Category Archives: Discrimination/Retaliation

States Mandating Companies’ Board Member Composition

Contributed by Noah A. Frank, May 9, 2019

In an effort to try and help root out discrimination, the Illinois legislature has followed California’s top-down approach of regulating the boardroom to ensure that decision makers include historically disenfranchised classes. 

black and white gavel

On March 29, 2019, the Illinois House sent HB 3394 to the Senate.  HB 3394 is modeled after California Corporations Code § 301.3, which requires publically held corporations (domestic and foreign corporations that list their outstanding shares on a major U.S. Stock Exchange), which state on their SEC Form 10-K that the principal executive offices are in California, to have at least one female board member by 12/31/2019 – with the number of female board members required increasing based on the board size. A corporation may also increase the number of directors on its board to comply. The Illinois bill is more expansive, as it requires at least one female director and one African American director on the board by 12/31/2020 (though the number of “designated seats” does not increase as board size increases). Much like the California law, publically held corporations whose principal executive offices are in Illinois may increase the number of directors on its board in order to comply with this proposed legislation. 

Sizeable Penalties

Illinois’s (prospective) and California’s laws apply to public companies whose principle executive offices are in that state, according to SEC Form 10-K. Both laws empower their respective Secretary of State (“SOS”) to adopt rules, as well as impose penalties of (i) $100,000 for failure to fill the designated seat(s) as required, (ii) $300,000 for a second or subsequent violation, and (iii) $100,000 for failure to file board member information. Each designated seat must be held “during at least one point of a calendar year” to avoid a violation (e.g., it would not be a violation if a board member left mid-year and was not contemporaneously replaced). Presumably Illinois SOS’s regulations will address: (a) the process for filing board composition information, and (b) whether an individual female, African American director satisfies both composition requirements (e.g., can one person fill both “designated seats”).

Precedent for a National Movement

Equal opportunity laws – such as ban-the-box, salary history inquiry bans, and harassment training mandates – have been sweeping the nation in a patchwork, making compliance much more difficult.  While California is currently the only state mandating board composition, New Jersey’s AB 4726 (introduced 11/26/2018) is pending, and others states have passed non-punitive resolutions encouraging female representation on boards, including Illinois (HR 439) and Massachusetts (Res. S 1007) in 2015, and Pennsylvania (HR 273) in 2017. Other than Illinois HB 3394, we are unaware of any other legislation mandating composition based on race or any other protected-class.

Will HB 3394 Become Law?

In 2018, overriding then-Governor Rauner’s veto, the Illinois General Assembly amended the Illinois Equal Pay Act to add African Americans to women as protected classes, effective 1/1/2019. (Note: Governor Rauner rejected the limitation of “African Americans” and suggested expanding the protection to race, color, national origin, and ancestry.) Governor Pritzker, along with the current General Assembly, have taken steps to enact legislation that protects employees and increases expectations and obligations for employers and businesses, ranging from increased minimum wage, wage and hour penalties, attacks on unfair competition agreements, and the like. Given this backdrop, it seems likely that Illinois will pass a board composition law, with the question being whether the current proposed language will be amended or changed. 

Is Compliance Limited to Public Companies?

Like many experiments, these laws typically first apply to public corporations that are, presumably, sophisticated enough to know, understand, and comply with their legal obligations. If successfully implemented, the requirements may be expanded to cover unlisted public companies, nonprofits, and large companies or employers.

Public companies that might be subject to these laws should start planning now, including considering topics such as board succession planning to identify qualified directors, and amending governing documents to permit increasing the board size to comply. Of course, qualified counsel should be consulted to avoid unforeseen pitfalls created by these untested laws.

US Supreme Court to Decide Title VII Sexual Orientation/Transgender Discrimination Cases

Contributed by Carlos Arévalo, April 22, 2019

Judge’s Supreme Court gavel with law books

The United States Supreme Court announced today that it will consider whether Title VII protects workers from discrimination based on sexual orientation. To date, several federal appeals courts have reached different conclusions on this issue. In 2017, the Seventh Circuit was the first to rule that sexual orientation discrimination was a form of sexual discrimination. The Second and Sixth Circuits followed in 2018. But in 2017, the Eleventh Circuit reached the opposite conclusion. And earlier this year, the Fifth Circuit reaffirmed its long standing “binding precedent” that Title VII does not prohibit discrimination on the basis of sexual orientation. This circuit split set up the stage for the Supreme Court to address the issue.

