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Tag: Age Discrimination in Employment Act

2019-2020 Supreme Court Labor and Employment Cases

Image of a gavel to represent the Supreme Court's labor and employment decision from this term.
Photo by Tingey Injury Law Firm on Unsplash

This is one of the most impactful years that the Supreme Court has had on labor and employment law. The Court took on a number of important and controversial issues including gender identity and sexual orientation discrimination, the DACA program, the standard that must be met for proving age discrimination under the Age Discrimination in Employment Act and race discrimination under Section 1981, whether the ministerial exception applies to teachers at religious schools, and whether the government properly exempted religious institutions from the contraception mandate under the Affordable Health Care Act (Obamacare). The impacts and the follow-up cases clarifying the decisions from this term will continue to be felt for years, especially in the context of issues involving sexual orientation and gender identity discrimination.

Bostock v. Clayton County (Consolidated with Altitude Express v. Zarda, and R.G. & G.R. Harris Funeral Homes Inc. v. Equal Employment Opportunity Commission)

This was by far the biggest case to come out of the Supreme Court in employment law in years. The Court held that Title VII of the Civil Rights Act of 1964 prohibits discrimination against individuals based on their gender identity (transgender discrimination) and their sexual orientation. Essentially, employers cannot discriminate against employees on the basis of their sex, which includes gender identity and sexual orientation. Employers should update their handbooks to ensure that discrimination against individuals on the basis of sexual orientation and gender identity is prohibited. Employers should also retrain managers to ensure that employees do not suffer these types of prohibited discrimination. As a reminder, a number of states have their own laws on sexual orientation and gender identity discrimination. This ruling will not affect those state laws. Anyone with questions should first check the laws of their state to determine the best approach to resolving sexual orientation and gender identity discrimination issues.

Justice Alito’s dissent outlined the most controversial issues that will be decided by future cases (these are described below in each subheading). The biggest questions that remain from the case involve the interaction between the law’s prohibition against gender identity and sexual orientation discrimination and its protection of religious liberty.

“[B]athrooms, locker rooms, [and other things] of [that] kind”

When will an employee that is transitioning be permitted (or required) to use the locker room or bathroom associated with their gender identity? How does this right interact with the rights of other employees that may not feel comfortable sharing a bathroom or a locker room with an employee who has not had gender reassignment surgery? Courts will help resolve this issue. Many states have their own statutes (and subsequent cases) clarifying these protections. It remains to be seen how the rights will be protected/interpreted under Title VII, but one should expect the law to settle along similar lines as those in the various states (i.e. it is likely that employees will have the right to use the locker room or bathroom associated with their gender identity at some point in the future).

Women’s Sports

Whether transgender athletes can or are required to participate in the team that is in line with their gender identity. This is not an employment issue (except for paid female athletes), but it is a question that will need to be resolved based on the ruling. Many states are examining this question for sports including most recently Idaho. It is an issue that will likely continue to be litigated.

Healthcare

There are likely to be lawsuits by transgender employees that have employer sponsored health plans that do not cover the cost of gender reassignment surgery. Many of these plans will likely start to cover the surgery due to social pressure anyway, but it is an issue that still needs to be resolved.

Freedom of Speech

Employees don’t have “freedom of speech” in the workplace. Companies can fire employees for what they say as long as the firing would not be for an unlawful reason (speech that is protected under the National Labor Relations Act, whistleblowing protections of various statutes, or protected by another law). For example, a company could and should fire someone for making a death threat against another employee. A company cannot fire someone because they say that the company needs a union.

The dissent in the Bostock case stated that “the Court’s decision may also pressure employers to suppress any statements by employees expressing disapproval of same-sex relationships and sex reassignment procedures. Employers are already imposing such restrictions voluntarily, and after today’s decisions employers will fear that allowing employees to express their religious views on these subjects may give rise to Title VII harassment claims.” The interaction of the decision with issues of religion and the protections that individuals have to practice their religion will undoubtedly be the most interesting.

Babb v. Wilkie

The Supreme Court ruled that under the ADEA (Age Discrimination in Employment Act) a plaintiff only needs to prove that age is a motivating factor in an employment decision for there to be a violation of the ADEA. However, but-for causation (but for their age the employee would not have suffered the adverse employment action) is important to determining the appropriate remedy for a violation of the ADEA. For example, a plaintiff cannot obtain some forms of relief, like hiring, reinstatement, backpay, and compensatory damages without a showing of but for causation. Plaintiffs could get injunctive or other forward-looking relief if they cannot show that age was a but-for cause of the employment decision but merely a motivating factor.

