Granting Humana’s motion to dismiss, the lower court held that the Plaintiff failed to allege facts sufficient to plead a prima facie case of intentional discrimination, citing to the burden shifting framework of McDonnell Douglas, which is used to evaluate claims of race discrimination based on circumstantial evidence.

Finding the lower court’s holding in direct conflict with Supreme Court precedent, the Sixth Circuit clarified that the McDonnell Douglas paradigm is an evidentiary standard and not a pleading requirement. See e.g., Swierkiewicz v. Sorema, 534 U.S. 506, 510 (2002); see also Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (the application of McDonnell Douglas at the pleading stage is “contrary to the Federal Rules structure of liberal pleading requirements”); Ashcroft v. Iqbal, 556 U.S. 662 (2009). Concluding the Plaintiff tendered more than “naked assertion[s]” in her Complaint and sufficiently pled a pattern of discrimination satisfying Civil Rule 8(a), the Sixth Circuit reversed and remanded the matter for proceedings consistent with its opinion.

This case comes less than a week after the Sixth Circuit handed down its hotly contested decision in Litton v. Talawanda School District, Case No. 10-3559 (June 26, 2012), where it held that once “the case proceed[s] to trial…we are no longer concerned with whether the plaintiff established a [McDonnell Douglas] prima facie case, but instead focus on the actual question of discrimination.” While it is unclear how far the Court will continue to narrow the reach of the burden shifting articulated in McDonnell Douglas, employers should take this as an opportunity to review current practices to determine if such practices cause disparate impact on employees within protected classifications. 

In disparate treatment cases lacking direct evidence of discrimination, courts apply the burden shifting framework from McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), the first step of which requires a plaintiff to establish a prima facie case of discrimination. A critical element of a prima facie case of discrimination is whether the plaintiff, in fact, suffered an adverse employment action. 

Upon receiving the verdict, the District argued that because the Plaintiff failed to prove an element of his prima facie case, the court was required to find no unlawful discrimination. The lower court entered judgment for the Plaintiff, finding once “the case proceed[s] to trial…we are no longer concerned with whether the plaintiff established a prima facie case, but instead focus on the actual question of discrimination.”

The Sixth Circuit upheld the trial court finding it well settled that a court should “disregard a jury’s assessment of [a plaintiff’s] prima facie case and instead focus on ‘the ultimate question of discrimination vel non.’” Citing the Supreme Court’s precedent in Postal Serv. Bd. of Governors v. Aikens, 460 U.S. 711, 715 (1983), as adopted by the Sixth Circuit, the Sixth Circuit concluded that because the jury’s assessment of the Plaintiff’s prima facie case did not control its finding on the ultimate question of discrimination, the district court was “not only permitted to disregard the jury’s answer to the adverse employment action question, it was required to do so, and instead to evaluate the strength of the evidence as a whole.”

So did the Sixth Circuit create a claim for benign discrimination?  It appears so.  In a strongly worded dissent, Chief Judge Batchelder reminded the Court that Title VII does not ban mere discrimination, but only adverse discrimination. This requirement “is not merely some vestigial prima facie element that fades into the background as the case progresses, it is at the heart of the claim itself.” Moreover, the Chief Judge rejected all of the cases cited in the majority opinion, finding that none of the cases support the notion that the “ultimate question of discrimination disregard[s] whether the discrimination was[,] in fact[,] adverse.” Such a holding, the Chief Judge declares, would be “[n]onsensical,” as “[t]he whole purpose of Title VII, as stated clearly by its text and controlling case law, is preventing harmful discrimination, not the lamentable-but-benign discrimination that the jury found Litton experienced.”

While we wait to see whether the Sixth Circuit will reconsider this matter en banc, employers should remain vigilant in documenting employment decisions to help defend against claims of discrimination. At the very least, this best practice may bolster an employer’s chances of curtailing litigation at the summary judgment stage, and prevent a similar post-trial anomaly. 

The Paycheck Fairness Act provision would only have bolstered similar protections existing under the federal National Labor Relations Act (“NLRA”) and certain state laws which bar employers from disciplining employees for discussing pay and benefits.  More specifically, Section 7 (29 U.S.C. § 157) of the NLRA states that employees have the right to "engage in concerted activities", including the right to discuss their terms and conditions of employment with each other.   And Section 8(a)(1) of the NLRA (29 U.S.C. § 158(a)(1)) makes it an unfair labor practice for an employer to deny or limit the Section 7 rights of employees.  These NLRA provisions apply equally to union and non-union employees. 

