CAVINESS BEEF PACKERS AGREES TO $600,000 SETTLEMENT WITH OFCCP ON ALLEGATIONS OF HIRING DISCRIMINATION

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

The settlement was announced in a news release dated 10/20/11 on the OFCCP website (http://www.dol.gov/ofccp/). The allegation in this case is that Caviness was guilty of discrimination of hiring based on sex and race. Based on audits at two facilities, the OFCCP found statistically significant hiring rates favoring men over women and Hispanics over non-Hispanics. Under the conciliation agreement, Caviness Beef Packers will pay $600,000 to 746 identified class members, including back wages and interest, and agreed it would extend at least 81 offers of employment as positions become available. Two things are unclear in the report. First, it’s not clear who the “non-Hispanics” were. Second, it’s not clear that there were any identified or identifiable selection factors resulting the alleged statistical disparities.

PROPOSED CHANGES TO CURRENT POPULATION SURVEY (CPS) DISABILITY SUPPLEMENT

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

In a release dated 10/19/11, the DOL announced proposed changes to the CPS Disability Supplement survey. The proposed changes are in accord with the Paperwork Reduction Act of 1995 (PRA95) [44 U.S.C.3506(c)(2)(A)]. According to the announcement, the Bureau of Labor Statistics (BLS) will issue an information collection request (ICR). Comments should be sent to:

Carol Rowan, BLS Clearance Officer, Division of Management Systems
Bureau of Labor Statistics, Room 4080
2 Massachusetts Avenue N.E., Washington, D.C. 20212.
Phone: 202-691-7628
Fax: 202-691-5111

According to the announcement, the May 2012 Disability Supplement will be conducted at the request of the DOL’s Office of Disability Employment Policy, and is designed to:

[P]rovide information on the low labor force participation rates for people with disabilities; the use of and satisfaction with programs that prepare people with disabilities for employment; the work history, barriers to employment, and workplace accommodations reported by persons with a disability; and the effect of financial assistance programs on the likelihood of working.

The BLS is particularly interested in comments that:

• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility.



• Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used.



• Enhance the quality, utility, and clarity of the information to be collected.



• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submissions of responses.

Comments submitted in response to this notice will be summarized and/or included in the request for Office of Management and Budget (OMB) approval of the information
collection request; they also will become a matter of public record.

THIRD CIRCUIT REVERSES AND REMANDS ON RESIDENCY REQUIREMENT FOR NON-UNIFORM WORKERS

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

The case is Meditz v. City of Newark [2011 U.S. App. LEXIS 19670] decided on 9/28/11. The issue is whether a residency requirement for non-uniform employees adversely impacts white applicants. The 3rd Circuit thinks so. Clearly, “reverse discrimination” cases are always of interest. However, this case is especially interesting in light of NAACP v. North Hudson Regional Fire & Rescue (2010) [707 F. Supp. 2d 520] in which a residency requirement for firefighter candidates that excluded applicants living outside of “member municipalities” was deemed to adversely impact black applicants. The North Hudson case was discussed in an alert on October 12, 2011. Also of relevance is a similar ruling to North Hudson by the 3rd Circuit in 1991 in NAACP v. Town of Harrison [940 F.2d 792].

Recall, there were three rounds in the North Hudson case. In Round 1, District Court Judge Dickson R. Debevoise issued a preliminary injunction giving North Hudson the option of hiring beyond its borders prior to the Supreme Court’s ruling in Ricci v. DeStefano (2009). North Hudson responded with a hiring freeze, fearing they would be in violation of a settlement reached with Hispanic applicants from within its borders in 2009. In Round 2, Judge Debevoise overturned the preliminary injunction in light of Ricci (that fear of losing a challenge by Hispanic applicants was job related). Judge Debevoise then changed his mind Round 3 when faced with statistical evidence that only 2 of 323 employees in the regional fire department were black, and black applicants would be hired in far greater numbers given expansion to neighboring counties.

