SUPREME COURT FAVORS PLAINTIFFS IN LEWIS V. CHICAGO

by Art Gutman Ph.D., Professor, Florida Institute of Technology

In a long awaited and much anticipated ruling issued on May 24, 2010, the Supreme Court unanimously opined that the plaintiffs may proceed to trial with their adverse impact challenge to written exams for entry-level jobs in the Chicago Fire Department. The full text of the ruling is presented here on the Findlaw.Com website.

At issue was a test administered to 26,000 applicants in July 2005. The City announced on January 26, 1996 that it would draw randomly from “top tier” scorers (89 out of 100 or greater). These applicants were labeled “well qualified”, and if randomly chosen, would proceed to the next phase of selection involving a physical abilities test, background check, medical examination, and drug test. Applicants scoring below 65 were labeled “unqualified” and were informed that they failed the test. However, more importantly for present purposes, applicants scoring between 65 and 88 were labeled “qualified” and were placed in limbo. They were informed it was unlikely they would be selected, but that their scores would remain on file in the event the list of “well qualified” applicants was exhausted. The City selected its first group of applicants on May 16, 1996 and a second group on October 1, 1996. The process was then repeated nine more times over the next six years.

Subsequently, one of the “qualified” applicants who was not selected, sued on March 31, 1997. Five other similarly situated plaintiffs joined him on July 28, 1998, and the district court then certified a class of 6,000 “qualified” applicants. However, the 7th Circuit overturned the district court on grounds that these claim were untimely because they were filed more than 300 days after the CPD sorted the scores into the three categories and reported those categories to applicants. The 7th Circuit ruled that the sorting process was the only discriminatory act, and described subsequent hiring decisions as an “automatic consequence of the test scores rather than the product of a fresh act of discrimination.” The Supreme Court then reversed the 7th Circuit in a unanimous ruling written by Justice Scalia.

Scalia’s ruling is easily the simplest and most straightforward Supreme Court ruling ever on an adverse impact issue, and also, the first unanimous opinion in this domain. The City argued that past Supreme Court rulings in UAL v. Evans (1977) [431 US 553], Delaware State College v. Ricks (1980) [449 US 250], Lorance v. AT& T Technologies (1989) [490 US 500], and Ledbetter v. Goodyear Tire & Rubber (2007) )[550 US 618] “stand for the proposition that present effects of prior actions cannot lead to Title VII liability.” Scalia replied that Title VII plaintiffs must show a “present violation” within the statute of limitations, and that the principal relating to present effects of prior acts applies only to disparate treatment claims, which require proof of an illegal motive (or deliberate discrimination) within those limits. However, in adverse impact claims, which do not require proof of motive, Scalia ruled there was “ongoing” adverse impact. Accordingly:

Under the City's reading, if an employer adopts an unlawful practice and no timely charge is brought, it can continue using the practice indefinitely, with impunity, despite ongoing disparate impact. Equitable tolling or estoppel may allow some affected employees or applicants to sue, but many others will be left out in the cold. Moreover, the City's reading may induce plaintiffs aware of the danger of delay to file charges upon the announcement of a hiring practice, before they have any basis for believing it will produce a disparate impact.

Scalia then ruled “the only question presented to us is whether the claim petitioners brought is cognizable. Because we conclude that it is, our inquiry is at an end.” So now the case can go to trial with a decided disadvantage to the City of Chicago conceded that the test results used to create the hiring list was unlawful. And isn’t it interesting that Justice Scalia, who wrote a concurring opinion in Ricci questioning whether adverse impact theory was constitutional in light of equal protection under the 14th amendment, wrote this adverse impact decision?

