The employment claim that keeps on giving – Vaughan v London Borough of Lewisham

By Sarah Wilkinson on Posted in Litigation

In the latest episode of this thrilling claim the EAT has upheld a rather hefty costs order against Ms Vaughan. For those of you who may have missed the first couple of episodes, let’s go back to the beginning.

Ms Vaughan appealed against the Employment Tribunal’s ruling that 39 hours’ worth of covert recordings of her employer’s meetings with her were inadmissible as evidence (see our post of 14 March).  She was eventually allowed to submit only a ‘Best of’ as evidence, which was still around 5 hours long and, as the Tribunal had the grace not to say, probably sufficient to induce narcolepsy in horses.

Next Ms Vaughan, obviously developing a taste for litigation, claims at the High Court for libel under the Protection from Harassment Act 1997 on the alleged basis that her colleagues had made defamatory statements about her which amounted to harassment and had thereby caused her to be dismissed.

The High Court held that that there were “cogent considerations in favour of the ET proceedings being dealt with first“, including that the Tribunal was the obvious place for the resolution of claims relating to employment and (more selfishly) that they didn’t want Ms Vaughan to use the High Court as a means to circumvent the Tribunal’s ruling and air her 39 hours’ worth of covert recordings after all.  One suspects that the Hon Mrs Justice Sharp was not unhappy to conclude that it would be “just and convenient” for the Tribunal to continue with the claim.  Ms Vaughan also tried to obtain an injunction to prevent the Respondent’s witnesses from making statements in the Tribunal that would amount to libel or harassment – this too was refused.

Ms Vaughan having failed on all counts, a brave Tribunal Judge exercised his discretion and made a costs award against her for a whopping £87,000. Ms Vaughan appealed the decision on a number of points including that a deposit order had not been sought, a costs warning letter not issued, she was unrepresented and (my particular favourite) that the Respondent witnesses had committed perjury.

During the hearing Ms Vaughan claimed that there was a mass conspiracy within the Respondent organisation, but sadly she had absolutely no evidence to support this. All in all, the Tribunal could do nothing but find that her claim was so wholly misconceived that a costs order should be made. The EAT agreed (some might say it’s a conspiracy…).

Upholding the Tribunal’s decision, the EAT found that whether or not the Respondent had made an application for a deposit order or put the Claimant on notice that she could be liable for its costs was, in this instance, irrelevant. The key factor seemed to be that even if a costs warning letter had been issued to Ms Vaughan, she was so entrenched in her position that it would not have “caused the scales to fall from her eyes“. Ms Vaughan’s rejection of a staggering £95,000 offer of settlement (for which she is probably now kicking herself) does rather hint at the fact that she was going to take it all the way, whatever the cost, or indeed the merits, of her claim.

The EAT found that a Claimant being unrepresented in a claim should indeed be a relevant consideration for the Tribunal when exercising a costs discretion. However, in this case it was not the Claimant’s lack of ability as a litigant in person that meant that she had pursued her flawed claim but “her fundamentally unreasonable appreciation of the behaviour of her employers and colleagues“.

It must be said that the EAT has made a sensible decision, however harsh it might seem to some. Claimants should not be immune from costs orders just because they are unrepresented. Neither should it be the responsibility of the Respondent’s solicitor to advise the Claimant of the merits of the claim or make an application for a deposit order, which could by itself prolong the matter and increase costs, just to reiterate that the claim has little prospect of success.

This case does not of course mean that employers facing weak Tribunal proceedings should be rubbing their hands with glee and taking their lawyers out for lunch whilst the clock keeps running (though of course I wouldn’t want to discourage this), all in the belief that the Claimant will pick up the tab. This case was very fact-specific and Judges will generally be sympathetic to a Claimant – but it is a reminder that Claimants cannot pursue unmeritorious claims with the complete impunity which the Press sometimes suggests.

So what next for the beleaguered Ms Vaughan? She has some claims which remain outstanding although I suspect she might now more seriously consider any settlement offers which come her way.  Rumours that John Grisham wants to write the screen play and Judi Dench has her eye on playing the Hon Mrs Justice Sharp are entirely untrue. Probably.