Enter Gregory Meditz, a white male resident of East Rutherford, New Jersey who applied for the position of Housing Development Analyst in the City of Newark. Meditz, a lawyer, argued his own case and showed statistically that 9.24% of Newark's non-uniformed member workforce is white compared to 14.2% available in the relevant labor market for the job in question. Citing both the Harrison and North Hudson cases, District Court Judge William J. Martini granted summary judgment to the City of Newark [2010 U.S. Dist. LEXIS 37334], ruling:

This is not a situation where less than 1% of Defendant's population or total workforce is White. ….. Newark's employment statistics do not suggest its Ordinance has caused a significantly discriminatory hiring pattern for the positions in question. Moreover, Newark is New Jersey's largest city with over 270,000 residents, 38,950 of whom are White. Given its diversity and large population, there is no need to redefine the relevant labor market past city limits for purposes of Title VII analysis.

In other words, Judge Martini’s ruling reduces to two points: (1) that because of the size of Newark’s population, the city’s limits constituted a relevant labor pool, and (2) that a residency requirement that creates a 9.24% vs. 14.2% disparity is too small to suggest racial discrimination. Both part of Martini’s ruling were reversed in light of the Supreme Court’s landmark ruling in Hazelwood v. US (1977) [433 U.S. 299].


The first point is easy to dispel. It’s like saying that because Brooklyn, New York is so large, applicants from neighboring boroughs of New York City need not apply, even though New York City residents routinely travel across the boroughs to go to work. Thus, the 3rd Circuit ruled employers must consider “geographical location, flow of transportation facilities, locations from which [employers] draw their work force, and commuting patterns” in order to determine a relevant labor pool. For example the Hazelwood School District was in a suburb of St. Louis and the Supreme Court ruled based on transportation facilities and commuting patterns that St. Louis was not part of the relevant labor pool for the school district in the Hazelwood case. In contrast, the 3rd Circuit deemed that the confines of Newark were too narrow to constitute the relevant labor pool given the normal transportation flow.

The second, and I think more important point for present purposes, is that Judge Martini failed to use the Hazelwood standard for assessing the 9.24% vs. 14.2% disparity. Or in the words of the 3rd Circuit:

The Supreme Court has set forth standards to be used as a basis for evaluating statistical evidence in disparate impact claims. Relying on the statistical standards developed in jury analysis cases, the Supreme Court suggested that "fluctuation of more than two or three standard deviations would undercut the hypothesis that decisions were being made randomly with respect to race." Hazelwood, 433 U.S. at 311 n.17. Assuming for the moment that the District Court was correct and the relevant labor market is the population of the city of Newark, the difference between the two percentages is slightly over six standard deviations, far in excess of the Supreme Court's suggested standard of two or three standard deviations.14 This difference appears to establish a prima facie case.

The reference to the “jury analysis cases” is to Castaneda v. Partida (1977) [430 U.S. 482], the ruling that established the deviation rule that was subsequently used (i.e., three months later) in Hazelwood.

The bottom line is even within the confines of Newark, the relevant disparity exceeded the requirements of the deviation rule, meaning Meditz has a valid adverse impact claim and the City of Newark must come up with a job-related reason for its residency requirement.

EMPLOYEE MISCLASSIFICATION PREVENTION ACT REINTRODUCED IN HOUSE OF REPRESENTATIVES

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

Following closely on the heels of the joint DOL-IRS announcement to improve efforts to identify employer practices of misclassification (9/19/11 – see alert posted on 10/18/11), Representative Lynn Woolsey (D-Calif.) re-introduced the “Employee Misclassification Prevention Act” (EMPA) on 10/13/11. Woolsey had previously introduced similar legislation in April 2010 that died in a Democratic-controlled House. Coming so closely on the heels of the DOL-IRS announcement, and in a Republican-controlled House, it will be interesting to see if this bill (H.R. 3178) advances. Recall that the purpose of the DOL-IRS release was to:

[E]nable the U.S. Department of Labor to share information and coordinate law enforcement with the IRS and participating states in order to level the playing field for law-abiding employers and ensure that employees receive the protections to which they are entitled under federal and state law.

