’ assisting wrongful conduct. Whether an act of complicity is or isn’t ‘too attenuated’ from the underlying wrong is sometimes itself a matter of faith we must respect.”

This line of reasoning could change how anti-discrimination laws have been enforced; pitting Title VII and Title II’s anti-discrimination goals (and the EEOC and various state human rights commissions) against an individual’s or business’s sincerely held religious belief (which is also protected under Title VII and Title II), may itself result in allowing certain types of discrimination.  For example, there are a multitude of cases involving bakeries and florists (from a variety of religious beliefs) refusing to provide services for the LGBT community.   Thus far, human rights commissions and courts have found in favor of the customer; however, applying Gorsuch’s reasoning in Hobby Lobby, an opposite result is easily reached. 

All that said, the Supreme Court’s rulings that may limit the power of agencies or curtail anti-discrimination protects will for the most part only affect federal law.  In “Blue states” and even “Swing states”, an opposite reaction to the changing tide under federal law may arise, and states laws may trend in the opposite direction to compensate for what happens at the federal level.  This has already occurred in many states with different (higher) minimum wages.  States have also been at the forefront of expanding civil rights protections and there is no reason to believe those trends will change with a Trump administration.  Indeed, those trends may accelerate given the divisiveness now in Washington and throughout the country.  In short, your Blue state will become Bluer, and your Swing state may well reflect the turmoil in Washington with uncertain results.

Steps You Can Take.

Make sure your employees understand the current anti-discrimination laws; training (and refreshers) are always helpful.  If an employee has questions regarding providing service (or seeking an accommodation for their own sincerely held religious belief), take time to listen and talk with your employee – then reach out.

With respect to anti-class action waivers and arbitration agreements – review your agreements to make sure there is a blue-pencil clause permitting invalid provisions to be removed from the document or reduced in force, but still allowing the document to stand.

As always, we’re here to help you navigate the changing waters.

A Gorsuch Confirmation Could Save Class Action Waivers for Employers

posted Feb 10, 2017, 7:03 AM by Adam Chandler

We have previously written on the advisability of employers entering into arbitration agreements with their employees that include a waiver of the employee’s right to initiate or join class action litigation against the employer.  Such agreements help guard against the possibility of potentially company-wide litigation over employment issues ranging from alleged wage and hour violations to age discrimination.  Without such protections, employers can face significant liability for even relatively minor legal infractions.

Over the past several years, federal courts and the NLRB have been playing a tennis match over the enforceability of these waivers.  Without fail, the NLRB finds these waivers to be unenforceable.  The Courts, on the other hand, typically reject the NLRB’s decisions and rule in favor of the employer, relying upon a preference in federal law for the resolution of disputes through arbitration.  This changed, however, in 2016, when both the 7th and 9th Circuits upheld NLRB decisions ruling that class or collective action waivers were unenforceable by employers.  Thus, in the last year, the tide seemed to have swung against employers’ attempts to protect themselves from ruinous litigation through class action waivers.

On January 13, 2017, the Supreme Court accepted for review these two cases, as well as a 5th Circuit decision upholding the validity of a class action waiver.  Initially, it was expected that these consolidated matters would be heard by the Court this term, with a decision issued by the summer.  In what many considered to be a surprise, however, this case will not be heard by the Court until October 2017 at the earliest, meaning a decision will not be issued until sometime in late 2017 or 2018.  That means, barring something currently unforeseen in the confirmation process, Judge Gorsuch should be sitting on the bench at the time the case is heard.

That is likely good news for employers and the future of enforceability of class action waivers.  While serving on the 10th Circuit Court of Appeals, Judge Gorsuch’s published opinions have strongly favored employers in disputes with their employees.  While Judge Gorsuch has upheld the NLRB’s decisions in the three cases before him for which he wrote for the majority, two of those three opinions favored the employer.  Judge Gorsuch also dissented in one NLRB case before him, in which he would have overturned the NLRB’s decision and would have found in favor of the employer.  Similarly, out of the 14 published majority decisions Judge Gorsuch issued on employment discrimination cases, nine were favorable to the employer, only three were favorable to the employee, and two were partial reversals.

Finally, Judge Gorsuch has come out in recent years as a strong proponent of overturning the Supreme Court’s Chevron Doctrine.  Under Chevron, courts give deference to an administrative agency’s interpretation of ambiguous statutes within their administrative jurisdiction.  Judge Gorsuch’s hostility to Chevron indicates a strong disfavor toward administrative bodies acting as legislative bodies, and may telegraph his leanings on the NLRB’s actions in the absence of clear legislative guidance as to the enforceability of class action waivers, particularly where those waivers are contained in arbitration provisions, which federal laws strongly favor.

Although the enforceability of class action waivers will remain a contested legal issue for the next year, until the Supreme Court’s decision, there is a strong possibility that they will be found to be enforceable under federal law.  Given that an enforceable class action waiver provides a strong shield against potentially ruinous litigation, employers should continue to require that employees sign arbitration agreements containing class action waivers pending the Supreme Court’s decision on this issue.