In Bostock v. Clayton County, Georgia (consolidated with Zarda v. Altitude Express, Inc., the Second Circuit case), the Supreme Court will decide whether discrimination “because of…sex” within the meaning of Title VII includes discrimination based on sexual orientation. In R.G. & G.R. Harris Funeral Homes v. EECO, the Sixth Circuit case, the court will decide whether Title VII bars discrimination against individuals based on their transgender status or sex stereotyping.

In Bostock, the plaintiff was fired from his position as child welfare services coordinator in 2013 after joining a gay softball club. The county conducted an internal audit on CASA program funds he managed and found that Bostock allegedly spent CASA funds fees sponsoring his softball team. Bostock alleged that “in May 2013, during a meeting with the Friends of Clayton County CASA Advisory Board, where his supervisor was present, at least one individual made disparaging comments about Bostock’s sexual orientation and identity and participation in the softball league.” A month later, Bostock was fired for “conduct unbecoming of a county employee.”  In Harris Funeral Homes, the employer fired the plaintiff, who previously presented as a man, when she said she would begin presenting as a woman at work and would adhere to the dress code for women.

Just last year, the Supreme Court declined to address a similar question originating in the Eleventh Circuit in Evans v. Georgia Regional Hospital, but additional petitions subsequently followed creating the need for clarity on Title VII. While the Supreme Court is poised to finally address this issue, many states have already enacted protections in anticipation of how the conservative leaning Supreme Court might rule. Should the Supreme Court rule that Title VII does not afford protection, employers should expect a massive onslaught of local and state laws and regulations to counter such a ruling. 

Check out our previous articles addressing Title VII and Sexual Orientation/Transgender Discrimination cases:

Sixth Circuit Says Transgender Discrimination is Protected

Seventh Circuit Issues Landmark Decision Holding that Title VII Prohibits Discrimination Based on Sexual Orientation

Suspicious Timing of Termination Supports Retaliation Claim

Contributed by Debra Mastrian, December 12, 2016

A recent 7th Circuit Court of Appeals decision, Gracia v. Sigmatron, International, Inc., Case No. 15-3311, is a good reminder to employers to be careful in taking adverse action against an employee who recently engaged in statutorily protected activity. In Gracia, a longtime employee, who had complained of sexual harassment by her supervisor and filed a charge of sex discrimination with the Equal Employment Opportunity Commission (EEOC), was fired two weeks later for allegedly allowing a subordinate to make a production error on a customer order.  The employee sued her former employer for sex discrimination and retaliation. While Gracia was unsuccessful on her sexual harassment claim, a jury found in her favor on the retaliation claim, awarding $57,000 in compensatory damages and $250,000 in punitive damages.

39454888 - notice of employee termination with glasses and ballpoint pen.Gracia was highly regarded and had received a number of promotions. In her current role as assembly supervisor, she was responsible for production output, quality, and overseeing the work of her team members on the assembly line. Gracia’s male supervisor began sending her sexually graphic photographs through the company’s email system. Gracia did not complain because of her supervisor’s position and his friendship with the company’s president. The supervisor then began writing Gracia up for attendance issues, even though Gracia had not been previously written up for similar problems in the past and, in fact, had been told her attendance was “excellent.” Gracia alleged the supervisor began calling her at home and asking her out. She declined and was suspended a few days later for attendance problems.

Gracia then complained to HR about her supervisor. HR informed the company’s president, who ultimately told Gracia and her supervisor to ‘shake hands’ and get along. Gracia, unhappy with the company’s response, filed a charge with the EEOC. Two weeks later, she was fired after one of her subordinates made a mistake, even though others made similar mistakes and were not terminated. Perhaps of significance to the jury on the punitive damages award was evidence that the company never admonished the supervisor for sending the graphic photographs but rather simply told him to stop using the company’s email for non-business reasons. The company also refused to admit the photographs violated the company’s sexual harassment policy.

On the retaliation claim, the 7th Circuit reiterated the general rule that timing alone is rarely enough to support a retaliation claim; however, if there is other circumstantial evidence, it may raise an inference of retaliatory motive. Here, the suspicious timing of Gracia’s termination, coupled with evidence that others had not been terminated for similar mistakes, supported the retaliation claim.

