Personality Testing

Time Magazine has a cover story this week entitled "How High Is Your XQ?" which describes the current interest among employers in the use of personality tests to make hiring, promotion and termination decisions. The answers to test questions are supposed to reveal personalty traits that are correlated with success on the job. You may hear the area referred to as "people analytics." The providers of such testing include Hogan Assessment, Caliper, Prophecy Healthcare, Pegged Software, Gallup's StrengthFinder, and Infor.

Testing raises legal issues that employers need to be aware of before they put people analytics into practice:

Reasonable accommodation: The disability laws require employers to provide reasonable accommodations during the hiring process, to make sure that applicants are not screened out because of an inability to perform tasks that are not essential functions of the job. The EEOC's guidance on "Job Applicants and the Americans with Disabilities Act" gives this example: "An employer gives a written test to learn about an applicant's knowledge of marketing trends. Maria is blind and requests that the test be given to her in braille. An individual's knowledge of marketing trends is critical to this job, but the employer can test Maria's knowledge by giving her the test in braille. Alternatively, the employer could explore other testing formats with Maria to determine if they would be effective, for example, providing a reader or a computer version of the test."

Disparate impact: Testing may exclude people with certain protected characteristics, This is referred to as disparate impact. For example, in Griggs v. Duke Power Co., 401 U.S. 424 (1971) (the Supreme Court's seminal case on disparate impact), the employer's requirement that applicants have a high school diploma and submit to an intelligence test excluded a disproportionate number off African American applicants from consideration. Where a disparate impact on those with a protected characteristic is shown, the employer must that the testing is job-related and consistent with business necessity. Even if the employer can make that showing, the testing may still be unlawful if the employees can show that there is a less discriminatory alternative. The process for determining whether a test is job-related and consistent with business necessity is called validation. A group of federal agencies (including the EEOC) has developed Uniform Guidelines on Employee  Selection Procedures for use in making sure that testing has sufficient validity to survive scrutiny under the discrimination laws. For a discussion of applying the guidelines to Prophecy, see Legal Defensibility of the Prophecy Assessment, from Biddle Consulting (one of the partners in the development of Prophecy). For further information, see also the EEOC's fact sheet on "Employment Tests and Selection Procedures."

U.S. Supreme Court adopts "but for" test for Title VII retaliation claims

In University of Texas Southwestern Medical Center v. Nassar, Case No. 12-484 (Jun. 24, 2013), the U. S. Supreme Court has directed courts to apply the "but for" test to retaliation claims brought under Title VII. This differs from the standard for assessing status-based discrimination claims that Congress enacted into 42 U.S.C. section §2000e–2(m). That section provides that a plaintiff may establish a case of discrimination based solely on proof that race, color, religion, sex, or nationality was a motivating factor in the employment action. If the employer proves that it would still have taken the same employment action in the absence of a discriminatory motive, it may avoid monetary damages and a reinstatement order.

The Court stated the "but for" test that will now apply to all Title VII retaliation claims as follows: "This requires proof that the unlawful retaliation would not have occurred in the absence of the alleged wrongful action or actions of the employer." Justice Ginsburg's dissenting opinion explained the impact on plaintiffs: "When an event is 'overdetermined,' i.e., when two forces create an injury each alone would be sufficient to cause, modern tort law permits the plaintiff to prevail upon showing that either sufficient condition created the harm. ... In contrast, under the Court’s approach (which it erroneously calls 'textbook
tort law'), a Title VII plaintiff alleging retalia­tion cannot establish liability if her firing was prompted by both legitimate and illegitimate factors."

Using Convictions and Arrests To Make Hiring Decisions

Last week, the EEOC adopted an enforcement guidance on the use of arrest and conviction records in employment decisions. It issued a press release, the guidance document itself, and a question-and-answer document about the guidance. With the guidance in mind, now is a good time for employers to scrutinize how they use such records to make hiring decisions.

The EEOC's concern is that the use of such records may have an disparate impact on those with protected characteristics. As the guidance document explains, "Nationally, African Americans and Hispanics are arrested in numbers disproportionate to their representation in the general population. In 2010, 28% of all arrests were of African Americans, even though African Americans only comprised approximately 14% of the general population. In 2008, Hispanics were arrested for federal drug charges at a rate of approximately three times their proportion of the general population. Moreover, African Americans and Hispanics were more likely than Whites to be arrested, convicted, or sentenced for drug offenses even though their rate of drug use is similar to the rate of drug use for Whites."

Nonetheless, anti-discrimination law recognizes that the wrongful conduct revealed by arrest and conviction records may be sufficiently job-related to justify their use despite a disparate impact. The EEOC says that employers may rely on convictions if (1) data validates the use of convictions for particular offenses as predictors of subsequent work performance, or (2) the employer determines which convictions will be considered by considering the nature of the crime, the time elapsed since the conviction, and the nature of the job, and then provides an opportunity for an individualized assessment for people excluded by the screen to determine whether the policy as applied is job related and consistent with business necessity.

