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EEOC Extends Title VII to Include Sexual Orientation Discrimination

EEOC Extends Title VII to Include Sexual Orientation Discrimination

By:  Rob N. Dare – 7/30/15

On July 15, 2015, for the first time, the Equal Employment Opportunity Commission (“EEOC”), the agency charged with enforcing federal workplace discrimination laws, ruled that Title VII extends to claims of employment discrimination based on sexual orientation. In _____ [name of charging party kept secret] v. Foxx, EEOC Appeal No. 2012-24738–FAA-03 (July 15, 2015), the Complainant, a former temporary worker at the Federal Aviation Agency (“FAA”), alleged that he was not selected for a permanent position at the FAA because he is gay. Further, he alleged that his supervisors repeatedly made homophobic comments about him.

Title VII makes it unlawful for a covered employer to “to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin.” Historically, federal courts have consistently held that Title VII does not extend to sexual orientation discrimination claims because “sexual orientation” is not listed anywhere in the statute or even mentioned in its legislative history. However, the EEOC saw it differently. Reasoning that such discrimination is a prohibited form of sex discrimination (which is listed), the EEOC opined that allegations of sexual orientation indeed create a viable claim under Title VII.

The EEOC based its decision on three rationales. First, the Commission concluded that sexual orientation is inherently a “sex-based consideration,” explaining that “[d]iscrimination on the basis of sexual orientation is premised on sex-based preferences, assumptions, expectations, stereotypes, or norms. ‘Sexual Orientation’ as a concept cannot be defined or understood without reference to sex.” Second, the EEOC opined that sexual orientation discrimination is sex discrimination because it is “associational discrimination” on the basis of sex. Noting that courts have applied this notion of “associational discrimination” in race discrimination contexts, the EEOC explained that “an employee alleging discrimination on the basis of sexual orientation is alleging that his or her employer took his or her sex into account by treating him or her differently for associating with a person of the same sex.” Third, according to the EEOC, sexual orientation discrimination also is sex discrimination because it necessarily involves discrimination on gender stereotypes. That is, it involves relying on gender stereotypes as to how “real men” and “real women” should behave, seeking to “enforce heterosexuality defined gender norms” – conduct that the U.S. Supreme Court has ruled is unlawful.

The EEOC also attempts to rebut anticipated criticism of its decision by, first, pointing out that the Supreme Court has held that even if Congress did not intend for Title VII to apply to this type of claim, “statutory prohibitions often go beyond the principal evil [they were passed to combat] to cover reasonably comparable evils.” Next, the EEOC opined that Congress is not required to pass legislation to explicitly provide for protection for sexual orientation because it already exists within the statute (sex discrimination) and thus, there is not a new class of covered persons under Title VII.

Although the EEOC’s ruling does not constitute binding law, this decision is unquestionably significant for three reasons: (1) the EEOC had never before held that Title VII extends to sexual orientation discrimination; (2) the holding is contrary to many federal court rulings interpreting Title VII; (3) it lays the foundation for an increased number of charges of discrimination filed and investigated based on sexual orientation.

Now that plaintiffs are armed with a road map for their arguments, employers are likely to see an uptick in discrimination charges, claiming sexual orientation discrimination as discrimination on the basis of sex – especially given the momentum provided by the Supreme Court’s recent decision to strike down bans on same-sex marriage as unconstitutional.

The EEOC’s perspective places employers in a bit of a dilemma. As noted, the overwhelming majority of federal courts hold that sexual orientation is not a protected classification under federal law and accordingly, they may continue to find that an extension of Title VII requires Congressional action. However, “gender stereotyping” has been a recognized species of sex discrimination for years. So, should employers revise their non-discrimination policies to include sexual orientation as a protected category? Certainly, many employers — especially those operating in one of the 21 states that prohibit discrimination on the basis of sexual orientation or gender identity — have already included sexual orientation in their policies.   However, changing the policy will make it more difficult to argue that there is no legal duty to avoid discrimination on that basis.

One thing is certain: It is important for employers to ensure that managers and supervisors are cognizant of, and sensitive to, sexual orientation discrimination and are appropriately trained to handle issues, complaints, etc. This is especially so, because some federal harassment cases say that an employer may have no defense to hostile environment claims if the company has not trained its employees on the topic.

