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Tenth Circuit holds that failure to exhaust is an affirmative defense not a jurisdictional defect in Title VII claims

The Tenth Circuit has reversed longstanding precedent to, now, hold that a plaintiff’s failure to exhaust the administrative charge requirements of a Title VII claim is a mere affirmative defense, not a jurisdictional defect. What’s the difference? The courts have jurisdiction to hear the circumstances surrounding the failure to exhaust when it is asserted as an affirmative defense. In this case, the plaintiffs apparently had failed to exhaust; however, they pointed to a prior stipulation by the defendant in which the company had agreed that they had in fact exhausted. The trial court had originally ruled, in line with the Tenth Circuit’s longstanding precedent, that a failure to exhaust is jurisdictional and that it, therefore, lacked jurisdiction over the claims and could not, as a result, entertain argument over the stipulation. The Tenth Circuit remanded, holding that the failure to exhaust was merely an affirmative defense, and as such the trial court is authorized to consider the stipulation.

Source: Lincoln v. BNSF Railway Co., case no. 17-3120 (10th Cir. 8/17/18).

“Zero Tolerance” policies go too far according to … the EEOC?

Employers should steer clear of “zero tolerance” policies according to the EEOC. A “zero tolerance” policy provides that any form of proscribed behavior (typically sexual harassment or discrimination) will result in immediate discharge.

Zero tolerance policies can “chill reporting,” cautions EEOC Commissioner Chai Feldblum (a Democrat appointee). According to Commissioner Feldblum, individuals may choose not to report harassment when they know it might result in the accused’s discharge: “A lot of people don’t want their co-worker to be fired, they just want the conduct to stop.”

It’s not just one EEOC Commissioner who doesn’t like zero-tolerance policies. It’s also the position taken by the EEOC’s 2015 task force on harassment. Its July 2016 report called “zero tolerance” policies “misleading and potentially counterproductive.” Like Commissioner Feldblum, the task force cautioned that such policies “may contribute to employee under-reporting of harassment.”

Instead, the EEOC recommends a policy that reserves to employers the ability to determine the appropriate level of discipline, up to and including, but not necessarily, immediate discharge.

Source: “Beware of ‘Zero Tolerance’ Policies, EEOC Commissioner Warns,” BNA Bloomberg (7/11/18).

The EEOC and a mixed fallout from #MeToo

Recent developments at the EEOC reflect a mixed fallout from the #MeToo movement.

Despite massive social change seen at many levels from #MeToo, with celebrities, politicians and business leaders all being called to answer for allegations of sexual harassment — and despite many lawyers who anecdotally report seeing increased charges in their own practices — EEOC Acting Chair Victoria Lipnic reported June 11 that the EEOC has yet to see a significant increase in sexual harassment charges.

Notwithstanding a lack of increased charges, the EEOC is determined not to be left behind by the #MeToo movement. The agency itself has formed a task force to study sexual harassment and, immediately following the task force’s meeting, the EEOC filed seven lawsuits (on and and about June 11, 2018) involving allegations of sexual harassment. Additionally, the EEOC has identified sexual harassment as one of its 2017-21 strategic enforcement priorities.

SCOTUS rules for baker in Masterpiece Cakeshop

By 7-2, the Supreme Court ruled for the baker in the Masterpiece Cakeshop case. All seven of the judges that formed the majority were struck by comments from the Colorado Civil Rights Commissioners that evidenced an anti-religious bias among the Commissioners when they decided the case. The Supreme Court called those comments “inappropriate,” “dismissive,” and “disparag(ing) of religion.”

What were these unacceptable comments? Well, in short, they included what can only be described as a gratuitous rant by one Commissioner about how, in her opinion, “religion has been used to justify all kinds of discrimination throughout history, whether it be slavery, whether it be the holocaust … we can list hundreds of situations.” It really didn’t help when the Commission, faced with three different cases involving bakers who refused to sell anti-gay marriage cakes, held for each of those bakers. The Supreme Court held that, pulling that all together, it seemed the Commission had made its decision not on the evidence and law but “the government’s own assessment of offensiveness.”