Why you should recruit entitled narcissists

By Squire Patton Boggs on Posted in Recruitment

Why should you seriously consider recruiting overconfident, entitled narcissists who still live with their parents, variously dubbed ‘Generation Y’ or the ‘New Millennials’?.   This is the generation of teens and twenty-somethings who have lived with new media from the start and have no fear of creating a near-celebrity persona online using YouTube, Facebook and Instagram.   What possible use could a professional business have for such people?

Here’s something to think about – this new generation is raised to have high self-esteem (hence the link to narcissism), and tends not to respect the traditional approach to hierarchy, either in general society or in particular, the workplace.   How do you employ and manage this generation?  And, given your other employees with varying ages and expectations of their colleagues, how do you manage the multiple generations’ different and potentially conflicting needs, wants and expectations and get the best performance from all of them?

Let’s examine expectations.  If we think about our young narcissists, then with high self-esteem come high expectations.  The question is – can today’s workplace live up to these high expectations?  “This generation has the highest likelihood of having unmet expectations with respect to their careers and the lowest levels of satisfaction with their careers at the stage that they’re at. It is a sort of crisis of unmet expectations.” says Sean Lyons, co-editor of Managing the New Workforce: International Perspectives on the Millennial Generation, cited in Time Magazine.  A friend working in professional services told me recently that when he is recruiting new graduates, he has noticed that the candidates in fact seem to think that they are interviewing him, grilling him about flexible working, the type of projects they can expect to work on, etc.  All take, take, take – a recipe for rapid mutual disenchantment, one would think, especially given the risk of the generations making factually accurate but nonetheless derogatory and unlawful remarks about each other (see our 14 June post).

Now let’s consider communication.  Generation Y interacts everyday with its peers and the wider world through mobile phone and screen.  How will its members get on with other employees and managers who prefer more formal and/or traditional face-to-face interaction or when they are tasked with running a project that requires more intimate and complex communication to motivate a team?  Will they respect boundaries and not share too much information about work or what they really think about their boss?  Freedom of expression is one thing, professional incontinence quite another.  One look at employer-review site glassdoor.com suggests a new level of transparency is growing around us, and we can’t control it.

The danger in all this is that we may see and accentuate only the negatives, coming across like Squadron Leader Disgusted DFC (retd.) of Tunbridge Wells, rather than search for and develop the positives about Generation Y and its shift in expectations.

On the plus side, we all need renewal, new ideas, a fresh perspective on things and innovation to improve on what we have today.  And then there’s the established business case for diversity in the workforce.  Not only fresh thinking but reflecting the customer base is important, particularly if a company wants to hold onto or grow its market.  On the other hand we also need experience, knowledge and skills so that inexperienced employees can be trained and developed.  Otherwise they may be in danger of repeating avoidable mistakes or breaching some critical compliance regulation through sheer lack of thought, imagination or learning.

Like good coffee or whisky, the key is all in the blend – the alchemy of producing a diverse workforce to maximum effect and performance rather than something bitter, tasteless or actively toxic.  The answer is the same as it ever was – management and leadership.

Excellent leadership can draw out the positives.  For example, Generation Y types are more likely to get frustrated if they feel they won’t be able to meet their expectations in the workplace.   What if the frustration is actually a symptom of drive, to achieve more, maybe to set up new businesses and ideas, particularly online?   Their challenging (or challenged, depending on your perspective) work ethic and confident pushiness may mask not a troublesome employee but a creative genius, and you know what differentiates a genius from talent – “Talent hits a target no one else can hit, but genius hits a target no one else can see” (Arthur Schopenhauer).  Therein lies the risk – just because we can’t always immediately see an opportunity does not mean it’s not there.  A good leader will see the opportunity presented by a careful mix of ages in the workforce and not just the potential problems.

To sum up, and regrettable though it may be, the new generation is the next step in the evolution and adaption of the species to the workplace.  It won’t go away and you can’t escape it.  If it cannot thrive or survive in your workplace it will do it somewhere else or just set up its own.  Any organisation that needs drive and innovation needs a diverse and blended workforce supported by sensible policies and reward and behaviour frameworks that encourage performance regardless of age or generation.

