Supreme Court Rules in Favor of Cake Baker in Landmark LGBT Case… But Fails to Provide New Guidance

The U.S. Supreme Court ruled in favor of a baker in Colorado who refused to bake a wedding cake for a same-sex couple based on his Christian beliefs in a 7 to 2 decision issued on June 4.  In Masterpiece Cakeshop, Ltd. v Colorado Civil Rights Commission, the majority opinion written by Justice Kennedy concluded that the wedding cake baker did not get a fair hearing on his complaint in the state proceedings, and specifically ruled that there was improper bias by the Colorado Civil Rights Commission.  Although the Supreme Court discussed the tension between the two legal rights – the EEO protections for gay persons on the one hand versus the sincerely-held individual religious beliefs on the other hand – the Court did not rule on the ultimate question as to how such conflicts are to be resolved.  Although the ruling fails to provide any new criteria under which there may be an exemption to the general anti-discrimination laws based on an individual’s sincerely held religious views, the Court reaffirmed that the First Amendment’s protections of religious rights also protects individuals during the proceedings for resolving discrimination claims.

The highly anticipated ruling in Masterpiece Cakeshop comes after years of litigation.  In 2012, David Mullins and Charlie Craig met with bakery owner Jack Phillips to order a custom wedding cake for their reception.  Phillips refused to make them a cake and indicated that the bakery would not sell wedding cakes to same-sex couples.  Subsequently, Mullins and Craig filed complaints with the Colorado Civil Rights Commission, which enforces the Colorado Anti-Discrimination Act (CADA) alleging sexual orientation discrimination.  The Commission then determined that the bakery had violated CADA and Phillips appealed.  In 2015, the Colorado Court of Appeals affirmed the Commission’s ruling over Phillips’ arguments that he had a constitutional right to refuse to bake the cake based on his First Amendment rights.  The Supreme Court granted certiorari on June 26, 2017.

Justice Kennedy, writing for the majority, emphasized that Phillips was entitled to a neutral decision-maker who would give full and fair consideration to his religious objection.  The Court did not discount the impact and significance of CADA but instead, focused on the importance of providing a fair and neutral forum for resolving the claims.  Justice Kennedy noted that it is unexceptional that the CADA “…can protect gay persons in acquiring products and services on the same terms and conditions that are offered to other members of the public, the law must be applied in a manner that is neutral toward religion.”  The Court concluded that the Commission’s treatment of Phillips’ case violated the state’s duty under the First Amendment not to base laws or regulations on hostility to a religion or religious viewpoint.

In the dissent, Justice Ginsburg emphasized that these circumstances do not evidence hostility to religion of the kind the Court has previously held to signal a free-exercise violation.  Additionally, the dissent argued that any comments signaling any sort of hostility cannot justify reversing the judgment below.

While a victory for the baker in this case, the ruling is fact-intensive and based on narrow and unusual facts. Justice Kennedy recognized the narrowness of the ruling stating that, “[T]he outcome of cases like this in other circumstances must await further elaboration in the courts, all in the context of recognizing that these disputes must be resolved with tolerance, without undue respect to sincere religious beliefs, and without subjecting gay persons to indignities when they seek goods and services in an open market.” Indeed, there already are appeals pending, including one before the Supreme Court from a florist in Washington who has appealed a state ruling that found she violated state law for refusing to provide the wedding flowers for a same-sex couple.  We will stay tuned.

For the full update on the Supreme Court’s ruling, click here.

Supreme Court Rules Class Arbitrations Can Be Barred By Agreement

The Supreme Court today ruled that employers may insist on and enforce mandatory arbitration agreements with employees that bar class actions against the employers.  This remains true even if signing such agreements is a condition of employment. The case is Epic Systems Corp. v. Lewis.

The issue before the Court has been brewing since the NLRB’s D.R.Horton ruling in 2012.  In a break with precedent, the Board ruled that class action prohibitions in arbitration agreements violated Section 7 of the National Labor Relations Act’s (“NLRA”) guarantee of collective action and, thus, was a valid exception to the strict requirement of the federal Arbitration Act (“FAA”).  The FAA, a law otherwise broadly supporting arbitrations, includes a “saving clause,” which permits courts to refuse to enforce arbitration agreements “upon such grounds as exist at law or in equity for the revocation of any contract.” §2.  Appeals courts have split on whether D.R.Horton expressed the proper application of the FAA in class arbitration cases and the matter was ultimately brought to the Supreme Court.