Because they are not proof of wrongdoing, arrest records alone should never be relied upon to make employment decisions. However, the fact of an arrest may prompt the employer to investigate the circumstances of the arrest and conclude that disqualifying misconduct did occur. The guidance documents gives the following example if a proper use of the fact of an arrest:

• Andrew, a Latino man, worked as an assistant principal in Elementary School for several years. After several ten and eleven-year-old girls attending the school accused him of touching them inappropriately on the chest, Andrew was arrested and charged with several counts of endangering the welfare of children and sexual abuse. Elementary School has a policy that requires suspension or termination of any employee who the school believes engaged in conduct that impacts the health or safety of the students. After learning of the accusations, the school immediately places Andrew on unpaid administrative leave pending an investigation. In the course of its investigation, the school provides Andrew a chance to explain the events and circumstances that led to his arrest. Andrew denies the allegations, saying that he may have brushed up against the girls in the crowded hallways or lunchroom, but that he doesn’t really remember the incidents and does not have regular contact with any of the girls. The school also talks with the girls, and several of them recount touching in crowded situations. The school does not find Andrew’s explanation credible. Based on Andrew’s conduct, the school terminates his employment pursuant to its policy.

Other laws bar use of some arrest and conviction records without regard to their discriminatory adverse impact. For example, the Fair Credit Reporting Act bars consumer reporting agencies from reporting records of arrests that did not result in entry of a judgment of conviction, where the arrests occurred more than seven years ago.

In California, arrest records may not be considered at all unless the arrest resulted in a conviction, or the applicant is awaiting trial. Employers may not inquire about marijuana convictions that are more than two years old.  See California Labor Code  sections 432.7, 432.8. 

Learn About the Equal Pay Act

The Equal Pay Act is a federal statute that tries to assure pay equality between male and female employees, even though job titles may differ.

Although the Equal Pay Act has been in effect since 1963, a pay gap continues. A GAO study released in October 2011 estimated that "in 2010, less-educated women earned 86 cents—compared with 81 cents in 2000—for every dollar men earned, after adjusting for available factors that may affect pay." Commentators continue to decry the gap. Witness this recent post by Congresswoman Jackie Speier.

The substantive provisions of the Act appear in 29 U.S.C. section 206(d), which states:

"No employer having employees subject to any provisions of this section shall discriminate, within any establishment in which such employees are employed, between employees on the basis of sex by paying wages to employees in such establishment at a rate less than the rate at which he pays wages to employees of the opposite sex in such establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions, except where such payment is made pursuant to (i) a seniority system; (ii) a merit system; (iii) a system which measures earnings by quantity or quality of production; or (iv) a differential based on any other factor other than sex: Provided, That an employer who is paying a wage rate differential in violation of this subsection shall not, in order to comply with the provisions of this subsection, reduce the wage rate of any employee."

The Equal Pay Act regulations promulgated by the EEOC elaborate on those provisions.

Unlike similar sex discrimination claims under Title VII, there is no exhaustion requirement. Claimants may file their claims in court without first going to the EEOC. California has its own Equal Pay Act, found in Labor Code section 1197.5, which is substantially the same as the federal one. California courts rely on federal precedent to interpret the statute. Green v. Par Pools Inc., 111 Cal.App.4th 620, 3 Cal.Rptr.3d 844 (2003). As is the case with the federal statute, there is no exhaustion requirement.

The Ninth Circuit applied the Equal Pay Act in an action by the USC women's basketball coach, who was paid less than the men's basketball coach. Stanley v. University of Southern California, 178 F.3d 1069 (9th Cir. 1999). Summary judgment for the university was affirmed: "Stanley [the women's coach] had far less relevant experience and qualifications than Raveling [the men's coach]. She had fourteen years less experience as a basketball coach. She, unlike Raveling, never coached the Olympic team. She had no marketing experience outside coaching. She had never written any books on basketball.

Whether an employee's rate of pay is less than the rate paid to another employee is not always a mathematical calculation. If the work is equal the pay must be in the same form.

Example 16 from the EEOC's Compliance Manual section on compensation discrimination explains this as follows: A male tennis instructor and a female tennis instructor at a particular health club provide tennis lessons that are substantially equal. The male instructor is paid a weekly salary, but the female instructor is paid by the lesson. Even if the two instructors receive essentially the same pay per week, there is a violation because the male and female are not paid in the same form for substantially equal work.