The State of California is even more explicit about this issue, California Labor Code sections 232 and 232.5 preclude employers from disciplining or discriminating against employees who discuss their pay or working conditions. The statutes also prohibit employers from making it a condition of employment or asking an employee to sign a document that he/she will not discuss pay or working conditions.  Note that these provisions do not mean that employers may not bar employees from discussing trade secret, proprietary or other confidential information by policy or agreement.  They do mean, however, that employers need to consider the source of any discussion of wages – if the source is an employee discussing his/her pay or a co-worker’s because that co-worker voluntarily shared the information, the employees are protected.  On the other hand, if an employee discloses pay information of other employees by improperly accessing or misusing access to private files, employers are in a position to investigate and take action as appropriate.  Employers should review any policies related to discussion of pay, benefits and/or work conditions to ensure compliance with the NLRA and state law. 

For more information, please visit the event website.

For the past seventeen years, courts in the Sixth Circuit required plaintiffs to prove that their disability was the “sole” reason for the adverse employment action taken against them.  However, that changed when the Court handed down their en banc decision in Lewis v. Humboldt Acquisition Corporation, Inc. [pdf].  Relying upon the text of the ADA, the Court in Lewis held that because the ADA prohibited discrimination “because of” disability, the ADA prohibited discrimination that was the “but-for” cause of the employer’s adverse employment decision.

In Lewis, the plaintiff had been employed by the defendant as a registered nurse at one of the company’s retirement homes.  The plaintiff was terminated in March, 2006.  The plaintiff claimed her termination was the result of a medical condition that made it difficult for her to walk and that occasionally required her to use a wheelchair.  The company, on the other hand, stated that the plaintiff was dismissed because of an outburst that occurred at work in which she allegedly yelled, used profanity, and criticized her supervisors. 

The plaintiff sued her former employer alleging discrimination under the ADA.  The case proceeded to a jury trial.  At the close of trial, much debate was had concerning the jury instructions and the appropriate causation standard that should be used.  The plaintiff asked the court to instruct the jury that “if the complained of discrimination was a motivating factor in the adverse employment decision,” the plaintiff should prevail.  The defendant countered, and argued the jury should be instructed that the plaintiff may only prevail if she proved “the fact that [the] plaintiff was a qualified individual with a disability was the sole reason for the defendant’s decision to terminate [the] plaintiff.”  In keeping with prior precedent in the Sixth Circuit, the district court adopted the defendant’s proposed instruction.  The jury returned verdict in favor of the defendant, and the plaintiff appealed.

Interestingly, neither the proposed causation standard advocated by the plaintiff nor the proposed causation standard advocated by the defendant was adopted by the Court.  The plaintiff argued the Court should adopt the “motivating factor” test.  This test is used in other circuits.  However, the Court pointed out that the text of the ADA does not contain the phrase “motivating factor.”  Instead, that phrase appears to be borrowed from the text of Title VII.  The Court dismissed the plaintiff’s argument by noting that it had no license to import a phrase contained in Title VII into the ADA.

Similarly, the defendant urged the Court to remain consistent with prior Sixth Circuit precedent and require that the plaintiff prove that her disability was the “sole” reason for the adverse action.  The Court pointed out that no other circuit has adopted the “sole” basis test, and that the text of the ADA does not contain the term “solely” as the Rehabilitation Act does.  As a result, the Court refused to read the term “solely,” which is found in the Rehabilitation Act into the text of the ADA.

Instead, the Court adopted a “but-for” test derived from the text of the ADA and the United States Supreme Court’s decision in Gross v. FBL Financial Services, 557 U.S. 167 (2009).  The Court concluded that the ADA’s text prohibited discrimination “because of” a disability and that the “but-for” test adopted by the Supreme Court in Gross when confronted with the similar language contained in the Age Discrimination in Employment Act (ADEA) should apply to the ADA. 

This decision will have an impact upon ADA litigation in the Sixth Circuit.  First, this decision could make it easier for plaintiffs to proceed with ADA claims.  The “but-for” standard is not as stringent as the “sole reason” standard, and as a result more plaintiffs could potentially prove their claims.  Additionally, because of the new standard, some uncertainty around how the court will interpret that standard will be present.  It will likely be some time before uniform standards that are clearly understood by all parties are adopted. 

As an employer, this decision means that having documentation to support adverse employment actions involving individuals with disabilities will be more important than ever.  Taking time now to conduct some additional training regarding documentation requirements could save time and money in the future.    

Nonetheless, as previously reported here, recent decisions in the Courts of Appeals have increasingly recognized gender nonconformity in reference to transgender individuals as a form of sex discrimination protected by Title VII, but the courts have stopped short of allowing a claim of sex discrimination based solely on the fact that the individual is homosexual.  

On April 20, 2012, the EEOC also put in its two cents worth and made clear its position on transgender discrimination in a decision which held the following: “[T]he Commission hereby clarifies that claims of discrimination based on transgender status, also referred to as claims of discrimination based on gender identity, are cognizable under Title VII's sex discrimination prohibition.''  In doing so, the EEOC, like the federal appellate courts earlier mentioned, found transgender protection to be an extension of sex stereotyping and gender non-conformity, first recognized in Price Waterhouse v. Hopkins.  