Massachusetts Pay Equity Act – Prepare Now or Pay Later

posted Dec 1, 2016, 7:17 AM by Adam Chandler

On August 1, 2016, Massachusetts Governor Charlie Baker signed into law An Act to Establish Pay Equity, sweeping legislation that protects the rights of female employees to be paid the same wage for the same work as their male counterparts, and vice-versa, but also greatly expands the liability that employers might face.  In order to temper this vast potential liability while still achieving the Act’s goals, the Act does not take effect until January 1, 2018.  Thus, employers have more than a year remaining to review their policies and practices to ensure compliance with the new law and to take advantage of substantial shields to liability that it provides.  Moreover, the Act provides for an affirmative defense for proactive employers who make a reasonable assessment of current practices and take good faith efforts to address any pay disparities.

Equal pay laws are nothing new in Massachusetts, as the Commonwealth has long required that men and women receive equal pay for comparable work.  The new Act, however, expands the definition of “comparable work,” provides additional requirements employers must meet, and lowers the procedural bar for bringing lawsuits while increasing employers’ potential liability.  In a nutshell, the law has expanded liability, increased potential damages, and made class-based lawsuits easier to bring.  If ever there was a recipe for increased litigation in a particular field, that is the recipe. 

What Protections Does the Act Provide?

               Equal Pay for Equal Work

The central protection afforded by the Act is that “No employer shall discriminate in any way on the basis of gender in the payment of wages, including benefits or other compensation, or pay any person a salary or wage rate less than the rates paid to employees of a different gender for comparable work.”  There are two key words or phrases in this sentence.  The first is “or,” the second is “comparable work.” 

By using the disjunctive word “or,” the Act prohibits both overt discrimination in pay and, more importantly, pay inequality for any reason other than those expressly allowed by the Act.  Thus, it is unnecessary for inequality in pay between genders to be the result of discriminatory intent.  If pay inequality exists, and is not permissible as set forth in the Act, a violation has occurred and the employer is liable.

The second phrase, “comparable work,” is defined in the statute to mean: “work that is substantially similar in that it requires substantially similar skill, effort and responsibility and is performed under similar working conditions; provided, however, that a job title or job description alone shall not determine comparability.”  The Act further defines “working conditions” to include: “the circumstances customarily taken into consideration in setting salary or wages, including, but not limited to, reasonable shift differentials, physical surroundings and hazards encountered by employees performing a job.”  Thus, under these definitions, a manager could be paid more than a line worker, a night-shift nurse could be paid more than a day-shift nurse, and a carpenter working outside in the elements could be paid more than a carpenter who works inside.

The law does, however, allow for variations in wages between individuals who perform comparable work if those variations are based upon one or more of the following: (1) a bona fide system that rewards seniority with the employer; provided, however, that time spent on leave due to a pregnancy-related condition and protected parental, family and medical leave, shall not reduce seniority; (2) a bona fide merit system; (3) a bona fide system which measures earnings by quantity or quality of production or sales; (4) the geographic location in which a job is performed; (5) education, training or experience to the extent such factors are reasonably related to the particular job in question and consistent with business necessity; or (6) travel, if the travel is a regular and necessary condition of the particular job.

The first three acceptable reasons for variations all require “bona fide systems.”  The statute does not define what a bona fide system is; Attorney General regulations, which have yet to be published, may fill in that gap.  Nonetheless, it is a safe assumption that, even if it is not required by the statute or the regulations, putting such a “bona fide system” in writing will strengthen an employer’s defense to a pay equity claim.  Additionally, to the extent that an employer has maintained such policies in the past, a written description of those policies should be maintained, as it may help to justify existing variations in salary.  Similarly, to the extent that the employer varies salary by geography, educational attainment, or travel requirements, those policies should also be memorialized in writing.

Finally, if an employer determines that there is a discrepancy in pay that cannot be justified based on the above reasons, it has only one choice to remedy the variation – increase the salary of the lesser-paid individual.  The Act forbids employers from decreasing any individual’s wages to eliminate a pay disparity.

               Employers Cannot Ask About Salary, but Employees Can Speak About It

Almost ironically, one of the most talked about elements of the new law is what employers and employees can and cannot say about employees’ current and historical salaries.  First, employers can no longer ask in a job application or during the interview process the amount of the applicant’s compensation in his or her current or prior jobs.  Similarly, prospective employers cannot request such information from a current or prior employer of the applicant.  An employee, however, may provide a prospective employer with written authorization to confirm prior compensation but only after an offer of employment, including the amount of compensation, has been made to the prospective employee. 

The objective of this requirement appears to be to eliminate to the greatest extent possible the effect that current disparities in compensation have on future employment.

