The EEOC is back at it! This time it has targeted corporate wellness programs and is challenging the legality of such programs under the ADA. The EEOC contends that the biometric testing and health risk assessments are “disability-related inquiries and medical examinations” that are not job-related and consistent with business necessity and, therefore, violate Title I of the ADA. The EEOC is focusing on the voluntary element of employee’s participation in a wellness program. Because while it is permissible for an employer to conduct a truly voluntary medical examination, it is illegal to force an employee to submit to such testing involuntarily, absent some statutory exception for the testing.

The EEOC is arguing that an employee should not have to submit to a medical examination in order to avoid a monetary penalty such as having to pay his full insurance premium or some cancellation fee. Where steep penalties are imposed for failing to participate in the wellness program, the wellness program is arguably involuntary, certainly in the eyes of the EEOC.

Employers should be careful when starting or managing a corporate wellness program. While this area is not settled by any means, these decisions will be an important guide for employers. To be safe, employers should make sure that when an employee elects not to participate in a wellness program they are not punished or penalized.

On September 25, 2014, the EEOC filed lawsuits in Florida and Michigan accusing employers of discriminating against transgendered employees. These are the first two cases ever filed seeking to protect transgender workers under Title VII.

In the Florida Case, EEOC v. Lakeland Eye Clinic,  the EEOC claims that Lakeland terminated an employee, Branson, in violation of Title VII. Specifically, the lawsuit alleges that “[a]t the time of hire, Branson presented as male (e.g., used the male name ‘Michael,’ wore male attire, and otherwise appeared to conform to traditional male gender norms).” During the course of employment, however, Branson began identifying herself as a female, and presented herself as female. She also informed Lakeland that she was undergoing a gender transition and was in the process of legally changing her name from Michael to Brandi. Lakeland claimed that Branson’s position was being eliminated.  The EEOC, however, alleges that Branson was discriminated against because of sex when she was terminated because she was replaced by a male in the same position two months later.

The Michigan Case is similar to the Florida case. In EEOC v. R.G. & G.R. Harris Funeral Homes, Inc., a funeral home fired an employee who presented himself as male at the time he was hired but was terminated two weeks after the employee notified her employer that she planned to undergo a gender transition and planned on presenting herself as female—wearing female clothes and conforming to female gender roles. In the lawsuit, the EEOC alleges that the employer terminated the employee by “telling her that what she was ‘proposing to do’ was unacceptable.”

Two years ago I wrote about the EEOC’s position on protecting transgender employees.  These cases are proof the EEOC was serious.  If successful, the EEOC will have legal precedent to rely upon to pursue employers under a broader definition of “sex discrimination” under Title VII. Employers must think twice before terminating an employee for making the decision to change gender. I strongly recommend employers check with counsel to obtain guidance about how to proceed if this issue presents itself.

Last week the Associated Press reported that the EEOC was sanctioned by a US District Court judge for $4.7 million dollars.  The sanctions were awarded because the EEOC brought a number of frivolous and groundless claims against trucking company CRST.

According to the opinion, the EEOC filed a lawsuit in 2007 against CRST alleging sexual harassment of a number of female employees.  In litigation over the next three years, the EEOC could not prove its claims and CRST sought to recover its attorney fees for defending the suit.  The Court ruled that 153 claims of the total claims brought by the EEOC initially were without foundation and sanctioned the EEOC approximately $4.5 million dollars.

The EEOC appealed to the 8th Circuit Court of Appeals.  On a technicality the case was reversed and returned to the US District Court for further rulings.  Again CRST sought its fees and again the judge ruled in its favor, this time adding the fees CRST incurred on the appeal.

This is an important decision for employers.  It will hopefully cause the often overzealous EEOC to temper its approach.  It also provides the basis for other employers across the US and Texas to make the same request if they prevail in a claim against the EEOC.  With the real possibility of recovering their fees, hopefully more employers will stand up to EEOC abuses and further reign in the agency’s excesses.

Of course, the sadest part of the whole situation in my opinion is that we the tax payers to this already strapped government will bear the cost of paying CRST.  Someone should be held accountable for the consequence to us and I, for one, have asked my representatives in Congress to do so.

Who, What, Why . . . 

Who does it apply to:  All employers that use criminal backgroundchecks to evaluate applicants or employees.

What is the issue:  Blacks and Hispanics are statistically more likely to be arrested and convicted of crimes than whites.  As a consequence, employers who make a blanket rule that any person with an arrest or conviction should not be hired or promoted may be unintentionally discriminating.  The EEOC recently used these statistics to force a settlement with Pepsi® over its policy against hiring anyone who has been arrested.   Following the settlement, the EEOC issued new guidelines regarding the use of criminal background checks.