On a related note, and with particular respect to the Supreme Court’s same-sex marriage ruling, employers should recognize that marital status discrimination is a cause of action in Michigan (but not under Title VII) , and accordingly, a Michigan employer who fails to recognize a same-sex marriage (for cheap AARP burial insurance, health insurance, benefits, etc.) acts at its peril.

Uber’s Problems in France Illustrates The Problems With Unions Everywhere

By:  Bill Pilchak – 07/07/15

Most news media outlets reported on Saturday, June 27, 2015, that French taxi drivers went on a rampage, overturning and destroying vehicles used by Uber drivers, skirmishing with and holding them and their passengers (including Courtney Love) hostage, erecting barricades and setting fires to block traffic. CNN was one of the few who mentioned the role of the French unions (the National Union of Taxi Drivers and the FTI taxi union) in the lawlessness.

Rideshare technology is annoying unions elsewhere. Media sources say that in the UK, the creators of the ridesharing app Hailo saw their offices vandalized – the word “scabs” was written on the wall – after Hailo’s app was expanded to include private vehicles instead of just taxis. Last year, Autoblog.com wrote of physical encounters between cabbies at O’Hare airport and Uber drivers after the Chicago city council declined to require Uber drivers to have cab licenses to pick up passengers. The New York cab union has apparently sought to become active in Chicago.

These incidents point out two main problems that anyone dealing with unions knows but which most people in business cannot say out loud without being tarred with the label of “anti-union animus” in their next proceeding before the NLRB: First, that unions will fight improvements, technological or otherwise, that require change or more effort by their members and certainly if the change makes existing union jobs or their artificially high compensation obsolete. Anyone responsible for a business knows that in today’s technology-driven environment, business must change or die. When Eastman Kodak went bankrupt in 2012, Bloomberg business reported the cause as Kodak’s failure to embrace digital cameras despite having invented the technology. Bloomberg said “They were a company stuck in time.” A company might have to turn on a dime when a competitor makes a move, a customer issues a demand or a technology emerges that will cut costs. Provisions of a union contract could easily prohibit such a move. The implications of yesteryear clauses in a constantly changing environment cannot possibly be predicted in advance. If clauses block change, a company with a union might be precluded from making that change during the life of the collective bargaining agreement.  During the three years left on the cba, the customer and indeed the entire industry may have moved on.

          Second, the Uber protests illustrate that unions have historically resorted to threats, thuggery, violence and criminal behavior to achieve their ends. NLRB case law is surprisingly tolerant of such conduct. Indeed, from the beginning, the National Labor Relations Act has been interpreted to endorse violence:

“”[S]ome disorder is unfortunately quite usual in a…drawn out strike. A strike is unfortunately a battle waged with economic weapons. Engaged in it are human beings whose feelings are stirred to the depths. Rising passions call forth hot words. Hot words lead to blows…The transformation from economic to physical combat…is difficult to prevent… Violence of this nature, however much it is to be regretted, must have been in the contemplation of Congress. “

Republic Steel Corp. v NLRB, 107 F.2d 472, 479 (3rd Cir., 1939)

Accordingly, picket line assaults and vandalism frequently occurs and goes unprosecuted because local prosecutors are politically vulnerable. Other conduct that would be considered intolerable in other contexts is given protection if committed by unions to obtain their ends. Stating “Section 7 rights “may permit some leeway for impulsive behavior,” the Board has precluded discharge of union employees for calling the boss a “F**king Queer” (Webster Clothes, 222 N.L.R.B. 1262), addressing written communications to co-workers as “Dear Pussies,” leading to complaints by female workers (Fresnius USA, 2012 NLRB LEXIS 611; later vacated by D.C. Cir.) and most recently, shouting at African American replacement workers ““Go back to Africa, you… f**king losers,” “f**king monkey scabs” and “f**king ****** scabs,” even though an arbitrator upheld dismissal. (Cooper Standard, June 15, 2015)

Sometimes unions cannot rein in the criminal license the NLRA grants them. In February, 2014, ten leaders of the Ironworkers Local 401 (Philadelphia) were indicted for setting fires, starting riots, and taking crowbars to the competition in an effort to protect union jobs. The group called themselves “The Helpful Union Guys” – “THUGS” for short. At the time of the indictment, prosecutors said “violence was not just a tactic in the ironworkers’ toolbox. It is deeply ingrained in the structure of their organization.”   After most of those indicted took plea deals, the only official to go to trial was convicted in January.