Other examples from the Compliance Manual explain other concepts under the Equal Pay Act:

Two of them illustrate how to determine whether a pay differential between work sites is a factor other than sex:

Example 17: CP [complaining party], a school teacher, alleges that she is paid less than a male teacher who performs equal work in the same school district. The school district asserts that their compensation cannot be compared under the EPA because they work in different schools. The investigation determines that the school district is a single establishment because hiring, assignments of teachers, and compensation rates are determined centrally, and personnel are sometimes reassigned to different schools. Therefore, the compensation rates of the two teachers can be compared.

Example 18: CP, a female, works for a computer services firm that has offices in numerous cities. She alleges that she is paid less than a male who performs the same job in a different branch office. The employer claims that the separate offices are separate establishments and that, therefore, the compensation rates in each office cannot be compared. The evidence shows that while the headquarters of the company exercises some control over the branches, the specific salaries offered to job applicants are determined by supervisors in each local office. The local offices therefore constitute separate establishments, and CP's salary cannot be compared to the salary of an employee in a different office.

Several of the examples explain what constitutes equal work:

Example 21: CP, a hotel clerk, alleges that she is paid less than a male who performs substantially equal work. CP only has a high school degree, while the male comparator has a college degree. However, performance of the two jobs requires the same education, ability, experience, and training. A college degree is not needed to perform either job. Therefore, the skill required to perform the two jobs is substantially equal.

Example 22: CP, a male, works for a telephone company diagnosing problems with customer lines. He alleges that he is paid less than his female predecessor in violation of the EPA. The evidence shows that the job of CP's predecessor required expert training in diagnostic techniques and a high degree of specialized computer skill. The respondent switched to a newer, more advanced computer testing system after CP's predecessor resigned. The job now requires much less overall skill, including computer skill, than was required when CP's predecessor held it. Therefore, the skill is not equal, and no violation is found.

Example 24: CP alleges that she and other female grocery store workers are paid less than males who perform substantially equal work. Most of the tasks performed by the males and females are the same. In addition to those same tasks, the male employees place heavy items on the store shelves, while the female employees arrange displays of small items. The extra task performed by the men requires greater physical effort, but the extra task performed by the women is more repetitive, making the amount of effort required to perform the jobs substantially the same.

Example 30: CP, a bank teller, alleges that she is paid less than a male bank teller who performs the same job. The respondent claims that the compensation disparity is justified because wages are paid under a merit system. That alleged merit system is unstructured, based on a manager's "gut feeling." Furthermore, the respondent offers no objective evidence to support CP's lower compensation under its merit system. In this case, the merit system is not bona fide and does not justify the compensation disparity.

Example 32: CP, a high school teacher, alleges that she is paid $5,000 less than a male teacher who performs substantially equal work. The respondent states that the compensation difference is due to its seniority system and that the male teacher has greater seniority. The investigation reveals that the male has worked at the school three years longer than CP, which would only justify a $3,000 difference in pay under the seniority system. An EPA violation is found.

The Customer Is Not Always Right

Businesses succeed by satisfying their customers. In a phrase coined by either Marshall Field or Harry Gordon Selfridge: "The customer is always right." But, where a customer's wishes collide with an employee's legal rights, the employer may have to ignore the customer's wishes.

A 2010 case from the United States Court of Appeals for the Seventh Circuit illustrates the dangers of acceding to customer preferences. In Chaney v. Plainfield Healthcare Center, 612 F.3d 908 (7th Cir. 2010), a white patient said that he only wanted to receive care from white health care providers. The facility complied by issuing written instructions that no Black providers were to enter the patient's room. That was consistent with its policy of honoring patients' racial preferences. The Court of Appeals found that the policy contributed to an unlawful hostile environment. The EEOC Compliance Manual similarly states that "customer preference is not a defense to race discrimination."

The Cheney court distinguished cases that had recognized gender as a bona fide occupational qualification in the health care and prison fields, where the customers had privacy concerns. See Jennings v. New York State Office of Mental Health, 786 F. Supp. 376 (S.D.N.Y. 1992). A recent case from the Southern District of New York acknowledged the need to accommodate privacy concerns, but ruled that there were means for accommodating that interest other than a flat ban on appointing female correctional officers to a particular position. See White v. Department of Correctional Services, Case No. 08-0993 (S.D.N.Y. Sep. 30, 2011).

A 2002 California Court of Appeal case recognized another limited exception to the usual rule. In West v. Bechtel Corp., 96 Cal.App.4th 966, 117 Cal.Rptr.2d 647 (2002), the court reversed a $100,000 judgment based on age discrimination allegations. The Saudi Arabian government entity that Bechtel had a contract with vetoed the hiring of a 62-year old employee for a key position because of his age. Because there was no evidence that the decision-maker at Bechtel had a discriminatory motive, the employee had no case. Bechtel had made a neutral business decision based on the direction of the Saudi government entity.

