The decision, Christine Savage v. Township of Neptune, involved a former police officer talking about her former employer’s abusive culture on television after the parties had entered into a settlement agreement. There, the Supreme Court ruled that the non-disparagement clause in Christine Savage’s settlement agreement resolving sex discrimination, sexual harassment and retaliation claims against her former employer was against public policy and unenforceable under New Jersey’s #MeToo statute, N.J.S.A.10:5-12.8(a). This case represents the latest in the trend of states eroding employers’ use of confidentiality in settlements.

What Were the Facts of Savage v. Neptune?

Christine Savage, a former police sergeant, initially sued her employer, the Neptune Township Police Department in 2013, alleging sexual harassment, sex discrimination, and retaliation. The first lawsuit settled in 2014. Savage brought another suit in 2016, alleging violation of the settlement agreement and that the harassment, discrimination, and retaliation had increased.

The parties entered another settlement in July 2020, which contained a non-disparagement provision providing that the parties agreed not to make or cause others to make any statements “regarding the past behavior of the parties” that “would tend to disparage or impugn the reputation of any party.” The non-disparagement provision extended to “statements, written or verbal, including but not limited to, the news media, radio, television, . . . government offices or police departments or members of the public.”

After the parties entered into the settlement agreement, Savage participated in an interview as part of a television news show covering her lawsuit. During the interview, Savage made comments such as “you abused me for about 8 years” and that the police department was run under the “good ol’ boy system.”

The police department filed a motion to enforce the settlement on the grounds that Savage’s television interview violated the parties’ non-disparagement clause. The trial court granted the motion. An appellate court reviewed and reversed, ruling that while the non-disparagement clause was enforceable, Savage did not violate it.

Then, the Supreme Court went a step further and held that the non-disparagement clause did violate N.J.S.A.10:5-12.8(a), which provides in part that “[a] provision in any employment contract or settlement agreement which has the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment (hereinafter referred to as a “non-disclosure provision”) shall be deemed against public policy and unenforceable against a current or former employee.”

The Supreme Court determined that whether the provision is labeled a “non-disparagement”, or “non-disclosure” provision does not control the application of the statute. Rather, the relevant determination is whether the provision has the effect of concealing the details relating to a claim of discrimination, retaliation, or harassment. The Supreme Court held that Savage’s non-disparagement provision had that effect, in violation of the #MeToo statute.

What Should Employers Do Now?

New Jersey employers should pay close attention and work with counsel to carefully craft settlement agreements for employees who have asserted claims of discrimination, harassment, or retaliation. Employers may not include any provision that has the effect of concealing the details relating to a claim, not just non-disclosure provisions. Significantly, this decision likely applies to New Jersey-based employees, so employers located outside of New Jersey may also be affected.

Further, despite having its origins in the #MeToo movement, the decision also does not limit such restrictions to agreements settling only sexual harassment claims, but also places such restrictions on agreements settling discrimination and retaliation claims as well.

Other states have similar #MeToo statutes, and we recently reported on amendments to New York’s law. Among other things, the amendments prohibit settlement agreements from requiring the complainant to pay liquidated damages or forfeit settlement payment for violating a non-disclosure or non-disparagement clause.

Unlike New Jersey, New York has not gone as far as to effectively ban restrictive non-disparagement provisions. It remains to be seen whether this New Jersey decision will serve as an impetus for changes in other states. Thus, all employers should work with counsel to track state laws and court decisions interpreting evolving #MeToo laws and their application to settlement agreements.

If you have questions concerning employee settlement agreements, please contact a member of Kelley Drye’s Labor and Employment team.

Employers beware: The Muldrow decision makes it easier for employees to assert claims of discrimination, when the only adverse action they suffered was a transfer. Prior to this new ruling, employees bringing Title VII lawsuits over a transfer in some Circuits had to show “significant harm” - that the alleged discrimination impacted material terms of employment such as pay. Now, the Supreme Court has uniformly lightened this burden for plaintiffs across all federal Circuits, as they only have to show “harm” rather than “significant harm” to allege a Title VII claim. Accordingly, this new ruling may pave the way for more employees to bring Title VII lawsuits in cases where employees are transferred and there is arguably “some harm,” but that harm is not significant. This change is crucial for employers, particularly those analyzing the risks of transferring employees, even where such transfers do not alter the employees’ pay or benefits. Employers and their counsel must now determine whether these often-routine employment changes could be construed as causing any sort of “harm” to employees under this new standard.

What were the Key Facts of Muldrow?

Sergeant Jatonya Clayborn Muldrow commenced a lawsuit against her employer, the St. Louis Police Department, alleging that she was transferred because she is a woman. Muldrow was transferred from her position as a plainclothes officer in the Intelligence Division and replaced with a male officer. In her new position, her rank and pay remained the same, while her responsibilities, perks, and schedule changed. Her new role involved supervising the day-to-day activities of the neighborhood patrol officers rather than working with high-ranking officials on the priorities of the Intelligence Division. She also lost access to an unmarked take-home vehicle and had a less regular schedule involving weekend shifts.

The lower court granted summary judgment to the Police Department, and the Eighth Circuit affirmed, concluding that Muldrow had not met her burden to show that the transfer out of the Intelligence Division constituted a significant employment disadvantage.

What are the Highlights of the Supreme Court’s decision?

The Court rejected the Eighth Circuit’s standard for analyzing Title VII claims for transfers. The Court articulated the new standard as follows: “Muldrow need show only some injury respecting her employment terms or conditions. The transfer must have left her worse off, but it need not have left her significantly so.” While Muldrow’s rank and pay remained the same, other aspects of the transfer left her “worse off” such as being moved from a prestigious specialized division working on priority investigations and with police commanders to a role that primarily involved administrative work.

Pre-Muldrow and Post-Muldrow Analysis Under Title VII

Whether Muldrow changed the law in your circuit or not at this point does not matter; all employees now have a lower burden when suing under Title VII to challenge a transfer. We can look at jurisdictions that already had this lighter standard, akin to Muldrow, for guidance as to how Muldrow will be applied.

For example, in the Second Circuit, Courts have determined that cases where an employee is transferred and the transfer does not affect pay or benefits, the transfer can still violate Title VII as long as it alters the terms and conditions of employment in a “materially negative way.” It remains to be seen how the Second Circuit and others will distinguish “worse off” from “materially negative.”

What Do You Need to Do?

ALL employers would be well advised to take a closer look at transfers of employees and analyze whether employees can claim any type of harm from those transfers. It may be the case that even if the employee points to some kind of harm – such as an inferior schedule or more administrative work – that may be sufficient to carry a lawsuit forward under Muldrow, where before the employer may have had a shot at a dismissal.

If you have any questions about employee transfers or would like to discuss best practices in light of the Muldrow decision, please reach out to a member of Kelley Drye’s labor and employment team.

While the decision remains—at least technically—restricted to the field of higher education, we undoubtedly observed a ripple effect throughout the private sector, both in the court of public opinion and actual court system. Following the decision, organized, well-funded, committed activist/political advocacy groups started to attack DEI programs. Efforts by groups like the American Alliance for Equal Rights (AAER) and America First Legal Foundation (AFL) included urging the Equal Employment Opportunity Commission to investigate DEI initiatives at top 100 companies and challenging initiatives at law firms and airlines in federal court. As a result, Revelio Labs estimated that the amount of DEI jobs shrunk by 8% throughout early 2024.

There remain several open questions regarding what organizations can do to protect against attacks on their DEI initiatives. On March 6, 2024, the Second Circuit presented one potential avenue to challenge the standing of organizations like the AAER or AFL. In Do No Harm v. Pfizer, Inc., the court rejected a challenge to Pfizer’s diversity fellowship program by Do No Harm (DNH), a group with the stated purpose of removing division and discrimination from healthcare professions. DNH claimed that Pfizer’s fellowship program—which seeks “to advance students and early career colleagues of Black/African American, Latino/Hispanic, and Native American descent”—discriminated against white and Asian-American applicants in violation of New York state and federal law. The court held that DNH lacked legal standing and dismissed the challenge to Pfizer’s diversity program.

The Second Circuit’s decision creates a potential roadblock for challenges levied by organizations against DEI initiatives. We will analyze the language of the opinion, evaluate the impact of the decision, and provide guidance for organizations that wish to continue to protect against attacks on their diversity, equity and inclusion initiatives.

Do No Harm v. Pfizer

In Do No Harm v. Pfizer, Inc., the Second Circuit majority held that DNH failed to establish standing to sue in the context of a motion for a preliminary injunction because it failed to identify by name any individual who was injured by Pfizer’s alleged discriminatory fellowship program. In its motion for a preliminary injunction, DNH alleged that two anonymous members met the eligibility requirements of Pfizer’s diversity fellowship, but did not apply because they identified as white and/or Asian-American. According to the allegations, the members felt that they were excluded from the fellowship because of their race and would be ready and able to apply if Pfizer eliminated its allegedly discriminatory criteria.

The Court rejected DNH’s standing to sue on behalf of the anonymous members. While the Court noted associations are allowed to sue on behalf of their members when those members would otherwise have standing to sue on their own, DNH was required to identify the actual names of the members harmed by the challenged program. The submission of two anonymous declarations was insufficient. Without actually naming members that were harmed by Pfizer’s diversity fellowship, DNH could not establish standing to sue under Article III of the Constitution. Without standing to file its motion for preliminary injunction, the Court dismissed both the motion and DNH’s complaint against Pfizer.

The Second Circuit carefully noted that it would not reach a determination of whether at the pleading stage DNH was required to identify its members to establish standing. The fact that DNH failed to establish standing for its motion for preliminary injunction was sufficient to dismiss all claims against Pfizer. But, the decision now presents a road map for companies to protect their diversity initiatives against organizations like AAER and AFL who cannot advance the interests of members shrouded in anonymity.

Impact on Other Circuit Courts

Prior to the Second Circuit’s decision in Do No Harm v. Pfizer, there were few cases tackling the issue of whether organizations need to identify their members by name to establish standing. In American Alliance for Equal Rights v. Fearless Fund Mgm’t, LLC, the Eleventh Circuit held that AAER had established standing on behalf of its members to bring forth a lawsuit against a venture capital firm focused on funding businesses that were majority-owned by Black women. Despite AAER not providing names of actual members, the Court noted it was inappropriate to require specific names at the motion to dismiss stage.

Notably, attorneys for Fearless Fund Management have already informed the Eleventh Circuit of the decision in Do No Harm v. Pfizer and noted that AAER failed to identify allegedly injured members by name. Fearless Fund Management requested that the Eleventh Circuit come to the same conclusion as the Second Circuit, and deny AAER’s standing to sue for a preliminary injunction because AAER failed to identify affected members and failed to corroborate boilerplate statements that the anonymous members are ready to apply for a grant.

The Eleventh Circuit’s decision will determine whether there is uniformity in evaluating standing issues for a preliminary injunction or whether a circuit split will have to be decided by the Supreme Court.

What Comes Next?

Do No Harm v. Pfizer presents a viable roadblock against veiled attacks by organizations seeking to challenge private sector DEI initiatives. In jurisdictions that follow the Second Circuit’s decision, companies can attack organizational standing in motions to enjoin diversity programs in an effort to dismiss the entire lawsuit. However, until the Eleventh Circuit, and potentially the Supreme Court, weighs in on the challenges to standing, there remain open questions about how reliable the defense will be. Courts will further have to opine on whether the standing challenge only applies to the enhanced requirements at the preliminary injunction stage or if the rationale can be transferred to the more lenient pleading stage analysis. For now, DEI programs are still lawful and employers who value diversity should remain diligent in checking updates to the legal landscape on how to best enact and protect their programs or initiatives.

If you have questions or would like to discuss your company’s DEI program and initiatives, please reach out to a member of Kelley Drye’s labor and employment team.