Blog Post Feedback – MANY THANKS

By David Whincup on Posted in Recruitment

I was very pleased to receive one of this blog’s first printable comments on our Penguin/Sombrero piece last week.  It is always reassuring to know that there are real readers out there!   Previous comments have included one ferociously racist in nature and a series of gently commendatory remarks which turned out to be spam for a loans company.

Nick the Employment Lawyer says in his comment that he would advise clients against asking the sort of odd-ball interview question referred to in our post “because the answers do not appear to be reasonably related to any legitimate business objective”.  They represent “pop psychology” of possible value only to professionals in the field and but not to most employers.  Nick notes that per my post, the factually correct answer to the chicken question (“I don’t know”) may actually be disqualifying.

Up to a point, I fully agree with Nick, but not beyond that point.  The questions are pop psychology, but no more so than other tests of verbal or visual reasoning which employers sometimes impose.   This is not a case where fine degrees of difference in the answer will lead to different outcomes, for example, as in MBTI and other psychometric tests which do indeed need to be unravelled or interpreted by a specialist.  These are unquestionably much blunter instruments than those scientific approaches, but I do not see why, in roles where personality matters (or indeed in a law firm), there should not be some form of test of that personality.  You can know all the law in the world but if you cannot apply it practically, you freeze when faced with an unknown or you are simply too dull in your demeanour to be allowed to talk to clients, the job I was dealing with was not for you.  Ascertaining a candidate’s likely “fit” in that sense is in my view a legitimate business objective.  “Define chicken” is so far away from any sensible answers to that question that it does shed an instant and terminally unflattering light on that candidate.  On the other hand, no-one would suggest (I do not, at any rate) that millimetrically different approaches to having a proper go at actually working out the answer could or should be used as the determinant of interview success or failure.

That does not mean that you cannot obtain any useful insight into the candidate by going a little off-piste in your questions.  The key, as I said, is to make a note of what led you to that insight.   Without notes, Nick is right – you then have your selection decision hinging upon a superficially irrelevant question to which you cannot remember the answer or what it told you about your candidates, and that is indeed a recipe for disaster.

Thank you for dropping us a line, Nick.   I appreciate your time in doing so.

Bright-line Rules Issued by US Supreme Court in Title VII Retaliation and Harassment Cases

By Squire Patton Boggs on Posted in Harassment, Recent Cases, Retaliation

On June 24, the Supreme Court issued two significant, employer-friendly decisions which effectively raised the bar for employees pursing retaliation and harassment claims under Title VII.

University of Texas Southern Medical Center v. Nassar

In a sharply divided 5-4 ruling, the Court held in University of Texas Southern Medical Center v. Nassar, No. 12-484 that the “but-for” standard applies to retaliation claims under Title VII. At issue was whether the amendment to Title VII in the Civil Rights Act of 1991 that permits liability to be established in status-based discrimination claims by merely proving that “race, color, religion, sex or national origin” was a motivating factor for any adverse employment action or practice also applies to retaliation claims asserted under Title VII. The Court said no, explaining that in Title VII retaliation claims, plaintiffs must establish traditional “but-for” causation—in other words, that the employer’s allegedly retaliatory decision would not have been made had it not been for the alleged protected activity or discriminatory intent (e.g., the employee would not have been passed over for promotion had she not complained about gender discrimination in the workplace). The Court supported its decision by looking directly at the language of the 1991 provision that expressly extends to claims only of “race, color, religion, sex or national origin” and opined that had Congress intended to extend its “motivating factor” analysis to retaliation claims, as opposed to only the enumerated status-based claims, it would have expressly done so. The Court also looked at the real-world practicality that endorsing a lower standard of causation would only result in an even further exacerbation of an already ever-increasing number of retaliation claims filed in the recent years. In dissent, Justice Ginsburg fervently urged Congress to overturn the majority decision and to apply the same “motivating factor” analysis as status-based discrimination claims to Title VII retaliation claims.