The Court majority found little ambiguity in the applicable laws.  Among the rationales upon which the majority based its ruling were its conclusions that the saving clause was intended to save defenses arising from state law and federal statutes and, as a law of general application, saving clause in the FAA “permits agreements to arbitrate to be invalidated by ‘generally applicable contract defenses, such as fraud, duress, or unconscionability,'” (citing AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011).  The Court noted “this means the saving clause does not save defenses that target arbitration either by name or by more subtle methods, such as by ‘interfer[ing] with fundamental attributes of arbitration.'” Id., at 344.

Thus, the lengthy judicial – and philosophical – battle among jurists and workplace participants has ended.  The “saga” of D.R.Horton has ended and arbitration agreements prohibiting class actions are licit.

The Court also rejected the argument that the NLRA, passed subsequently to the FAA, implicitly “amended” the prior statute or otherwise altered its effect.  Commenting that the NLRA focuses on the right to form unions and bargain collectively, the Court pointedly notes that the NLRA is silent with respect to arbitration and shows no intent to modify the FAA.  The Court dryly states

Our rules aiming for harmony over conflict in statutory interpretation grow from an appreciation that it’s the job of Congress by legislation, not this Court by supposition, both to write the laws and to repeal them. Slip Op.  at 10

and goes on to note that the Supreme Court has consistently rejected attempts to “conjure” conflicts between the FAA and other states.

No report of this decision can be complete without noting the acerbity of the language in both the majority decision and the lengthy dissent.  The 5-4 decision once again split the High Court along ideological grounds and the “battle lines” were once again distinctly drawn: the role of legislative history, the importance of legislative intent, the extent of judicial “activism” or “restraint” on behalf of whom.  Justice Gorsuch also took this opportunity to articulate his position on the limits of the Chevron decision in parsing asserted “statutory ambiguities.”

In sum, Epic Systems can be read as a simple and straight-forward decision permitting the use of arbitration agreements that prohibit class actions.  To careful readers, this decision indicates that a number of battles have yet to be waged on issues of workplace practice and social policy.  And the make-up of the Court may be a chief determinant of the outcomes.

New Jersey Passes Landmark Equal Pay Act

On April 25, New Jersey joined a growing list of states to enact robust equal pay laws.  The Diane B. Allen Equal Pay Act, which takes effect on July 1, 2018, amends the New Jersey Law Against Discrimination in several ways.  The amendments provide broader protections than the federal Equal Pay Act (EPA).

While the EPA prohibits discrimination based exclusively on gender, the New Jersey law extends its protection to workers denied equal pay based on race, creed, color, national origin, nationality, marital status, sexual orientation, gender identity, disability, and age, among others.

The New Jersey law prohibits employers from providing members of a protected class a lower rate of pay “for substantially similar work, when viewed as a composite of skills, effort and responsibility,” a broader standard than the federal EPA’s “equal work” standard.

Like the EPA, the New Jersey law includes specific affirmative defenses, but the defenses under the new law are narrower and may be more difficult for employers to demonstrate.  Specifically, a difference in pay is permitted under the New Jersey law only if it is the result of a bona fide seniority or merit system or the employer can justify a pay difference by demonstrating that:

  • it is based on legitimate factors unrelated to characteristics associated with the employee’s protected status such as training, education or experience, or the quantity or quality of production;
  • the factors are not based on and do not perpetuate a pay differential based on a protected characteristic;
  • all factors are applied “reasonably”;
  • one or more factors explain the entire pay differential; and
  • the factors are job related, based on business necessity and there are no alternatives with less of an impact on pay.

This final catch-all exemption is narrower than the EPA’s catch-all exemption – the pay differential is based on a factor other than sex.

The New Jersey law also provides more generous damages than the EPA.  Prevailing employees are entitled to three times the amount of the pay differential for the entire violation period, which can extend as far back as six years.  In comparison, the liability period under the EPA is two years.

New Jersey joins Massachusetts, Oregon, and Washington in passing comprehensive equal pay legislation that become effective by January 1, 2019 or sooner.  It is critical that employers, particularly those operating in multiple states, quickly get up to speed on their varying obligations.  Moreover, proactive pay audits under the protection of attorney-client privilege and, where appropriate, pay adjustments, will put employers in the best possible position to defend against what we expect will be an increase in complaints of compensation discrimination.