NOVARTIS LOSES CLASS ACTION SEX DISCRIMINATION CASE

by Art Gutman Ph.D., Professor, Florida Institute of Technology

On May 17, 2010, a jury awarded nearly 3.4 million dollars to 12 named female plaintiffs in Velez v. Novartis Corp. There was a 5-week trial in front of District Court Judge Colleen McMahon of the Southern District of New York. The jury deliberated for four days. The 12 named plaintiffs are slated to receive between $50,000 and $598,000 each for lost wages and compensatory damages from the 3.4 million dollar award. But that was just an appetizer. The entrée in this case occurred two days later, when the jury awarded 250 million dollars in punitive damages for a class of 5,600 current or former female sales representatives employed between 2002 and 2007. An estimated class size of 5,600 women will now have the opportunity to opt for damages in front of a special master. The facts of this case are summarized here on the Law.Com website.

This case drew a lot of attention because it is the second largest class action sex discrimination case after Dukes v. Wal-Mart. It is now the largest class action sex discrimination lawsuit to reach a jury trial. The charges were discrimination in promotion, pay , and pregnancy discrimination by female sales representatives. Novartis indicated that it would appeal the ruling.

With the Novartis ruling in the books, attention now turns to Dukes v. Wal-Mart. As we reported in a recent Alert, the 9th Circuit supported a class size of approximately 500,000 women in its en banc ruling on April 26, 2010. It doesn’t take a degree in mathematics to infer that if the punitive damages for 5,600 claimants amounts to 250 million dollars, that the potential award for 500,000 claimants is potentially more than 200 billion dollars.

One gets the feeling that somewhere down the line, the Supreme Court will likely rule in both the Novartis and Wal-Mart cases. If not, we may be close to some precedent setting settlements. We will remain on alert and keep you informed as developments occur in both cases.

HOMELAND SECURITY VIOLATES REHABILITATION ACT BY ASKING INAPPROPRIATE MENTAL-HEALTH QUESTIONS

by Art Gutman Ph.D., Professor, Florida Institute of Technology

In a ruling issued on May 3, 2010 by Judge Barry Ted Moskowitz of the Southern District of California, the Department of Homeland Security (DHS) was found to have violated the Rehabilitation Act of 1973 (Rehab-73) by asking overly broad questions relating to mental health issues that were deemed unrelated to essential job functions (Scott v. Napolitano [2010 U.S. Dist. LEXIS 42882].

The facts in this case were that James Scott was an existing employee at DHS and was diagnosed with “an adjustment disorder with mixed depression and anxiety”. He was placed first on long-term disability from July 2000 to February 2002. He then filed worker compensation claims in 2004 related to sinusitis stemming from wildfires and construction work at his office. He subsequently filed claims for work-related tendonitis. When cleared for work in 2005, DHS asked Scott six questions. Scott refused and was terminated. The questions were:

1. Have you ever been treated for a mental condition? (If yes, specify when, where, and give details)

2. Have you ever had any illness, injury, or other condition (including learning disability, attention deficit disorder, etc.) other than those already noted? (If yes, specify when, where and give details)

3. Have you consulted or been treated by clinics, physicians, healers, or other practitioners within the past years for other than minor illness? (If yes, give complete address of doctor, hospital, clinic, and details.)

4. Have you ever received, is there pending, or have you applied for pension or compensation for existing disability? (If yes, specify what kind, granted by whom, and what amount, when, why)

5. Have you or do you currently experience any of the following: psychiatric/psychological consult, episodes of depression, periods of nervousness? Please specify.

6. List all medication (prescription and non-prescription) you are currently taking with dosage and [f]requency, and reason below.

Judge Moskowitz ruled that these questions “were not narrowly tailored to address the Plaintiff's current ability to work”, addressing each of the questions. Accordingly

The first question, which asked if Plaintiff had ever been treated for a mental condition, was not limited in time and would include, for example, a childhood phobia or a long-resolved eating disorder. The second and third questions are even broader because they are not limited to mental conditions and would include, for example, a past episode of appendicitis or a bad bout of eczema. The fourth question is ambiguous and overbroad in that it does not define "disability" and does not distinguish between job-related and non-job-related "disabilities." The fifth question is not limited in time, does not address the severity of the "nervousness" or "depression," and extends to any type of psychiatric/ psychological consult, such as grief counseling. The sixth question, which asks about all types of drugs, including prescription and non-prescription, is intrusive and not tailored to determining whether an employee is using a drug that may affect his ability to [*28] do his job. In answering this question, a person would have to reveal whether they were taking any medication, including Advil, birth control, or Viagra. Given the scope of these questions, Defendant cannot satisfy its burden of establishing that the inquiries were "no broader or more intrusive than necessary" to accomplish its goal of ensuring that Plaintiff could still safely do his job.