Vance v. Ball State University

In another closely divided majority, the Court in Vance v. Ball State University, No. 11-556 endorsed a narrowly tailored definition regarding who is considered a “supervisor” for purposes of Title VII harassment claims. Here, the Court had to determine whether the “supervisor” liability rules established in earlier precedent applies to harassment by anyone the employer vests with the authority to direct and oversee the complainant’s daily work, or it if only applies to those alleged harassers who have the power to take tangible employment actions (such as hiring, firing, promoting, disciplining, etc.) against the complainant. The Court held that a “supervisor” is only defined as the latter—a person who merely has the authority to direct and oversee the complainant’s daily activities is not a supervisor for purposes of Title VII’s vicarious liability provisions. This decision is of critical importance because the Court has long established that an employer can be automatically liable for the harassing actions of a “supervisor” whereas, for co-worker harassment, an employer is only liable if it was negligent in preventing the alleged harassment. Justice Ginsburg for the dissent again argued that this ruling ignores the Court’s prior broad definition of “supervisor” and diminishes the Court’s prior decisions regarding the scope of an employer’s liability.

Seen as wins for employers, these rulings will make it more difficult for plaintiffs to prove their cases and provide further solid support for employers to seek summary judgment in retaliation and harassment claims. More importantly, employers now have clearer bright-line rules that will allow greater guidance in making legitimate business decisions as they navigate through today’s sometimes treacherous employment landscape.

U.S. Supreme Court Upholds Class Action Waiver in Arbitration Agreement

By Daniel Pasternak on Posted in Class Action, Recent Cases

In a much anticipated follow-up to its 2011 decision in AT&T Mobility, LLC v. Concepcion, the U.S. Supreme Court held that a class action waiver in a commercial arbitration agreement between American Express and merchants who accept its charge cards is enforceable under the Federal Arbitration Act, even if the costs the individual merchants would incur to pursue their individual antitrust claims would exceed any potential individual recovery.  Although the case arose in a non-employment context, the decision has significant ramifications in the workplace.

The plaintiff merchants argued to the Court that enforcing the class action waiver in the arbitration agreement would effectively preclude them from vindicating their rights under federal antitrust law due to the financial disincentive imposed by individual arbitration.  Writing for the majority, Justice Scalia rejected that argument, explaining that absent a “contrary Congressional command” requiring the Court to reject the class action waiver – which the Court determined was not present in the Federal Arbitration Act – the Court would not invalidate the parties’ contractual agreement to arbitrate claims solely on an individual basis.  The Court additionally rejected the merchants’ “effective vindication” argument based on those cost of individual arbitration relative to the potential recovery – an argument frequently advanced by plaintiffs at both the state and federal level – explaining that the “effective vindication” exception to enforcement of contracts applies to situations where the contract imposes a  prospective waiver of the party’s right to pursue the claim.  A class action waiver does not interfere with the right to pursue a claim, the Court explained, but instead limits the arbitration to the two contracting parties.

As noted above, the American Express case arose in the commercial context.  But the Court’s holding, along with its reaffirmation of the principles it explained in Concepcion, strongly suggests, if not establishes conclusively, that a class action waiver in an arbitration agreement between an employer and an individual employee will be enforced.  Employers thus have been provided a clear signal that deploying these waivers as a means to manage risk associated with potential class discrimination, wage and hour, employee benefits, and other employment-related claims will be enforced and pass judicial review.

How EU are you? UK Immigration and the ‘beautiful game’

By Squire Patton Boggs on Posted in Business Immigration

Sky News recently trumpeted that according to an ‘exclusive’ poll by professional research company Survation, the UK is currently split right down the middle over EU membership. When asked ‘Do you think that the UK should remain a member of the European Union?” it said, 51% of those polled said NO and 49% said YES. Oddly, even though Survation’s own website describes this as a “statistical dead heat”, www.PoliticsHome.com states that the poll “makes it clear what voters want”.