FortneyScott’s Pay Equity practice is dedicated to guiding employers through the changing and challenging world of pay equity. Please reach out to us if we can help you think through these increasingly complex matters, to provide strategic and practical legal advice and counsel, and to help you get pay equity “right.”

EEO-1 Report Deadline Extended

The U.S. Equal Employment Opportunity Commission’s (EEOC) EEO-1 Joint Reporting Committee has extended the deadline for filing the 2017 reports to June 1, 2018.

Employers should check for a communication to the EEO-1 company contact introducing the new EEO-1 survey.  Contact your FortneyScott attorney should you have any questions.

On “Equal Pay Day,” Growing Challenges – and Proactive Steps – For Employers to Consider

For 2018, April 10th is “Equal Pay Day.” That is the day the typical woman must work into 2018 to get paid what the typical man was paid by the end of 2017.  The pay controversy turns on whether there are legitimate reasons for the differences, e.g., one employee produces more widgets than another, or whether the differences are due to unlawful discrimination.  As on past years’ Equal Pay Days, civil rights groups, women’s groups and others will stage a high-profile campaign to highlight and seek to close the national “pay gap” between men and women workers and the even larger pay gap that exists between men and women of color. Here is just one example of the campaign that shines a bright light – for your employees to see – on Equal Pay Day and the continuing pay gap.

But the focus on pay equity and the national pay gap is no longer limited to one day each year on Equal Pay Day.  Pay equality has quickly emerged as one of the most challenging issues employers face today. A growing patchwork of new, often differing, state equal pay laws (14 states passed equal pay laws in the past 18 months and another 18 states have proposed equal pay laws that are right now moving forward in their respective legislatures), increased agency enforcement, a rising tide of pay discrimination litigation, and your employees’ growing awareness of – and expectations for – equal pay all coalesce to make pay equity an issue employers must face proactively, or face the increasing risk of legal exposure and reputational harm.

So what is an employer to do?

One quickly emerging best practice is to conduct a proactive pay analysis – under attorney-client privilege – to identify those pay disparities (all employers have some) that can be explained by legitimate factors and those that can’t. It is the unexplained pay differences you should uncover, investigate and – where appropriate – address through equity adjustments that are thoughtfully designed and well-deployed to close the unexplained gaps while minimizing the chances of “blow back” claims from the employees who receive adjustments and other employees who do not.

FortneyScott’s Pay Equity practice is dedicated to guiding employers through the changing and challenging world of pay equity. Please reach out to us if we can help you think through these increasingly complex matters, to provide strategic and practical legal advice and counsel, and to help you get pay equity “right.”

OFCCP Issues Directive Requiring PDNs

OFCCP Director Ondray Harris? first public act as Director is to require a national, uniform practice at an agency not known for its uniformity.  In Directive 2018-01, Harris directed the Regional and District Directors to issue Pre-Determination Notices (PDN) in every compliance evaluation where the agency believes either individual or systemic discrimination findings may exist.  Contractors will then have 15 calendar days to rebut the OFCCP?s proposed findings.  Further, every PDN must be reviewed by the appropriate Solicitor?s office before being forwarded to the National Office for final review.  The new directive takes effect immediately, and any Notice of Violation (NOV) not yet issued must be withheld until a PDN is first issued ?to allow contractors an opportunity to respond to the agency?s preliminary findings.?

In the past, PDN?s were reserved for matters of systemic discrimination, and the decision to issue a PDN was left to the discretion of the OFCCP District and Region.  This led to varying practices across the country.  Further, where PDNs were not issued, the NOV often curtailed conciliation efforts, and moved the compliance evaluation into a more adversarial posture. Harris? aim, as stated in the Directive, is ?to achieve consistency across regional and district offices, increase transparency about preliminary findings with contractors, and encourage communication throughout the compliance evaluation process.?

Although a great many compliance evaluations are closed without any findings of violations, this Directive is, nonetheless, a significant first step.  Multi-jurisdictional contractors have been seeking greater consistency among the Districts and Regions of the OFCCP for years.  For many of those contractors, working with different Regions of the OFCCP has seemed as if they were dealing with entirely different agencies of the federal government.  As a result, any efforts by OFCCP to bring greater consistency are important.  Further, the promise of an earlier notification of the agency?s findings, and an assurance that contractors will have an early opportunity to respond, holds out the hope that more meaningful communications will take place in a less contested context than that created by a NOV.  Most significantly, the fact that PDNs will be reviewed by the National Office will likely have the effect of tempering the positions of the more aggressive Districts and Regions; all of which may lead to more amicable resolutions of compliance evaluations.