The EMPA would be an amendment to the Fair Labor Standards Act. The main legislative provisions of Woolsey’s bill include:

• Ensuring that employers keep records reflecting the accurate status of each worker as an employee or nonemployee and clarify that employers violate the Fair Labor Standards Act when they misclassify workers.



• Providing penalties for employers that misclassify their employees and are found to have violated employees' overtime or minimum wage rights. The penalty would not exceed $1,100 for first-time offenders and up to $5,000 for repeated violations.



• Requiring employers to notify workers of their classification as an employee or nonemployee.



• Creating an “employee rights” website to inform workers about their federal and state wage and hour rights.



• Providing protections to workers who are discriminated against because they have sought to be accurately classified.



• Mandating that states conduct audits to identify employers who misclassify workers and require that DOL monitor states' efforts to identify misclassification.



• Directing states to strengthen their own penalties for worker misclassification.



• Permitting DOL and IRS to refer incidents of misclassification to one another.

According to George Miller (D-Cailf.), the ranking member of the House Education and Workforce Committee:

Misclassification is fundamentally unfair to our nation's law-abiding employers, and unfair to the countless workers who are unlawfully stripped of basic protections like minimum wage, overtime, and the right to organize. Strengthening the law to prevent misclassification will level the playing field for those that follow the law and help to close an estimated $54 billion federal tax gap resulting from this illegal activity.

According to Woolsey, the IRS estimates that misclassification cost the federal treasury about 2.7 billion a year in unpaid tax revenue. Woolsey also noted that:

[A]ccording to the General Accountability Office, the misclassification of employees is widespread with at least 10 million workers rightly or wrongly classified as independent contractors. In addition, Woolsey said, the Labor Department has estimated that up to 30 percent of U.S. companies misclassify their employees.

This is beginning to look like a well coordinated frontal assault on misclassification of employees.

DOL ANNOUNCES MEMORANDUMS TO ADDRESS MISCLASSIFICATION OF EMPLOYEES

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

In a news release dated September 19,2011, DOL Secretary Hilda Solis announced an agreement between the DOL and IRS to improve efforts to identify employer practices of misclassification of employees that serve to avoid provision of federal employment protections. Eleven state leaders representing seven signed the memorandum (Connecticut, Maryland, Massachusetts, Minnesota, Missouri, Utah and Washington). Solis also announced agreements with state labor agencies in Hawaii, Illinois and Montana, and with New York’s attorney general. According to the release:

The memorandums of understanding will enable the U.S. Department of Labor to share information and coordinate law enforcement with the IRS and participating states in order to level the playing field for law-abiding employers and ensure that employees receive the protections to which they are entitled under federal and state law.

The primary example given that would “change, obscure, or eliminate the employment relationship” is denial of rights for an employee who is classified as an independent contractor, and therefore, loses federal protections under various laws. The memorandums were a product of “Misclassification Initiative” spawned by Vice President Biden’s Middle Class Task Force

SUPREME COURT HEARS ORAL ARGUMENTS ON MINISTERIAL EXEMPTION IN ADA & RETALIATION CASE

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

The case is Hosanna-Tabor Evangelical Lutheran Church & School v. EEOC. At issue is the definition of “minister.” The oral arguments were on 10/5/11 and may be viewed at http://www.supremecourt.gov/oral_arguments/argument_transcripts/10-553.pdf.

The facts of the case are that Cheryl Perich, a teacher, was diagnosed with narcolepsy and given a medical leave of absence with the promise that her job would be held open. However, Hosanna-Tabor ultimately denied Perich’s request to return to work and Perich threatened to sue. There is no doubt that Hosanna-Tabor fired Perich for threatening to sue (they called it “insubordination”), and that there was no “flexible interaction” with respect to reasonable accommodations as required under the ADA. Thus, Perich would be a clear winner on both ADA and retaliation charges if her employer was a public school. The problem is she worked for a Church school.