In this claim, Mia Macy, a former soldier and police officer, alleged that she applied for and was offered a position with a government agency, pending a background check.  At the beginning of the employment process, which included an interview, Ms. Macy presented as a male.  However, later, during the background check, the agency discovered that Ms. Macy was transitioning from a man to a woman.  Upon this discovery, the employer informed Ms. Macy that the job was no longer available, but Ms. Macy later found that the agency had hired someone else.  Ms. Macy then filed a formal complaint with the EEOC in which she claimed that the agency denied her employment because of her status as a transgender individual.  In a unanimous ruling, the EEOC recognized Ms. Macy’s claim as valid under Title VII’s prohibition of discrimination based on sex, thus giving her the ability to file a civil action. 

This EEOC decision is a significant development for employers as the administrative agency has set forth its policy on the prohibition of transgender discrimination.  Employers are reminded to make employment decisions based upon performance or requirements of the position and not based upon individuals’ gender.

In this case, the Sixth Circuit focused on clarifying its rejection of the Seventh Circuit’s honest belief doctrine, which states: “‘so long as the employer honestly believed in the proffered reason,’ an employee cannot prove pretext even if the employer’s reason in the end is shown to be ‘mistaken, foolish, trivial, or baseless.’” Wright v. Murray Guard, Inc., 455 F.3d 702, 707-08 (6th Cir. 2006). Instead, the Sixth Circuit has adopted a “modified honest belief approach,” which focuses on whether the employer made a reasonably informed and considered decision before taking the adverse employment action. The Court notes that while it will not “’micro-manage the process used by the employers in making their employment decisions,’ we also will not blindly assume that an employer’s decision of its reasons is honest.’” (Id.) “Therefore, ‘[w]hen the employee is able to produce sufficient evidence to establish that the employer failed to make a reasonably informed and considered decision before taking its adverse employment action’…then any reliance placed by the employer is such a process cannot be said to be honestly held.’” (Id).

Under this standard, the burden falls on the employer to point to specific facts that it held at the time the decision was made, which would justify its belief in the proffered reason for termination. The Sixth Circuit ultimately held that the employer failed to provide sufficient evidence to establish that its reliance was “honestly held.” 

The Court’s opinion puts employers on notice that they will need to do more than simply state an “honest belief” to demonstrate a reasonably informed and considered decision. Thus, employers are best advised to make sure that they are consistently and carefully documenting adverse employment actions and the rationale behind their employment decisions.  

In Berryman v. SuperValu Holdings, Inc. [pdf], eleven plaintiffs brought suit for race discrimination alleging they were subjected to a racially hostile work environment.  The trial court found in favor of the defendants concluding that the events did not rise to the level of a hostile work environment.  The court examined the claims of each employee separately, and “limited its analysis to those events that were either perceived by an individual or that the employee knew about.”  The Sixth Circuit Court of Appeals upheld the trial court’s decision.

On appeal, the plaintiffs argued the trial court should have viewed the plaintiffs’ claims in the aggregate.  The plaintiffs relied upon the Sixth Circuit’s prior decision in Jackson v. Quanex Corp.  In Jackson, the court reversed the trial court’s dismissal in favor of the defendant, and held that a plaintiff was not required to be a party or witness to the harassing events in order to proceed with a claim for a hostile work environment.  The court rejected the defendant’s argument, in part, because it believed limiting claims to only those events that were directed at or witnessed by a particular plaintiff was too restrictive.  Instead, the court instructed that the appropriate test was whether the “totality of the circumstances” created a hostile work environment.   

Although Jackson broadened the scope of conduct that can be considered by a court in determining whether a hostile work environment exists, according to Berryman, it does not expand to include conduct that a plaintiff did not perceive or was not aware of.  Instead, the majority made it clear that while a plaintiff does not need to be the target of harassment, or a witness to the harassment; he must know of the harassment.    

 Berryman’s limitation of evidence on which a plaintiff may rely is significant for employers.  The decision clarifies an earlier Sixth Circuit decision and limits what the phrase “totality of the circumstances” means.  This decision will prevent groups of employees from aggregating allegations for the sole purpose of ensuring they have alleged events sufficient to meet the definition of a hostile work environment.