Employers are reminded that before you take action against an employee who has recently engaged in protected activity (i.e., complained of discrimination, filed a charge), make sure you have, or would have, taken the same action against other employees for doing the same thing. Consult with experienced legal counsel before taking adverse action against a ‘protected’ employee.

Seventh Circuit Opinion Confirms Flexible Analysis of Adverse Employment Actions

Contributed by Allison Sues, November 9, 2016

On October 19, 2016, the United States Court of Appeals for the Seventh Circuit reversed a District Court’s Rule 12(b) (6) dismissal of two plaintiffs’ retaliation claims brought under Title VII and the Illinois Human Rights Act. In Volling and Springer v. Kurtz Paramedic Services, Inc., Case No. 15-3572, two Emergency Medical Technicians (EMTs) alleged that their employer and its new subcontractor refused to hire them because they had reported and/or supported claims of sex discrimination and sexual harassment against the employer’s previous subcontractor to the Equal Employment Opportunity Commission.

gavelbwThe new subcontractor filed a motion to dismiss, arguing that the plaintiffs had not stated a viable retaliatory failure-to-hire claim because the plaintiffs had not applied for the position that they claimed they were denied. The District Court dismissed the retaliation claims after referring to the prima facie case for a retaliatory failure to hire, which required the plaintiffs to allege that they applied for and were qualified for the position sought.

On review, the Seventh Circuit examined the circumstances under which the plaintiffs claimed to have been refused a position to determine whether they alleged an adverse employment action distinct from a straightforward failure-to-hire claim. In this case, the employer terminated its contract with the previous subcontractor following the plaintiffs’ reports of misconduct and replaced it with a new subcontractor. The employer informed all the EMTs who had worked with the previous subcontractor, with the exception of the two plaintiffs, on how to apply for unpublished vacancies with the new subcontractor. The new subcontractor hired all of these applicants. The plaintiffs never applied and were not hired. The Seventh Circuit reasoned that the plaintiffs alleged a discriminatory practice slightly different than a failure to hire – the failure to inform them of the vacancies where other employees who had not engaged in protected activity received notice of the positions. The Seventh Circuit stated, “plaintiffs’ failure to apply stemmed from the very discriminatory practice they complained of, and their failure to apply need not bar their retaliation claims.”

Employers should note that a court’s analysis of retaliation claims may be flexible and stretch outside confines of oft-repeated prima facie cases. Discrimination and retaliation claims can stem from not only a failure to hire an applicant because of his or her protected characteristic or prior protected activity, but also for any disparate treatment in the way employers publicize or recruit for the position prior to the hiring decision.

Can Employment Discrimination Plaintiffs Survive Summary Judgment?

Contributed by Julie Proscia and Steven Jados

The Seventh Circuit recently affirmed summary judgment for the employer in Miller v. St. Joseph County, a race discrimination case, and in doing so applied what may prove to be a streamlined standard for determining whether employment discrimination plaintiffs can survive summary judgment.

The plaintiff in Miller was a long-time employee of the county’s police department who sought several promotions which he did not receive. He alleged, among other things, that the promotion denials, a temporary assignment he disliked (but which did not change his compensation, benefits or rank), and the fact that he did not receive certain other promotions for which he apparently did not even apply, were all the result of race discrimination.

The court, while noting that it could not overrule the McDonnell Douglas burden-shifting method of proof, and its prima facie elements, instead applied a brief three-part test as a substitute for what the court called the “cumbersome” indirect and direct methods of proof. The three parts are: (1) membership in a protected class; (2) an adverse employment action; and (3) evidence from which “a rational jury could conclude that the employer took that adverse action on account of . . . protected class, not for any non-invidious reason.”

Applying that test, the court noted that there was no evidence of racial slurs or other manifest racial hostility; no evidence that the plaintiff was more qualified than the individuals hired into the positions plaintiff sought; and no evidence that race played a factor in the temporary assignment the plaintiff disliked. In short, the court looked at the evidence the plaintiff presented and saw nothing that could lead a rational jury to conclude that race discrimination occurred—and the court affirmed summary judgment in the employer’s favor as a result.

Now, what does this mean as a practical matter for human resources and management professionals?  It appears to signal the court’s interest in adjudicating discrimination cases on a common-sense basis.  That sounds simple, but whether it actually streamlines the litigation of discrimination cases—especially a case based heavily on circumstantial evidence—remains to be seen.