The proposed guidance lays out in detail the legal standards applicable to harassment claims under the federal law and provides a variety of illustrative examples coupled with references to recent case law.

One of the most notable aspects of this guidance is the incorporation of the Supreme Court’s decision in Bostock v. Clayton County. In Bostock the Supreme Court ruled that Title VII’s protections extended to claims for discrimination on the basis of sexual orientation and gender identity. Although that case dealt with a discriminatory termination, and not harassment, in the proposed guidance, the EEOC has noted: “[t]he Supreme Court’s reasoning in the [Bostock] decision logically extends to claims of harassment.”

The proposed guidance unequivocally states that Title VII extends to claims for harassment on the basis of sexual orientation or gender identity, “including how that identity is expressed.” Beyond these overt protections for LGBTQ+ employees, the proposed guidance also expressly acknowledges pregnancy, childbirth, and “related medical conditions,” encompasses harassment claims based on a woman’s reproductive decisions, including those related to contraception and abortion.

The EEOC’s proposed guidance lays out a playbook for how employers can show that they have exercised “reasonable care” both to prevent and correct harassment by describing in detail features of effective anti-harassment policies, processes, and training.

But the guidance is not final just yet. It is anticipated that the guidance will be published in the Federal Register on Monday, October 2, and once published the draft guidance will be open for public comment for 30 days.

Although the guidance itself will not be legally binding, employers would be wise to review this lengthy document and understand myriad ways that employees can pursue harassment claims against employers. If anything, it is a reminder that the best defense to these kind of claims is working to foster a respectful workplace and maintaining effective policies to mitigate issues that may arise. If you have any questions concerning compliance of your business’s current harassment policies or procedures, please contact a member of Kelley Drye’s Labor and Employment team.

Last week, the U.S. Equal Employment Opportunity Commission (EEOC) introduced proposed regulations to assist covered employers in their implementation of the PWFA. The proposed regulations identify certain accommodations for pregnant and postpartum workers that must be provided regardless of the circumstances. As a result of these proposed regulations, employers throughout the nation should be preparing themselves to identify and better manage requests for accommodation from pregnant and postpartum workers.

What’s the status of the proposed regulations?

The EEOC unveiled the proposed regulations on Monday, August 7, 2023, and subsequently published these proposed regulations in the Federal Register on Friday, August 11, 2023. The public will have 60 days to comment on the proposed regulations. The EEOC has asked for input on specific areas including defining key terms and examples of what would constitute reasonable accommodations under the law.

Has the EEOC identified reasonable accommodations?

The EEOC has identified four pregnancy accommodations that should be granted in almost every circumstance. These accommodations include allowing employees to carry and drink water as needed, additional restroom breaks, standing and sitting options, and additional breaks to eat and drink.

Additionally, the EEOC identified other examples of possible reasonable accommodations that a covered employer must provide unless it can demonstrate that the accommodation would impose an undue hardship, including:

• Schedule changes, part-time work, and paid and unpaid leave
• Telework
• Closer parking spaces
• Light duty
• Making facilities accessible or modifying the work environment
• Job restructuring

What’s the interplay between the PWFA, PDA and ADA?

Historically, two federal laws have governed an employers’ obligation to pregnant and postpartum workers. The Pregnancy Discrimination Act of 1978 (PDA) prohibits discrimination on the basis of pregnancy, childbirth, or related medical conditions. By contrast, the Americans with Disabilities Act of 1990 (ADA) prohibits discrimination based on a disability, including a disability related to a pregnancy (i.e. diabetes that develops during pregnancy). The PWFA bridges the gaps between these two federal laws, both of which provide minimal guidance with regard to appropriate reasonable accommodations for pregnant and postpartum workers.

The PWFA does not replace federal, state, or local laws that are more protective of employees and applicants and the PWFA does not apply to claims of discrimination. Rather, the PWFA focuses only on a covered employer’s obligation to provide reasonable accommodations.

What can employers do now to comply with the PWFA?

The EEOC began accepting charges alleging violations of the PWFA on June 27, 2023, leaving employers in a quandary as to how to comply with the new law with very little guidance. The EEOC’s proposed regulations shed some light on what accommodations may pass muster, but what practical measures should a covered employer consider now to manage risk? Here are some tips:

• Policy Updates: While many employers may already have policies in place that comply with the PDA and ADA, covered employers should review and, if necessary, update their accommodation policies to ensure compliance with the PWFA, as well as related state laws.

• Revamp Protocols: Employers must reevaluate and/or formalize processes for managing requests for accommodation from pregnant and postpartum workers, thereby ensuring that employers consistently satisfy their obligation to engage in the interactive process pursuant to the PWFA.

• Training: Employers should consider training managers on how to identify requests for accommodation from pregnant and postpartum workers, including channeling these requests to the appropriate individual(s) within the organization who is tasked with facilitating workers’ accommodation requests.

As covered employers navigate these new accommodation requirements, Kelley Drye’s Labor and Employment team can assist employers in their efforts to ensure compliance with the new law, including updating policies and procedures and training Human Resources and supervisors to identify and better manage pregnant and postpartum workers’ requests for accommodation.

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In the SFFA ruling, the Court struck down affirmative action programs at Harvard and the University of North Carolina, holding that the admissions programs at both universities violated the Equal Protection Clause of the 14th Amendment. On July 13, 2023, the Attorneys General (the AGs), of thirteen states – Alabama, Arkansas, Indiana, Iowa, Kansas, Kentucky, Mississippi, Missouri, Montana, Nebraska, South Carolina, Tennessee, and West Virginia – sent a letter to the CEOs of Fortune 100 companies warning that their current race-conscious hiring and promotion preferences violate the law, and citing the SFFA decision as authority. The AGs’ letter threatens that hiring and promotion quotas favoring minorities violate Title VII of the Civil Rights Act of 1964, and may further violate analogous state laws that the AGs have jurisdiction to enforce. Similar to the Supreme Court’s analysis of the affirmative action issue, the AGs argue that even if DEI hiring programs are benignly designed to “help” members of certain minority groups, they naturally do so to the detriment of others who do not meet the same protected criteria. Senator Cotton certainly takes a similar view.

Then, on July 17th, Senator Tom Cotton (R-Arkansas) sent a letter to 51 major U.S. law firms, claiming that DEI employment initiatives violate federal law and the Supreme Court’s holding in SFFA. In his summary, the Senator broadened the threat not just to the firms themselves, but to their clients as well, warning: “to the extent that your firm continues to advise clients regarding DEI programs, or operate one of your own, both you and those clients should take care to preserve relevant documents in anticipation of investigations and litigation.”

To further confuse businesses, on July 19, the Attorneys General from 21 states sent their own letters to a number of large companies stating that DEI programs are lawful. They pointed out that the SFFA decision does not apply to private businesses, and that DEI programs are still a lawful goal for companies to pursue. The pro-DEI AGs go on to encourage employers to continue to advance diversity lawfully, and to recruit and retain diverse employees. Faced with these two competing viewpoints, employers are left to pull out their hair in confusion.

Who is right: Are DEI Progress Unlawful?

First, the July 19th pro-DEI AG’s are correct: the SFFA decision does not directly apply to private employers. The decision only addressed the narrow issues of whether the admissions process of two educational institutions, both of which accept federal financial assistance, violated Title VI of the Civil Rights Act of 1964 and the Fourteenth Amendment. These laws do not apply to private employers, which are covered by statutes like Title VII, and use different legal frameworks to analyze claims of discrimination. Those legal tests were not affected by the SFFA decision at all.

Additionally, even before the SFFA decision, many of the processes which universities were allowed to follow in admissions were already illegal for a private employer – which cannot favor one race over another in employment decisions. Under Title VII, private employers are prohibited from making decisions based on race and other protected characteristics. Unlike higher education, federal law has never allowed employers to take race into consideration in making employment decisions, and employers generally are not permitted to take employment actions motivated by protected characteristics, including meeting racial- or sex-based quotas.

The EEOC’s View

Following the SFFA decision, the EEOC released a statement reiterating that the decision does not address employer efforts to foster diverse and inclusive workforces. The EEOC has made it clear that it remains lawful to implement DEI programs to ensure that workers of all backgrounds are provided with an equal opportunity in the workforce. This dichotomy between the EEOC and conservative political elements in Congress, mean that employers who choose to implement DEI programs must pay attention to the swinging political pendulum, and be ready to adapt as necessary to conform with any power changes in Washington (or, alternatively, be prepared to bear the financial costs of litigating any challenges).

The opposing view as stated by the 13 AGs’ letter to the Fortune 100 CEOs, is concerned with any progress that provides a benefit to some applicants but not others in a corporate setting. Corporate DEI hiring programs that have given a “plus” factor to some protected characteristics, may operate as “negative” factors for others, and might not hold up under greater scrutiny in future litigation. In the wake of the SFFA decision, we may see an uptick of “failure to hire” lawsuits by non‑diverse applicants, who allege that they were not fairly considered based upon an employer’s publicly-expressed DEI initiatives, which are perceived to favor minority-applicants.

Are reverse-discrimination claims on the rise?

In recent years, there has been an increase in cases where Caucasian employees have sued claiming reverse discrimination, and won. For example, in Philips v. Starbucks (Case No. 1:19-cv-19432-JHS-AMD, D.N.J. June 15, 2023), the New Jersey federal court awarded $25.6 million dollars to Philips, a White manager who was fired following an incident with a Black customer. In Philips, the jury found that the plaintiff’s termination was motivated by her race.

In another example, a conservative group filed a complaint with the EEOC against McDonald’s concerning the fast food giant’s DEI strategy. In the letter Michael Ding of America First Legal Foundation wrote, “In its 2021-2022 Global DEI Report, the corporation credited its “Global Diversity, Equity and Inclusion Strategy” as the primary cause for driving an increase in women at the Senior Director and above level from 37% in 2020 to 41% in 2021, and an increase of “Underrepresented Groups” from 29% to 30%.5 … To further incentivize managers to hire and promote employees according to these quotas, in 2022, the corporation has, among other things, expanded its quantitative metrics to hold all Vice Presidents, Senior Vice Presidents, and Managing Directors “accountable for engaging in inclusive behaviors that support talent development and building a strong diverse succession pipeline” and implemented race, sex, and national origin based preferences and quotas for hiring, promotion, and training within its legal department.”

There’s also the Netzell v. Amer. Express Co. (2:22-cv-1423-SMB, D. Az.) case, where American Express is currently being sued by a group of employees who claim that its DEI initiatives directly violate Title VII. The rise of “anti-woke” activism, particularly by conservative-aligned, non-profit organizations, will only increase this trend.

What Should Employers Do?

The SFFA decision did not change the law for private sector employers. However, it certainly signals a “shift in the winds,” which may have indirect implications for the continued trend of pushback against DEI initiatives. Now is the moment to act, before your company is targeted for a lawsuit. Take proactive steps to assess your diversity programs, and eliminate any adverse risks.

• Evaluate your DEI initiatives. Review your voluntary DEI initiatives and programs carefully and make sure they are compliant with the law. There should never be a mandate or directives to “favor” or “target” certain groups for hiring or promotion. Avoid or eliminate direct numerical targets, such as “10% of this team must be a certain demographic”. Look closely at leadership acceleration programs or internship programs that are open only to members of underrepresented minority groups, as these may come under scrutiny under the expected wave of further litigation.
• Review Your DEI Communications. Review internal and public facing DEI communications to avoid statements that may be mischaracterized as unlawful. Take care to be clear that your company is committed to all employees, regardless of protected class. Make sure that race or ethnicity are not explicit “plus” factors in any employment decision. Also make sure that executives are careful about statements that indicate any sort of racial or ethnic preference.
• Use Other Factors to Encourage Diversity. It is important to keep in mind that DEI programs do not exist to favor certain groups of individuals over others. These programs exist because diverse, equitable, and inclusive workplaces may be more successful, agile, and equipped to fit customer and client needs. Rather than directly relying upon an individual’s race or other protected characteristic, it may be more appropriate to consider an individual’s history of overcoming adversity or economic status when making hiring decisions.
• Expand Your Recruiting Efforts. The SFFA decision is likely to have an effect on the diversity of graduating classes in higher education, which will result in decreased diversity in applicant pools coming from at least certain colleges and universities. Employers committed to ensuring a diverse applicant pool may want to reconsider what colleges and universities they recruit and hire from as part of this effort. Employers may also lawfully take steps to ensure the applicant or talent pipeline includes people of all backgrounds.
• Pay Attention to State Law Requirements. A number of states and localities have enacted their own anti-discrimination laws. More recently, a small number of states have enacted “anti-DEI” statutes that could affect your business. Employers in these jurisdictions should be cognizant of the applicable laws and consult with their counsel to ensure any DEI programs are compliant.