The decision will make it easier for plaintiffs to obtain relief under the ADEA as some forms of relief may be available even if they cannot meet the but-for causation standard. 

Comcast Corp. v. National Association of African American-Owned Media

The Supreme Court unanimously ruled that under 42 U.S.C. § 1981 a plaintiff must show that race was the but-for cause of the plaintiff’s injury rather than  a mere motivating factor (one factor among others that lead to the adverse employment action).

The case will make it easier for companies to defend against Section1981 claims, but employees that cannot meet the but for causation standard may be able to meet the motivating factor standard under Title VII and choose to file a charge with the EEOC or their respective state agency.

Department of Homeland Security v. Regents of the University of California

While this is not strictly an employment law case, it will have a big impact on employment.

As I said in a prior post, “DACA (the Deferred Action for Childhood Arrivals) protects certain people that were brought to the US as children from deportation and allows them to get a job or attend school. They cannot obtain permanent residency through the program but may obtain work authorization and continue to reside in the country. There are currently nearly 700,000 people that are in the DACA program.”

In this case, the Supreme Court ruled that the Trump administration’s order to undo the Deferred Action for Childhood Arrivals was arbitrary and capricious (the administration did not conduct a thorough review of all the relevant factors that it should have  taken into account such as any “legitimate reliance” that individuals had on the DACA memo, whether the government could have eliminated eligibility while continuing forbearance, and giving consideration to other policy alternatives). Instead, the Trump administration relied only on the illegality of providing the benefit by the prior administration as its reason for ending it.

Little Sisters of the Poor Saints Peter and Paul Home v. Pennsylvania

This is one of the three major religious liberty cases that were before the Supreme Court this year. It may provide some insight into how the Court will view religious liberty issues in the future within an employment context, especially how they relate to sexual orientation and gender identity discrimination.

In a 7-2 decision, the Court concluded that:

As we have explained, RFRA [(Religious Freedom Restoration Act)] “provide[s] very broad protection for religious liberty.” Hobby Lobby, 573 U. S., at 693. In RFRA’s congressional findings, Congress stated that “governments should not substantially burden religious exercise,” a right described by RFRA as “unalienable.” 42 U. S. C. §§2000bb(a)(1), (3). To protect this right, Congress provided that the “[g]overnment shall not substantially burden a person’s exercise of religion even if the burden results from a rule of general applicability” unless “it demonstrates that application of the burden . . . is in furtherance of a compelling governmental interest; and . . . is the least restrictive means of furthering that compelling governmental interest.” §§2000bb–1(a)–(b). Placing Congress’ intent beyond dispute, RFRA specifies that it “applies to all Federal law, and the implementation of that law, whether statutory or otherwise.” §2000bb–3(a). RFRA also permits Congress to exclude statutes from RFRA’s protections. §2000bb–3(b).

The essence of the decision is that the government acted lawfully to expand the contraception exemption for employers like the Little Sisters of the Poor. Justices Alito and Gorsuch wished to go further and rule that the RFRA required the government to do so, but that issue was not necessarily ripe at the time. Of course, that will likely be one of the major cases before the Court in the future.

Our Lady of Guadalupe School v. Morrissey-Berru

In this case, the Supreme Court applied the ministerial exception to teachers at religious schools. The ministerial exception bars ministers from suing churches, synagogues, mosques, and religious institutions for employment discrimination. The Court, in a 7-2 decision, found that the school and religious institution meet the exception because the teachers are responsible for instructing the students in their faith. Whether the exception applies depends heavily on the beliefs of the particular faith and the employee’s role in teaching or developing it.

As a reminder, the ministerial exception grew out of the idea that religious institutions should be able to remove ministers without interference from the government. This makes sense for many reasons. For example, it would be weird, and unjust for a Lutheran church to be sued for discrimination because the pastor became a Buddhist and the church terminated his contract. The minister of a Lutheran church or the minister (or equivalent position) of any faith should obviously believe the teachings of that particular faith to hold that position.