Although federal law prohibits discriminating against individuals based on gender nonconformity, the federal anti-discrimination statute, Title VII, does not list sexual orientation as a protected class.  Thus, last year, the Sixth Circuit Court of Appeals upheld summary judgment for the employer finding that sexual orientation was not protected under Title VII in Gilbert v. County Music Assn., Inc. [pdf].  In that case, the plaintiff, a homosexual individual, worked as a theater professional organizing award shows.  After he complained that he was threatened by another employee and called a homosexual slur, he alleged that he stopped receiving work.  The court noted that although sex stereotyping is a recognized form of gender discrimination, there was “not a single allegation that anyone discriminated based on his appearance or mannerisms for his gender non-conformity.”  This case highlights that under current federal law, an individual cannot establish sex discrimination based solely on the fact that the individual is homosexual.  However, employers must consider state and local laws regarding such discrimination as an increasing number of them are passing laws and ordinances that protect homosexuals from workplace discrimination and harassment. 

So what should employers take away from these cases?  Employers are best advised to take action based on an employee’s work performance and select the most qualified individual.  Employers should review their policies and procedures including dress code policies to ensure that they are neutral.  Further, employers are encouraged to maintain an environment that supports a diverse culture.

In this case, the Court found that a “called teacher” fell within the ministerial exemption.  The Church regarded called teachers as being led into the vocation by God.  In order to become a called teacher specific academic requirements must be met, including theological study, and the teacher must receive a “call” from a congregation, which allows the teacher to receive the formal title “Minister of Religion, Commissioned.” 

Previously, the Sixth Circuit recognized the ministerial exception existed, but held that the plaintiff was not a minister because her duties were identical to those of “lay teachers” who were also employed by the church. 

Because appellate courts have uniformly recognized the ministerial exception for some time, the Supreme Court’s formal approval of the ministerial exception may not be that surprising.  Perhaps the more interesting question in this case is this: Just who is a “minister”?   

The Court refused to answer this question directly and effectively limited its holding to the specific facts of this case.  The Court stated “[w]e are reluctant, however, to adopt a rigid formula for deciding when an employee qualifies as a minister.  It is enough for us to conclude, in this our first case involving the ministerial exception, that the exception covers [the plaintiff], given all the circumstances of her employment.” 

The decision, however, does take issue with three specific areas of the Sixth Circuit’s decision.  Thus, these areas may provide some guidance for determining whether a specific employee is, or is not, a “minister.”  First, the Supreme Court noted that the Sixth Circuit improperly failed to see the relevance in the plaintiff’s title as a commissioned minister.  Second, the Court noted that the Sixth Circuit gave too much weight to the fact that lay teachers at the school performed the same duties as the plaintiff.  Finally, the Court noted that the Sixth Circuit placed too much emphasis on the plaintiff’s performance of secular duties, noting that the issue presented “is not one that can be resolved by a stopwatch.” 

Although the Court did not provide a clear test as to who is a minister, it does appear that the Court will likely focus on the totality of the job performed by the individual as opposed to focusing its attention on one factor.  But one can presume that the employee’s title, the training or education that the employee received to attain that title, the employee’s job duties, and whether the employee is regarded as engaging in a ministry will be significant.     

What is clear from this decision is that for the first time the Supreme Court has formally recognized the ministerial exception, giving religious organizations the right to select their own ministers without interference from anti-discrimination laws.  As far as predicting just how far this decision will reach . . . stay tuned!  

Assembly Bill 1136: IIPP Update for Health Care Facility Employers (Effective Jan. 1, 2012):  AB 1136 [pdf] requires a health care facility employer to update its injury and illness prevention programs to adopt and include safe patient handling policies meaning that the IIPP should include patient protection and health care worker back and musculoskeletal injury prevention plans.

Assembly Bill 22:  Limitations on Employee Screening in Employment (Effective Jan. 1, 2012):  Previously, California law generally allowed employers to request credit reports for employment purposes so long as written notice was presented to the applicant or employee for whom the report was sought.  AB 22 [pdf] now prohibits employers and prospective employers from using consumer credit reports to screen applicants or to make other personnel decisions.

Eight positions are exempted from this requirement including certain financial institutions, managerial positions (those which qualify for the executive employee overtime exemption), law enforcement positions, positions that involve sensitive information or access to $10,000 or more of cash including where the employee would be a named signatory on the employer’s bank or credit card account or otherwise be an agent in financial transactions, and positions for which credit information is otherwise required by law to be disclosed or obtained. If an exception applies, the employer must provide the employee or applicant with written notice specifying the basis for requesting the report, informing the person of the source of the report, and providing a box to check to request a free copy of the report.

Senate Bill 757: Discrimination in Health Insurance for Domestic Partners (Effective Jan. 1, 2012):  Under the California Insurance Equality Act, insurance companies must provide the same coverage for registered domestic partners as for spouses. SB 757 [pdf] closes a gap in that law as, for the past several years, out-of-state policies issued to employers who maintain their principal place of business and the majority of employees outside the state did not provide the same benefits to registered domestic partners.  Now, every group health insurance policy provided to a California resident, regardless of where the contract is entered into, must offer equal coverage for spouses and registered domestic partners.