Delve a little deeper, however, and the author of the Sky News report admits that these headline-grabbing statistics disregard the number of ‘don’t know’ responses. So in actuality, when asked whether the UK should remain a member of the EU, 44% said yes, 45% no and 11% don’t know. So it is only by excluding over one-tenth of those polled that we get to the 51% wanting out, the real figure in fact being only 45%.  I am already starting to get a headache.

Naturally, immigration is at the very top of the list of our concerns with 65% of survey respondents wanting control over immigration between EU countries returned to the UK.  Cue glee from UKIP. The report concludes that Britain’s future in Europe ‘sits on a knife edge’. Even though any referendum is likely not to occur until 2017 (if at all, see below), some 51% can already be sure that they ‘want out’ (again of course, disregarding the ‘don’t knows’, but let’s not complicate things).  I suppose that one attraction of being so clear as to your vote so far in advance is there is no risk of your opinions becoming cluttered up with any actual facts, but we shall let that pass for now.

The immediate backdrop to this current storm is two-fold (or actually three-fold). Firstly, immigration restrictions on Bulgarians and Romanians are set to lift on 1 January 2014.  Secondly, Croatia is now confirmed to join the EU on 1 July 2013, albeit with time-limited work restrictions akin to those imposed on their previously newbie Romanian and Bulgarian EU buddies. A current e-petition which has amassed over 100,000 signatures calls on the Government to continue restrictions on Romanian and Bulgarians for a further 5 years, citing as usual the “flood” of Poles to the UK as reason for this.

Here’s the thing, however – the Government cannot actually do this. Its hands are tied by the ‘EUSSR’ (as one particularly excited member of the public commenting on the Sky News piece lovingly coins Brussels).  Under EU law, the UK Government cannot put any further restrictions on Bulgarians and Romanians beyond 1 January 2014, however much the public or ‘e-petition.com’ wants them to.  So therein lies the current political problem, explaining perhaps why the debate has now rolled on to talk of a full-blown referendum.  Above I referred to a third reason for the current storm, which is, of course, the next UK general election scheduled for 2015.  That being the case, why isn’t Mr Cameron promising a referendum until 2017? It is just immigration going back to being a political football with even Labour being forced to re-think its position on a referendum, according to reports this week.  If that particular ball can be hoofed into the long grass until well after the election, none of the parties will need to tackle their essential impotence on the point until another day, despite UKIP’s yapping away around their feet.

If ‘the powers that be’ cannot reduce net migration to ‘tens of thousands’ (which they can’t), then they will promise voters a referendum on the EU as a placebo. And in this vein, albeit with significantly less fanfare than Sky News, the Home Office has published a public Call for Evidence on ‘the Government’s Review of the balance of competencies between the UK and the EU’. Working alongside the Department for Work & Pensions, the focus of this Review is on ‘the free movement of persons’, one of the fundamental Four Freedoms which comprise the EU internal market. It is an impact-based assessment on the movement of EEA nationals and their families on the UK economy and labour market, as well as its societal and cultural repercussions. More succinctly perhaps, ‘What have EU migrants ever done for the UK?’

The closing date for responses is 5 August 2013 and more information can be found via the Gov.uk website.

NB, Mr EUSSR, only responses based on ‘objective, factual information’ are required, from respondents with ‘a key area of expertise’ in this area.  Sorry, and all that.

UK HMRC Investigations and Disclosures: The Legacy of Jimmy Carr

By Squire Patton Boggs on Posted in Tax

Over the past 2 years HMRC has invested close to £100 million on tackling tax avoidance and evasion.  It is now using various behind the scenes technology to track and analyse property purchases, tax returns, loans, bank accounts and employment data to create a risk profile database which will highlight transactions and help it identify those who are concealing from it (whether intentionally or negligently) any taxable income or wealth.  Various inter-government agreements with offshore territories mean that its search has a global reach.   