Of course, this all must be undertaken without any suggestions that diversity would be seen as a negative factor. You never want to suggest that hiring or promoting a diverse person would be a bad thing, everyone should be judged on merit.

Employers who value diversity do not need to immediately abandon their diversity initiatives, but do need to expect that they may be challenged, and ensure that they are compliant with the law and do not promote favorable treatment of one ethnic group over another.

If you have any questions concerning your business’s current DEI initiatives or the impact of the SFFA decision, please contact a member of Kelley Drye’s Labor and Employment team.

While it remains to be seen how the lower courts apply Groff, for employers in healthcare and transportation and hospitality with 24/7 scheduling needs, Groff could make staffing on weekends a bigger challenge than it already is.

Background

Title VII (along with all state and many local laws) has long-required employers to provide applicants and employees with a “reasonable accommodation” from any employment obligations that may conflict with their religious beliefs or practices. The key word here is “reasonable.” Employers do not need to provide accommodation if doing so creates an undue hardship for the business.

Courts, lawyers, and businesses have grappled with the meaning of these terms for decades, especially when it comes to the issue of accommodating Sabbath observance, which generally entails requests for weekend days off. Up until Groff, the Supreme Court’s decision in Trans World Airlines (TWA) v. Hardison, 432 U.S. 63 (1977) had set the standard. Hardison concerned an employee’s request for Saturdays off from work to accommodate his religious observance, which conflicted with seniority rules and other employees who also wanted that day. In Hardison, thecourt found in favor of TWA, ruling that the employer did not have to grant the accommodation, because it would have borne “more than a de minimis cost.”

Since Hardison, courts have repeatedly clashed over the definition of “undue hardship” and the threshold an employer must demonstrate in order to reject an employee’s request for religious accommodation. Many courts took this decision to mean that any religious accommodation that produces a “more than a de minimis cost” would not need to be granted. By that definition it is a relatively low bar for employers to prove, allowing more employers to deny religious accommodation so long as it they can prove minimal impact on operations. Additionally, it was generally recognized that employers did not have to violate seniority rules or a union contract in order to grant religious accommodation.

This may all now change due to the Groff decision.

Groff v. DeJoy

Groff also arose out of a dispute over time off, and concerned a U.S. Postal Service employee (Groff) who requested Sundays off from his job at a small rural Post Office to accommodate his Evangelical faith. This was not an issue until his branch partnered with Amazon and began delivering packages on Sundays. Groff then requested and received a transfer to a different branch that did not deliver on Sundays. When the second branch also partnered with Amazon Groff remained unwilling to make deliveries on Sundays. For a time the Post Office did attempt to accommodate Groff, staffing other employees to cover his shifts. Eventually however, Groff was disciplined for failing to work on Sundays, and ultimately resigned. Groff then sued the Post Office for religious discrimination on account of its unwillingness to accommodate his religious beliefs.

The lower court applied the Hardison standard and sided with the Post Office, finding that granting Groff’s accommodation would have presented more than a de minimis cost to the Post Office. The Supreme Court however, found that the lower court applied the wrong standard, and sent the case back to the lower courts to apply the new standard adopted in its opinion.

Groff’s New “Undue Hardship” Standard

Although the Supreme Court claimed that it was not directly overruling Hardison, it came very, very close, and certainly implied that ‘de minimis,’ as defined under Hardison, was no longer the operative test.

The Supreme Court criticized the way Hardison had been applied over the years, and held that many courts applying Hardison failed to invoke the fact-specific analysis and consideration of alternatives, that is required under Title VII, to evaluate a request for a religious accommodation. Implicit in the criticism was an undertone that more accommodations should have been granted.

The Court stated that in order to deny a religious accommodation (or defend any claim for failure to accommodate), the “employer must show that the burden of granting an accommodation would result in substantial increased costs in relation to the conduct of its particular business.” As part of this analysis, the Supreme Court stated that employers must consider: (i) the particular accommodations at issue, (ii) their practical impact in light of the nature, size and operating cost of an employer, and (iii) the availability of alternative means of accommodating the employee’s religious beliefs.

Interestingly, the Court stated that it did not believe that the EEOC would need to change its guidance. The Court also did not “foreclose the possibility that the (Postal Service) would prevail” under this new standard.

It will be interesting to see how the lower courts treat Mr. Groff’s claim the second time around. And whether showing the effects of Mr. Groff’s accommodation on other employees, and slowed delivery of mail in the area will be enough to show an undue hardship.

What Should Employers Do Now?

Right now – nothing is required. Assuming that you have a policy that provides for individual consideration of requests for religious accommodation, you do not need to change that policy.

However, in applying that policy, we suggest that you keep the following guidelines in mind:

1. Be more careful how you apply your religious accommodation policy, and be more cautious when denying a request for religious accommodation.
2. The standard announced by the Supreme Court is context-specific, so be sure to look at the facts of every situation. Avoid blanket rules such as ‘we never do that.’ Consider each request independently, and document your decision.
3. Be wary of questioning the bona fides of an employee’s religious belief. This is a very loose standard. You can ask for some explanation, and if appropriate, a letter from the clergy. The EEOC’s definition of a ‘sincerely held’ religious belief is quite liberal – tread carefully.
4. Be sure to train front-line managers about these issues so they do not inadvertently say yes or no to a request without knowing the legal standards. Make sure they know to contact HR when religion is raised.
5. In considering what is an ‘undue hardship’ look beyond dollars. Especially for a large employer, you may have to consider not just the total amount that an accommodation will cost, as this may not be enough to appear ‘significant.’ Consider other soft costs that may not be measurable in dollars, such as the cost to your operations, your ability to provide service, your ability to staff, etc. Document all hard and soft costs. You may not be able to deny an accommodation based on revenue lost, but there may be other costs you can cite to.
6. Engage in an interactive process of communication with every employee who makes a request, and respond to each request in writing, especially if it is a denial. Documentation is key, and may well become essential to your defense to a charge or lawsuit.

In the wake of Groff, many employers may see more requests for religious accommodations. Employers dealing with religious accommodation requests should tread cautiously, evaluating the totality of the circumstances behind the request, including the direct financial cost (if any), and the availability of alternatives such as voluntary schedule swaps, “floating” holidays, and flexible scheduling. Employers do not have to entirely upend practices to the detriment of other employees.

Importantly, the Supreme Court expressly avoided determining if existing EEOC regulations complied with its new standard, and directed the agency to review and revise its regulations as appropriate. Employers should watch for potential EEOC updates regarding its interpretation and enforcement efforts on this issue. Employers should also keep in mind that state and local laws are often more liberal than the federal law.

If you have any questions concerning religious accommodations under federal, state or local law, please contact your usual counsel at Kelley Drye, or a member of our Labor and Employment team.

Regulators have asked a legitimate question, however: what if the AI algorithm looks for characteristics that disproportionally, even if unintentionally, impact one kind of legally-protected status more than some other class? Consider this example: during a Zoom interview, AI reads facial expressions to capture information about mood, personality traits, and even honesty. (Yes, this is a thing.) What if an applicant has limited facial movement because of a stroke? Would that potentially impact AI’s assessment of a candidate’s “mood”? (Hint: yes, it would.)

It is exactly these unintended impacts that has motivated the U.S. Equal Employment Opportunity Commission’s (“EEOC”) recent guidance, published on May 18, 2023, clarifying that even if an employer is utilizing AI to make employment decisions, the protections of Title VII still apply. The EEOC previously addressed similar issues in the context of the Americans with Disabilities Act (“ADA”) in a guidance document this time last year.

The AI-related issues under Title VII and the ADA are similar in some ways, but also distinct. Title VII prohibits discrimination based upon race, color, religion, sex or national origin. The ADA prohibits discrimination based upon a person’s disability. The previous ADA guidance focused primarily on intentional and unintentional bias against disabled applicants, such as a decision-making algorithm failing to consider whether an applicant may be able to perform the role with a reasonable accommodation. In this respect, issues under the ADA may be more individualized to specific applicants and employees. For additional commentary on the previous ADA-targeted guidance and initiatives in other jurisdictions, please be sure to review our prior blog on the topic.

By contrast, the AI-related issues under Title VII are broader, and concern whether a specific tool may cause a disparate impact (or, “adverse impact”) on members of a protected class.

What Does this Mean for Employers?

Employers are free to use AI and other algorithmic-based methods to screen applicants or identify problem employees; however, this technology does not insulate the employer from discrimination claims. Employers have an obligation to reasonably understand how this technology works, and ensure that it is being used in a way that does not disparately impact any protected class without a justifiable basis.

Disparate Impact Analysis

Generally, a policy or employment decision is considered to have a disparate impact when it disproportionately excludes or targets members of a protected group. This can be true even when a policy is facially-neutral, such as requiring all applicants to have a minimal level of education.

The EEOC’s recent guidance states that if use of AI or a similar tool selects individuals in a protected group “substantially” less than individuals in another group, then the tool will violate Title VII unless the employer demonstrates that the methodology is job related and consistent with business necessity.

The EEOC also addressed what it considers to be “substantial” in terms of any disparate impact analysis. Traditionally, the EEOC has relied upon the “four-fifths rule,” which sets a baseline for whether the selection of one group over another may be disproportionate. (For example: if 60% of all White applicants are selected for a position, and 30% of all Black applicants are selected, then the process would violate the four-fifths rule, because 30 divided by 60 is less than 4/5). In the recent guidance the EEOC retreated from the four-fifths rule, stating that it is merely a “rule of thumb,” and that it may be inappropriate in some circumstances. Although this rule has been applied by courts and the EEOC in the past, the EEOC explicitly warns employers: “the EEOC might not consider compliance with the rule sufficient to show that a particular selection procedure is lawful under Title VII when the procedure is challenged in a charge of discrimination.”

It will be important for employers to consult with counsel before taking any action that may disparately impact a certain group, and reliance upon the four-fifths rule by itself may not be sufficient to mitigate any enforcement action by the EEOC.

What if a Vendor or Outside Consultant Creates and Implements the Tool?

The EEOC guidance states that an employer who uses AI or a similar tool to make employment decisions may be held responsible even if the tool was created or implemented by a third-party, such as a software vendor. The guidance emphasizes that employers have an obligation when deciding to utilize a vendor to question the vendor on whether the tool has been evaluated to ensure it does not target a specific protected group.

From a practical perspective, managers and human resources professionals overseeing these types of decisions may not understand the technical aspects of the tool, and cannot be expected to become experts in AI overnight. However, these decision makers should consult with counsel and their own information technology experts as necessary, and be sure to vet any vendors thoroughly. To the extent that management or human resources recognizes that the tool may be yielding an adverse impact on a protected group, alternative approaches should be considered as soon as possible.

Likelihood of Enforcement

The EEOC often seeks to take on novel cases in new areas of the law that are likely to create employee-friendly court rulings and maximize deterrence. Employers should expect the EEOC and similar state and local agencies to target discrimination issues based upon employers’ use of AI and other algorithmic technology for enforcement actions. The EEOC’s emphasis on disparate impact issues also means that any enforcement action could incorporate a large population of employees or applicants, inherently increasing the “dollar value” for any lawsuit or settlement (in turn, maximizing the deterrence value to the government).