My two points above, are interrelated. Just as Uber is bypassing the business model of the taxi, civilized society has moved past the days when bloodying the nose of someone we disagree with is acceptable. But unions fight change and resort to thuggery. In the same way that civilized society decries efforts by the Taliban, Al Quaeda and ISIS to drag us back to 7th century customs, 21st century America should decry union tactics that were barely tolerable in 1939.  One can only hope that younger Americans, who embrace rapid change, who take economic charge of their lives in the fashion of Uber drivers and have too much respect for their fellow human beings to call them “queers” and “n*****s,” will decry such tactics. And, indeed, maybe they are decrying union tactics. Maybe that’s one reason for plunging union membership across the country.

Salary Level Increases for White Collar OT Exemption:  The Latest Transfer of Wealth by the Feds

Salary Level Increases for White Collar OT Exemption: The Latest Transfer of Wealth by the Feds

By:  Dan Cohen – 7/2/15

 On June 29, 2015, The Department of Labor announced its proposal to more than double the salary level for the “white collar” overtime exemptions from $23,660/year to $50,440/year ($970/week). By most accounts, this will result in millions of additional employees becoming eligible for overtime pay. The white collar overtime exemptions include the executive, administrative and professional exemptions under the Fair Labor Standards Act (“FLSA”). The DOL last revised its overtime regulations in 2004 when it raised the salary level from $8060 established in 1975 to $23,660. As part of the 2004 Regulations, the DOL created a highly compensated executive exemption for those earning $100,000. Under its latest proposal, the threshold for the highly compensated executive exemption would jump to $122,148. The proposal also includes an annual bump up of the salary level. Whether this annual adjustment will be tied to inflation is yet to be determined.

Under the white collar exemptions, there are three tests: the salary basis, salary level and duties tests. For the exemption to apply, each of the three tests must be satisfied. The June 29th announcement only affects the “salary level” component.   For now, there have not yet been any proposals on the salary basis or duties tests.   However, the DOL has indicated that it is seeking comment on whether the standard duties tests are working. This does not sound too encouraging. In fact, my guess is that there will be a push to undo some of the 2004 changes in the duties test that then-Democratic Presidential candidate John Kerry claimed would strip 6 million workers of the right to receive overtime pay. See e.g. http://www.nytimes.com/2004/08/23/us/controversial-overtime-rules-take-effect.html.

While I will be the first one to admit that the $23,660 threshold was too low, more than doubling the threshold is probably too much, particularly since the economy has not recovered nearly as much as President Obama would like to think. One group that will be impacted by a $50,000 salary level are “supervisors” under the “executive” exemption. Supervisors in the fast food and retail industries typically do not make $50,000 and often work significant amounts of overtime. Retail businesses work on notoriously slim margins while competing against internet sales and a substantial increase could easily tip the scales of survival for some.  Small business will feel the economic pain of a $50,000 salary threshold as well. The arguments against are similar to the arguments against significant increases in the minimum wage that have been championed by this administration as well. Will this be a job killer? For some, perhaps. Will this lead to widespread use of kiosks in fast food restaurants? Maybe.   What we do know for sure, however, is that this will transfer wealth from the job creators to employees. the DOL does not hide this undeniable fact:

     “In addition to the direct costs, this proposed rulemaking will also transfer income from employers to employees in the form of higher earnings. Average annualized transfers are estimated to be between $1.18 and $1.27 billion, depending on which of the two updating methodologies is used” http://www.dol.gov/whd/overtime/NPRM2015/faq.htm.

The proposed changes will be open for public comment and could take months to finalize. They can be enacted through regulation, without approval by the Republican-led Congress.  However, Congress has the right to introduce legislation that could slow the process down even more.