New York Labor and Employment Law Report : New York Employment Lawyer & Attorney : Bond Schoeneck & King Law Firm : NY Labor Relations, Employee Benefits

On July 15, 2009, the EEOC issued additional guidance to employees and employers on the use of releases in employment severance agreements.  After acknowledging the current economic downturn and the resultant increase in workforce reductions, the EEOC noted that increasing numbers of employees are being presented with severance agreements containing release language and are wondering: “Is this legal? Should I sign it?”  The EEOC Guidance is designed to assist employees in understanding waiver agreements and answering these questions.  The Guidance is also useful to employers seeking to develop severance and release arrangements that will pass muster with the EEOC. 

The EEOC Guidance provides instruction on the general requirements for a valid release of discrimination claims, as well as on the additional requirements applicable to age discrimination waivers covered by the Older Worker Benefit Protection Act (“OWBPA”) amendments to the Age Discrimination in Employment Act (“ADEA”).  The EEOC has issued detailed regulations interpreting and implementing the OWBPA/ADEA waiver rules (29 CFR § 1625.22), and much has previously been written about the requirements that must be satisfied to obtain an effective age discrimination waiver.  See BS&K Information Memos: "EEOC Issues Final Regulation On Waivers Under The Age Discrimination In Employment Act"  (Jan. 2001); "Lack of Valid Employment Releases Can Lead To Lawsuits" (Apr. 1998).  The EEOC Guidance reaffirms these requirements.  Under the ADEA waiver rules:  workers must be advised in writing to consult with an attorney; be afforded specified minimum time periods to consider the waiver (at least 21 days, or 45 days if offered as part of an “exit incentive” or "other termination program”); be allowed at least seven days after signing the waiver to revoke it; and receive other information about the benefits they will be receiving and the rights they will be giving up in order for the ADEA waiver to be valid (See EEOC Guidance at pp. 5-15). 

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The U.S. Equal Employment Opportunity Commission (“EEOC”) has approved new regulations implementing the Americans with Disabilities Act Amendments Act of 2008 . Although these regulations are not yet public (and are pending review at the Office of Management and Budget), recent comments offered by EEOC officials nevertheless provide an insightful glimpse as to what changes employers can expect—including some changes arguably outside the scope of the ADAAA.

Congress passed the ADAAA with the intent of reversing several Supreme Court rulings interpreting the ADA’s scope of protection.  In short, the ADAAA sought to expand the definition of “disability” to cover a broader range of impairments than permitted under the Supreme Court’s interpretation of the law. The legislation also empowered EEOC to draft regulations implementing this new, broader definition.

EEOC recently met to approve proposed regulations fulfilling this mandate. At this meeting, EEOC officials—principally Assistant Legal Counsel Christopher J. Kuczynski—commented on select portions of the new regulations, which appear to constitute a major shift in policy. Given the remedial intent of the ADAAA, this shift will not come as a surprise to most observers. What is surprising, however, is that EEOC’s proposed regulations, at least according to some commentators, arguably exceed the scope of the ADAAA’s rulemaking authority. A few examples illustrate this noteworthy development.

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Effective July 24, 2009, the New York State minimum wage will increase from $7.15/hour to $7.25/hr. This increase will bring the state minimum wage in line with the federal minimum wage which will increase from $6.55/hour to $7.25/hour, also effective July 24, 2009. Employers should note this change, take the necessary steps to implement this increase and replace all prior state minimum wage postings with the recently-promulgated New York State Department of Labor Minimum Wage Notice.

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Somehow our legislature and Governor found time to amend the New York State Human Rights Law to expand the application of civil fines and penalties to include cases of employment discrimination occurring on or after July 6, 2009. N.Y. Exec. Law Sec. 297(4). Previously, the imposition of civil fines had been limited to cases of housing discrimination. With the enactment of the new law they may now be assessed in all cases of employment discrimination, which account for 80% of Division of Human Rights’ cases.  A fine of up to $50,000 may be imposed, or in the case where the conduct is found to be “willful, wanton or malicious,” a fine of up to $100,000. Where the employer has fewer than 50 employees, civil fines and penalties may be paid in installments by the employer.

The purpose of the amendment, according to the Division, is to:

…greatly advance the Division’s mission to exercise the police power of the State for the protection of the public welfare, health and peace of the people of this State, and in fulfillment of the provision of the constitution of this State concerning civil rights. N.Y. Exec. Law § 290.1. The fines imposed will further the goal of equal opportunity in New York State by acting to deter and reduce discrimination on the basis of race, color, creed, national origin, sex, age, disability, sexual orientation, marital status, military status, and other protected categories.

Furthermore, the imposition of such fines will be in addition to and will not reduce or offset any compensatory damages awarded to a prevailing complainant. The fines are payable to the State.

The law does not change the types of relief that may be awarded to the complainant. Complainants who prevail in an action under state law may be awarded affirmative relief from the employer (e.g., be hired, promoted or reinstated) and awarded compensatory damages (economic damages and emotional distress damages. However, there is pending legislation in New York which would allow individuals to also recover punitive damages and reasonable attorneys fees for human rights law violations.

There is presently little guidance on how the penalties will be applied. The Division promises future guidelines. It may be that the standards applied in housing discrimination cases will be considered relevant.  In housing discrimination cases, the factors that determine if civil fines and penalties are appropriate are: 1) whether the respondent previously committed unlawful housing discrimination; 2) the respondent’s financial resources; 3) the degree of respondent’s culpability; and 4) the goal of deterrence. The Division may also consider whether: 1) the employer has an established anti-discrimination policy; 2) the policy was distributed to employees; 3) there is an effective complaint procedure; and 4) employees have been trained in the law and the employer’s policies.

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This blog was prepared with the assistance of Bond, Schoeneck & King PLLC attorney Kerry Langan.