Other issues and forms of discrimination are a little less clear (such as disability issues) but the Supreme Court determined that the employees subject to the ministerial exception do not have that protection. The reach of the exception will generally be limited as it only applies to people that teach the faith (i.e. are ministers). It is not going to be broadened to apply to those that work at religious institutions that are not tasked with ministerial duties (teaching the faith) such as janitors, administrators, and even those that work at many nonprofits that are owned by religious institutions (such as universities and hospitals).

Conclusion

This was a huge year for labor and employment decisions from the Supreme Court. The Court altered the impact of Title VII by finding that it protects individuals from discrimination based on their sexual orientation and gender identity. It also decided three cases regarding protections for religious beliefs (it found for the religious institutions in all three cases) including one case where the Court found that states cannot bar taxpayer aid to parochial and other religious run schools if they provide aid to nonreligious schools (essentially the Court found that states cannot discriminate against schools based on their religion). It seems inevitable that there will be a clash between religious protections and issues involving gender identity and sexual orientation. Courts will need to determine how these rights interact.

The information provided in this blog is for educational purposes only and is not legal advice. If you need legal advice, then you should speak with a lawyer about your specific issues. Every legal issue is unique. A lawyer can help you with your situation. Reading the blog, contacting me through the site, emailing me or commenting on a post does not create an attorney-client relationship between any reader and me.

The information provided is my own and does not reflect the opinion of my firm or anyone else.

Severance Agreement Checklist

Picture of a man leaving an office to represent that all employers need a severance agreement checklist. before employees leave a company.
Photo by Jornada Produtora on Unsplash

Unfortunately, the Coronavirus and COVID-19 layoffs are going to continue. In one survey, 32% of Chief Financial Officers believe that there will be more job cuts. There are a number of surveys that discuss what people will do once restrictions regarding the coronavirus are lifted. One survey found that 57% of people in Seattle will avoid social gatherings once restrictions are lifted. There are a lot of stories out of Texas about restaurants and other businesses that have no customers coming back. Some experts expect a recovery sometime soon and others looking at a recovery in 2 years or so.

With more layoffs expected now is a good time to review the basics of severance agreements.

One thing that many employers fail to do is to create a severance agreement checklist when they are laying off employees. There are a number of items that should be included. A checklist is a great way to make sure that companies have the information that they need to let create the best severance agreement. Here are some provisions that should be considered to include in any severance agreement checklist.

1. Waiver of Liability

All severance agreements normally have a waiver and release of various claims including: Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act (ADA), the Equal Pay Act (EPA), 42 U.S.C. § 1981 (“Section 1981”), Veteran’s Reemployment Rights Act, Employee Retirement Income Security Act, Age Discrimination in Employment Act including the Older Worker’s Benefit Protection Act, and many other statutes such as state statutes.

Some claims cannot be waived such as Workers’ Compensation claims or rights falling under the National Labor Relations Act.

Severance agreements should normally include a waiver of liability and some sort of admission that the employee does not have any claims that they are aware of against the company. This waiver serves as a way to reduce a company’s liability.

2. Company Property Returned

Companies need to make sure that employees return property. Any severance payment should be contingent on the employees returning any files, computers, passwords, and other items that they have taken or have from the company.

Employees should also be required to return any confidential information in any medium including flash drives, passwords, access to dropbox and other accounts on home and other devices. Employers should ideally change passwords after an employee leaves.

3. Confidentiality

Most people want to keep the terms of the agreement secret (both for the employee’s and the company’s sake). Moreover, confidentiality is something that the employer may also be purchasing with the payment that they give to their soon to be former employee. The confidentiality provision usually protects the employer and the employee from revealing issues about each other and the terms of the agreement. The employer would be prohibited from revealing the terms that the employee is leaving under to anyone that asks them (usually a future employer or member of the media).

4. Non-Disparagement

Companies and employees often seek a non-disparagement agreement that prevents both parties from discussing problems in the workplace or with each other. Again, this is beneficial for both employers and employees. Both parties are prohibited from giving negative comments about the other party. For employees, this generally prohibits them from commenting to the media, writing on social media, and engaging in other communication that is negative about the company. For employers, this usually is meant to stop them from making negative comments about an employee to potential future employers.

5. Medical Benefits

Many companies will offer me`dical benefits to employees as an incentive for the employee sign the agreement or as a benefit that that they want departing employees to have. Employers may wish to pay for an employee’s COBRA insurance for a certain period while alerting employees that they will be responsible for COBRA after that period.