This initiative from the EEOC, together with the enactment of state and local laws like New York City’s Local Law 144 (discussed here), should signal to employers that this is a hot button issue likely to gain even more attention as AI becomes a part of everyday life and decision-making. Employers utilizing AI and other advanced tools to make employment decisions can do so confidently, so long as appropriate controls are put into place to ensure compliance with existing employment laws.

For up-to-date and individualized guidance on the interaction between AI and employment laws, please contact your regular Kelley Drye & Warren LLP employment attorney.

Earlier this month, the New York City Council passed Bill INT 0209, new legislation that would add “height” and “weight” to the list of classes protected under the New York City Human Rights Law. If the mayor signs or takes no action, the bill becomes law and will take effect 180 days thereafter.

Currently, there are a number of jurisdictions with similar laws banning height and weight discrimination, including Michigan state, Washington State, Washington D.C., San Francisco and a handful of other smaller jurisdictions. Potentially marking a trend, lawmakers in New York State, New Jersey, and Massachusetts have also eyed similar legislation.

Here’s what New York City employers need to know about this likely new law:

1. The law would not apply when the employer’s action is required by federal, state, or local law or regulation.
2. The law empowers the NYC Commission on Human Rights to establish jobs or categories of jobs for which (a) a person’s height or weight could prevent the performance of the essential requisites of the job, and (b) the Commission has not found an alternative action an employer could reasonably take to allow the person to perform those requisites. Similarly, the Commission may identify jobs or categories of jobs for which consideration of height and weight is reasonably necessary for the execution of the normal operations of the jobs.
3. Finally, the law offers employers an affirmative defense. Employers may consider height and weight if they can demonstrate that these characteristics are essential qualifications for performing the job.

What should employers do to prepare?

Given that this bill is likely to become law, employers would be wise to get into compliance now. This means reviewing any existing job descriptions for potentially problematic requirements. Employers may also update any anti-discrimination and anti-harassment policies to include height and weight as protected classes. These new protected characteristics should be added to general training courses and managers should be informed of the new law.

Is more legislation like this coming?

In short, we expect it is. Lawmakers have been expanding anti-discrimination laws to afford workers greater protection and have added new classes to cover everything from cannabis use to hairstyle. This generally follows trends toward creating more inclusive and diverse workplaces. Employers are wise to stay up-to-date on the state and local laws where they operate. For more on how equal opportunity laws are changing this year, see our past post on the trends shaping 2023.

As always, subscribe to this blog to keep informed of the latest updates.

What will this all mean for employers? There are challenges for sure, but with planning they are manageable. We take a look at the top trends that will shape labor and employment law in the months to come.

DISCRIMINATION AND EEO ISSUES

More enforcement

Given trends from last year and public messaging from top enforcers, we anticipate an increase in harassment and discrimination litigation, particularly for class-based claims.

In its recently released 2022 Financial Report, the EEO signaled its plan to strengthen enforcement around systemic discrimination. The Agency heralded several victories including obtaining $29.7 million in monetary benefits for victims and collecting over $28 million in damages from 10 lawsuits asserting systemic discrimination last year. Enforcers also recovered a combined $403 million from the Agency’s top 10 settlements of 2022 (nearly doubling rates from the previous year). Highlights include an $18 million settlement with Activision Blizzard over sexual harassment and pregnancy-bias claims and $8 million from Circle K stores over disability and pregnancy discrimination issues.

Even more, the EEOC’s enforcement hike has considerable support from the White House. The President’s proposed budget requests $481 million for the EEOC – a 5.7% increase over its 2023 allocations. While this money is unlikely to materialize in full, it does underscore the growing political support for anti-discrimination and harassment enforcement.

For its part, the workplace plaintiffs’ bar is also seeing historic scores. Last year, plaintiffs won nearly $2 billion combined and saw higher rates of success certifying classes in employment bias, benefits, and wage and hour cases. Top settlements included $597 million from Sterling Jewelers for sex bias claims; $118 million from Google in a pay discrimination dispute; and $185 million between the MLB and minor league players for violations of state and federal wage laws.

Expanded protections

The list of protected classes is growing – quickly. New York added discrimination based on citizenship or immigration status to its prohibitions while Illinois amended its anti-discrimination laws to include “work authorization status.” Seattle passed a first-of-its kind law banning “caste” discrimination while California joined New York in adopting protections based on an employee’s “reproductive health decision making” and off-duty cannabis use. CROWN Act legislation, which prohibits discrimination based on hairstyle and hair texture, is also making its way through the states. The Illinois version became effective most recently, on January 1, when the state joined California, New York, New Jersey, Washington D.C., and several other jurisdictions that have based similar bans. Because these classifications are jurisdiction specific, employers have an added burden of keeping up with numerous changing state and local laws to ensure compliance.

Pregnancy protections are also ramping up. In late December, the Protections for Nursing Mothers (PUMP) Act took effect, expanding protections for nursing employees under the FLSA. The new law covers both exempt and non-exempt employees, expanding its reach to nearly 9 million more employees, including teachers and nurses. Even more, the federal Pregnancy Workers Fairness Act will take effect this June, requiring employers to provide reasonable accommodations for workers with known limitations connected to pregnancy, childbirth, or related medical conditions.

Practical considerations for employers

Watch out for these “hot” areas and be wary if there is an EEOC investigator poking around your company. Be especially careful concerning potential workplace harassment or indications of systemic or ongoing infractions, requests for accommodation (including related to disability and FMLA leave), any accommodations for pregnant persons, and issues of pay disparity. All of these are examples of complaints that can lead to class actions, or large verdicts, so they should be handled carefully.

ARTIFICIAL INTELLIGENCE

Maybe it is not surprising to hear that nearly 1 in 4 organizations use artificial intelligence HR tools, according to a 2022 survey from the Society for Human Resource Management. Nearly 80 percent use AI for recruiting and hiring. This has sparked backlash from government regulators, who worry this software may run afoul of nondiscrimination laws if it illegally rejects candidates based on a protected characteristic.

In its recently proposed “Strategic Enforcement Plan,” the EEOC makes clear that it will target employers using HR software, including programs that incorporate algorithmic decision-making in recruitment, selection, or production and performance management tools. Last May, the EEOC sued three companies under the “iTutorGroup” umbrella for programming its online recruitment software to reject some older applicants. The agency sought back pay and liquidated damages for more than 200 applicants they say were illegally denied jobs based on age.

States are also taking up this cause. Illinois was the first in 2020, followed by Maryland, to regulate the use of automated decision tools in hiring interviews. New York City moved the goalpost even further with a new law that will require employers to audit certain automated tools for bias and post a number of public disclosures. While that law was set to take effect on January 1, enforcement has been postponed until April 15, 2023 to give regulators time to finalize proposed rules surrounding the law. California regulators have taken similar steps to ensure employers and vendors could face liability under state law, regardless of whether there was discriminatory intent, through a new proposed rulemaking. Even more, the California Consumer Privacy Act recently took effect, expanding data privacy law to cover employees, applicants, and others in the workplace.

Practical considerations for employers

In short, employers will likely need to contend with a growing number of state laws on this issue, compounded by complexities of advertising remote work across several jurisdictions. For businesses using AI, consult with outside counsel (yes, you can call us) to ensure compliance with this legal patchwork. For businesses not formally using AI, be sure to audit whether employees are using AI tools. Clients are increasingly beginning to monitor employee use of various AI tools and create policies around their use in the workplace. Even if a tool is not distributed by the company, it may still raise legal concerns for employers if employees are using it unlawfully for work purposes. New York City employers can read more about the city’s recently passed sweeping AI law here.

LABOR, LABOR, LABOR!

Unions are, once again, getting prime political billing in Washington while the NLRB continues its pattern of aggressive enforcement. During the State of the Union, President Biden called on Congress to pass the Protecting the Right to Organize Act and condemned companies for “breaking the law by preventing workers from organizing.” While the Act is unlikely to succeed, this does signal that unions will take center-stage in the upcoming elections.

The NLRB got a $25 million funding boost to its 2023 budget. It had originally requested more than $100 million to account for an increase in its caseload, including an uptick in union representation petitions. In the last year, the NLRB has handed down a host of pro-union decisions and overturned some key Trump-era decisions. This included requiring employers to again deduct union dues after a collective bargaining agreement expired and a major opinion on severance agreements (more on that below).

On the horizon, the NLRB’s general counsel has signaled an interest in reconsidering when an employee is an “independent contractor,” educating the workforce about their rights under federal law, and tackling captive audience meetings.

As unions spread into new, non-traditional industries and we see a general uptick in labor activism (including strikes), the NLRB will likely continue is active role in shaping the workplace.

Practical considerations for employers

Employers with unions should already be familiar with the NLRB and the requirements of the NLRA. However, be aware that unions are becoming more active, and are looking now to organize pockets of the workforce who may not be unionized yet. Employers without unionized employees should watch out for new union organizing and upcoming rulings from the NLRB impacting all employees, not just those already unionized.

PAY TRANSPARENCY

Pay transparency has become a hallmark of the Equal Pay movement. With legislatures around the country enacting a patchwork of new restrictions and obligations, this is becoming a potential landmine for multistate employers.

This started years ago when several jurisdictions enacted laws prohibiting employers from inquiring about an applicant’s salary history. Next, states began requiring employers to disclose compensation ranges to applicants upon request or when making an offer. And now, states including California and New York, are moving the ball even further with laws requiring employers to disclose salary ranges in job postings if the job could be performed in that jurisdiction, including sometimes for internal opportunities. California and Illinois also require some employers to submit their pay data to state agencies. This not only affects how employers negotiate compensation for newcomers, it could also open the door to costly lawsuits should transparency laws unearth potentially discriminatory pay disparities. Even more, some states now prohibit retaliating against an employee for discussing their own or other employees’ pay.

On the federal level, the EEOC has also established pay equity as a main enforcement priority. So as pay ranges become more common on job applications and general anti-discrimination enforcement kicks up, we expect pay transparency issues to be a major focus to come.

Practical considerations for employers

Pay transparency issues can create exposure on multiple fronts for employers, including legal liability and public scrutiny. Employers operating in California and New York should take particular note of local laws, including requirements for job postings and data reporting. This may mean conducting an internal audit, updating hiring templates, and consulting with counsel. Read more of our coverage on laws in New York and California.

EMPLOYEE PRIVACY (Looking at You, Biometrics)

Biometric data has become big business for employers. This includes a host of services that rely on fingerprints, facial scans and voice recognition to do things like verify an employee’s identity, launch automated assistants, access events, or track time. But as these types of tools became more common, regulators took notice.

Illinois was the first state to directly regulated biometric data as a consumer (and employee) privacy matter. We’ve been covering the state’s Biometric Information Privacy Act (BIPA) since it first starting making waves for employers in court. Just recently, two monuments state supreme court decisions were handed down that should give any employer operating in the jurisdiction pause. The court made clear that BIPA violations will be tallied by act, not by individual. This means a new violation could accrue every time an employee uses a biometric time clock, potentially several times per work shift, and could open even more cases on this already contentious law. We expect this will lead to even more BIPA-related cases with huge payouts for employees and the plaintiffs’ bar.

Even more, other states are trying their hand at similar types of legislation. Texas and Washington have similar biometric laws, but do not allow for a private right of action. As of this January, Maryland and Mississippi have introduced new biometric privacy bills and other states may follow suit. We will continue to monitor major developments in this area of law as the legislative season moves forward.

Practical considerations for employers

Biometric tools can be very valuable in the workplace, but compliance with related privacy laws is also a challenge. The best advice is get good privacy counsel, as this is an area of the law which has become increasingly complex and specialized. Read more on BIPA – a monster of privacy statute – here.