On July 9, 2009, the White House announced that it had sent three nominees for membership to the National Labor Relations Board (“NLRB” or “Board”) to the Senate for confirmation.  The latest nominee, Republican Brian Hayes, joins previously announced nominees, Democrats Craig Becker and Mark Gaston Pearce, as the three President Obama nominees to the five member Board. 

Currently, the Board has been operating with just two members, Chairperson Wilma Liebman (a Democrat) and Member Peter Schaumber (a Republican).  The United States Court of Appeals for the D.C. Circuit has recently held that the two-member Board lacks authority to issue decisions.  See Laurel Baye Healthcare of Lake Lanier, Inc. v. NLRB, No. 08-1162 (D.C. Cir. May 1, 2009).  Three other federal Circuits have held to the contrary.  See Northeastern Land Services Ltd. d/b/a The NLS Group v. NLRB, No. 08-1878 (1st Cir. Mar. 13, 2009); Snell Island SNF LLC, d/b/a Shore Acres Rehab. & Nursing Ctr. v. NLRB, No. 08-3822 (2d Cir. June 17, 2009); New Process Steel, L.P. v. NLRB, Nos. 08-3517, 08-3518, 08-3709, 08-3859 (7th Cir. May 1, 2009).

The new nominees, assuming they are confirmed by the Senate, which now has 60 Democratic members, will address the quorum issue and allow the Board to operate with a 3-2 Democratic majority.  And, the three Democratic members are all on record as being staunchly pro-union in their views.  Chair Liebman has been a vigorous dissenter in a number of Bush-era Board decisions.  Nominee Becker is currently Associate General Counsel to both the Service Employees International Union and the AFL-CIO.  See NLRB Press Release.  Nominee Pearce is a former NLRB attorney at the Regional level and has been a union-side labor lawyer in recent years.  See NLRB Press Release.

Although the proposed Employee Free Choice Act (“EFCA”) and other potential labor law reforms have received the lion’s share of attention from commentators and labor and management advocates, the composition of the NLRB may well have a greater impact on labor-management relations than any compromise EFCA or labor law reform ultimately enacted.

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In many workplaces, it is not uncommon for employees to speak with each other about politics. As managers and employees learn each others’ political views, some employees may get the impression—rightly or wrongly—that their employers are discriminating against them because of political disagreements. 

Sometimes, political discrimination can be overt. In the 2004 presidential campaign, there was a well-publicized incident in which an employer in Alabama told an employee that she was being discharged because she had a John Kerry bumper sticker on her car.   But even when the employer does not expressly state why it has taken an adverse action against an employee, the circumstances may support an inference that the reason was political.

Employers and employees often assume that employment discrimination on the basis of political beliefs is unlawful. After all, discrimination on the basis of such obscure categories as marital status and genetic predisposition is unlawful, and human resources professionals constantly stress that all personnel decisions should be based on merit.  However, surprising as it may seem, federal and New York law do not generally prohibit political discrimination in the private sector. The First Amendment restricts action against political dissentersby the government, but it does not restrict action by private actors. An employer that fires an employee because of a political bumper sticker may well be acting within its legal rights, reprehensible as such an action may seem. This blogpost examines the types of political discrimination that are plainly unlawful, as well as legal theories that can be argued when none of the well-established prohibitions applies.

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On June 29, 2009, the Supreme Court issued its decision in the case of Ricci v. DeStefano (see June 15, 2009 blog post for an explanation of the case and the positions of the parties).  In a 5-4 decision, the Supreme Court reversed the Second Circuit Court of Appeals, holding that the City of New Haven violated Title VII of the Civil Rights Act by refusing to certify the results of firefighter promotional examinations because too few minority candidates passed.

The Supreme Court agreed with the plaintiffs that an employer must have a "strong basis in evidence" to believe it will be subject to disparate impact liability in order to make a race-conscious decision such as the one made by the City of New Haven.  The Supreme Court rejected the position of the City of New Haven (and the position taken by the U.S. Government in its amicus brief) that an employer need only have a "reasonable basis" for believing it might be liable under a disparate impact theory.  In prior decisions (such as Richmond v. J.A. Croson Co., 488 U.S. 469 (1989)), the Supreme Court has applied this same "strong basis in evidence" standard in determining whether certain types of race-conscious government actions to remedy past racial discrimination are justified under the Equal Protection Clause of the U.S. Constitution.  Therefore, it appears that the Supreme Court's decision is consistent with, rather than a deviation from, the current legal standards.

Upon examining the record, the Supreme Court held that the City of New Haven did not have a strong basis in evidence to believe it would have been subject to disparate impact liability.  The Supreme Court found that the City of New Haven's decision to throw out the results of the promotional examinations was based only on the statistical disparity in the number of white and minority candidates who passed.  The Supreme Court held that the statistical disparity alone was insufficient to justify the City of New Haven's race-based decision to reject the results of the examinations.  The City of New Haven would only have been liable under a disparate impact theory if the examinations were not job-related and consistent with business necessity, or if there existed a less discriminatory alternative that the City refused to adopt.  The Supreme Court found that there was no evidence that the examinations were not job-related and consistent with business necessity, or that there were less discriminatory alternatives available.  The Supreme Court held that "fear of litigation alone cannot justify an employer's reliance on race to the detriment of individuals who passed the examinations and qualified for promotions."

The lesson of the Ricci v. DeStefano case is that employers must be extremely cautious about making race-based employment decisions (or employment decisions based on any protected category) simply to avoid a disparate impact lawsuit.  Employers that find themselves in the difficult position faced by the City of New Haven should do a thorough analysis in order to determine whether there is a strong basis in evidence to support a disparate impact theory of liability, and should not make race-based employment decisions in the absence of such evidence.

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