Although there are limited circumstances where an employer' accession to customer preference may be a defense to a discrimination claim, those are exceptions to the firmly established rule to the contrary.

In addition, failure to take corrective action when informed of a customer's harassing behavior may expose the employer to hostile environment liability. In Salazar v. Diversified Paratransit, Inc.,117 Cal.App.4th 318, 11 Cal.Rptr.3d 630 (2004), the court ruled that a female driver had a viable hostile environment claim if her employer had failed to take action after she reported that a client had harassed her.

Employment Cases on the Supreme Court's Calendar

U.S. Supreme Court Building

The U.S. Supreme Court's new term got under way on October 3, the first Monday in October. Here are the employment cases for which the Court has so far granted review. We will update this posting with developments in these cases and any other employment cases for which review is granted.

Coleman v. Court of Appeals of Maryland, No. 10-1016. On March 20, 2012, the Court ruled that Congress did not abrogated the States' Eleventh Amendment immunity when it included a right to time off for an employee's own serious health condition in the Family and Medical Leave Act. The Fourth Circuit ruled that the Eleventh Amendment barred an FMLA claim against the Maryland Court of Appeals. The case was argued on January 11, 2012. The briefs filed in the case are available at the ABA's Supreme Court Preview site. A transcript of the oral argument is available here.

Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC, No. 10-553. On January 12, 2012, the Court ruled that the First Amendment requires a "ministerial" exception to employment discrimination laws, and that the exception barred the claims in the case before it. The Sixth Circuit had ruled that the exception did not bar the teacher's claims under the Americans with Disabilities Act. The case was argued on October 5, 2011. The briefs filed in the case are available at the ABA's Supreme Court Preview site. A transcript of the oral argument is available here.

Knox v. SEIU Local 1000, No. 10-1121. This case clarifies a union's obligations to nonunion public employees who are compelled to pay fair share fees for union representation under Chicago Teachers Union, Local No. 1 v. Hudson, 475 U.S. 292 (1986). On June 21, 2012, the Court ruled that any dues increase that funds political activities must be preceded by notice and an opportunity to object. The Ninth Circuit decision under review is available here. The case was argued on January 10, 2012. The briefs filed in the case are available at the ABA's Supreme Court Preview site. A transcript of the oral argument is available here.

Pacific Operators Offshore, LLP v. Valladolid, No. 10-507. The case concerns compensation for workers injured as a result of operations conducted on the outer continental shelf. On January 12, 2012, the Court affirmed the decision under review, adopting the "substantial nexus" text for determining whether the operative statute applies. The Ninth Circuit decision under review is available here. The case was argued on October 11, 2011. The briefs filed in the case are available at the ABA's Supreme Court Preview site. A transcript of the oral argument is available here.

Roberts v. Sea-Land Services, Inc., No. 10-1399. On March 20, 2012 the Court ruled that an employee is “newly awarded compensation” when he first becomes disabled and thereby becomes statutorily entitled to benefits, no matter whether, or when, a compensation order issues on his behalf, under the Longshore and Harbor Workers Compensation Act. The Ninth Circuit decision under review is available here.The case was argued on January 11, 2012. The briefs filed in the case are available at the ABA's Supreme Court Preview site. A transcript of the oral argument is available here.

UPDATE [10/19/2011]

Elgin v. Department of the Treasury, No. 11-45. On June 11, 2012, the Court ruled that the Civil Service Reform Act establishes the exclusive means for obtaining judicial review for covered employees who challenge covered adverse employment actions. The First Circuit decision under review is reported at 641 F.3d 6 (1st Cir. 2011). The case was argued on February 27, 2012. The briefs filed in the case are available at the ABA's Supreme Court Preview site. A transcript of the oral argument is available here.

UPDATE [11/17/2011]

NFIB v. Sebelius, No. 11-393; Florida v. Department of Health and Human Services, No. 11-400. On June 28, 2012, the Court upheld the individual mandate of the Patient Protection and Affordable Care Act as a tax measure, but struck down the requirement that States join the expansion of Medicaid under threat of losing all Medicaid funding. The Eleventh Circuit decision under review is reported at 648 F.3d 1235 (11th Cir. 2011). For information about the law's anticipated effect on employers, see this analysis from the Rand Corporation and this one from The New England Journal of Medicine. The case was argued over three days: March 26, 27 and 28. The briefs filed in the case are available at the ABA's Supreme Court Preview site. Transcripts of each day's oral arguments are available here.

UPDATE [2/21/2012]

Christopher v. SmithKline Beecham, No. 11-204. On June 18, 2012, the Court ruled that the FLSA's outside salesperson's exemption applies to pharmaceutical sales representatives, who do not sell directly to consumers. The Ninth Circuit decision under review (which applied the exemption to the representatives) is reported at 635 F.3d 383 (9th Cir. 2011). The case was argued on April 16, 2012. The briefs filed in the case are available at the ABA's Supreme Court Preview site.