RESTRICTIONS ON RESTRICTIVE COVENANTS

Noncompetes: An FTC Final Rule on … Maybe?

We’ve covered the Federal Trade Commission’s proposed rule that would ban essentially all noncompete agreements extensively (read more here) as unfair restraints of trade. From the Agency’s vantage, these common contractual provisions illegally suppress competition and employee wages. Before promulgating a final rule, the agency must accept public comment. The deadline to submit comments has been extended several times. Even if the rule is finalized, it will likely face a host of court challenges.

Practical considerations for employers

We’ve covered the FTC’s proposed rulemaking in depth (read that here), but there are some key takeaways for employers:

• Craft any restrictive covenant with caution. Restrictions on an employee’s post-employment prospects (be it their next job or their ability to “speak out” against their former employer) are increasingly disfavored.
• Restrictions should be targeted and narrowly tailored to protect an employer’s interests. In other words, try not to use boilerplate agreements, and tailor each agreement to the position or the person who is signing it.
• Carefully consider who signs a noncompete. This should be limited to senior executives or those who have access to sensitive data or information. Even more, be aware of local laws that could render restrictive convents more difficult to enforce.

Nondisclosures and Non-disparagement

The Biden administration has seemingly adopted a whole-of-government approach to restrictive covenants. Aside from the FTC’s historic rulemaking, the EEOC has identified overly broad waivers, releases, and non-disclosure and non-disparagement agreements as priorities for the Agency as barriers to access to the judicial system. And in December, Congress passed the Speak Out Act, which curtailed the use pre-dispute restrictive covenants that would prohibit employees from speaking out against sexual assault or sexual harassment.

The NLRB’s McLaren Macomb decision also took aim at the use of non-disclosure and non-disparagement clauses in severance agreements, which may apply to both union and non-union employers. (We covered that here.) And in a recent memo, the Board’s General Counsel Jennifer Abruzzo issued guidance following McLaren. Notably, it reasons that maintaining or enforcing a severance agreement with offending provisions would constitute a continuous violation and suggests employers may avoid liability by notifying former employees that certain provisions are no longer applicable in their severance agreements.

Practical considerations for employers

What to do with existing non-disclosure or non-disparagement agreements is a tricky issue, as there is no clear answer here. The “safest” option would be to look at all agreements and revise any agreement that contains a clause which may conflict with these new regulations. However, most clients are taking a “wait and see” attitude. The devil may be in enforcement of agreements in the future, and there may need to be consideration of whether an agreement should be enforced, if it contains a conflicting provision.

As the year unfolds and new laws and regulations come into view, we’ll keep you up-to-date with the major changes and issues you should be thinking about.

Tuesday, September 13, 2022 at 12:30pm ET Pay Equity & Transparency: Rising Workplace Trends

New York, which has over 9.3 million workers and counting, will soon join other jurisdictions in a growing trend of state and local pay transparency requirements for employers across the country. Currently there are 17 states (and numerous cities) that have laws requiring pay transparency and/or prohibit salary inquiries by current/prospective employers. Additionally, the recent focus on pay equity laws, both state and federal, has served as a catalyst for increased scrutiny by government agencies and resulted in an uptick in related class action lawsuits in recent years. While transparency is generally a virtue, compliance with the ever-evolving pay transparency and pay equity laws across multiple jurisdictions can create a quagmire of issues in attracting and retaining talent—not to mention the HR and legal landmines.

This webinar will cover:

• New pay transparency laws
• Review of pay equity and salary history ban laws
• Insights on compliance
• Practical implications for talent acquisition and retention

Tuesday, October 11, 2022 at 12:30pm ET Wake-up Call: The Resurgence of Unions

The death of union representation was probably not exaggerated—that is, before the pandemic. Now, with employers desperate to recruit and retain employees in a robust labor market, wages seeing the highest percentage increases in years, and a sense of worker-side empowerment not seen for years, unions are more powerful and relevant than at any time in decades.

This webinar will explore recent trends, strikes, organizing activity, and strategies to mitigate union-related risks and disruptions to your business.

This webinar will cover:

• The resurgence in union activity across all industries
• Changes at the NLRB that affect your everyday business operations
• Taking the temperature of your workforce

Tuesday, November 8, 2022 at 12:30pm ET Protecting Your (Human) Resources: Fighting Business Email Compromise and Ransomware

HR employees are, willingly or not, the guardians of the company’s most sensitive collection of data—its employee’s personal information. Cybercriminals often perceive the human resources department as the perfect gateway into a company’s employee data goldmine. Many scams and information theft are perpetrated through social engineering. Cybercriminals posing as job applicants, recruiters or new vendors prey on the fact that human resource employees often receive emails and attachments from unknown sources. Conversely, because of the central role that HR plays in employees’ lives, many employees reflexively open emails and attachments that appear to be sent from the HR department. Employees are just one click away from granting fraudsters the access they need to install ransomware or steal login credentials, potentially exposing employees’ sensitive and valuable personal information, and resulting in significant losses and legal exposure for your company.

This webinar will cover:

• Weapons and techniques fraudsters use to infiltrate company systems and current scam trends
• Proactive best practices for fraud and information theft prevention
• E! true HR stories: theft, lawsuits, and the one simple move that would have stopped it all
• What to do when the perpetrators are in-house

On March 17, 2022, a mere two weeks after the MeToo Law’s passage, the U.S. House voted to advance the Forced Arbitration Injustice Repeal, or FAIR Act (H.R. 963), a bill which could effectively void all pre-dispute mandatory arbitration agreements in employment, antitrust, consumer and civil rights disputes as well prohibit waivers of joint, class, or collective action in such matters. So from an employment perspective, the FAIR Act, if enacted, would go far beyond the MeToo law’s prohibition against arbitration of sexual harassment claims—it would bar mandatory arbitration of all employment-related claims.

Perhaps for that reason, the FAIR Act doesn’t enjoy the same bipartisan support as the MeToo law, which has already been signed into law by President Biden. The FAIR Act passed the House on a 222-229 vote, essentially on partisan lines (with Democrats predictably in favor and Republicans predictably opposed). The FAIR Act has no Republican sponsors and has little traction in an evenly divided Senate. So it’s far from clear that the FAIR Act will actually become law.

If it does, however, the FAIR Act will represent a radical departure from the way the FAA has worked since 1925. Aided by very favorable Supreme Court interpretations of the FAA, which broadly allow parties to agree to arbitration if they want to, mandatory arbitration agreements have been widely used by employers for decades. The FAIR Act would change all of that.

So, what should employers do?

First things first— if you use mandatory arbitration agreements that require arbitration of sexual harassment claims, those specific provisions are now unlawful under the MeToo law. You should work with employment counsel to amend them now.

Given that the FAIR Act is not yet law, you should use this time to consider what you would do if the law actually comes into effect. The FAIR Act would not be retroactive, meaning that if you have arbitration agreements in place now, they will still be enforceable. However, the FAIR Act could cast a much wider net than the MeToo Law, if the bill passes the Senate and is signed into law. If you’ve been using mandatory arbitration agreements, the new risks to employers if the FAIR Act passes would include:

• No more mandatory arbitration of employment disputes. (Note that employers and employees could agree to arbitrate after a dispute arises, but it doesn’t take much to imagine how that might go.)
• Critically—since the FAIR Act would bar mandatory arbitration in all employment claims—employers would no longer be able to rely on arbitration agreements that bar employees from pursuing class actions on behalf of larger groups of employees.

Stay tuned for updates on the status of the FAIR Act on this blog. And, as always, working with outside counsel when assessing the impact of burgeoning laws is key to staying compliant and predicting risks. For individualized guidance on the FAIR Act and other developing laws, contact Kelley Drye & Warren LLP.

What does the new law mean for the future of employment arbitration? Can employers still have any type of a mandatory arbitration program? The answers to these questions are not immediately obvious, but you can be assured that the Me Too Bill will make harassment claims more expensive and more complicated to resolve. It is also not a surety that the end of arbitration will be good for victims or potential plaintiffs.

What the law will mean for your business will depend on a number of factors, including where you are doing business (as mandatory arbitration is already prohibited in some states), and whether your company had a mandatory arbitration program in place for customers or employees. However, all businesses may see an uptick in harassment claims, as that often happens whenever there is a very public legal development in this area.

What does the Me Too law say?

The main provision of the law is short enough to reproduce here:

“[A]t the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute, or the named representative of a class or in a collective action alleging such conduct, no predispose arbitration agreement or predispose joint-action waiver shall be valid or enforceable with respect to a case which is filed under Federal, Tribal, or State law and relates to the sexual assault dispute or the sexual harassment dispute.”

The terms “sexual assault dispute” and “sexual harassment dispute” are not confined to federal claims, but is any such claim as defined according to “applicable Federal, Tribal, or State law.”

What are the key elements to the law?

ONE - Employers may no longer be able mandate the arbitration of claims of sexual assault or sexual harassment, whether those claims are brought under federal or state law.

The new law does not redefine assault and harassment, and instead defines those terms as any instance where such claims may be brought under applicable federal or state law.

Now more than ever, it is important to understand how the state you are doing business in defines sexual harassment or sexual assault. For example, in New York, sexual harassment is defined far more broadly than it is in Title VII, and constitutes instances where “an individual is subjected to inferior terms, conditions or privileges of employment” on the basis of their sex. Perhaps even more importantly, while Title VII applies only to employers with 15 or more employees, the New York State Human Rights Law applies to employers of any size. Even if you are a small employer to whom Title VII does not apply, if your state has similar laws to New York, the Me Too law could apply to you!

TWO - Plaintiffs also cannot waive their right to bring claims of sexual assault or harassment collectively through a class action.

THREE - Importantly, the law applies to both claims of sexual harassment and assault, and does not just apply to employment disputes. It extends to any person who might sign a mandatory arbitration agreement or a mandatory waiver of their right to bring a class action for a claim of sexual misconduct.

For instance, a “services” company may have previously mandated, through its terms of service, the arbitration of any claims brought by a customer that they were sexually assaulted by an employee. These types of mandatory arbitration clauses will no longer be enforceable.

FOUR - The law provides that it “shall apply with respect to any dispute or claim that arises or accrues on or after the date of enactment of this Act.”

Therefore, it will apply to current arbitration agreements, even those signed before the law went into effect.

There may be an argument that a claim of sexual harassment or assault that is now in arbitration can be completed, but companies will certainly not be able to enforce an arbitration mandate going forward.

FIVE - Finally, the law states that it must be a federal judge, not an arbitrator, who decides whether a claim is subject to arbitration.

What should you do now?

According to a 2018 study, 53.9% of nonunion private-sector employers have mandatory arbitration procedures, so the new law will have a far-reaching effect. But depending on where you do business, the law may change very little.

New York, Maryland, Vermont, New Jersey, and Washington have all passed similar laws effectively banning mandatory arbitration for employee claims of sexual harassment in the workplace. In fact, New Jersey’s law is the most expansive of these, and bans the mandatory arbitration of all claims of discrimination, not just sexual harassment. Meanwhile, California has taken things further than any other state and effectively banned all mandatory arbitration agreements in the employment context. Those doing business in any of those states should have already addressed these limitations in their arbitration policies.

Nonetheless, this new law provides a ripe opportunity for every business to review their sexual harassment and arbitration policies. If your policy covers harassment claims, consider changing it for the future. We do not believe it makes sense to have employees who have already signed an agreement re-sign, as this will create administrative headaches.

But you should revise all future mandatory arbitration agreements to affirmatively state that notwithstanding anything else in the agreement, the signatory has the choice to bring their claims of sexual harassment or assault in court, collectively or individually, and that they are not required to individually arbitrate those claims.

For existing employees, create a policy statement that makes clear that they are no longer required to arbitrate harassment or assault claims, even if those are covered in an agreement they may have signed in the past. As long as this carve-out is clear, the old agreements should still be enforceable.