A final point to note is that technically, the ADA does not apply to federal employees. However, ADA rules were grandfathered into Rehab-73 via the ADA statute in order to make the two statutes harmonious. Therefore, the ruling in this case applies to ADA cases, and the rulings in ADA cases apply to Rehab-73 cases.

DOL's E.O. 13496 FINAL RULE PUBLISHED

by Fred Satterwhite, Senior Consultant, DCI Consulting Group

On May 20, the U.S. Department of Labor (DOL) will publish its final rule implementing Executive Order 13496 and prescribing the size, form, and content of the notice to be posted by a contractor describing the rights of employees under Federal labor laws in the Federal Register. The final rule becomes effective on June 21, 2010.

The final rule includes a lengthy discussion of the 86 comments received during the public comment period that ended on September 2, 2009, and reflects several changes based on that feedback. (The proposed rule was discussed in detail here.) Highlights from the final rule document include:

Approximately one-third (1/3) of the commenters argued that the content of the Notice of Proposed Rulemaking (NPRM) notice was not balanced and promoted unionization. In response, the DOL modified some language in the final notice, including a list of five examples of unlawful union conduct (vs. a single statement in the NPRM notice).

Despite several comments suggesting that the final notice include an explanation of employee rights under Beck, the DOL chose not to include such language, citing "space limitations" and a "policy choice" to move away from the language of the E.O. 13201 notice (which was rescinded by E.O. 13496).

In a prudent move that no doubt will be welcomed by the contractor community, the DOL will permit incorporation of the notice by reference in contracts and subcontracts, rather than requiring that the full text of the notice be included in every contract. The DOL received 10 comments regarding this section of the NPRM notice- nine of which stated that it should allow incorporation by reference. Several commenters pointed out that the requirement as written in the NPRM was inconsistent with E.O. 11246, VEVRAA, and Section 503 of the Rehabilitation Act- all of which are enforced by the DOL.

Subcontracts of less than $10,000 are exempted, but all tiers of subcontractors above that threshold are covered. The DOL made clear statements that they are going to interpret the "necessary to the performance of" the government contract criterion as broadly as possible, which is consistent with recent OFCCP presentations regarding jurisdiction. The takeaway message is that the DOL is setting the bar very high for subcontractors to demonstrate that they are not covered by these executive orders.

Employers will have to post copies of the poster in languages other than English where employees not literate in English make up a “significant portion of a contractor’s workforce”.

For electronic postings of the notice, the required text for the link to the DOL web site containing the full notice must be "Important Notice about Employee Rights to Organize and Bargain Collectively with Their Employers.” As with the physical posters, the link must be provided in languages used by a "significant portion" of the contractor's workforce.

Third-party vendors who sell "all-in-one" employment law posters may be unhappy with the final rule- while the DOL did acknowledge that contractors use such posters and said they will be permitted, the final rule states that such posters cannot "alter the size, color, or content of the poster provided by the Department."

OFCCP scheduling procedures for evaluations of compliance with the final rule were not described, leaving open the possibility of "13496-only" reviews in addition to regular compliance reviews.

More information about the final rule, including PDF copies of the poster, are available on the DOL web site. OFCCP has added a compliance page and presentation to their web site, and will be presenting a webinar on June 3 and June 10 to provide guidance on compliance with the final rule.