Along those lines, Justice Gorsuch, in his concurrence, noted that, if the government could make decisions on the basis of what it deems offensive, freedome of speech and expression would be lost. This is the oft-recognized principle that the only speech that really needs Constitutional protection is offensive speech.

The Constitution protects not just popular religious exercises from the condemnation of civil authorities. It protects them all.

In reversing based on the Commission’s own bias, the Supreme Court never reached the underlying question whether/when does a baker/florist/other expressive craftsman have a First Amendment right to refuse to sell their good/service to a consumer for religious reasons. Instead, the Supreme Court held that the baker had at least been entitled to a fair hearing of that issue, and that the Commission’s own bias had stripped him of that right.

(T)he delicate question of when the free exercise of his religion must yield to an otherwise valid exercise of state power needed to be determined in an adjudication in which religious hostility on the part of the State itself would not be a factor in the balance the State sought to reach. That requirement, however, was not met here. When the Colorado Civil Rights Commission considered this case, it did not do so with the religious neutrality that the Constitution requires.

Justice Kennedy — who has been the Court’s champion of both gay rights and speech rights, as well as religious liberty rights — wrote the majority opinion. He acknowledged that the Court was dodging the real question of how to balance those rights.

The outcome of cases like this in other circumstances must await further elaboration in the courts….

Still, his opinion suggested how he thought the Court should rule in future cases.

Some examples of cases where he suggested future bakers/florists/etc. might lose on the merits included the following:

  • A baker who “refused to sell any goods or any cakes for gay weddings”

Some examples of future cases where bakers/etc. might win included the following:

  • A “refusal to put certain religious words or decorations on the cake”
  • A “refusal to attend the wedding to ensure that the cake is cut the right way”
  • A “refusal to sell a cake that has been baked for the public generally but includes certain religious words or symbols on it”

We may not have to wait long to find out how the Supreme Court will rule on the underlying issues. A similar case — involving a florist from Washington — is already pending a decision by the Supreme Court whether to hear the appeal in the fall.

Separate opinions in Masterpiece Cakeshop seemed to preview how the Justices might vote:

  • Justice Gorsuch wrote suggesting that he is likely to rule broadly for future bakers/florists/etc.
  • Justice Thomas wrote along such lines as well, though his opinion suggested concern over the concept of even trying to protect the rights of a gay couple in this type of circumstance.
  • Justices Kagan and Breyer, who joined the majority in this case, suggested they would lean split on future cases, ruling against bakers/etc., where there is no evidence of anti-religiouis bias among the state agencies.
  • Justice Ginsburg joined by Justice Sotomayor wrote to express their concerns that the anti-religious comments by the Commission, while unacceptable, were simply not so substantial as to warrant reversal; they would have ruled on the merits, and in doing so, for the gay couple who wished to buy the cake.

That means future cases are likely to have 4 Justices inclined to rule for and 4 Justices inclined to rule against the bakers/florists/etc., and as was expected here, Justice Kennedy is likely to be the swing vote. Expect to see him flesh out his balancing test based on those examples.

As for future cases, Justice Kennedy gave one word of warning — frankly simply restating the concern most of America seemingly has had and had hoped the Supreme Court would wrestle with in this decision — that these rights must be balanced such that religious liberty is not so broadly defined that it becomes an easy excuse for discrimination:

And any decision in favor of (a future) baker would have to be sufficiently constrained, lest all purveyors of goods and services who object to gay marriages for moral and religious reasons in effect be allowed to put up signs saying “no goods or services will be sold if they will be used for gay marriages,” something that would impose a serious stigma on gay persons.

Readers of course will note that this concern exists not only as to LGBTQ individuals (which is all that quote discusses) but also individuals on the basis of race, gender, age, etc., and, yes, even religion. It simply cannot be the law that a business may refuse to do business on the grounds that a consumer is of a different race, color, gender or even religion.