Likely we have high-profile tax “minimisers” like comedian Jimmy Carr and Starbucks to thank for this increased vigilance as HMRC is keen to show the media that “steps are being taken.” Whatever the origins, the upshot is higher-quality tax investigations and a significant deterrent for those who have not made full disclosures to HMRC.  The key is to make sure that your tax affairs are up to date and squeaky-clean and to ensure that you put right any indiscretions before it pounces. Where regularisation is required, it is reasonably straightforward and relatively painless, at least compared to the alternative. Here are a few possible avenues:  

Liechtenstein Disclosure Facility

The LDF represents a real tax “amnesty”.  It came into being in 2009 and will continue to provide an opportunity to disclose until 31 March 2016.  Under the LDF the taxpayer will be subject to a 10% penalty on all income and gains with a Liechtenstein connection in the 10 year period to April 2009 and can opt for a composite rate of tax on any outstanding liabilities as well as being guaranteed that he will not be subject to criminal prosecution.   Even where a defaulting taxpayer has no funds in Liechtenstein it is possible to transfer funds to the territory in order to make use of the favourable terms of the LDF.  Since its inception the LDF has raised a very decent £630 million for HMRC.  

Swiss Agreement

The Swiss Agreement came into force on 1 January 2013 with the first batch of one-off tax payments raising an almost equally handsome £342 million for HMRC.  It applies to UK taxpayers with funds in Switzerland.  They will have had communications from their banks and ought to be considering their past tax compliance record and deciding a way forward.  The information- sharing powers under the Swiss Agreement mean that there is no possibility of concealing assets in Switzerland.   Where disclosures need to be made in relation to Swiss-held monies it is sometimes more worthwhile to move funds to Liechtenstein to make use of the LDF.  

Other Offshore Island Facilities

The Isle of Man, Jersey and Guernsey have all recently signed disclosure facilities similar to the LDF which provide lower penalty rates and a 1999 cut off, although do not guarantee immunity from criminal prosecution.   

Contractual Disclosure Facility

If HMRC starts a tax investigation before the taxpayer gets round to making a disclosure as above, then it is too late; these favourable facilities will no longer be available, with the result that the interest and penalties on the tax due will be much higher. However, all may not be lost, as there may still be an opportunity to make a deal with HMRC if the matter is dealt with carefully.  

The CDF was introduced in January 2012 but did not really gather pace until the back end of last year.  It is a simple procedure whereby HMRC contacts the taxpayer, stating that it suspects that there is some serious tax fraud and offering him 60 days in which to consider his situation and respond to HMRC.  Once both parties have agreed to cooperate, the taxpayer’s advisers will set out in more detail the full nature of the “oversight” and a civil settlement will be reached with no criminal sanctions for the taxpayer.  The CDF still needs a few refinements (in particular that HMRC ought to stop discouraging taxpayers from using it by its assuming a “serious fraud”) but is generally working well.   

The Legacy

Where a taxpayer (either an individual or a corporate) is concerned that there may be irregularities in their tax filing history, the penalty regime for “unprompted” disclosure before HMRC discovers the irregularity by itself is much more favourable.  The voluntary disclosure will also bring the taxpayer outside of HMRC’s Managing Serious Defaulters special investigations unit and their Naming and Shaming lists on the HMRC website.

In our experience the use of the disclosure facilities made available by HMRC are extremely well administered and if used properly should produce a palatable outcome for the defaulting taxpayer.

“A penguin walks through that door right now wearing a sombrero. What does he say?”, and other interview questions

By David Whincup on Posted in Discrimination, Recruitment

HereIsTheCitynews.com (HITCN) recently ran a piece on left-field recruitment interview questions, including the one in the title, “What kitchen utensil would you be?”, and the potentially lethal “On a scale from 1 to 10, rate me as an interviewer”.  Would you seriously want to tell the Employment Tribunal that your disputed selection decision between man and woman, old and young, gay and straight, turned upon the answers to such tosh?   

Actually, maybe yes, you would.  Many years ago I interviewed a keen young candidate for the firm and asked a question long-treasured by one of my more evil partners here: “How many chickens are eaten in the UK each year?”.  Of course, no one knows the answer to that one off-hand, not even the partner in question, but the candidate could nonetheless have had a gallant run at it by assuming out loud a UK population of X of whom Y per cent were probably vegetarians, the remainder eating chicken Z times per week, etc.  That would show us that he would not panic immediately if faced with an unknown, had an analytical mind set and possessed some degree of numeracy.   