CHECKING IN WITH RICCI: BRISCOE V. CITY OF NEW HAVEN

by Art Gutman Ph.D., Professor, Florida Institute of Technology

Michael Briscoe was one of the black applicants for promotion to lieutenant in the Supreme Court’s ruling in Ricci v. DeStefano (2009). On remand from the Supreme Court, District Court Judge Janet Bond Arteton certified the promotions to lieutenant and captain based on the 2003 exams central to the Ricci case. Briscoe then lodged his adverse impact claims on the heels of the certifications, and these complaints were dismissed on April 28, 2010 by District Court Judge Charles S. Haight, Jr. Part of Briscoe’s complaint was that testing was scheduled for April 30 and May 1, 2010 for the administrative position of Director of Training for candidates holding the rank of lieutenant or captain. Briscoe sought to sit for this exam on the theory that he would win his adverse impact claim. Additionally, two of the promoted firefighters in Ricci intervened against Briscoe on grounds that any relief granted to him would adversely impact themselves.

Briscoe challenged the 60-40 weighting for written versus oral tests. He was the top scorer among 77 applicants for lieutenant on the oral exam. However, he ranked 24th overall because of his poor performance on the written test. Briscoe claimed that a 70-30 oral versus written weighting “would be equally good or better at identifying the best-qualified candidates for promotion, and would have less disparate impact on racial minorities.”

In a nutshell, Judge Haight ruled that the Supreme Court’s ruling in Ricci precluded Briscoe’s claims. Recall that the main ruling in Ricci was that New Haven lacked a strong basis in evidence for discarding promotion exams. Interestingly, Judge Haight ruled that New Haven was protected for making the promotions ordered by Judge Arteton because it now had a strong basis in evidence for believing it would lose a disparate treatment claim if it did not follow the judge’s order.

One last thing --- Judge Haight did not discard the weighting issue. Rather, he emphasized that the proper times for Briscoe to challenge the weighting were in 2003, when the exams were administered, and in 2004, when the Ricci plaintiffs sued. Indeed, he stressed the narrowness of his ruling as follows:

It is important to emphasize the narrow boundaries of this opinion. I am concerned only with the effect of Ricci upon Briscoe's disparate-impact challenge to the 2003 examinations. That limited reach is dictated by the fact that the complaints of the Ricci plaintiffs and Briscoe relate solely to the 2003 examinations. Nothing in this opinion would foreclose or diminish the rights of Briscoe or any other firefighter to challenge a subsequent NHFD promotional examination on the same grounds that Briscoe seeks to assert in this case with respect to the 2003 examinations.

In short, the issue of alternative weightings with less adverse impact is still fair game.

RICCI’S TENTACLES EXPANDED

by Art Gutman Ph.D., Professor, Florida Institute of Technology

In NAACP v. North Hudson Regional Fire & Rescue (2010 U.S. Dist. LEXIS 40067), the NAACP challenged a residency requirement for firefighter candidates excluding applicants living outside of “member municipalities” on grounds of adverse impact on blacks. Prior to the Ricci ruling, Senior District Court Judge Dickson R. Debevoise for the District of New Jersey issued a preliminary injunction against North Hudson, giving the municipality the option of hiring from a tri-county list from within and beyond North Hudson. However, North Hudson responded with a hiring freeze, believing they would be in violation of a settlement reached with Hispanic applicants from North Hudson in 2009. Talk about a conflict? Stick with the residency requirement and one minority group sues, go against it and another minority group sues. Fortunately for North Hudson, Judge Debevoise overturned the preliminary injunction in light of Ricci. Curiously, the judge acknowledged there was no inherent connection between the North Hudson residency requirement and the Ricci ruling. Nevertheless, the judge ruled that North Hudson’s fear of losing a challenge by Hispanic applicants was job related, and therefore, was likely to prevail in its defense.

Of further interest in this case, the plaintiffs cited US v. City of New York [637 F.Supp 2d 77 (E.D.N.Y. 2009)], a case decided shortly after Ricci in which a district court judge Nicholas G. Garaufis struck down a firefighter test based on weak validation evidence. In that case, Judge Garaufis ruled that Ricci was irrelevant to the issue of whether a test is valid or not valid. In the North Hudson case, Judge Debevoise disagreed with both “the plaintiffs in the instant case and with the court in the City of New York case” on grounds that the North Hudson case involves “tensions between disparate impact and disparate treatment.”