"Me Too" Evidence in Discrimination and Harassment Cases

"Me too" evidence is testimony from a plaintiff's co-workers that they were subjected to inappropriate conduct similar to that experienced by the plaintiff. Such evidence can provide powerful support for a plaintiff's case by taking it out of the realm of he said, she said. On the other hand, the use of such evidence can consume trial time on side issues and unduly prejudice the jury. The possibility that such evidence might be introduced at a trial should convince employers to put a stop to any inappropriate conduct even if the victim of the conduct does not complaint.

A recent decision from the Fifth District Court of Appeal in Fresno illustrates the use of "me too" evidence. Lorraine Pantoja complained that she was harassed and discriminated against on the basis of sex and race by the lawyer she worked for. She claimed that he used profanity constantly, referred to her as a b__, and used the term "Mexicans" in a derogatory way. Her employer denied her claims, testified that he never called anybody b__, and never used "Mexicans" in a derogatory way. He presented testimony from other employees who said that he used profanity but never directed it at individuals. The trial court refused to allow Pantoja have other employees testify that the employer frequently used b__ to refer to female employees, that he used "Mexicans" in a derogatory way, and directed profanity at individuals, because they would not be testifying to things that he said in front of Pantoja. The Court of Appeal reversed, ruling that the evidence should have been allowed because it tended to prove that the lawyer had a bias. See Pantoja v. Anton, Case No. F058414 (5th Dist. Ct. App. aug. 9, 2011).

There are two other notable California cases dealing with "me too" evidence:

1. Beyda v. City of Los Angeles, 76 Cal.Rptr.2d 547, 65 Cal.App.4th 511 (1998): The Court of Appeal affirmed a trial court ruling that barred "me too" evidence of sexual harassment not committed in the plaintiff's presence. It was improper to use such evidence to show that the defendant had a propensity to harass.
2. Johnson v. United Cerebral Palsy/Spastic Children's Foundation, 93 Cal. Rptr. 3d 198, 173 Cal. App. 4th 740 (2009): The Court of Appeal reversed a summary judgment for the employer in a pregnancy discrimination case, because declarations from five former employees who claimed they were discriminated against after they disclosed that they were pregnant created a triable issue of material fact.

Among the federal courts, the Supreme Court has yet to give a definitive ruling, but the Ninth Circuit has ruled that "me too" evidence is permissible.

1. Sprint/United Management Co. v. Mendelsohn, 128 S. Ct. 1140 (2008): The Supreme Court found that the Tenth Circuit had misinterpreted the district court's ruling about "me too" evidence and remanded for further analysis without ruling on admissibility. At the end of his majority opinion, Justice Thomas wrote: "The question whether evidence of discrimination by other supervisors is relevant in an individual ADEA case is fact based and depends on many factors, including how closely related the evidence is to the plaintiff's circumstances and theory of the case. Applying Rule 403 to determine if evidence is prejudicial also requires a fact-intensive, context-specific inquiry."
2. Obrey v. Johnson, 400 F. 3d 691 (9th Cir. 2005): Discriminatory treatment of other employees was admissible to help prove the plaintiff's pattern and practice case.
3. Heyne v. Caruso, 69 F.3d 1475 (9th Cir. 1995): The district court should have allowed testimony by the plainitiff's co-workers that they were sexually harassed by the same individual whom the plaintiff claimed had harassed her. Their testimony tended to prove the individual's motive.

Use of Criminal Background Checks May Violate Discrimination Laws

In an effort to avoid hiring problem employees, employers frequently include criminal background checks as part of the application process. Employers who rely on such information must be careful to avoid practices that might subject them to discrimination lawsuits.

The anti-discrimination laws prohibit employment practices that have an unjustified disparate impact on a protected group, even if the employer did not intend to discriminate. For example, the use of height and weight requirements in law enforcement and firefighting organizations excluded large percentages of women from consideration. Therefore, such requirements are illegal if they are not sufficiently job-related, as the Supreme Court explained in Dothard v. Rawlinson.

Similar considerations apply to blanket exclusions based on criminal history. For example, the Eighth Circuit Court of Appeals found that the Missouri Pacific Railroad's policy of disqualifying any applicant with a criminal conviction other than a minor traffic offense had a disparate impact on Black applicants. The evidence established that in urban areas from 36.9 percent to 78.1 percent of all Blacks would incur a conviction during their lifetimes, while only 11.6 percent to 16.8 percent of all white persons would acquire a conviction. See Green v. Missouri Pacific Railroad Co.