Are the EEOC’s guidelines law:  The guidelines do not change existing law, but they reflect the EEOC’s focus on this issue and its intent to use the statistics against businesses.

How is the discrimination happening:  You all know discrimination is illegal.  You are probably less clear on the legal framework underlying discrimination, which comes in two forms: “disparate treatment” and “disparate impact”.  Disparate treatment involves intentionally treating one employee or a group of employees differently because of a protected characteristic.   Disparate impact is a little more subtle.  It involves a rule or policy established by an employer that disproportionately affects people in a protected group – here Hispanics and Blacks.  The EEOC’s new guidelines are primarily directed toward disparate impact discrimination where employers use criminal background checks as a threshold test to weed out applicants without considering the facts of each individual case.  Even though the employer’s policy is not discriminatory on its face, it can have the unintended consequence of reducing the number of Blacks and Hispanics in the employer’s workforce.

What are employers supposed to do differently:  To avoid accidentally denying a disproportionate number of Blacks or Hispanics a job or promotion, employers who use criminal background checks are required to make an in-depth analysis of that background.  Employers cannot simply deny all people employment because they have been arrested or convicted of a crime.  Instead, an employer must determine whether the specific criminal history should be used as a consideration for the job or promotion at issue.   Stated simply, employers should consider whether the particular crime should really act as a reason to deny a person employment to the particular job or promotion at issue.  As an example, a person considered for a night watchman position where people are rarely encountered should not necessarily be denied a job because of a conviction for assault in high school.   The EEOC wants to foster the use of targeted exclusions for particular positions.  This means that employers should evaluate each job category and exclude applicants with a criminal history only if that history relates to the performance of the job in question.

Are arrests somehow distinguishable from convictions:  In the EEOC’s view, employers should not ever use an arrest alone as a basis to deny a job or promotion to a candidate.  The EEOC cites two primary reasons for this view: (1) arrested people are still innocent until proven guilty; and (2) criminal databases are sometimes incomplete, leaving final dispositions out of records which might reflect an acquittal or failure to prosecute.  Interestingly, the EEOC does believe that employers can evaluate the underlying facts and act as judge and jury to decide whether the person committed the crime and whether there are extenuating circumstances that negate the arrest.

What type of in-depth analysis is required:  The EEOC cites to court of appeals cases setting out a three pronged analysis:

   • What was the nature and gravity of the offense;

   • How much time has passed since the offense; and

   • The nature of the position sought.

Are there some businesses that have to exclude convicts:  There are a large number of federal and state laws that restrict businesses from hiring people with certain criminal records.  For example, there are federal laws restricting people with criminal histories from having federal law enforcement positions, and being child care workers for federal agencies, bank employees, and port workers.  For a complete understanding of the restrictions that may affect your business, consult a lawyer.

Common Situations:

But we’re diverse:  Bakery of the South has a policy against hiring anyone with a criminal conviction in the last 10 years.   An applicant complains under the new EEOC guidelines.  After learning of the EEOC’s new guidelines and that its rule might not be legal, Bakery’s lawyer argues that there is no disparate impact against Blacks or Hispanics at Bakery because 40% of its employees are Hispanic and 35% are Black.  Are Bakery’s excellent diversity statistics sufficient to overcome the claim.  Unfortunately, no.  While it might seem counter-intuitive, simply having a diverse workforce does not change the fact that Bakery’s hiring practices have a disparate impact.  Without the policy Bakery might be 50% Black and 50% Hispanic.  But the law says I can:  If the federal limitations for working in banks are convictions within the last 10 years, Bankorama figures limiting for 20 years would be even better.  It can pride itself on the security it takes for its customers.  Is this OK?  There is no clear answer, but you can bet the EEOC is going to take the position that 10 years is good enough for the federal regulations, so it ought to be good enough for you.  If there are limitations in your industry, you probably should not go beyond them.

Only for applicants:  Nick has been a faithful employee of Fidget Widget, Inc. for 15 years, when the company’s owners sell out to Conglomerate.  Conglomerate wants to promote Nick to head Fidget Widget in the absence of the old owners, but finds a criminal conviction for felony assault 25 years ago when running a background check before the promotion.  Conglomerate refuses Nick the promotion because of this single criminal event.  Is Conglomerate within its rights?  No.  The guidance by the EEOC doesn’t just apply to applicants – it applies to all employment decisions.  As long as there is not a business justification consistent with Nick’s position, Conglomerate will be in the wrong with the EEOC.