The hope among the contractor community is that this first step is followed by others regarding other facets of the audit process, bringing still more consistency and transparency to a process that has been going in the opposite direction.

OFCCP Issues 1,000 CSALs, and New Compliance Evaluations Will Commence in 2018

Federal contractors should be watching their mailboxes. On February 1, OFCCP mailed 1,000 Corporate Scheduling Announcement Letters and will begin mailing the formal Scheduling Letters on March 19, 2018.

OFCCP also announced significant modifications to its audit selection protocols including a limit of 10 establishments of a single contractor being placed on the scheduling list as well as no more than four establishments of a single contractor being placed in a single district office.  Most significantly, OFCCP expanded the prior two-year audit grace period by now providing that no establishment with a review closed in the last five years will be placed on the scheduling list.

Contact your FortneyScott attorney for more information about how these changes may affect your company or contact FortneyScott for more information.

The full DOL announcement can be read HERE.

GAO Report Recommends Improvements in Federal Agencies? Oversight of Tech Industry

The Government Accounting Office (GAO) has issued
a report recommending improved oversight of the tech industry by EEOC and OFCCP
because of the lack of women and African American workers in the industry. The
GAO was asked to review the workforce trends in the technology sector and
oversight by the federal enforcement agencies.

The GAO reviewed trends in the gender, racial and
ethnic composition of the technology sector workforce and the oversight by EEOC
and OFCCP of tech companies’ compliance with equal employment and affirmative
action requirements. After analyzing the workforce data from the American
Community Survey for 2005-2015; EEOC EEO-1 Reports for 2007-2015; and OFCCP data
on compliance reviews for FY2011 to 2016; and interviewing agency
officials, researchers and workforce, industry and company representatives, the
GAO found that while the percentage of minority technology workers increased
between 2005-2015, there was no growth for women or African Americans.   Hispanic and Asian workers, however, made significant gains.  Women, African Americans and Hispanics make
up a smaller percentage in the technology workforce-math, computing and
engineering-as compared to their representation in the general workforce while
Asians have a higher percentage in the technology workforce than in the general
workforce.

The GAO also found that although EEOC and OFCCP have
taken steps to enforce equal employment and affirmative action requirements,
both face limitations. The EEOC is limited by its complaint based focus and the
lack of industry based data. The OFCCP’s regulations and its
establishment-based limit its ability to hold contractors responsible for
compliance.

In response to these concerns, the GAO made 6
recommendations:

  • The
    Chair of the EEOC should develop a timeline to complete planned efforts to
    clean IMS data for one-year period and add missing industry code data.
  • OFCCP
    should analyze its internal process data from closed evaluations to understand
    the causes of delays during compliance evaluations and change the process
    accordingly.
  • The
    OFCCP should require contractors to disaggregate demographic data for the
    purpose of setting placement goals in AAPs rather than setting single goals for
    all minorities.
  • OFCCP
    should assess the quality of the methods used by OFCCP to incorporate
    consideration of disparities by industry into its process for selecting
    contractor establishments for compliance evaluation.
  • OFCCP
    should evaluate its current approach used for identifying entities for
    compliance review and determine what modifications are needed to reflect current
    workplace structures and location or to ensure subcontractors are included.
  • The
    OFCCP should evaluate the Functional Affirmative Action Program to assess its
    usefulness as an effective alternative to an establishment-based program and
    determine what improvement could be made to better encourage contractor
    participation.

Fortney
Scott is reviewing this report in detail and determining what impact these
recommendations will make on the tech industry, EEOC and OFCCP. Please contact
your Fortney Scott attorney for more information.

DOL Requests Comments for Draft Strategic Plan


On
Tuesday, November 7, 2017, the U.S. Department of Labor (DOL) will publish  a request for
comments on its draft FY2018-2022 Strategic Plan in
the Federal Register.  The draft strategy plan
itself can be found here
or on the DOL website. The notice will open a period of 30 days in which
stakeholders can comment on the draft Strategic Plan. The notice states that
the draft Strategic Plan represents “the Secretary’s vision, the Department’s
mission, and a description of how component agencies will achieve supporting
goals and strategic objectives in the next four years.”