Publications from the EEOC explain its enforcement philosophy in this area. An EEOC fact sheet explains how selection procedures may violate Title VII by having a disparate impact on applicants with protected characteristics. In an informal discussion letter, the EEOC explained that, although Title VII does not override federal background check requirements, it does preempt state or local requirements that have a discriminatory impact. In a policy guidance, the EEOC concluded that a business justification can rarely be demonstrated for blanket exclusions based on arrest records. In a policy statement on use of conviction records, the EEOC states that, where a disparate impact is shown, the employer must show that it considered these three factors: (1) the nature and gravity of the offense or offenses, (2) the time that has passed since the conviction and/or completion of the sentence; and (3) the nature of the job held or sought.

A 2009 study confirms that reliance on old convictions is unjustified. As the authors of the study explain on the National Institute of Justice website in 'Redemption' in an Era of Widespread Criminal Background Checks, after eight years the "hazard rate" (the chance that someone will be arrested) for ex-cons declines to the rate for the general population.

Sometimes, the EEOC overreaches in this area. In EEOC v. Peoplemark, Inc., a federal district court in Michigan awarded the defendant its costs (including attorney's fees) after the EEOC continued to pursue a disparate impact claim based on use of criminal background checks long after it should have realized that it had no case. The company did not in fact a blanket exclusion policy. It had in fact hired several of those with criminal records whom the EEOC purported to be representing in the lawsuit.

California employers should also be aware that state law imposes restrictions on the use of certain convictions. For example, employers are prohibited by Labor Code section 432.7 and 432.8 from making employment decisions based on arrests that did not result in convictions and marijuana convictions that are more than two years old. Civil Code section 1786.18 prohibits investigative reporting agencies from reporting arrests and convictions that are more than seven years old.

UPDATE [1/26/2012]

On January 12, 2012, the EEOC announced a $3.1 million settlement with Pepsi Beverages of a claim that its criminal background check policy had a disparate impact on African American employees. Under Pepsi’s former policy, job applicants who had been arrested pending prosecution were not hired for a permanent job even if they had never been convicted of any offense. The former policy also denied employment to applicants from employment who had been arrested or convicted of certain minor offenses. Pepsi adopted a new background check policy and will offer jobs to those improperly excluded under its former policy.

Staub v. Proctor Hospital And Motivating Factor

The Supreme Court's recent decision in Staub v. Proctor Hospital, Case No. 09-400 (Mar. 1, 2011) discusses the standards for proof of motive in a claim for discrimination based on military obligations. This prompts consideration of the role of motive in all sorts of employment cases.

In Staub, two low level supervisors were hostile to the military reserve obligations of an angiography technician. One of the supervisors gave the technician a disciplinary warning with a directive to report to one of the supervisors when his cases were completed. After it was reported that the technician had violated the directive, the vice president of human resources decided to fire him. The technician complained that one of the supervisors had fabricated the original warning out of hostility to his military obligations, but the vice president adhered to her decision.

The Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) and the Department of Labor's USERRA Regulations prohibit employers from discriminating against employees based on military service or the obligation to perform military service. An employee may sue for damages caused by a USERRA violation if his military affiliation was a "motivating factor in the employer's action." Although Proctor Hospital argued that it was shielded from liability because its vice president was not hostile to the technician's military obligations. The Supreme Court rejected the argument, holding that, "if a supervisor performs an act motivated by antimilitary animus that is intended by the supervisor to cause an adverse employment action, and if that act is a proximate cause of the ultimate employment action, then the employer is liable under USERRA."

The same analysis appears to apply in cases brought against California employers under Title VII and under California's Fair Employment and Housing Act (FEHA). See, e.g., Poland v. Chertoff, 494 F.3d 1174 (9th Cir. 2007); Reeves v. Safeway Stores, Inc., 121 Cal.App.4th 95, 16 Cal.Rptr.3d 717 (2004).

Employers should keep in mind that there are other standards for proving unlawful motive in other types of employment cases.

Where direct evidence of discriminatory intent is unavailable, plaintiffs may prevail in disparate treatment cases under Title VII and FEHA by invoking the burden-shifting approach set forth in McDonnell Douglas. See McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973); Guz v. Bechtel Nat. Inc., 24 Cal.4th 317, 8 P.3d 1089 (2000). Under that approach, the plaintiff establishes a prima facie case by showing that (1) he belongs to a racial minority; (2) he applied and was qualified for a job the employer was trying to fill; (3) though qualified, he was rejected; and (4) thereafter the employer continued to seek applicants with complainant's qualifications. That shifts the burden to the employer to provide a legitimate reason for its action, which the plaintiff may then overcome by proving that the employer's stated reason is a pretext for discrimination.