Can you still arbitrate other claims?

Yes. Subject to applicable state laws, companies remain free to mandate arbitration or a waiver of class action rights for all other claims, including salary or wage/hour claims, other types of discrimination, retaliation, or any other kind of liability.

Can you still arbitrate harassment or assault claims?

That now depends on the claimant. We do believe that employees may opt to arbitrate even assault or harassment claims. It will just have to be clear that this is their choice, so forms will have to be developed to give them that choice.

This type of a choice will be easier to enforce if the employee has an attorney, and it may be advisable to suggest that they consult with counsel before choosing to arbitrate a harassment claim.

What about claims which combine sexual harassment or assault with other allegations?

Employees are smart, as are lawyers. You may well see them add on harassment to every claim, just to get out of mandatory arbitration. What are your options then?

While the new law is not clear and will have to be fleshed out in the courts, it does appear that if an employee combines a harassment claim with other claims, you may still be able to require that they arbitrate the non-harassment aspects of their case. Strategically, this will depend on whether harassment or assault is the “main” claim or just tacked on. If harassment is not the primary claim, it may make sense to push the other claims to arbitration, but be ready for a fight. That is a decision best left to you and your counsel.

What about prevention?

There is no hiding this change in the law from plaintiff’s attorneys and employees, and it may well cause an uptick in claims. You may also be facing juries, not arbitrators, in the future. Thus, all employers should take stock of your current training and prevention policies and redouble efforts to prevent sexual harassment or assault from occurring in the first place.

As yourself some key questions:

• Is training reaching everyone?
• Is it time to offer a live (not online) training to key executives?
• Is there a region or business unit where harassment is a problem? Do they need some extra guidance?

Implementing and enforcing zero-tolerance policies can be one of your most powerful tools. Empower your Human Resources department to conduct thorough investigations and act independently to root out misconduct. Put systems in place that ensure that employee complaints are solicited and kept as confidential as possible.

The end goal is to stop sexual harassment before it starts, and well before you face a verdict in the court of public opinion.

COVID Concerns

For now, the headline issue remains COVID. 2021 had seemed to offer a glimmer of hope that the pandemic was coming to an end, only for those hopes to be dashed by the virulent Delta and Omicron variants. Big cities like New York implemented sweeping vaccine mandates for businesses and customers, while some states and even the federal government issued more targeted mandates for healthcare workers and contractors. Earlier this year, we saw the Supreme Court issue two seemingly divergent rulings on vaccine mandates, eliminating President Biden’s requirement for employers with 100+ employees to mandate vaccination or masking for those in the workplace. Meanwhile, a New York judge in Nassau County struck down the state’s masking requirement for public spaces (the order is currently stayed pending appeal).

Employers are left with a hodgepodge of COVID-related rules and regulations depending on where they and their workers reside. New laws and lawsuits are inevitable, but they only amplify the collective wish for the pandemic to be extinguished—here’s hoping.

Restrictive Covenants

The onset of COVID-19 ushered in the remote-work revolution. But this phenomenon, coupled with the so-called “great resignation” has led to employers confronting some novel legal issues. When seeking to enforce a restrictive covenant against a former worker, which law applies? The question was a simpler one in the Before Times—back when it was obvious that the worker lived and worked in the same state as the employer. But now, a vague restrictive covenant might no longer apply to an employee who made a big move.

Even after confronting choice-of-law issues, expect to see more arguments over what restrictions are now viable in a world where an employee can work remotely for a competitor across the country just as easily as your competitor down the block.

Of course, these are just the issues exacerbated by the pandemic. As ever, restrictive covenants remain a thorny issue and fodder for frequent legislation. For instance, Oregon has passed a law making any restrictive covenant lasting for more than a year to be unenforceable. Expect a lot of activity in this area throughout 2022.

The End of Mandatory Arbitration?

With a GDP roughly equivalent to those of the bottom 25 states combined, California’s employment laws can serve as a bellwether for the rest of the country. For that reason, the 9^th Circuit’s ruling in Chamber of Commerce of the United States of America v. Bonta, No. 20-15291 (September 16, 2021) may be one of the biggest stories still flying under the radar. The case involves a dispute over California’s AB 51, which effectively banned mandatory arbitration agreements in the employment context. In a 2-1 decision, the Court of Appeals reversed the District Court, partially upholding AB 51, albeit on narrow grounds.

Current arbitration agreements in California are still in effect, but an employer can violate the California Labor Code if the execution of an arbitration agreement is a condition of employment. There is currently a petition for a writ of cert pending with the Supreme Court. The outcome of this case can have sweeping implications for employers across the country, so be sure to keep an eye on this one.

Indiscriminate Anti-Discrimination

The winds of change will continue to blow through 2022, as both state and federal legislators continue to draft anti-discrimination laws. North Carolina and Oregon expanded their respective definitions of a “protected class,” while in Illinois, it is now unlawful to discriminate against an employee for being “associated” with a disabled person.

As more and more states decriminalize marijuana, expect to see a push in a growing number of jurisdictions to keep employers from discriminating against employees who partake in the drug’s use while off-duty. The stresses of the pandemic have opened the door to discussions regarding mental health concerns and self-care, so we can expect to see employees crying foul when required to work despite illness or exhaustion, or when instructed to not take prescribed medication.

New York has passed new protections for whistleblowers, in our view “all but ensuring a new wave of whistleblower claims.” Additionally, the Pregnant Workers Fairness Act (PWFA), currently before the Senate, would expand short-term disability protections for expecting workers.

For every swing of the pendulum, there must come a backswing. Following the Supreme Court’s landmark Bostock v. Clayton County decision in 2020, which extended Title VII protections to LGBTQ employees, we can now expect to see lawsuits seeking to clearly demarcate how far those protections may extend. The argument goes that the opinion may conflict with religious liberty rights protected by the federal Religious Freedom Restoration Act (RFRA). Currently, Bear Creek Bible Church v. EEOC, 2021 WL 5449038 (N.D. Tex. Nov. 22, 2021) has scored a win for those putting forth that argument, holding that a non-denominational Christian Church was exempt from Title VII, and that a for-profit Christin institution was not required to comply with Title VII since compliance would substantially interfere with its free exercise of religion.

Meanwhile, as Americans return to the workplace following years of lockdowns and a shrinking economy, expect to see discrimination litigation accelerate generally.

Pay Equity and Class Actions

Pay equity cases will continue to prove a thorn in the side of employers—these cases tend to rely heavily on fact discovery and expert opinion, and are thus particularly difficult to dispense of through motion practice. And despite what the headlines might lead you to believe, these lawsuits are not exclusive to female employees. In response to this groundswell, states and cities have recently instituted bans against employers requiring that applicants provide salary history. Considering the costs presented by equal pay litigation, this legislation may be doing employers a favor. Ironically, this is a situation where fewer documents may be helpful to employers.

The inverse is true of wage-and-hour actions, where an employer’s recordkeeping is crucial. For all the disruptions caused to employers since March 2020, clean recordkeeping nears the top of the list. Not only does a transition to virtual work mean that wage and hour records mean that records may have been misplaced, entered incorrectly, or never entered at all, but some employers have struggled to adapt their pay practices to remote work, resulting is unpaid hours, misclassified employees, and an utter nightmare when a class action lawsuit arrives on their doorstep. All these pitfalls can only mean an increase in wage and hour class actions.

Beyond the Law

Peering past the miasma of litigation and legislation, we’re left with the fundamental question underpinning every issue in this space: how do I keep my workers satisfied and my business running without needless interruptions? To that question, avoiding legal troubles is only half the answer. Employers of every size and in every industry are innovating and finding new ways to keep their workers happy and to stay competitive in the marketplace. Certainly these business decisions, such as vaccine mandates, remote/hybrid work policies, or paid leave and other benefits plans, only complicate the employer/employee relationship and only lead to more legal questions. But deciding the direction you want your business to move in is the threshold issue—you can leave it to us to help you figure out the rest. However you decide to innovate and adapt in our rapidly-evolving world, Kelly Drye & Warren has your back.

So here’s to a happy, healthy, and successful 2022!

In a move that comes as no surprise, the EEOC has updated its COVID-19 technical assistance to provide guidance on when COVID-19 may be considered a “disability” under the ADA, making specific reference to the DOJ/HHS guidance discussed in the original blog below. The EEOC’s technical assistance focuses “more broadly on COVID-19” beyond just “long COVID,” and does so “in the context of Title I of the ADA and section 501 of the Rehabilitation Act, which cover employment.” However, the EEOC’s guidance clearly echoes the DOH/HHS guidance and states that long COVID or sustained symptoms of COVID may be a “disability” under the law.

In many states, long COVID could also qualify as a disability under state laws. So, employers should be ready for more claims into the future, even when the pandemic (finally) ends – from employees who suffer symptoms of COVID as a chronic illness.

THE GUIDANCE

What is Long COVID and when is it a disability?

The EEOC has reemphasized that determining whether COVID may be considered a “disability” under the law is a fact-intensive question, requiring an analysis of the extent to which COVID’s symptoms, its long-term effects, or the manner in which it exacerbated the symptoms of another condition “substantially limit a major life activity,” as discussed in the original blog below. This means that an individual suffering, even intermittently, from certain symptoms relating to long COVID can be considered to be “disabled” under the law.

The EEOC provides several examples of these impairments, including: “brain fog” and difficulty remembering or concentrating; substantially limited respiratory function; chest pains; or intestinal pain.

Importantly, the EEOC distinguishes these “substantially limiting” conditions from less-serious symptoms, such as “congestion, sore throat, fever, headaches, and/or gastrointestinal discomfort, which resolve within several weeks,” which would not create a “disability.” But make no mistake: even these relatively insignificant symptoms may constitute a disability if they last or are expected to last for a significant period of time (i.e. more than six months).

According to the guidance, while long COVID “does not automatically qualify as a disability,” as with any disability inquiry, an employer is obligated to engage cooperatively with an ailing employee to conduct an “individualized assessment” and determine whether that employee’s long COVID symptoms constitute physical or mental impairments that substantially limit one or more major life activities.

The guidance emphasizes that the symptoms need not necessarily manifest physically—long COVID may substantially effect an individual’s psychological or emotional wellbeing to the point that an accommodation may be required.

What You Can and Cannot Do

Thankfully, the EEOC has not issued employees with long COVID a ticket not to do their jobs.

Not wanting employers to lose sight of the bigger picture, the EEOC also clarified that taking an adverse action against an employee disabled due to COVID-19 does not automatically mean that the action to discriminatory. Rather, an employer may have legitimate, non-discriminatory reasons for having undertaken the adverse action. The EEOC points to the circumstance in which the affected employee was no longer able to perform their job duties at all due to the disability. Additionally, the EEOC states that “the ADA’S ‘direct threat’ defense could permit an employer to require an employee with COVID-19 or its symptoms to refrain from physically entering the workplace during the CDC-recommended period of isolation, due to the significant risk of substantial harm to the health of others.”

In sum, the EEOC’s guidance is concordant with the DOJ/HHS guidance we discussed back in August. But don’t let the blog’s focus on long COVID distract from the larger point that any COVID-19 infection, including active infections, may constitute a “disability” under Title I of the ADA depending on the severity and duration of the symptoms. As we said, each employee brings their own set of facts that require an individualized analysis. For prompt answers to your fact-intensive COVID-19 questions, contact Kelley Drye.

ORIGINAL BLOG: August 5, 2021

It seems that at every turn, COVID-19 is keeping employers from catching their breath. We’ve discussed on this blog how employers should navigate having employees work from home, reopening and remaining compliant with the law and CDC guidelines, mask and vaccine mandates, and what to do when an employee tests positive for the virus. Now another issue confronts employers: how to best accommodate employees who are suffering from COVID symptoms months after having been infected with the virus—long COVID.