The draft strategic plan has a total of four goals.  The first strategic DOL goal-Support the
Ability of All Americans to Find Good Jobs-focuses on how to use DOL resources
to close the current skills gap such as apprenticeships and training as well as
how to increase the job opportunities for veterans and their spouses; for individuals
with disabilities and working women.
Interestingly, the Strategic Plan notes that the Bureau of Labor
Statistics (BLS) should provide timely, accurate and relevant information on
the labor market, working conditions and price changes.  BLS was attacked by President Trump during
the 2016 election for providing inaccurate data.

The second strategic goal-Safe Jobs and Fair Workplaces-outlines
the plans for each of the enforcement agencies under the DOL.  The common denominator for OSHA, MSHA, Wage
& Hour, OFCCP, ILAB and OLMS is increased focus on compliance assistance to
employers.  The Wage and Hour Division
specifically indicates it is planning to modernize its compliance assistance,
while the OFCCP states that it will expand its compliance assistance and
stakeholder engagement.

The third strategic goal-Promote Strong Workers’
Compensation and Benefits Programs-covers the DOL’s agencies that handle
workers’ compensation, unemployment compensation, and retirement security.

The DOL’s Management Goal has the usual discussion of
working more effectively, more efficiently and with more accountability.  More to the point, however, is the DOL’s goal
to upgrade its technology capability which would increase its ability to work
smarter with fewer employees.

Surprisingly, the Strategic Plan does not mention how it
will comply with the OMB initiative to restructure the federal government to
reduce the size of the civilian workforce and eliminate unnecessary programs
although the strategic plan although the plan indicates that reform plan
initiatives will be inserted in the December revised draft.

FortneyScott is planning on preparing comments. If you are
interested in participating, please contact David S. Fortney.

Mickey Silberman, Esq. joins FortneyScott

Nationally acclaimed
employment attorney Mickey Silberman has joined Fortney & Scott, LLC as a Shareholder
and Chair of the firm’s Affirmative Action & Pay Equity Practice Group. Mr.
Silberman has extensive experience in counseling and advising employers and
federal contractors in all areas of employment law, with nationally
recognized expertise in pay equity, OFCCP compliance and audit defense,
affirmative action and EEO, and diversity and inclusion.


In
announcing that Mr. Silberman has joined FortneyScott, David Fortney, co-founding
shareholder of FortneyScott, stated: “We are delighted that Mickey has joined
FortneyScott.  Mickey is an expert in the areas of pay equity and systemic
pay discrimination.  He has extensive
experience in advising clients in conducting pay equity analyses both
proactively and in response to OFCCP and EEOC pay investigations and private
pay litigation. We are pleased to be able to enhance our current client
services with the significant expertise and experience that Mickey brings to
our firm and that our clients value.”

Jacqueline
Scott of FortneyScott noted, “Mickey builds on and expands our abilities to
assist clients in understanding and complying with the ever-increasing number
of new state and municipal fair pay laws and compensation enforcement
initiatives, laws, regulations, and Executive Orders imposed by the federal
government. We are very excited to have him as part of the FortneyScott
team.”

Mr. Silberman said, “It is an honor
to join a law firm with such an impressive reputation for delivering
sophisticated and strategic legal advice and service excellence to clients
throughout the country. I look forward to working closely with David, Jacqueline
and the superb FortneyScott team to provide our clients with creative and
strategic advice and counsel in the dynamic and changing areas of pay equity,
OFCCP compliance and diversity and inclusion.”

Mr. Silberman also adds significant
expertise for federal contractors, having overseen the annual preparation of
thousands of affirmative action plans for government contractors across the
country in all industries. He also has directed the defense of hundreds of
OFCCP audits.
As a result of his extensive
practice, Mr. Silberman is on the “cutting edge” of OFCCP’s rapidly evolving
enforcement trends.

Mr. Silberman also is the Co-chair of the Institute for
Workplace Equality, a national, nonprofit employer association. Through his
role with the Institute, he meets with OFCCP, EEOC and other federal agency
national leadership to present the employer community’s perspective on proposed
laws and regulations and agency enforcement trends.

Additionally,
for many years, Mr. Silberman served as General Counsel and on the Executive
Committee for the National Industry Liaison Group and has been a leader in the NILG’s
programs throughout the country.

Mr. Silberman has been recognized by Chambers USA from
2014 to present as a leading Labor & Employment attorney in Colorado. Immediately
prior to joining the FortneyScott, Mr. Silberman had a distinguished career
with a national employment law firm.