There is no right answer to most of these questions, but there are several wrong ones.  HITCN suggests that the worst answer that you can give when bowled one of these googlies is “I don’t know”, being rather a conversation-stopper.  In fact that is not right.  Our candidate on that occasion looked briefly affronted (“I came from the Magic Circle for this?”) and then asked me to “define chicken”.  In that single moment, more quickly and more effectively than through any number of answers on employment law and his hobbies and interests, he demonstrated categorically that he was not for us.  I do sometimes wonder at quiet times if he is still out there somewhere, laboriously researching the precise legal definition for “chicken”, and even now puzzling over his rejection.  

Exactly the same applies to those questions where the truthful answer is clear but potentially embarrassing, HITCN referring by way of example to “Have you ever stolen a pen from work?” and “If you had to get an injured passenger to hospital urgently, would you run a red light?”  Anyone denying possession of a company biro at home is either lying or has not yet found the stationery cupboard, but the red light question (asked by a law firm) invites the candidate into some potentially very dangerous waters – will I be truthful even if I thereby admit that I will break the law if I feel it necessary?  Not easy questions to answer smoothly but not an atypical challenge in one’s working life and so the way the candidate reacts can be very telling.  

So while the questions may sound odd, the answers can still tell you much about the candidate.  The key to using them successfully from the legal perspective (i.e. to demonstrate that you are applying an objective selection process rather than just being swinish because you can) is to ensure the retention of written records of what the answer told you about the relevant attributes of the candidate.  Supportable references to resilience, lateral thinking, analytical skills, pragmatism, sense of humour, even honesty, are all possible outcomes from such questions, provided that you can explain why – and without those written records, forget it.   

PS, the successful answer to the penguin question was apparently “Where’s the sunscreen?” – concise, apt, mildly humorous, ideal.  HITCN does not provide the winning formula for rating your interviewer, but it is probably safe to say that anything under a 5 will not get you far, however scintillating your reasoning.

EEOC Follows Up Recent Guidance On Use Of Criminal Background Check Info With Lawsuits

By Laura Lawless on Posted in Discrimination

The Equal Employment Opportunity Commission (EEOC) has been concerned for quite a while about the disparate impact that the criminal background checks many employers run on applicants and employees may have a disparate impact on the basis of race and national origin.  Specifically, the EEOC has been convinced since at least the 1980s that the use of criminal background checks, and employers’ tendency to automatically screen out applicants with arrest histories, has historically had a disproportionate impact on applicants and employees belonging to minority races and those of foreign national origin.

The EEOC codified its position in April 2012 when it issued its “Enforcement Guidance On the Consideration of Arrest and Conviction Records in Employment Decisions under Title VII.”  In that document, the EEOC cautioned employers that the fact that an applicant or employee has been arrested does not establish that criminal conduct has occurred, and an exclusion based on an arrest, by itself, is not job-related and consistent with business necessity.  The EEOC cautioned employers to make employment decisions based on the conduct underlying an arrest if the conduct makes the individual unfit for the position in question, rather than relying on the fact of the arrest itself.  The EEOC further cautioned employers who conduct criminal background checks that a violation of Title VII may occur when an employer treats criminal history information differently for an applicant or employee of one race or national origin over another, as it suggests that the employer is relying on discriminatory animus – that is, stereotypes about an individual’s proclivity for criminality based on his or her race or national origin.

The EEOC recently followed through on its new Guidance by filing well-publicized lawsuits in federal court against two major employers (a major discount retail chain and a luxury car manufacturer), claiming that their use of criminal background checks disproportionately screened out African-American job applicants.  The EEOC found fault with the employers’ practice of conditioning all job offers – regardless of the nature of the applicants’ expected job duties – on successfully passing a criminal background check, a practice that the EEOC contends results in a pattern of nationwide race discrimination against African-American job applicants.