Readers should also note that this line of cases isn’t just about consumers, and it certainly isn’t about just cakes. This line of cases has potential to touch all aspects of American life. It cannot be, for example, that a business has a right to refuse to hire someone simply because they assert a religious belief against that person’s sexual orientation, gender preference, race, gender, religion, etc.

Source: Masterpiece Cakeshop, Ltd. v. C.C.R.C., case no. 16-11 (Sup.Ct. 6/4/18).

Bad faith required for spoliation instruction, holds Tenth Circuit

There is a general requirement that parties not destroy evidence; bolstering that, there is a specific requirement in EEOC regulation 29 CFR 1602.14 that employers preserve personnel records for 1 year and that the parties in an EEOC charge preserve evidence until final disposition of the charge.

In this case, the EEOC and plaintiffs argued that an Excel file contained information that was allowed to be destroyed as the file was routinely updated. Additionally notes of a meeting were at-issue. The employer’s witnesses testified that they did not know how the records had been lost and, further, that, even if they hadn’t been destroyed, they had never contained evidence relevant to the case at-issue. The EEOC argued it should, nonetheless, be entitled to a presumption that the records would have been helpful to its case, and further that the jury should be so instructed. Such an instruction is called a “spoliation” instruction.

The Tenth Circuit reviewed its precedents and held that, first, a litigant must show the destroying party did so in bad faith. Merely allowing records to be destroyed is not sufficient to warrant a spoliation instruction. The EEOC responded that, unlike general litigants, it should, even despite the lack of bad faith, be entitled to a spoliation instruction because, whatever the employer’s intent had been, it had allowed the records to be destroyed in violation of that regulation. The Tenth Circuit rejected the argument that a spoliation instruction should be a remedy for such a violation absent bad faith, noting that was especially true where, as here, the EEOC and plaintiffs failed to produce any evidence countering the employer’s evidence that, if the records had been preserved, there was nothing helpful to the EEOC and plaintiffs in them.

Source: EEOC v. JetStream Ground Services, Inc., case no. 17-1003 (10th Cir. 12/28/17).

EEOC is about to shift to majority of Republican-appointees

As previously reported, the NLRB recently shifted to a majority of Republican-appointees. Next, with President Trump’s appointments of Janet Dhillon (to be Chair) and Daniel Gade, it will be the EEOC’s turn. Their confirmation (expected by the end of October) will create the first Republican-majority at the EEOC in a decade.

President Trump is expected to nominate a new EEOC General Counsel soon, as well.

These changes will likely have significant impact on issues including LGBTQ protections and equal pay, as well as the EEOC’s recent practice of issuing, without undertaking the requirements for rulemaking, guidances and other non-regulatory publications.

Office of Management and Budgets (OMB) rejects EEOC’s revised EEO-1 Form

The OMB rejected the EEOC’s new EEO-1 form, which would have become effective March 31, 2018. The OMB reviews agency forms like this pursuant to the Paperwork Reduction Act and determined that the EEOC’s new EEO-1 had been unlawfully developed by the EEOC had underestimated the burden on employers it its published estimate. The PRA was enacted into law in 1980 and since then has required agencies to estimate the paperwork burden any new bureaucratic action would require. Here the OMB determined that the EEOC’s previously published estimate was simply, and significantly, too low. Specifically the new EEO-1 form would have required employers who are subject to EEO-1 reporting (typically employers of 100 or more) to report wage and hours worked for all employees by race, ethnicity and sex, all within 12 specified pay bands. The OMB determined that the public had not been properly apprised by the EEOC of the burdens such a requirement would entail.
The OMB’s ruling comes after much controversy over the new EEO-1 form. Commentators criticized the EEOC’s approach not only as being overly burdensome but also as overly simplistic. Commentators noted it would have created the impression that workers within the same pay bands should be paid the same amounts (irrespective of their gender, race, etc.) despite the fact that they may work in very different positions within those bands. Likewise it has been noted that the EEOC’s approach overly simplified compensation practices by not properly allowing for articulation of base wages versus bonuses, commissions, overtime and non-wage benefits that form part of a compensation package.
Although a part of the White House, the OMB is often seen as a non-partisan watch dog.
The OMB’s ruling leaves the EEOC’s proposed EEO-1 for 2018 dead in the water. The OMB has invited the EEOC to continue the OMB’s examination of the proposed EEO-1 form if it believes the form defensible. The OMB has also noted the EEOC’s prior EEO-1 would be acceptable for use. The EEOC has announced it is considering its options. Employers must wait for the EEOC’s decision to determine what form to use in the future.
Source: OMB Memoradum re EEO-1 Form, Review and Stay (8/29/17)