The courts will also entertain disparate impact cases under Title VII and FEHA. Griggs v. Duke Power Co., 401 U.S. 424 (1971); Guz v. Bechtel National, Inc. 24 Cal.4th 317, 100 Cal.Rptr.2d 352, 8 P.3d 1089 (2000). To prevail in such cases, the plaintiff must identify a specific hiring practice (such as a test) that has a substantial statistically disproportionate effect on a protected group. Even if the employer did not intend to discriminate, it is still liable for discrimination unless it can show that the practice is substantially job-related. The EEOC has adopted Uniform Guidelines on Employee Selection Procedures, which provide guidance for avoiding disparate impact claims.

In cases where there is evidence of both a discriminatory, and a non-discriminatory motive, employers may invoke the mixed motive defense. Desert Palace, Inc. v. Costa, 539 U.S. 90, 123 S.Ct. 2148 (2003); Heard v. Lockheed Missiles & Space Co., 44 Cal. App. 4th 1735, 52 Cal. Rptr. 2d 620 (1996). Under the FEHA, it is a complete defense. In Title VII cases, it limits the plaintiff's remedies.

Layoffs Mean Lawsuits

An article in The New York Times on Saturday, January 31, reports on a trend that should come as no surprise -- Layoffs Herald a Heyday for Employee Lawsuits. While the article is concerned chiefly with WARN notification requirements, other statutes pose much greater liability risks for employers who have to let employees go because of difficult economic circumstances. We'll discuss WARN briefly, and then turn to the other statutes.

WARN

WARN is the Worker Adjustment and Retraining Notification Act, a federal statute that requires most employers with 100 or more employees to provide notification 60 calendar days in advance of plant closings and mass layoffs. Failure to comply with WARN makes the employer liable for the pay and benefits during the period of the violation up to 60 days. The court in an enforcement action may also award a prevailing plaintiff his or her attorney's fees. The United States Department of Labor has detailed information about WARN at this web page. California has its own WARN statute that applies to employers with 75 or more employees and defines the circumstances requiring notice somewhat differently. The California Employment Development Department compares the two statutes on this web page.

Wage and Hour Liability

A discharged employee can make easy extra money if his or her employer is not in compliance with the federal and state wage and hour laws. Misclassification of employees, failure to follow the overtime rules, not providing meal and rest periods, and other violations can easily lead to awards in the several thousands of dollars from the California Labor Commissioner. Read our 10 Tips for Avoiding Wage and Hour Violations to make sure that you are in compliance before you discharge any employees.

Discrimination Liability

That anti-discrimination statutes prohibit discrimination based on race, religion, color, national origin , ancestry, physical disability, mental disability, medical condition, marital status, sex, sexual identity, age, and sexual orientation. That means that every discharged employee has at least four characteristics that could form the basis for a discrimination claim.

Further, the prima facie case approach that applies to discrimination lawsuits makes it relatively easy for the plaintiff in a lawsuit to burden on the employer to justify the discharge. All the employee need show is showing (i) that she has a protected characteristic, (ii) that she was performing her job competently; (iii) that, despite her job performance she was discharged; and (iv) that the position remained open to qualified applicants after her discharge. If the employee makes that showing, the employer must prove that it had a legitimate reason for the discharge.

Retaliation Liability

Discharged employees may also file retaliation claims. We have explored the risks of such claims in two previous posts -- August 17, 2008 and November 16, 2008.

To establish a prima facie case of retaliation, the employee need only establish that he or she engaged in protected activity and was discharged, and that there was a causal link between the two. To establish the link, it is enough to show that the adverse action followed closely on the heels of the protected activity. Such a showing then places the burden on the employer to establish that it had a legitimate reason for the adverse employment action.

What Employers Should Do

The key to limiting the risk of liability is to put yourself in a position to be able to prove the legitimate reason for the discharge or layoff. That means if layoffs are necessary for financial reasons, you must be ready to show the financial difficulties and the reasons why those laid off were chosen.

If performance is the reason, follow this advice:

1. Make sure that each employee's personnel file includes a job description acknowledged by the employee. This will avoid disagreement over job duties if an issue arises about an employee's ability to continue working.
2. Develop a set of written performance expectations for each employee. This will avoid an employee's argument after being subjected to adverse employment action that he or she never understood what was expected.
3. Insist on honest annual performance evaluations. This will avoid an employee's argument that nobody ever told him or her that there were performance issues.
4. Document every communication with an employee about performance or misconduct, no matter how minor. This will avoid a possible argument that it never happened.

Religion in the Workplace

Employees do not leave their religious beliefs behind when they go to work. But, those beliefs seldom matter to employers or fellow employees. Where religious beliefs affect dress or appearance, there may be an impact in the workplace. There may be conflicts with the employer's practices and policies or with other employees. Religious beliefs may also have an effect when employees practice their religious beliefs at work. Both Title VII and the California Fair Employment and Housing Act forbid discrimination based on religion, and require employers to accommodate their employees' religious beliefs.