What Employers Should Know

The guidance, just like our understanding of long COVID, is frustratingly vague. The silver lining is that any employer already sensitive to the accommodation needs of its employees is already well-positioned to account for the needs of employees with long COVID symptoms. Employers should not fall prey to tunnel vision and determine whether an employee’s symptoms are due to COVID per se.

Rather, they must stay focused on the fundamental question: are these symptoms substantially limiting my employee’s ability to perform their job?

As with any medical condition, the substance of an ensuing “cooperative dialogue” between employer and employee may vary greatly depending on the employee’s duties, their symptoms, and the advice they receive from their medical care providers. Of course, any employer may make the reasonable request that an employee provide a doctor’s note in order to substantiate a request for an accommodation under the ADA, but simply making that request of an employee does not absolve an employer from making reasonable efforts to engage with that employee to determine what accommodations, if any, are available.

Planning for the Future

Employers should also anticipate ongoing and evolving accommodation discussions, particularly if the employee is in fact a COVID “long-hauler.” The long-term effects of a COVID infection are still not fully understood, and the best-prepared employer is the one ready to adapt to an employee’s needs not only reasonably, but also rapidly.

That can mean a few different things.

• DOCUMENT. It will be crucial for anyone performing a human resources function to (securely) memorialize the substance of every discussion regarding an employee’s requests for accommodation. At the same time, be sure to sequester and secure any medical records, and work to ensure confidentiality.
• ASSESS REGULARLY. As so little is known about long COVID, and because symptoms may suddenly lessen or become more severe in time, employers should require affected employees to agree upon pre-determined “check-in” meetings. At a specific date in the future, employer and employee might reconvene to reassess what further (or fewer) accommodations the employee could require. This is a sensitive issue, however, and is best done in concert with qualified legal counsel.
• BE FLEXIBLE. If an employee requires an accommodation for long COVID, be flexible in addressing their requests. Consider whether you can grant the accommodations, and document why you can or cannot. Finally, before denying an accommodation, be sure that there is now reasonable way that the accommodation may be granted.

For the moment, covered employers have to sit tight: Biden’s announcement last week was simply that OSHA will issue the new vaccination rule “in the coming weeks.” We will continue to update this blog on the many complicated issues arising from the anticipated OSHA rules, including how to comply with the rule when various Republican state governors and right-leaning interest groups have already promised litigation to challenge the rule from the moment the rule is implemented.

For now, however, here are the key takeaways for employers:

• Employers (100+ Employees): OSHA is developing a rule that will require all employers with 100 or more employees to ensure their workforce is fully vaccinated or to require any workers who remain unvaccinated to produce a negative test result on at least a weekly basis before coming to work. Given the practical challenges with implementing weekly testing, many employers may simply mandate vaccination to comply with this new rule—and many already have. What happens if they don’t? This requirement is to carry substantial fines to be enforced by OSHA. In addition to the mandate, OSHA is developing a rule that will require employers with 100+ employees to provide PTO for the time it takes workers to get vaccinated and to recover.

• Federal Workers & Contractors: The President also signed an Executive Order (EO) to require all federal executive branch workers and contractors that do business with the federal government to be vaccinated. This EO eliminates the exception to the July vaccination mandate for federal employees and contractors that allowed them to opt out if they wore masks, socially distanced, and were tested for COVID-19 at least weekly.

• Health Care Workers: The Centers for Medicare & Medicaid Services (CMS) is taking action to require COVID-19 vaccinations for over 17 million health care workers in most health care settings that receive Medicare or Medicaid. Some facilities and states have already begun to adopt hospital staff or health care sector vaccination mandates, and this action will create a consistent standard across the country.

• Large Entertainment Venues: The President’s plan calls on large entertainment venues to require proof of vaccination or testing for entry.

• COVID CONSIDERATIONS: Long COVID Now a Disability
• The New Employee Status: Vaccinated or Unvaccinated
• Vaccination: To Mandate or Not to Mandate?
• Judge Holds that a Hospital can Fire Employees Who Refuse the Vaccine
• New York Gives Employers More Time to Be a HERO
• OSHA’s Emergency Temporary Standard for Healthcare
• The EEOC’s Latest Guidance on COVID Vaccine

Cuomo did not leave office alone—at least four former senior aides and state officials have also resigned, as well as several prominent supporters who found themselves caught up in the scandal created by his conduct. That number does not include those who left their positions due to the harassment they allege to have faced. Hochul must now rebuild from the rubble left behind by her predecessor, as the leadership team in the executive branch, as well as those of prominent organizations throughout New York, have been left in disarray.

The allegations against Cuomo are voluminous, and range in severity from his usage of “pet names” to his inappropriate touching of female subordinates. The report concluded that beyond the Governor himself, “the Executive Chamber’s culture” was “filled with fear and intimidation, while at the same time normalize[ed] the Governor’s frequent flirtations and gender-based comments[.]”

Cuomo’s downfall was shocking on one level, as he was long seen (or wanted to be seen) as a champion of women’s rights. In fact, on August 12, 2019, he signed groundbreaking legislation establishing some of the strongest anti-harassment legislation in the country. However, it may not have shocked many who knew him, as the report commissioned by Attorney General Letitia James’ detailed years of questionable behavior and cover-ups by those around Cuomo.

How did this happen? There are many factors that led to Cuomo’s resignation, the most striking of which being the conduct of certain members of his staff, who the Attorney General’s report portrays as seeking to “protect” Cuomo by enabling and perpetuating the conduct that led to his downfall.

It is just the latest in a long line of harassment scandals in the #MeToo era, but the facts here raise sharp questions. Is knowing the law enough? How can you protect against misconduct at any level in your organization? And what happens when the principal offender is the one in charge?

The Attorney General’s report has been called “a road map for lawsuits.” While Cuomo and his counsel continue to deny the report’s findings, it offers crucial lessons for anyone looking to prevent lawsuits, or at least prevent the kind of workplace environment which is detailed in the report. For those in positions of power, the lesson should be that no one is immune from these claims—not even a governor.

The Basics

We’ve written extensively on Labor Days about the ever-changing world of sexual harassment, retaliation, and hostile work environments. New York in particular is home to some of the strongest anti-harassment laws in the country. Under the framework of either the New York State Human Rights Law or Title VII of the Civil Rights Act of 1964, employers are obligated to take proactive steps to ensure that no employee suffers from gender-based discrimination.

Therefore, any employer can learn something from what happened in the Executive Chamber.

There is no “silver bullet” policy or plan that will completely eliminate discrimination from a workplace, and any policy must be continuously updated as businesses grow and the law changes. Therefore, employers must remain vigilant and ready to adapt, working with legal professionals to make sure that their policies not only meet legal requirements, but also the needs of their particular business.

That also means that all employees should regularly receive training on harassment and acceptable workplace standards of conduct. That includes your most senior executives, who should each attend a special session of training geared to senior leadership.

Many of the lessons learned are common sense and not dissimilar from what we were taught as children when we started grade school: keep your hands to yourself, don’t call people names, be respectful of your friend’s body and personal space, let a superior know if something has gone wrong, etc. That’s why it’s a common reaction from anyone reading the headline du jour to think, “how could they not have known this was wrong? Why didn’t anyone stop it?”

That issue is complicated, but solvable.

Start Again, From the Top

Most of the coverage surrounding the Cuomo scandal has remained focused on the Governor himself. Cuomo drew significant criticism for admitting during his resignation speech, “In my mind, I have never crossed the line with anyone, but I didn’t realize the extent to which the line has been redrawn.” Certainly, the conduct described in the report was never acceptable, but to the extent the legal “line” in New York was redrawn, it was done by his own hand. Cuomo is both intelligent and knowledgeable enough to have known better.

So why did the harassment occur, despite this?

With a high-profile offender, it is far too easy to hold the individual responsible—to focus on a nameable, recognizable face, instead of systems comprised of otherwise anonymous enablers.

The Attorney General’s report did not reach the easy conclusion and place all the blame on Cuomo. Instead, it emphasized that it was “the Executive Chamber’s culture” that normalized and perpetuated the abuse.

Even when improper behavior is not outright encouraged (as it may be in the most toxic workplaces) it may still be acquiesced to. This acquiescence is a sign of perhaps the most insidious kind of culture—one in which an individual has no recourse and no way to make their voice heard.

Therefore, employers cannot settle for regular harassment trainings. It is not enough to simply establish and update policies and procedures. Instead, this most recent scandal teaches us that the most proactive thing any business can do is to establish systems of accountability into all echelons of its structure.

Rank-and-file employees are reminded again and again to report harassment or discrimination to a supervisor or to human resources. But what happens when the harasser is a supervisor, or a member of human resources? Worse, what happens when the harasser is superior to that supervisor or to all of human resources? What happens when the harasser is the CEO of the company, or the Governor of an entire state?

Internal checks and balances work well, but only to a point. For total accountability, there must be an external check on even (and especially) the highest-ranking members in an organization.

There may always be mold spores, that doesn’t mean that they must be given damp, dark environments in which to grow. Systems of accountability are the best way to shine a light on what’s happening within a corporate structure.

Transparency and Advocacy

We know the effectiveness of external checks on organizations. For Cuomo, that check came from an investigation after the fact from the Attorney General and two well-respected law firms. Public opinion, plus the threat of impeachment from the legislature, eventually forced his resignation.

Similarly, in the private world, a CEO is accountable to the Board, which is in turn accountable to shareholders, and all of whom are accountable to that organization’s clients and customers.

This all costs hundreds of hours and thousands upon thousands of dollars. It has also cost the jobs of not just the former governor, but also of many of those within his administration. Worst of all, these checks can come into effect too late—failing to prevent years or even decades of abuse, and leading to the final and most destructive external check: litigation.

Taking some proactive steps now can save your organization thousands of dollars, stave off the evisceration of your senior workforce, and create a safer, more inclusive environment for all your employees.

How do you do that?

• Train at the Top. It is not enough to make a CEO and executive team take the same general-purpose training that their assistants take—each should have a special session. This must be an in-person training, geared to your industry and the situations which those individuals will face.

Consider private sessions of training for those at the very top (at least every two years). The money you spend on this type of training will be well worth it.

• Act, Don’t Suppress. The most effective way for employers to become aware of misconduct at the outset is through employee reports, and so an employer is well-served by not simply telling employees to report misconduct, but also to establish systems that help employees feel secure in coming forward.

A refrain throughout the report was that many interviewees knew what was happening, but feared coming forward as they did not believe anything would be done. Coming forward would imperil their jobs, and there would be no change whatsoever.

An employee should know precisely how their complaint will be investigated, and that the investigation will take place in a neutral, confidential environment. Human resources is an outlet, but can be perceived as a “black box,” or a department subordinate to the whims of the alleged harasser. Transparency in investigative procedures, along with clearly-defined triggers for investigations, will help employees feel like their voices will actually be heard. It is incumbent upon employers to make reporting more effective and more convenient that sweeping misconduct under the rug and hoping it goes away.

In short, employers must remain transparent, thorough, and consistent in their handling of complaints to ensure that employees feel safe and heard.

• Conduct Real Exit Interviews. Exit interviews can be seen as a formality for most organizations—particularly those with high turnover. But exit interviews present an opportunity for ground-level, unvarnished insights into the health of your company. It may seem counterintuitive, but making complaints easier to submit is the best way to stamp out harassing behavior before it gets out of control. Use exit interviews to find out what roadblocks your employees are running into.

Consider adding pointed questions to your standard exit interview form: “Did anyone ever say or do anything to make you feel uncomfortable in the workplace?” “Did you ever feel unsafe?” “Did you ever want discuss a workplace issue, but were unsure of with whom you could speak?” A single question may be overlooked as a token effort. You have to insist that speaking the truth is to everyone’s benefit.