Both lawsuits are still in their earliest stages, and whether the EEOC will ultimately be successful is unclear.  But employers should be aware that the EEOC has identified eliminating barriers to hiring as one of its top priorities in its recently-adopted strategic enforcement plan, and, therefore employers would be well-served to revisit any background check policies. Employers implementing background checks should make conditional offers prior to running the background check.  If a candidate does have a criminal background, the employer should determine whether hiring the individual poses a risk, taking into account the nature of the crime of which the employer was convicted, the time that has elapsed since the conviction, and the nature of the job for which he or she is being considered (i.e., does the job involve handling money, having access to customers’ sensitive data, having access to children or vulnerable adults?).  Employers should also ensure that their background check process – including pre-check disclosure and subsequent notifications – comply with the Fair Credit Reporting Act, and are encouraged to consult with their employment counsel to review their policies and associated forms.

Supreme Court Allows Class Arbitration, Despite No Explicit Agreement, Deferring To Arbitrator’s Bargained-For Interpretation Of Contract

By Laura Lawless on Posted in Healthcare

The U.S. Supreme Court departed from the pro-arbitration stance it has taken in the past several terms in Oxford Health Plans LLC v. Sutter, No. 12-135, 569 U.S. ___ (June 10, 2013). Dr. John Sutter, a pediatrician, brought a putative class action lawsuit against Oxford Health Plans, a health insurance company, for Oxford’s purported failure to promptly reimburse physicians for in-network services rendered. Oxford moved to compel arbitration, relying on a provision in his contract stating that “[n]o civil action concerning any dispute arising under this Agreement shall be instituted before any court, and all such disputes shall be submitted to final and binding arbitration[.]” The state court granted the motion, and referred the suit to arbitration. Once in that forum, the parties agreed that the arbitrator should decide whether their contract authorized class arbitration. The arbitrator determined that it did, relying on the language that “all … disputes” included disputes resolved through class arbitration. He thus allowed Dr. Sutter to pursue class arbitration on behalf of other allegedly aggrieved physicians.

Oxford then moved to vacate the arbitrator’s decision, claiming that the arbitrator exceeded his powers under the Federal Arbitration Act (“FAA”). The District Court, the Third Circuit Court of Appeals, and, unanimously, the U.S. Supreme Court all concluded that the arbitrator had not, in fact, exceeded his authority under the FAA. The Third Circuit based its decision on the limited scope of judicial review that the FAA allows and concluded that, so long as an arbitrator makes a good faith attempt to interpret a contract, even serious errors of law or fact will not subject his award to vacatur. Since the arbitrator had endeavored to give effect to the parties’ contractual intent and articulated a contractual basis for his decision, the arbitrator’s decision – that class arbitration could proceed – could not be set aside. The Supreme Court affirmed: because the parties bargained for the arbitrator’s construction of their agreement, an arbitral decision even arguably construing or applying the contract must stand, regardless of the court’s view of its merits. Only if the arbitrator acts outside the scope of his or her contractually delegated authority – issuing an award that reflects his or her own notions of justice rather than drawing its essence from the contract – may a court overturn the determination.

Although the Court sided with the employees in this decision, Sutter does not mark as much a departure from recent precedent as it may appear at first blush. Arbitration law has always been a matter of contractual construction, and courts have paid great deference to arbitrators’ interpretations of those contracts. Questions of arbitrability are still questions for the court, but once disputes are squarely within the province of the arbitrator, the arbitrator is empowered to interpret the contract before him. Here, the arbitrator concluded, in reasoned fashion, that “all…disputes” included class disputes. The decision likely would have been affirmed even if he had concluded that the same language excluded class arbitration, because Oxford stipulated that the decision of arbitrability was for the arbitrator. In the words of the Court, “[t]he arbitrator’s construction holds, however good, bad, or ugly.”

The take-home for employers is arbitration clauses must be drafted unambiguously. If the intent is to prohibit class arbitration, employers should be sure that their arbitration contracts unambiguously state as much. Where, as in Sutter, there is ambiguity as to class arbitration, parties will be bound with the arbitrator’s decision as to whether employees can proceed with arbitrating their claims on behalf of themselves and a class, thus dramatically increasing the cost of litigation and potential exposure.

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