United States: A Review of Key Cases and New Laws Affecting Employers (US Employment Litigation Round-Up for January 2016)

Keywords: employment, ERISA,

NLRB Invalidates Workplace Recording Device Ban

Decision: On December 24, 2015, the National Labor Relations Board (NLRB or the Board) ruled in Whole Foods Market, Inc., 363 NLRB No. 87, that Whole Foods' policies prohibiting employees from using cameras or recording devices in the workplace violated the National Labor Relations Act. An Administrative Law Judge had previously concluded that the policies were lawful because they did not prohibit employees from engaging in protected activity and because "making recordings in a workplace is not a protected right." However, the NLRB emphasized that using recording devices can be a protected activity "if employees are acting in concert for their mutual aid and protection and no overriding employer interest is present." Reviewing Whole Foods' policies under this standard, the NLRB majority concluded that the policies, which prohibited all recordings in the workplace, could reasonably be interpreted as restricting the employees' ability to engage in protected, concerted activity. While the NLRB had previously upheld a hospital's restrictions on the use of cameras because of patient privacy rights (Flagstaff Medical Center, 357 NLRB No. 65 (2011)), the Board rejected Whole Foods' business justification that it wanted employees to feel comfortable expressing their views during annual town hall meetings and in termination-appeal panels as distinguishable from the situation in Flagstaff Medical Center.

Impact: In recent years, the NLRB has invalidated numerous employer policies restricting use of email and social media, and the dissemination of confidential information. Whole Foods Market, Inc., is a continuation of this trend, with the NLRB now determining that no-recording policies are unlawful unless there is an overriding employer interest justifying the limitations. Given the Board's current composition, it is likely to continue aggressively scrutinizing any rule restricting an employee's ability to use recording devices in the workplace, regardless of the justification. Employers would be wise to evaluate any no-recording policies and consider whether legitimate business justifications exist that are sufficient to override employees' rights to use recording devices to engage in protected activity.

Seventh Circuit Rejects EEOC's Attempt to Avoid Conciliation

Decision: On December 17, 2015, in EEOC v. CVS Pharmacy, Inc., No. 14-3653, the US Court of Appeals for the Seventh Circuit rejected the Equal Employment Opportunity Commission's (EEOC) argument that it was not required to engage in conciliation before filing a lawsuit. The EEOC had sued CVS, alleging that certain provisions in the retailer's standard severance agreement violated Title VII of the Civil Rights Act because they deterred terminated employees from contacting the EEOC. The district court had dismissed the underlying lawsuit on procedural grounds, including the EEOC's failure to engage in conciliation. On appeal, the EEOC argued that Section 707(a) of Title VII authorized it to bring lawsuits challenging a "pattern or practice of resistance" without having to engage in the pre-suit procedures outlined in Section 706. The Seventh Circuit rejected this argument, emphasizing that the EEOC is "required to comply with all pre-suit procedures" in Section 706, including conciliation, whenever it pursues a pattern-or-practice claim. The circuit court also rejected the EEOC's argument that the pre-suit procedure requirements do not apply to "resistance claims," emphasizing that there is no difference under Title VII between a suit challenging a pattern or practice of resistance and a pattern or practice of discrimination.

Impact: In April 2015, the US Supreme Court held in Mach Mining, LLC v. EEOC, 575 U. S. ____ (2015) (No. 13-1019), that federal courts have authority to review claims that the EEOC has not fulfilled its duty under Title VII to engage in conciliation before bringing a lawsuit. Despite the Supreme Court's clear holding, the EEOC continues its attempts to avoid conciliation, in this case by arguing that conciliation is only a prerequisite to a "pattern or practice of discrimination" claim. In rejecting this argument, the Seventh Circuit observed that, "[i]f we were to adopt the EEOC's interpretation of Section 707(a), the EEOC would never be required to engage in conciliation before filing a suit because it could always contend that it was acting pursuant to its broader power under Section 707(a)." Therefore, while the current legal standard for what counts as conciliation is low, the EEOC cannot avoid conciliation altogether by claiming that it is challenging a pattern or practice of resistance under Section 707(a) of Title VII.

Federal Contractor's Hiring Policies Discriminate Against Male Job Applicants, Says Department of Labor Lawsuit

Complaint: On December 9, 2015, the US Department of Labor's (DOL) Office of Federal Contract Compliance Programs (OFCCP) filed a lawsuit against AmeriQual Group LLC, an Indiana food packaging company that since 1988 has manufactured portable rations for the US Department of Defense and the US Armed Forces. The lawsuit alleges that AmeriQual discriminated against male job applicants seeking entry-level jobs because AmeriQual regularly hired women for light-duty tasks and men for labor-intensive work, meaning men were less likely to be hired, because there were more light-duty positions. The lawsuit seeks 27 job offers for male job applicants and back wages on behalf of 237 male job applicants.

Impact: The OFCCP has been active in pursuing claims against federal contractors that allegedly discriminate against applicants and has been successful in obtaining significant settlements. For instance, in 2014 and 2015, the OFCCP obtained settlements ranging from $300,000 to close to $2 million over allegations including race, gender, and disability discrimination. In light of these lawsuits, employers should not take lightly the risk of action by the OFCCP.

Originally published 26 January 2016

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