United States: US Employment Litigation Round-Up for May: A Review of Key Cases and New Laws Affecting Employers

EEOC's Failure to Conciliate Confirmed as an Affirmative Defense

Decision: In Mach Mining, LLC v. Equal Employment Opportunity Commission, the US Supreme Court confirmed that courts have a duty to review whether the Equal Employment Opportunity Commission (EEOC) has fulfilled its obligation to attempt conciliation. However, the Court held that the scope of the review is narrow, focusing solely on whether the EEOC complied with its statutory obligation without probing deeply into the substance of the conciliation efforts. The EEOC sued petitioner Mach Mining, LLC, for sex discrimination in hiring. Mach Mining raised as an affirmative defense that the EEOC had failed to fulfill in good faith its statutory obligation to conciliate before filing the lawsuit.

The Supreme Court held that in order to meet the conciliation requirement of Title VII of the Civil Rights Act of 1964 the EEOC must inform the employer about the substance of the claim—including the individuals or class of individuals who have allegedly been discriminated against—and provide the employer with an opportunity to discuss the matter in an effort to achieve voluntary compliance. The Court observed that a sworn affidavit from the EEOC stating that it has discharged these obligations is likely to suffice in most cases. But, if the employer provides credible evidence to the contrary, "a court must conduct the factfinding necessary to decide that limited dispute." Should a court find in favor of the employer, it should stay the case and order the EEOC to undertake the mandated conciliation efforts.

Impact: This decision confirms for employers that the target of an EEOC discrimination suit may insist on receiving information about the claim during the conciliation process and, if the EEOC refuses, may raise the EEOC's failure to conciliate as an affirmative defense. However, employers should keep in mind that the EEOC maintains extensive discretion to determine the kind and amount of communication that is appropriate in any given case and that the affirmative defense generally will not result in a substantive employer win but rather in sending the case back to the conciliation process.

California Appellate Court Denies Discovery Aimed at Identifying State-Wide Putative Class Members

Decision: In Williams v. Superior Court, the California Court of Appeal denied the writ petition brought by a putative representative plaintiff seeking to overturn the trial court's decision to deny discovery of the names and contact information of all of the defendant's nonexempt employees in California. The plaintiff, a former employee of a retail store operated by Marshalls of CA in Costa Mesa, California, brought a representative action under the California Labor Code Private Attorneys General Act of 2004 (PAGA) alleging various violations of California's Labor Code. The trial court also ordered that the plaintiff could renew his motion after he had been deposed "for at least six productive hours," and that Marshalls could attempt to show the substantive claims had no merit in opposition to that motion.

The Court of Appeal upheld the trial court's decision, finding that the requested discovery was premature and that the employees' privacy interests outweighed the plaintiff's need for disclosure, particularly since the only allegations in the complaint pertained to the Costa Mesa store and there was no reason to conclude that the plaintiff had knowledge of a uniform, statewide policy. The court also concluded that staging discovery was warranted to delay the incursion of potentially unnecessary costs.

Impact: This case provides a good blueprint for employers to follow in attempting to defeat discovery regarding employees statewide in California. In order establish a need for such discovery that would outweigh privacy interests, plaintiffs must first establish that they were subjected to violations of the Labor Code. At that point, a trial court could consider whether the employment practice at issue was uniform throughout the company. Only if plaintiffs can reasonably establish these prerequisites could a trial court then consider whether statewide discovery was justified.

Fourth Circuit Holds Isolated Incidents of Harassment Can Create a Hostile Environment

Decision: A recent en banc decision of the US Court of Appeals for the Fourth Circuit held that "an isolated incident of harassment, if extremely serious, can create a hostile work environment," partially overruling a 2006 Fourth Circuit decision. In Boyer-Liberto v. Fontainbleau Corp., the plaintiff alleged that the defendant maintained a racially hostile work environment and that she was retaliated against in violation of Title VII of the Civil Rights Act of 1964 after she reported to the company's human resources department that a white supervisor had twice in one day called her a "porch monkey." The employer defended against the claims by arguing that the isolated incidents were not severe and pervasive, and that the plaintiff could not have reasonably believed that they were. In rejecting this argument, the appellate court held that a reasonable jury could conclude that a hostile work environment existed because the racial epithet that was used "is not just humiliating, but degrading and humiliating in the extreme." The court further explained that when considering a claim of hostile environment based on an isolated incident, the court's focus should be on the severity of the harassment.

Impact: This decision highlights the importance of considering the entire context and content of any alleged discriminatory harassment before dismissing it as isolated behavior. The mere fact that the alleged discriminatory harassment occurred only once (or a few times) will not necessarily entitle the employer to a judgment that a hostile environment does not exist or that the employee did not engage in protected activity when complaining about it. When confronted with such circumstances, employers should consult counsel for advice regarding how to proceed with investigating and resolving such complaints.

New York City Passes Law Prohibiting Credit Checks for Employment Purposes

Law: New York City recently amended the New York City Human Rights Law (NYCHRL) to prohibit, with limited exceptions, employers from using consumer credit history to make employment decisions. The amendment defines "consumer credit history" to include consumer credit reports, credit scores and information obtained directly from an individual regarding details about credit accounts, bankruptcies, judgments or liens. The NYCHRL provides for a private cause of action and the award of unlimited punitive damages, compensatory damages and attorneys fees to successful plaintiffs. The law goes into effect on September 3, 2015.

Impact: New York City joins a growing number of jurisdictions and the EEOC in limiting the ways in which employers can request and use applicant and employee credit histories. These jurisdictions and the EEOC (in joint guidance with the Federal Trade Commission issued in early 2014) have expressed concerns that credit histories are of limited relevance to performance for many jobs and that their use as an applicant screening tool can have an adverse discriminatory impact on certain groups. New York City's law is among the most restrictive of the laws in this area, allowing for employer use of credit history in only a limited number of circumstances. Private employers with employees in New York City should review their credit check policies to ensure compliance with the new law.

US Supreme Court To Determine When Filing Period for Constructive Discharge Claim Begins To Run

Grant: The US Supreme Court has granted certiorari in Green v. Donahoe in order to resolve a circuit split and decide whether the filing period for a constructive-discharge claim begins to run when the employee resigns or at an earlier date when the employer commits the last allegedly discriminatory act leading to the resignation. In Green, a former postmaster initiated administrative proceedings alleging that the United States Postal Service forced him to resign by creating unendurably discriminatory work conditions in retaliation for his earlier filing of an administrative claim of race discrimination. He initiated the administrative proceedings 41 days after his resignation, but more than three months after the allegedly discriminatory conduct had ended. The district court held that his claim was time-barred and the Tenth Circuit affirmed, holding that the filing period for a constructive-discharge claim begins to run at the time of the last allegedly discriminatory act leading to the resignation, not at the time of the resignation itself.

Impact: Assuming that the Court addresses the issue of time-bars generally, as it was presented, and does not limit its holding to federal employees, its decision will be significant to all businesses that are covered by federal employment-discrimination laws. A more narrow decision may be of less impact to the private sector.

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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.