What is the OWBPA Again and Why Should We Care? Here Is A Quick Refresher

Contributed by Suzanne Newcomb

The Older Workers Benefits Protection Act (OWBPA) amended the Age Discrimination in Employment Act (ADEA) back in 1990 to specifically permit bona fide seniority systems and voluntary early retirement incentive plans.  Along with these allowances, the OWBPA mandated strict requirements for ADEA waivers and disclosures for group termination.  The provisions are very technical and have tripped up many unsuspecting employers.

To be effective a waiver must be “knowing and voluntary.”  That sounds straightforward, but the statute specifically spells out what “knowing and voluntary” means in this context.  If the situation involves an isolated termination – a single employee terminated for cause or let go as a result of a restructuring that impacts his position alone – an ADEA waiver is not “knowing and voluntary unless at a minimum,” the waiver:

  • is in writing and written in a manner the individual can understand;
  • specifically refers to ADEA rights or claims;
  • does not waive rights or claims arising after the waiver is executed;
  • provides consideration over and above anything to which the individual is entitled already;
  • advises the individual in writing to consult with an attorney prior to executing the agreement (advising the individual has the right to consult with an attorney may not be sufficient);
  • allows the individual at least 21 days (45 in the case of group terminations addressed below) to consider the agreement before signing; and
  • allows the individual at least 7 days to revoke following execution of the agreement.

The statute tacks on additional requirements for waivers “requested in connection with an exit incentive or other employment termination program offered to a group or class of employees.”  Legislators complicated matters by failing to define the key terms in this phrase.  Relevant regulations and considerable case law interpret them broadly to encompass any situation in which two or more employees are terminated at or near the same time under similar circumstances or are offered incentives which stem from a standardized plan.

Whenever a release is offered in conjunction with a reduction in force involving more than one employee or other group terminations, the employer must follow each of the requirements set forth above and must also disclose:

  • the “decisional unit” or class, unit, or group of individuals covered by such program – in other words, the pool of employees from which the employer chose those who would be involuntarily terminated or offered an incentive to leave;
  • the eligibility factors used to determine who was selected for termination or offered an exit incentive;
  • any applicable time limits; and
  • job titles and ages of all eligible or selected individuals and all individuals in the same job unit who are not eligible or selected.

If you are implementing a RIF or thinking about offering severance to a departing employee in hope of avoiding potential litigation, you should consult qualified legal counsel first.  It is important to make sure the ADEA waiver contained in your release is enforceable.

Retaliation Claims Continue to Rise… and Business Marches On

Contributed by Noah A. Frank

While the total number of charges before the EEOC increased by 18,732 for the 15 year period 1997 to 2012, the total number of retaliation charges has increased at a faster rate, by 19,638.  In fact, in 1997, retaliation accounted for 22.6% of charges, and in 2012 retaliation accounted for 38.1% of charges.  As claimants become more sophisticated, they will continue to assert retaliation as one of their bases of discrimination.

Recently, in Benes v. A. B. Data, Ltd., Case No. 13-1166, the Seventh Circuit granted a victory to employer A.B. Data for terminating employee Michael Benes for acting out during an EEOC-sponsored mediation.  

Benes had been employed by A. B. Data for four months prior to claiming sex discrimination.  After receiving an offer that he deemed too low during the mediation, he entered his employer’s representative’s separate mediation room, and declared: “You can take your proposal and shove it up your [expletive omitted] and fire me and I’ll see you in court.”  With its representatives shaken, A. B. Data accepted Benes’s proposal and terminated him within an hour. 

The court found that there was no retaliation for terminating the employee where the employer would not have tolerated such conduct had it occurred at work.  The court held that Title VII (and instigating proceedings under it) does not create a privilege for any party to misbehave in mediation or court; The Title VII anti-retaliation provisions forbid only that conduct which would dissuade a reasonable worker from making or supporting a charge of discrimination.

Lessons Learned: Even though the Seventh Circuit ultimately agreed with A. B. Data’s decision to terminate Benes, three years of litigation passed prior to arriving at this stage.  While an employee who reported discrimination internally or filed a claim with an agency does not have an unqualified immunity to misbehave, the situation should be handled carefully.  Consider speaking with counsel prior to effectuating discipline, as it is becoming more and more likely that the employee will tack retaliation onto any charge.