OFCCP THREATENS SANCTIONS AGAINST ASTRAZENECA ON SEX-BASED WAGE DIFFERENCES

by Art Gutman Ph.D., Professor, Florida Institute of Technology

Lorraine McCarthy, staff writer for BNA, reported on May 17, 2010 that the OFCCP has charged AstraZeneca PLC with violating Executive Order 11246 in an administrative complaint filed on May 3, 2010. The OFCCP claims that AstraZeneca underpaid female Level III pharmaceutical sales specialists as compared to male counterparts at its Wayne, Pa., facility. According to the OFCCP, the salary disparity “remains after adjusting for differences in legitimate pay-determining factors.” The OFCCP is demanding that the company identify and provide relief to affected employees, including lost wages, interest, front pay, salary adjustments, fringe benefits, seniority, and all other employment benefits under the threat of cancellation of existing federal contracts and debarment from entering into future contracts.

For its part, AstraZeneca claims that statistical results by an independent expert shows there are “no statistically significant gender-based difference in salary between employees in Career Ladder Level 3, or any other position, in the AstraZeneca workforce.”

Stay tuned, this might turn out to be a hot one.

WAL-MART AGREES TO MULTI-MILLION SETTLEMENT IN CALIFORNIA WAGE-HOUR CLASS ACTION

by Art Gutman Ph.D., Professor, Florida Institute of Technology

Wal-Mart agreed to a settlement of up to 86 million dollars for 232,000 employees alleging nonpayment for vacation or personal leave in accordance with California state law after they were terminated (Ballard v. Wal-Mart Stores Inc., N.D. Cal., No. 4:06-cv-02069, motion to settle filed 5/11/10). The remedy includes 12 million of lost wages in relation to vacation pay and 74 million in potential penalties and interest. The settlement ends two 2006 lawsuits consolidated in the Northern District of California. Wal-Mart appealed class certification in this case, and the ruling, by the 9th Circuit, was stayed pending the ruling in Dukes v. Wal-Mart, a sex discrimination case. The 9th Circuit ruled in Dukes on April 27, 2010, and the settlement in the California wage and hour case followed within two weeks. The case itself is reminiscent of a 2006 case (Braun v. Wal-Mart) in which a jury awarded nearly 250 million dollars under Pennsylvania State law for violations for overtime violations and failure to honor break times.

THIRD-PARTY SEXUAL HARASSMENT IN PRISONS

by Art Gutman Ph.D., Professor, Florida Institute of Technology

On May 7 2010, the 11th Circuit affirmed a district court judgment of $630,000 for 14 women (12 nurses, 1 doctor & 1 classification officer) on grounds of third-party sexual harassment. The case is Beckford v. Florida Department of Corrections (DOC) [2010 U.S. App. LEXIS 9452]. In the interest of full disclosure, I was an expert for the plaintiff’s attorneys in this case. I spent many hours reviewing nearly hundreds of pages of documents, including depositions. My task was to evaluate the DOC policy for preventing and correcting sexual harassment. My conclusion was that as written, the policy was pristine, including a special section on third-party harassment. The problem was, the DOC did not consider prison inmates as third parties, and they were the harassers. Here’s what happened.

The women worked in “close management” dorms reserved for male inmates considered too great a safety threat for placement in the general prison population. The prisoners routinely masturbated at the women (called “gunning”) and directed foul sexually explicit language at them using words I will leave to the reader’s imagination. The women wrote DRs (disciplinary reports) and complained on numerous occasions to high-level management, including the warden and state officials. The record shows that one male captain told the women that the inmates were in their “living rooms” and could do what they please. Other male employees commented that the women should feel “complimented” by the gunning. Corrective measures were never taken.