Tenth Circuit confirms employees may “double file” EEOC charges

An employee filed an EEOC charge in 2009 for sexual harassment, but did not sue when he received his administrative right to sue. Instead, he continued to work, then filed another charge in 2011. When he sued for sexual harassment after the second charge, the employer challenged his claim as timely. The trial court held that he could not include in his claim any events preceding 300 days (the applicable statute of limitations) prior to the 2011 charge, in other words, all of the 2009 charge’s allegations (and potentially a period thereafter into 2010). The Tenth Circuit reversed. The Tenth Circuit said that, under the Supreme Court’s 2001 decision, Nat’l R.R. Passenger Corp. v. Morgan, any events constituting the “the same actionable hostile work environment practice” are admissible in the lawsuit, irrespective of whether they occurred before the 2011 charge’s time period. In other words, a plaintiff is allowed to “double file” EEOC charges for the same conduct.

In so ruling, the court noted its 2005 precedent in Duncan v. City and County of Denver, outlining the relevant factors to determine if events do or do not constitute part of “the same actionable hostile work environment practice” under Morgan: They must be “related by type, frequency, and perpetrator” without any “intervening action by the employer” that might break the relationship.

The case is Hansen v. SkyWest Airlines, 844 F.3d 914 (10th Cir. 2016).

 

Supreme Court holds that trial court analysis of EEOC subpoena’s enforceability is entitled to discretion, not de novo review.

In a decision that probably surprised no one except the often-reversed and reversed-in-this-case Ninth Circuit, the Supreme Court held that a trial court, not an appellate court, is in the best position to review the particulars of a subpoena.

Interestingly, the decision, which can be seen as reinforcing the EEOC’s ability to issue subpoenas – or at least reducing judicial scrutiny over EEOC subpoenas – was technically a loss for the EEOC. The EEOC had issued a subpoena for contact information for employees who’d taken a certain test, nationwide. The company objected, and the trial court agreed with the company, holding the EEOC’s nationwide request was overly broad. The EEOC then appealed to the Ninth Circuit, which ruled it could review the trial court’s ruling de novo (from scratch) without having to give the trial court any deference. The Supreme Court disagreed and sent the case back to the Ninth Circuit. Now, the EEOC will decide if it still wants the information, and if so, it will have the heavy burden of proving not only that  it is entitled to the information but that the trial court was so wrong when it decided otherwise that it abused its discretion.

While the EEOC lost the Supreme Court case, companies should be mindful of the overarching lesson: The EEOC has broad subpoena power, and a trial court may now be the only judicial body with substantial authority to hear a challenge to an EEOC subpoena.

For an example of how EEOC subpoenas are analyzed for enforceability, see this posting.

The case was McLane Co., Inc. v. EEOC, — S.Ct. — (4/3/17/).

Tenth Circuit refuses to enforce EEOC subpoena

The Tenth Circuit refused to enforce an EEOC subpoena denied where the EEOC’s subpoena requested information regarding the employer’s treatment of other employees. The request exceeded the scope of the purely individual-oriented charge, no EEOC charge had been filed and the employer had not put its treatment of other employees at-issue in its position statement.

The case was EEOC v. TriCore Reference Laboratories, — F.3d — (10th Cir. 2/27/17).