Generally, churches and church-affiliated institutions are entitled to exemptions. For example, a church may discriminate for any reason for the position of minister (i.e., the “ministerial exception”), and may discriminate based on religion for any non-minister position. What it can’t do is discriminate based on factors other than religion (e.g. race, sex, age or disability) for non-minister positions. Therefore, the key question in this case is whether Perich was a minister. Clearly, there is no problem assessing the ministerial exception for Priests, Rabbis and the like. However, as this case illustrates, it’s not always that clear for other types of positions.

In the present case, Hosanna-Tabor had two different teaching positions: (1) “lay” or “contract” teachers and (2) “called” teachers. The lay teachers were clearly non-ministers by Hosanna-Tabor’s definition, but not so the called teachers. Called teachers had to complete colloquy classes and receive a certificate of admission into the teaching ministry. Once admitted, called teachers received the title of “commissioned minister.” The problem in this case was, with some minor exceptions, Perich’s duties mimicked those of the lay teachers, as she taught mainly secular courses (e.g. math, language arts, social studies, science, gym, art, and music).

The case can be made that the justices were tough on both sides during oral arguments. They induced Hosanna-Tabor’s attorney to state that there two ways to qualify as a minister: (1) to be declared a minister irrespective of what the job description is and (2) to teach primarily religious courses, even in the absence of the title of minister. The justices also drilled the EEOC’s attorney on grounds that the EEOC was arguing that the exemption in this case is not warranted based on the 1st Amendment’s freedom of association, whereas the justices believed the more appropriate route was the Establishment Clause of the 1st Amendment as it applies to entanglement between church and state.

One thing is clear –the ministerial exemption has not been applied in prior lower court cases in which teachers have taught secular courses in religious schools. Thus, in my opinion, the issue here boils down to whether a church can “ordain” a minister who, in effect, has no ministerial duties. The district court granted summary judgment to Hosanna-Tabor and the 6th Circuit reversed. A Supreme Court decision is likely sometime in June 2012.

HAMPTON INN IN THE CROSSHAIRS OF THE EEOC --- AGAIN

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

About a year ago, the EEOC sued a Hampton Inn franchise for racial discrimination and retaliation (see http://www.eeoc.gov/eeoc/newsroom/release/9-30-10.cfm). This particular franchise was located in Indianapolis, Indiana. That lawsuit was on behalf of a class of terminated black housekeeping employees as well as a class of black housekeeping applicants. The EEOC alleged that the general manager of the hotel told her employees that she favors Mexicans because they “clean better and complain less” than black housekeeping staff. The EEOC also alleged that the company destroyed employment records for a period of well over a year, thus widening the potential class.

At the time, I thought the case was interesting, but not worthy of an alert (so many cases, so little space). Now comes another EEOC lawsuit against a Hampton Inn in an entirely different locale that raises the same two issues. The more recent lawsuit features a Hampton Inn franchise in Craig, Colorado (see http://www.eeoc.gov/eeoc/newsroom/release/10-3-11b.cfm). Here, the alleged victims are three white employees, and the allegation is that franchise owners believed that “white or non-Hispanic workers” are “indolent” (i.e., they are lazy and lack energy). As in the prior case, there is the additional allegation that the federal recordkeeping laws were violated by failure to “archive and preserve employment records for at least one year.”

The lesson seems simple enough. When individual high ranking employees (owners, general managers, front line managers, etc) can make subjective discretionary decisions linked to stereotypical beliefs, and the outcome could be discrimination based on whatever stereotypical beliefs exist in the minds of the high ranking officials. Therefore, they can favor one group in one area of the country and another group in another areas of the country. What’s needed, particularly in companies that have multiple franchises in multiple locations, is a structured selection process that circumvents subjective, discretionary decision-making.

CCE SUBMITS COMMENTS ON COMPENSATION DATA COLLECTION TOOL NPRM

October 11, 2011 - CCE submitted the following comments on OFCCP’s NPRM for the proposed compensation data collection tool. These comments were submitted through www.regulations.gov.

CCE Comments on Compensation Data Collection Tool