Assembly Bill 1236:  Limits on Employer Use of E-Verify (Effective Jan. 1, 2012):  Under AB 1236 [pdf], the “Employment Acceleration Act of 2011”, California employers cannot be required by a state, city, county, or special district, to use a federal electronic employment verification system (specifically E-Verify) to verify their employees are authorized to work in the United States in order to receive a government contract or obtain a business license, or as a penalty for violating licensing laws.  There are certain exceptions, for instance when the employer is required by federal law to use E-Verify or as a condition of receiving federal funds.  The stated purpose of the law is to save employers costs and expenses.

Assembly Bill 1401: Minors in the Entertainment Industry (Effective immediately):   Currently, the labor commissioner must furnish his or her written consent in order for a minor under the age of 16 to participate in certain projects.  AB 1401 [pdf] establishes a temporary work permit program for minors in the entertainment industry, to be administered by the Labor Commissioner, that allows the parent or guardian of a minor performer to obtain a temporary permit for the minor's employment under certain circumstances.

And A Few Were Actually Vetoed!!   Some may find it instructive to see some key bills the Governor did veto.  Probably most notable was AB 325, a bereavement leave bill that would have prohibited employers from refusing to grant employees up to three days of unpaid bereavement leave.  The Governor noted that the vast majority of employers already voluntarily provide such unpaid leave, but codifying the practice would have created yet another private right to sue.  Similarly, the Governor vetoed SB 931, which would have authorized payment to employees using a payroll card on the ground that the law would have created costly, complicated new requirements for use of payroll cards by employers.  The Governor also vetoed AB 267, which would have made choice of law provisions in employment contracts void as a matter of public policy, on the ground that California law already prohibits application of laws that substantially diminish California employees' rights.

Senate Bill 299 and Assembly Bill 592:  Additional Pregnancy Disability and Leave-Related Protections  (Both effective Jan. 1, 2012):  Under current law, employers (with five or more employees) must allow female employees to take Pregnancy Disability Leave (“PDL”) for a reasonable time of up to four months. An employee is entitled to PDL where she is disabled by pregnancy, childbirth, or a related medical condition. Under SB 299, which amends Government Code Section 12945, employers must maintain and pay for group health plan coverage during the entire time that an eligible employee is on PDL.  Coverage must be at the level and under the conditions as would have been provided had the employee not gone on leave.   Employers can, however, recover from an employee the health care premiums it paid if the employee fails to return from leave, so long as failure to return is not due to the employee taking leave under the California Family Rights Act (“CFRA”) (which provides for family care and medical leave), or due to circumstances beyond the employee’s control. 

AB 592 [pdf] makes it an unlawful employment practice for employers to “interfere with, restrain, or deny an employee’s exercise of, or the attempt to exercise, any rights” provided by the CFRA or PDL laws.  The legislature determined these protections were important because, as currently written, neither the CFRA nor the PDL laws explicitly prohibit employers from interfering with an employee's right to take a leave of absence or otherwise exercise their rights under those laws.  At bottom, AB 592 is largely “declaratory of [] existing law”, as it has been generally understood that an employer’s obligation to provide mandated leave includes the parallel obligation not to somehow interfere with the employee’s right to take mandated leave.  

Senate Bill 272:  Leave for Donors  (Effective immediately): Prior law, enacted only last year, (SB 1304) required employers with 15+ employees to grant a leave of absence to an employee who is an organ donor (up to 30 days in a one-year period) or a bone marrow donor (up to 5 days in a one-year period).  SB 272 [pdf] clarifies that the days of donor leave are business days, not calendar days, and may not be considered a break in continuous service for purposes of annual leave, vacation, salary adjustments, seniority or the like.  The one-year period is calculated from the date the leave begins.  As an initial condition of granting leave, the employer may require the employee to use a certain specified number of days of earned and unused sick leave, vacation or paid time off:  up to 5 days for bone marrow donation and up to two weeks for organ donation.  The law states that it is declaratory of existing law, so employers are advised to being to comply immediately.

Senate Bill 559:  Discrimination Based on Genetic Information (Effective Jan. 1, 2012):  SB 559 [pdf] amends the Fair Employment and Housing Act (“FEHA”), among other laws, to prohibit discrimination based on “genetic information”, defined as: the individual employee's genetic tests, the genetic tests of the employee's family members, and the manifestation of a disease or disorder in the employee's family members.   The law, including its definition of “genetic information” is generally consistent with and tracks the recently-enacted federal Genetic Information Non-Discrimination Act of 2008 (“GINA”), however it has broader application because it also prohibits discrimination in other non-employment related areas such as housing, business services, licensing qualifications, mortgage lending, life insurance coverage and the like.  Check to ensure your GINA-related discrimination policy updates are also compliant with this new California law.