The DOC argued that prisons are exempt from Title VII rules governing third-party harassment, to which the court responded “We refuse the invitation of the department to treat inmates differently from other third-party harassers and prisons differently from other employers under Title VII.” The court also rejected the “equal opportunity harassment” defense that prisoners harassed men and women alike, and therefore, the harassment was not because of sex. Bottom line: the 11th Circuit affirmed the district court’s ruling that the DOC “unreasonably failed to take steps to stop or mitigate the harassment.”

The moral is simple. Employers are liable if they fail to take corrective actions for harassment by any third party, including customers, contractors, visitors, etc.

DCI PRESIDENT DELIVERS FIRST KEYNOTE ADDRESS AT RADFORD UNIVERSITY'S GRAD SCHOOL COMMENCEMENT

DCI President David Cohen delivered the first-ever keynote address at Radford University's Graduate College Commencement and Hooding Ceremony on May 7, 2010. Cohen was chosen as the inaugural speaker based on his success in the short period of time since earning his master’s degree in industrial/organizational psychology from Radford and his commitment to his alma mater.

OMB COMPLETES REVIEW OF E.O. 13496 FINAL RULE

by Fred Satterwhite, Senior Consultant, DCI Consulting Group

(UPDATE: Final rule published on May 20, 2010)

On May 4, the Office of Management and Budget (OMB) completed its review of the U.S. Department of Labor's (DOL) final rule prescribing the details of the notice of employee rights under Federal labor laws required by Executive Order 13496. This means that the final rule will be published in the Federal Register very soon.

As mentioned here in March, the DOL submitted its final rule to the OMB on February 17.

President Obama signed Executive Order 13496 (“Notification of Employee Rights Under Federal Labor Laws”) on January 30, 2009. E.O. 13496 required the Secretary of Labor to prescribe the size, form, and content of the notice to be posted by a contractor describing the rights of employees under Federal labor laws, consistent with the policy set forth in section 1 of the order. The DOL published its proposed rule on August 3, 2009, and the subsequent public comment period ended on September 2, 2009.

Contractors should stay tuned to see what changes, if any, are made to the final rule based on the comments received by the DOL. Given OFCCP’s recent increase in scheduling on-site compliance reviews and repeatedly stated new interest in fielding and investigating individual employee complaints, the final implementation of the E.O. 13496 posting requirements will be germane to contractors’ compliance efforts.

UPDATE ON FUNCTIONAL AFFIRMATIVE ACTION PLAN (FAAP) PROCESS

by Keli Parody Wilson, Consultant, DCI Consulting Group

On February 22, 2010, DCI Consulting posted a blog highlighting the agency's Functional Affirmative Action Plan (FAAP) process trends. In summary, the blog focused on the prolonged approval process for amendments/renewal to FAAP agreements. Recently, contractors have received a letter from the agency explaining that the OFCCP is not approving any new requests to develop or renew FAAP agreements. Until the policy is updated by the agency, OFCCP is advising contractors to continue developing establishment AAPs. OFCCP will most likely be releasing policy guidance in the next 30 days.

Specifically, the letter stated the following information:

“The Office of Federal Contract Compliance Programs (OFCCP) has received your request to develop a Functional Affirmative Action Program (FAAP) agreement. At this time, the OFCCP is not approving any new requests to develop or renew FAAP agreements. The OFCCP is reviewing its policies regarding the FAAP process. We will issue new guidance in the near future. Until such guidance is issued, you should continue to develop and maintain your establishment-based AAPs. If your FAAP agreement has expired or is scheduled to expire within 30 days of receipt of this notice, you should continue to operate under your current agreement until new guidance is published. We will notify you when such guidance is published.”

For contractors with a current FAAP agreement, there’s a directive on the OFCCP website which explains the process for terminating the FAAP agreement. To officially terminate the agreement, there must be a termination letter explaining the reason for termination with a 90 day termination period. Specifically the directive states the following:

“Either party may terminate the functional AAP agreement upon 90 calendar days written notice. The notice will provide a brief explanation of the reason(s) for the termination, and the effective date of the termination.”