• Establish an Independent Investigative Person or Department. Many employees are unable to distinguish between human resources and the company. They may believe (oftentimes justifiably) that their complaints will fall on deaf ears. To counteract this endemic belief, employers should establish the independence of Human Resources from the rest of the corporate structure—having it be answerable to only the Board, or even to an internal review panel (diffusing power is a tried-and-true method of diminishing the corrupting influence of unchecked authority).

An effective Human Resources department requires executive-level authority over every member of an organization. For instance, in many financial service businesses, an internal compliance office may act independently within the organization to ensure legality at all levels—human resources can be similarly empowered.

Taking things a step further, companies may retain the services of outside law firms, instructed to identify and report on misconduct as they are made aware of it.

Also, consider empowering this investigative department to commence their own investigations when they hear the rumblings of misconduct. Is there a story of something that happened at a business dinner? Is it well known that the Senior VP was flirting with a low-level clerk? When they hear the rumors, they must be empowered to act on them and investigate as needed. If the investigator can commence an investigation, without a formal “complainant”, it may uncover the next scandal before it hits.

Looking back, it was June 2020 when the Supreme Court held that discrimination on the basis of sexual orientation and transgender status constitutes unlawful sex discrimination under Title VII of the 1964 Civil Rights Act. We’ve discussed the landmark Bostock v. Clayton County decision in-depth before. Fast forward, one year later on Bostock’s first anniversary, the EEOC issued a slate of new resources to help employers comply with new LGBTQ+ protections.

According to Catalyst.org, members of the LGBTQ+ community still face high rates of discrimination in the workplace. At least 20 percent of LGBTQ+ employees report being discriminated against when applying for jobs and 52 percent report having been subjected to lesbian or gay jokes in the workplace.

Discrimination is bad for business, as it impacts employee retention. Nearly half of LGBTQ+ workers in the United States are closeted at work with 10 percent having left a job because of an intolerant environment. Meanwhile, 25 percent reported staying in a job because of an inclusive culture.

As discrimination in the workplace persists, so too do related lawsuits. In fact, before we were able to finalize this short blog, two new cases hit the press. One involved a former Boeing contractor’s suit against a staffing agency claiming she was fired for being a transgender woman. The other involved a former Iowa Democratic official’s suit against the state’s prior Republican governor alleging the governor cut his salary and urged him to resign because he was gay. Without commenting on those claims, no employer wants to be in that headline.

So how do you avoid being in the headlines? Start by knowing the law. Here’s what you need to know about the new EEOC guidance:

How has the EEOC interpreted Title VII protections after Bostock?

The EEOC’s post-Bostock guidance outlines the types of actions it considers unlawful discrimination or harassment based on sexual orientation or gender identity.

• It doesn’t matter what clients or customers prefer. When it comes to the rights of your LGBTQ+ employees, your clients are NOT always right. For example, the EEOC states that it would be unlawful to move an LGBTQ+ employee out of a public-facing position because of real or perceived client preferences about sexual orientation or gender identity.

So employers should avoid acting on customer suggestions about how client/customer-facing roles must “look” like a certain gender.

• Employers cannot discriminate based on non-conformity with gender stereotypes. For example, employers cannot require transgender employees to dress in accordance with the sex they were assigned at birth. This is true regardless of whether an employer knows the employee’s gender identity or sexual orientation.

Employers should avoid the “male” and “female” dress codes. Instead, employers should require their employees to be neat, professional, and wear clothing that is appropriate for their job.

• Employers can have separate, sex-designated bathrooms, locker rooms, and showers. However, the EEOC’s position is that employers may not deny an employee equal access to a bathroom, locker room, or shower that corresponds with the employee’s gender identity.

While, this can be tricky to comply with, we have not found it to be an insurmountable problem with most employees. The key is often some education. You may just need to give some explanation to employees, especially if there has been a gender transition, as to who is using the facilities.

• Employers cannot disregard an employee’s preferred name or pronouns. This gives much more weight to the preferred pronouns that some have opted to include in their signature block and LinkedIn profiles. While accidental misuse of a transgender employee’s preferred name and pronouns does not constitute a Title VII violation, intentional and repetitive use may contribute to a hostile working environment.

Employers, train your employees and especially managers to be sensitive to proper name and pronoun use.

Among their recent notable victories, EEOC litigators secured a $175,000 judgment against a retail employer for subjecting a gay male and female employees to a hostile work environment based on sex when a manager subjected those employees to unwanted sexual comments, photographs, and touching and the employer failed to adequately intervene. The Commission also filed one of the lawsuits decided in the Bostock. That case, which dealt with a transgender employee’s clothing preferences and subsequent termination, resulted in a more than $250,000 judgment against the funeral home that fired her.

Conclusion

What employers should know is there are many different gender identities and they are all under a protected class under Title VII. And the EEOC’s interpretation of Title VII protection after Bostock has made is that much easier for an employer to fall out of compliance and susceptible to litigation.

We recommend you review your antidiscrimination policies and employee handbook to address the EEOC’s new enforcement positions. If you have any questions related to the laws protecting LGBTQ+ workers, reach out to your Kelley Drye contact for guidance.

Tuesday, June 22nd at 12:30pm ET

Restrictive Covenants 101: NDAs, Non-Competes & Other Tools To Protect Your Company

A company’s confidential information and customer relationships are its lifeblood—and are the assets that can walk out the door too easily with a departing employee. Too few companies take a considered approach to protecting those assets. NDAs and noncompetes can help, but using them without a holistic strategy can be worse than no protection at all. Join the Kelley Drye Labor and Employment team for a practical look at how to use—and not to use—restrictive covenants, and how to tailor them to your company’s unique needs.

On May 28, the EEOC updated its Technical Assistance Guidance and has now stated with certainty that employers CAN indeed require employees to be vaccinated before coming in to the office or workplace. The updated guidance also addresses accommodations for the vaccinated, vaccine incentives, and vaccines for pregnant employees, among other questions. However, since this was drafted before the CDC came out with its latest guidance, it does not specifically address all issues related to the handling of unvaccinated and vaccinated employees in the workplace.

Below are some key points of the new guidance:

Mandatory Vaccination is Lawful, But Accommodations Must Be Offered

Even though many employers have opted against mandatory vaccination for their employees, the EEOC made clear that they can, in fact, mandate vaccinations for those who want to report to work. The key for employers, however, is they must engage in the interactive process and provide reasonable accommodations under the ADA and Title VII, for eligible employees seeking an exception to the mandate.

The EEOC offers some examples of possible accommodations, most of which are no surprise, such as allowing unvaccinated employee to wear a face mask, maintaining social distance from others, working a modified shift, periodic COVID-19 testing, being allowed to telework or, as a last resort, reassignment to another position.

Further, the EEOC makes clear that employees who claim they cannot get vaccinated because of disability or religious objections must notify their employer of the need for an exemption and must also present some proof to back up that exemption. Of course, these accommodations may not be possible for all workplaces and all employees, and it will be a case by case decision how employers handle accommodation requests.

For instance, you will have to consider whether the employee who cannot be vaccinated must be in the workplace to do their job, and whether their presence presents a ‘direct threat’ to others.

The EEOC also advises employers to consider whether a vaccine mandate may have an adverse impact on or disproportionately exclude employees based on their race, color, religion, sex, national origin, or age. Specifically, the updated guidance states that “[e]mployer should keep in mind that because some individuals or demographic groups may face greater barriers to receiving a COVID-19 vaccination than others, some employees may be more likely to be negatively impacted by a vaccination requirement.”

For industries where employees interact with the public, like retail and hospitality, a mandatory vaccine policy could be a good thing. Not only will it comfort customers and co-workers, but can even be used to differentiate from other businesses. For example, a restaurant that can say “All of our servers are vaccinated,” may have a leg up on others in the neighborhood.

However, employers should also consider the downside to a mandatory vaccine policy – the ability to provide or consider reasonable accommodations for those employees with disabilities or religious objections. As recommended by the EEOC, the process should be to announce that vaccination is mandatory and that requests for reasonable accommodation based on disability or religious objection will be considered.

Disclosing Vaccine Status – Keep it Confidential

The EEOC states that employers may lawfully ask employees to disclose their vaccine status, whether or not there is a mandatory vaccination policy in place. However, employers cannot ask why employees did not get the vaccine because this inquiry is not considered a “disability-related” inquiry under the ADA.

In other words, pre-vaccination questions are permissible under the ADA. However, an employee’s decision to answer those questions are purely voluntary; they do not have to tell you why they are not vaccinated. You may also face challenges from employees to those questions.

Further, the EEOC makes clear in its updated guidance that documentation concerning proof or confirmation of vaccination is a medical record subject to the strict confidentiality requirements of the ADA.

Lastly, you cannot ask your employees whether their family members have been vaccinated because it is prohibited under GINA.

Can Vaccinated Employees Request an Accommodation?

What about vaccinated employees who are still nervous about returning to work because of COVID? Is this even something that employers must consider at this point?

According to the EEOC, at least on paper, the answer is YES. The EEOC states that fully vaccinated employees, if they are still concerned about a potential COVID-19 infection, may still be entitled to reasonable accommodation based on an underlying medical condition. The EEOC explains that for employees with certain medical conditions (i.e. immunocompromised), the vaccine may not offer the same measure of protection as other vaccinated individuals. In this situation, employers must engage in the interactive process with such employees and provide accommodations, absent undue hardship.

Can You Require Pregnant Employees To Get The Vaccine?

Studies have confirmed that pregnant women can safely be vaccinated, and that it may be a good thing. However, there is still hesitation on this issue.

The EEOC states that employers may require pregnant employees to be vaccinated. It also addresses how employers should handle pregnancy related requests for accommodation from the vaccine.

In addressing accommodation requests by pregnant employees, the EEOC states that you cannot discriminate. In other words, the pregnant employee who requests an accommodation must be treated the same as “other employees similar in their ability or inability to work. This means that a pregnant employee may be entitled to job modifications, including telework, changes to work schedules or assignments, and leave to the extent such modifications are provided for other employees who are similar in their ability or inability to work.”

This suggests that employers should accommodate pregnant employees who do not get the vaccine in the same manner as they would for employees who cannot get the vaccine because of a disability or religious objection.

Vaccine Incentives Are Generally Fine

Vaccine incentives can be divided into two groups, (1) incentives for employees to get a vaccine from a 3^rd party, and (2) incentives if the employer is doing the vaccinations.

For Group 1, if an employer is not doing the vaccinating, the EEOC makes clear that it CAN lawfully offer employees an incentive to get vaccinated. So, free lunch or a gift card for the vaccinated is fine. It is also lawful to offer employees and family members education about the efficacy of the vaccines.

For Group 2, if it is the employer or an agent of the employer providing the vaccines, incentives may be offered, as long as they are not “so substantial as to be coercive.” The EEOC stated that a “very large incentive” could make employees feel pressured to disclose protected medical information. Having said that, the agency failed to give any guidance on what is or is not considered a “very large incentive.” Employers who plan to provide the vaccine directly or through an agent should consider any incentives carefully.

Conclusion – Where Does this Leave Us

The good news is that the updated guidance provides a clear answer on the question of vaccines. If you believe that it will be good for your business to require those who are coming to the workplace to be vaccinated, you may lawfully make that a requirement.

So:

• You can ask employees if they are vaccinated;
• You can offer an incentive to be vaccinated, with some caveats; and
• You can mandate a vaccine for those coming to work.

• Will you allow the unvaccinated employees to come in with masks? Will that make other employees feel unsafe?
• Am I going to require pregnant employees to be vaccinated?
• What proof will be required of those who claim they require accommodations?
• Will you allow the unvaccinated to continue to work remotely? How do you then handle vaccinated employees who want to also work remotely?
• Should you offer a vaccine incentive?

Since COVID-19 hit us in 2020, the workplace as been filled with challenges. If you have any questions on these and other workplace issues, be sure to contact your Kelley Drye contact to get the answers!