Assembly Bill 887:  Discrimination Based on “Gender Identity” (Effective Jan. 1, 2012):  AB 887 [pdf] also amends the FEHA to redefine the definition of “gender” and thus explicitly prohibits discrimination based on “gender identity” or “gender expression.”  “Gender expression” is defined as “a person’s gender-related appearance and behavior, whether or not stereotypically associated with the person’s assigned sex at birth.”   AB 887 requires employers to allow gender expression related dress, meaning employers must allow employees to dress or appear consistent with that employee’s gender identity and gender expression (although it does not limit an employer’s ability to impose reasonable workplace appearance, grooming, or dress standards).  It prohibits gender-related employment violence.  Employers are best advised to review and update employee handbooks including the discrimination and dress policies as well as provide additional training to supervisors and managers regarding application of policies in light of this law.

Thirty-five African-American patrol officers filed suit alleging, in relevant part, that a sergeant’s exam had a disparate impact under Title VII of the Civil Rights Act of 1964 (“Title VII”), causing a failure to promote minority officers. Although the District Court found the sergeant’s exam valid and reliable, the Court found a violation of Title VII because less discriminatory alternatives were available. The Court ordered all minority plaintiffs to be promoted to the rank of sergeant.

In August 2007, the City announced that it would hold a make-up promotional exam for the rank of lieutenant. The plaintiffs moved for a preliminary injunction, requiring the City to allow them to take the exam, even though they had not actually held the position of sergeant for two years. The District Court granted the injunction based upon its finding of prior discrimination, which it deemed an “exceptional circumstance.” The Sixth Circuit affirmed the injunction finding, in relevant part, the plaintiffs would suffer irreparable injury, namely, the loss of valuable work experience and opportunities to compete for other promotions.

The Sixth Circuit’s ruling offers two pearls of wisdom for employers:

• First, employers should carefully review their promotional process to determine whether there is an unanticipated effect of excluding minority candidates.
• Second, consider whether other less discriminatory alternatives are available and whether any process needs to be amended.

Due to the potential legal ramifications, employers are best advised to consult with legal counsel to evaluate a current promotional process or when implementing a new promotional system.

For a more detailed summary of Johnson v. City of Memphis, please check out the Squire Sanders Sixth Circuit Appellate Blog. 

The general background facts include:  in 2001, the action was filed in California federal district court with the named plaintiffs seeking to represent approximately 1.6 million past and present female Wal-Mart employees at the company's 3,400 stores nationwide.  The plaintiffs claimed that Wal-Mart discriminated against women in pay and promotion decisions.  Namely, the discretion given by Wal-Mart to local managers over pay and promotion decisions was alleged to have disproportionately favored men, thus having a disparate impact on women.  The plaintiffs did not allege that Wal-Mart had any express corporate policy against the advancement of women.  However, they did contend that Wal-Mart's alleged failure to rein in the discretion of its managers amounted to disparate treatment of women.  The district court ruled in favor of class certification, finding Wal-Mart "acted or refused to act on grounds that apply generally to the class."  Wal-Mart appealed to the Ninth Circuit, which affirmed the district court's class certification [pdf].  Wal-Mart petitioned the Ninth Circuit for rehearing en banc and, in April, 2010, the en banc court again affirmed [pdf] the district court's class certification.  Wal-Mart appealed to the U.S. Supreme Court.  On June 20, 2011, the Supreme Court found in Wal-Mart's favor [pdf], ruling the class action could not proceed as then framed.  Among other technical reasons, the Supreme Court found that plaintiffs had failed to establish that Wal-Mart operated "under a general policy of discrimination."  Wal-Mart's "policy" of handing discretion to local managers could not establish commonality because, given the size and geographical scope of Wal-Mart, and absent some common policy or direction, it was unlikely that all managers would exercise their discretion in a common way.  Because plaintiffs failed to demonstrate the 1.6 million female employees had much in common other than "their sex and this lawsuit", the Supreme Court found the action was not properly litigated as a class action.  The case was remanded back to the California district court where it was first filed back in 2001.

As to be expected, just last week the plaintiffs filed a Fourth Amended Complaint in the district court.  The complaint has been updated with the intent of bringing the scope of the class, as it is defined in the complaint, into accordance with the commonality guidelines set out by the U.S. Supreme Court.  The complaint thus substantially narrows the class.  No longer framed as a nationwide class action, the named plaintiffs now only purport to represent women working in California's 220 Wal-Mart and Sam's Club stores between 1998 and through at least June 2004 if not later (Sam's Club being a division of Wal-Mart).  This class is estimated to be about 90,000 female employees -- a significant decrease from the initial 1.6 million class yet a size that we can expect Wal-Mart will continue to argue is unmanageable large. 