This is what happened in one workplace. A female former software developer sued the defendant temporary employment agency claiming religion discrimination in violation of Title VII. The plaintiff alleged that the defendant denied her promotions because she was not a member of a religious group that the other employees belong to. The plaintiff further alleged that in a period of four years there were five management positions for which she was qualified and that four of those positions went to members of that religious affiliation. The defendant denied the allegations and claimed that the fellowship was not a religion, but a philosophical group and that the plaintiff was not a good choice to boost morale within the software group. The jury awarded the employee $647,174 in emotional distress damages, and $5,900,000 in punitive damages. Noyes v. Kelly Services, Case No. 2:02-cv-02685 (E.D. Cal. April 2008). Read the Ninth Circuit Court of Appeals decision that ordered the case to go to trial here.

Another case illustrates the circumstances under which an employer may limit an employee's practice of her religion at work. A student intern at at the Department of Children and Family Services handed out religious literature during her internship hours at the Department and shared her religious views with colleagues. After becoming concerned that the employee would not be able to separate her religious beliefs about homosexuality and abortion from her work with clients, the Department had the University to place plaintiff in a different internship at another agency. The jury agreed that the employer was right to have the intern placed in a different agency. Escobar v. Los Angeles County Department of Children and Family Services, Case No. CV060917 (C.D. Cal. April 10, 2007).

For further information on employer obligations with respect to religion, consult these sources:

1. Questions and Answers: Religious Discrimination in the Workplace (EEOC)
2. Best Practices for Eradicating Religious Discrimination in the Workplace (EEOC)
3. "Religion" portion of Case Analysis Manual (DFEH)

Retaliation Claims Lurk in Meritless Discrimination Lawsuits

Two recent verdicts from California Superior Court juries illustrate the risk of retaliation liability that arises in the wake of employee complaints about mistreatment. It is not uncommon for employers to prove that a discrimination, harassment or other employment claim lacks merit, only to be held liable because the complainant suffered adverse employment consequences after complaining. An employee who files a complaint in good faith (even if it turns out to be unfounded) is protected from retaliation.



Retaliation Verdicts

In one case, a state correctional officer claimed to have been discriminated against and harassed because of her sexual orientation and disability. She also alleged that her supervisors retaliated against her for complaining about their actions. The jury decided that the supervisors had not engaged in unlawful harassment or discrimination, but awarded the officer $800,000 on the retaliation claim, all for non-economic, that is, emotional distress damages. The court also awarded attorney fees of $442,400 and costs of $60,123. Mootz v. Department of Corrections and Rehabilitation, Case No. 05AS04214 (Sacramento Superior Court 3/27/2008).


In the second case, two sales persons alleged that they had complained to their employer about various wage and hour practices, and were terminated as a result. They recovered a combined verdict of $840,400. Boren v. Global Medical Mobile Diagnostics Inc., Case No. BC356430 (L.A. Superior Court 5/22/2008).



The Law

All employment laws prohibit employers from taking adverse employment action against employees for engaging in protected activity. Protected activity includes complaining about or opposing practices forbidden by the statutes and participating in investigations of prohibited conduct. Adverse employment action includes termination, failure to promote, punitive transfers and other actions that have a material impact on the terms and conditions of employment.



To establish a prima facie case, the employee need only establish that he or she engaged in protected activity and suffered adverse employment action, and that there was a link between the two. To establish the link, it is enough to show that the adverse action followed closely on the heels of the protected activity. Such a showing then places the burden on the employer to establish that it had a legitimate reason for the adverse employment action. If the employer provides evidence of a legitimate reason, the burden shifts to the employee to prove that the given reason was a pretext for retaliation.

A successful plaintiff in a retaliation case may recover any economic loss, damages for the emotional distress from experiencing retaliation, punitive damages (if the retaliation was egregious), and, under most employment statutes, attorneys fees.

What Employers Should Do

To navigate between the Scylla of a large damages award and the Charybdis of not taking action against a poor-performing employee who happens to have complained, employers must adopt good documentation practices. Such practices will prevent corrective measures from boomeranging and exposing the employer to liability.

1. Make sure that each employee's personnel file includes a job description acknowledged by the employee. This will avoid disagreement over job duties if an issue arises about an employee's ability to continue working.

2. Develop a set of written performance expectations for each employee. This will avoid an employee's argument after being subjected to adverse employment action that he or she never understood what was expected.

3. Insist on honest annual performance evaluations. This will avoid an employee's argument that nobody ever told him or her that there were performance issues.

4. Document every communication with an employee about performance or misconduct, no matter how minor. This will avoid a possible argument that it never happened.