What should I do:

Good: Be certain you are following all federal and state requirements applicable to your business restricting the hiring of convicted individuals.  Avoid using criminal convictions or arrests to make hiring decisions without a good connection to the position and your business.

Better: If using arrest as a basis to make hiring decisions, obtain the underlying facts and make your own decision about whether the applicant committed the offense.  Create conviction history restrictions for each job position in your business with strong consideration of whether the restrictions set are consistent with business necessity for that job.

Best:  All of the above, plus, document all facts considered for arrests and individualized circumstances considered when using convictions.  Be sure to draw the connection between the job and the need of the business in doing so.  Be careful not to create restrictions that are tenuous which might be questioned by the EEOC.

“Mia” Macy applied for a job with the Bureau of Alcohol Tobacco and Firearms and interviewed as a male candidate.  A former police detective from Phoenix relocating to San Francisco, Macy was repeatedly told by persons she interviewed with that she would be given the job she applied for.  Some time after interviewing, but before being hired, Macy reported to the organization that she was beginning the process of changing from a man to a woman.  Shortly thereafter Macy received notice that she would not receive the position because it was allegedly closed due to lack of funds.  Later, however, Macy learned that the position was not closed and had been filled by another candidate.

Following the public sector EEO procedures which are different than those in the private sector, Macy alleged sex discrimination and discrimination regarding gender assignment.  The allegation under gender assignment was rejected and Macy filed an internal appeal with the EEOC.  On April 20, 2011, the EEOC ruled that gender assignment is a “sex” discrimination claim.

What does this mean for Texas businesses?  Maybe a lot.  Maybe not much.  The decision is not binding on Texas or federal courts, but it will be used to suggest that these courts should adopt the position that gender assignment can result in a sex discrimination claim.  If a Texas state or federal court adopts the view that it is a claim, it may become the law.  I wouldn’t count on it happening any time soon, though.   The appeals courts that govern Texas both at a state and federal level have a reputation for being very conservative.  If a decision is made at a local level that gender assignment supports a claim for sex discrimination, it will most certainly be appealed and I cannot see any of the Texas appellate courts finding in favor of it.

Regardless of your views on the issue, however, it may be worthwhile to take the decision into consideration in future employment decisions.  Gender assignment is not likely to become a viable claim in Texas any time soon, but you would probably prefer to avoid the publicity and legal expense that comes along with being the guinea pig chosen to find out!

Everything is bigger in Texas.  Darn right.  Well, maybe this is one distinction Texas businesses could have done without.   In recently released EEOC complaint results for 2011, Texas ranked first. One in ten complaints across the US were filed in Texas.  Of those claims filed in Texas, race charges came in first, followed by sex, age, and national origin.

Folks, we are beating California where the employment laws and employee protections run rampant!  Let’s try to take some proactive steps to avoid this distinction in the future.

The EEOC announced today that Pepsi Beverages has agreed to a settlement of $3.1 million to resolve a claim by black prospective employees.  Between 2006 and 2010, Pepsi excluded from any consideration for employment any applicant who had been arrested or convicted of a crime, including minor offenses (not sure how minor).

The EEOC found reasonable cause to believe that Pepsi’s policy had a disproportionate effect on black applicants, and was poised to file a lawsuit against Pepsi.  According to the EEOC, the use of criminal background checks “can be legal”, but now apparently, it can also be illegal.

For the uninitiated, the US laws on discrimination not only prevent what might be called direct discrimination – toward a particular individual or group of individuals, but also they also prevent what is known as “disparate treatment”.  Disparate treatment happens when a protected class does not equal treatment with other protected class.  Disparate treatment can even happen when an otherwise innocuous policy – such as using criminal background checks – has a disproportionate and discriminatory effect.

Now, many of you reading this would say that it is ridiculous to say that you can’t exclude prospective employees because they have a criminal history.  After all, being a criminal isn’t a “protected class”.  I’m right there with you, but the EEOC doesn’t seem to see it that way.  From its perspective, a person’s criminal history might not be relevant to whether they can be a good employee.  I’m not exactly sure how that would work.  A person who commits a crime is willing to cross a line that I believe an employer ought to have the right to say they don’t want crossed.  It doesn’t matter to me if the person is applying for a job as a janitor and their crime was being drunk in public.  Sure the two are different, but that crosses a line I don’t want crossed.

If the EEOC can sue for this, it is tantamount to making being an ex-con a protected class.  Of course, since I am not king of the world, I don’t get to overrule this decision and my opinion doesn’t matter.

So, what does this mean for you, employers?  I guess it means that you have to give more thoughtful consideration to hiring criminals, or perhaps you have to be more careful to have a thoughtful excuse why a particular criminal shouldn’t be hired and mark it on their application.