The plaintiffs continue to allege that, as to female employees working in its California stores, Wal-Mart "maintained a pattern or practice of sex discrimination in compensation and promotion and that its compensation and promotion policies and practices had a disparate impact not justified by business necessity on its female employees."  Plaintiffs' counsel has gone on record [pdf] stating the complaint was amended to not only narrow the class but also to add allegations based on newly discovered information and statistical analyses showing a consistent pattern of discrimination in pay and promotions through California.   For instance, the amended complaint alleges that in January 2004, the then-CEO of Wal-Mart, Thomas Coughlin, told Wal-Mart's district managers at a meeting that the key to success was a "single focus to get the job done .  . . [and] women tend to be better at information processing.  Men are better at single-focus objective."  He then allegedly instructed the managers to create a "culture of execution" and "culture of results" as they picked their “future leaders.”  This, of course, is meant to establish a "general policy of discrimination" that was orally communicated from the top down to district managers.  The suit, as before, seeks back pay and punitive damages for the class members as well as injunctive relief.

Plaintiffs' counsel is expected to file similar lawsuits around the country.  Stay tuned.  Wal-Mart has stated it does not believe that plaintiffs have cured the defects found by the Supreme Court.  We anticipate it is likely that class certification issues in this case will again be presented to the Ninth Circuit, in which case, we may get further clarification on standards for class certification. 

Many employers desire to contest unemployment claims while keeping costs down by utilizing the company's managers or human resources department to handle the unemployment proceedings.  However, in light of the economy and increased attention to the unemployment proceedings, employers should carefully consider the individual circumstances for each claim when making this decision.  

It is becoming more common for attorneys who are considering filing a lawsuit on behalf of unemployed individuals to be involved at the unemployment proceedings resulting in more adversarial proceedings.  These attorneys utilize the proceedings to obtain free information or discovery about the employer before filing lawsuits alleging such claims as discrimination or retaliation.  During the proceedings, they can interrogate and assess the company's witnesses at hearings scheduled before the unemployment agency.  Thus, before contesting unemployment and proceeding through the administrative process particularly putting forth witnesses at any hearings where attorneys can question witnesses, employers are best advised to consult with legal counsel particularly when the former employee is in a protected class (e.g., age, race, gender) or engaged in protected conduct (e.g., whistleblower activity, made complaints of discrimination). 

In a case of first impression, the Sixth Circuit recently affirmed that a volunteer may constitute an “employee” under Title VII. Expressly rejecting the Second Circuit’s two-step test, which requires a putative employee to make a threshold showing of remuneration before a court may determine whether an employment relationship exists  under the common-law agency test, the Sixth Circuit distinguished itself from the Second, Fourth and Eighth Circuits by holding that “significant remuneration” is  only one factor that must be weighed along with all aspects of the employment relationship.

This case is significant as it demonstrates the Sixth Circuit’s willingness to throw volunteers into the employee tally, expanding the range of “employers” that may fall under the purview of Title VII.  So will this result in employers treating volunteers more like employees (e.g., conducting performance reviews)?  Only time will tell, but employers are best advised to  look beyond their payroll records and instead examine the degree of control that they are exercising over the individual and the work that is being accomplished. For more information on the case, visit Squire Sander’s Sixth Circuit blog.

The legislation, Int. No. 632-A, essentially makes it more difficult for New York City employers to prove that a particular religious accommodation presents an “undue hardship” in order to decline providing the accommodation. Under the new law, an “undue hardship” means “an accommodation requiring significant expense or difficulty (including a significant interference with the safe or efficient operation of the workplace or a violation of a bona fide seniority system).”  The legislation lists factors to be considered when determining whether or not an accommodation constitutes an undue hardship:

• the identifiable cost of the accommodation, including the costs of loss of productivity and of retaining or hiring employees or transferring employees from one facility to another, in relation to the size and operating cost of the employer;
• the number of individuals who will need the particular accommodation to a sincerely held religious observance or practice; and
• for an employer with multiple facilities, the degree to which the geographic separateness or administrative or fiscal relationship of the facilities will make the accommodation more difficult or expensive.

The law does provide that an accommodation would constitute an undue hardship if it would result in the inability of an employee to perform the essential functions of the position in which he or she is employed.

The law is part of New York City’s Human Rights Law, which is enforceable by the New York City Human Rights Commission. New York City employees also may sue employers under the law directly in court.

The legislation is currently on Mayor Bloomberg’s desk and is awaiting his signature. He has indicated he intends to sign the legislation, and it will then go into effect immediately.