The second requirement regarding compensation disclosure is that, in almost every case, employers cannot prohibit employees from discussing their wages or the wages of any other employee.  The only exception to this ability to speak freely about compensation is that human resources employees, or other employees whose job responsibilities require access to employees’ compensation information, may be prohibited from disclosing such information without written consent from the affected employee.

Finally, to give these requirements teeth, the law prevents any form of retaliation against employees who oppose any practice made unlawful by the law or who discuss salary information as permitted by the law.  The Act also requires that employers post notice of the provisions of the Act in a conspicuous place.

Low Procedural Hurdles to Enforcement Against Employers.

In addition to providing employees with additional substantive protections, the Act also makes it easier, and in many ways more profitable, for employees to bring suit against their employers.  The Act appears to treat pay inequity in much the same way as the laws treat a failure to pay wages, rather than a discrimination issue.  This conclusion is drawn from parallels that exist between the Act’s enforcement mechanisms and the relatively low procedural thresholds associated with claims brought under the FLSA.

First, the Act does away with the requirement that a plaintiff first file a charge with the Massachusetts Commission Against Discrimination.  Rather, a plaintiff may proceed directly to court with any claims he or she may have. 

Second, the statute of limitations has been extended to three years, and the Act expressly adopts the continuing violation theory.  Thus, every time disparate wages are paid, a new violation occurs, and the statute restarts.

 Third, the Act provides that employees who establish a violation of it are automatically entitled to double damages, as well as attorneys’ fees.

Finally, the Act allows a plaintiff to bring an action on his or her behalf, as well as on behalf of all “similarly situated” employees.  Again, this language was imported from the FLSA.  Courts have interpreted this language in the FLSA context to provide for a class-action type mechanism, but with a much lower standard to determine whether the action is suitable for class treatment, at least during the early stages of a case.  Whether Massachusetts courts adopt a similar approach to cases brought under the Act remains to be seen.

Thus, the Act lowers the hurdles to bringing suit by allowing them to be brought directly in court, allows for liability, multiple damages, and attorneys’ fees without the apparent need for proof of discriminatory intent, and provides an easy mechanism for bringing cases on a class-wide basis.  It would be reasonable to assume that the plaintiffs’ bar is lining up to bring these cases.

What Steps Can You Take to Avoid Liability?

Despite this grim outlook for employers, all is not lost.  Employers still have more than a year to prepare for the effects of the Act, and the Act provides for substantial protections for employers who take adequate steps to address pay inequity.

As an initial matter, the easiest adjustments to make likely concern issues surrounding privacy and disclosure of compensation information.  Job applications should be amended to remove requests for salary information.  Interviewers and recruiters, both internal and external, should be trained to understand that such information is off-limits during discussions with prospective employees.  Employee handbooks and policies should be altered to state that employees can discuss salary information without fear of reprisal, and policies against retaliation should be updated to be consistent with this law.  Finally, human resources and compensation and benefits personnel should sign agreements stating that they will not disclose other employees’ compensation information accept for legitimate business purposes or with an employee’s consent.

Employers should also review current criteria for determining rates of pay for employees in similar job classifications to determine whether they are consisted with the six criteria set forth in the Act.  In addition, employers should determine the current ranges of salaries for certain positions to ensure that they are consistent with company policy and to ensure that new hires into similar positions are properly compensated.

Finally, that Act provides an affirmative defense to employers for disparate pay practices, if the employer makes an effort to audit its pay practices and address any perceived disparities. The Act provides little guidance regarding what type of self-audit employers should perform but merely states that the evaluation may be of the employer’s own design, so long as it is reasonable in detail and scope in light of the size of the employer.  If such an evaluation reveals gender-based pay disparities, the employer must then take action to correct this disparity and be able to demonstrate that it made reasonable progress towards eliminating compensation differentials based on gender for comparable work.  If the employer can meet this burden, it will be shielded from liability in a pay inequity case.

By using the word “reasonable” to describe both the detail and scope of the audit and the employer’s progress toward eliminating pay inequity, the Act leaves itself open to interpretation and litigation.  To achieve more certainty, the Act also provides for audits that are “consistent with standard templates or forms issued by the attorney general.”  To date, however, the Massachusetts Attorney General has not issued any such templates or forms.  Because there is more than a year left before the Act goes into effect and no forms or templates are available from the Attorney General, it makes sense to hold off on performing such an audit until the early part of 2017.  If the Attorney General issues such forms, they will provide a valuable tool to help comply with the statute, as following these templates should remove one of the issues that could provide fertile ground for litigation – whether an employer’s audit was reasonable in detail and scope.

Once such an audit is complete, it provides a defense to an action brought under the Act for the following three years.  Thus, compliance does not end with the completion of the audit, and employers should determine a reliable means to ensure that similar audits are undertaken at least every three years going forward.

There is a high likelihood of litigation for Massachusetts employers under the Pay Equity Act.  At the same time, the Act provides employers with powerful defenses to liability.  Although employers do not yet have all of the tools necessary to ensure compliance, they should begin developing a plan for compliance today.

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