Unemployment rates continue to rise resulting in more out-of-work individuals searching for employment and having a difficult time finding work.  Earlier this year, the Equal Employment Opportunity Commission held a meeting examining employers’ treatment of unemployed candidates.  During the meeting, Christine Owens of National Employment Law Project testified that various employers are blatantly discriminating against unemployed job seekers.  As reported by Adam Cohen in Jobless Discrimination? When Firms Won’t Even Consider Hiring Anyone Unemployed, some companies have posted job announcements specifically stating “no unemployment candidates will be considered at all.” 

Is it illegal to exclude unemployed individuals?  No, at least not yet.  Under federal law, employers are prohibited from discriminating against applicants based on age, disability, race, color, religion, sex, or national origin.  But employers can refuse to hire a candidate based on job status. 

That may all change if the Fair Employment Opportunity Act of 2011 (H.R. 2501), introduced earlier this month becomes law.  The bill would make it illegal for employers to refuse to hire a person because of employment status. 

Regardless of the bill’s passage into law, employers are best advised to make employment decisions based on the most qualified individual and not exclude individuals based simply on their employment status. 

It was recently reported that Michel Barnier, Europe’s Internal Markets Commissioner, would like to impose mandatory quotas dictating that membership of the managements boards of banks should be at least a third female.  However, if UK companies were to introduce such quotas at present they would certainly fall foul of discrimination laws. So, if employers wish to increase the representation of women, even to positively discriminate, how can they best go about this without discriminating against men?

The Equality Act 2010 introduced new rules dealing with positive discrimination, which apply where certain groups are under-represented in the workforce.  Since April 2011, employers have been able to take positive action in recruitment and promotion. Where there are two applicants for a role or promotion who are of equal merit or are equally qualified – this is sadly undefined – the employer is entitled (but not obliged) to choose the person from the under-represented group for the role.

Of course, it very is unlikely that an employer will ever have two candidates between whom it has no preference at all, especially at senior levels where the inequalities are said to be greatest. Therefore selecting on the basis of sex (or race, religion, etc.) will almost always carry a risk that the person not selected claims discrimination even if he comes from an over-represented group and even if the selection of the other was with the best possible motives. The new rules do not permit you to boost your diversity statistics by recruiting a minority candidate (whether by virtue of his race, age, religion, etc.) whom you do not believe to be the best person for the job.

So, be clear on your reasoning before you make your decision – am I recruiting this woman because she is equally as qualified as the man but women are under-represented or because she is actually the better candidate? The two positions are totally incompatible, so no jumping from one horse to the other mid-claim is possible.

At present, the steps UK employers can safely take are therefore limited and unlikely to make a significant difference. It may be that, above all, it is a cultural change that is needed.  It is hoped that Lagarde’s appointment is evidence that such a change is taking place (albeit slowly). As sage of our times, Lady Gaga, said: "Some women choose to follow men, and some women choose to follow their dreams. If you're wondering which way to go, remember that your career will never wake up and tell you that it doesn't love you anymore." If only it were true.

According to the recent Employment Tribunal case of Jain v Teachers 2 Parents Ltd, and to no-one’s very great surprise, asking employees of ethnic origin to anglicise their names for business usage is capable of amounting to race discrimination. The case was brought by Indian-born Rahul Jain. On his first day of employment as a telesales operative for Teachers 2 Parents Ltd, Mr Jain and other inductees of ethnic origin were asked by the manager to change their name whilst at work to make them more anglicised. It was explained that emails to employees with names that were more difficult to spell had apparently gone missing.

Mr Jain reluctantly agreed to be called Rob. Other Asian employees at the company also adopted aliases: Mehul became Max; Faizal became Fred; Sarbjit became Sally; and curiously, Prankhash adopted the moniker of Terry. When he was dismissed for redundancy, Mr Jain brought a claim for race discrimination as a result of his being required to change his name in this way.

The Tribunal ruled that putting pressure on an employee to change his name to something “English” did indeed amount to direct discrimination. It found that the Company would not have required an employee with a ‘tricky’ Western name (such as Siobhan or Ian/Iain or any one of the multitudinous permutations of Alistair/Alasdair/Alisdair etc.) to change his/her name. Therefore the Asian employees were being singled out for less favourable treatment only because of their ethnic origin. The practice of requiring staff of ethnic origin to adopt an anglicised name could also amount to indirect discrimination as, on similar grounds, it was not thought by the Tribunal to be a proportionate means of achieving a legitimate aim, i.e. of reducing the number of emails that went astray.

The correct use of an employee’s name is vital to building the employer/employee relationship. Getting that name repeatedly (and perhaps deliberately) wrong, asking him to change his name or imposing a ‘convenience nickname’ could in some circumstances cause a breakdown in trust and confidence, entitling the employee to resign and claim constructive dismissal. If race, sex or any other protected characteristic under the Equality Act 2010 is a causative factor, as in Mr Jain’s case, the employer may also face discrimination claims. It is no defence that the employer meant no offence with this practice or did it only “for the good of the business”.