6. Older Worker Benefits Protection Act

The Older Worker Benefits Protection Act modified the Age Discrimination in Employment Act that protects workers that are 40 and older. There are some requirements that the OWBPA imposes on any severance agreement.

  • It must be in writing.
  • The agreement must be drafted in plain language so that the employee signing the agreement can understand it.
  • It should not be misleading. Any advantages or disadvantages should be adequately described.
  • The waiver must specifically waive rights under the ADEA and OWBPA.
  • The agreement cannot waive future claims.
  • The agreement must be backed by consideration. The employer must give something of value to the employee in exchange for the agreement.
  • Employees must have 21 days to consider the severance offer, or 45 days if more than one employee is laid off as part of a group lay off.
  • When the layoff is for a group of employees then the individuals must be informed in writing of the group of individuals that will be laid off, the eligibility factors for the exit program (e.g. voluntary early retirement), the job titles and ages of all employees that are eligible to participate in the lay off or those that are laid off involuntarily, the ages of all employees in the same job/class as the person being laid off that were not eligible for the voluntary layoff or were not selected for the layoff.
  • Employees also have 7 days to revoke the severance agreement after signing. The parties cannot waive this time to revoke.
  • Employees should also be advised in writing to consult a lawyer before signing the agreement.

Employers are strictly liable when they fail to follow the requirements. An employer either followed it or failed to follow it. There is not much arguing about whether the required steps were in the agreement, so employers should be careful to follow all requirements.

7. Waiver of Future Employment

A severance agreement may need to address whether an employee will be able to join the company in the future and what will happen if they apply. When an employee is being terminated for cause or because of a disagreement with the company, the employer will typically require the employee to waive the right to rejoin the company or apply for jobs at the company.

8. Address Letters of Recommendation

There are usually two purposes to a provision about letters of recommendation and they differ based on the circumstances for the termination of the employee. For employees that had good performance and were not fired for cause, a severance will often say that the employer will provide a detailed letter of recommendation on request. For employees that were terminated for cause or due to some dispute with the company, the provision usually states that the employer will give a letter confirming dates of employment and job title with few other details. Some employers will refuse to do even this.

9. Dispute Resolution

How will disputes between the parties be solved?  Will the agreement require claims to go to arbitration or through the court system? Is the agreement going to include a class action waiver that limits class claims? Will the agreement have a jury waiver so that the dispute will be heard by the judge? These are a few of the issues that should be resolved.

10. Tax Issues

Employees should be required to accept and bear all tax consequences for the payment (under most circumstances). Some payments may not be treated as wages and the employer is not able to withhold income taxes for the employee (which should be outlined in the agreement) for these payments.

11. Unemployment

Employers often agree not to contest unemployment. It is often beneficial to not contest a departing employee’s unemployment even when they are being terminated for cause to discourage the employee from filing a claim against the company.

12. Paying Out Vacation

Companies should consider whether they intend to pay out vacation. In may states, PTO must be paid out. Texas does not require companies to pay out any accrued paid time off or other leave. Employers should follow their policies and past practices for paying out vacation.

13. Governing Law and Venue

What state law will apply to the agreement? How will disputes be resolved? Some states allow you to insert a choice of law provision to apply the law of another state to the dispute concerning the agreement. Usually, this occurs when an employer is headquartered in a different state than the state where the employee works,  when the employee works in more than one state, or when the employee lives in a different state from where they work. The venue, particular state or federal court or arbitration association and the location of any arbitration, should be outlined in the agreement.  There are very specific state laws to follow here so you should consult an attorney.

14. No Admission of Liability

A severance agreement normally includes a clause that the company does not admit liability for anything that may have happened, and the agreement should not be evidence that the company did something wrong.

15. Severability Provision

Agreements should include a provision stating that provisions within the agreement may be removed from the agreement or not enforced if they are unlawful or impermissible. However, the rest of the agreement will remain in force.  

16. Liquidated Damages Provision

This is not a necessary part of the agreement. However, many agreements will put some form of liquidated damages that will or could be enforced upon a party that breaks the agreement. Frequently, this is something that the employer seeks to include in the agreement in the event that the employee disparages the company, breaks the confidentiality agreement, or violates other portions of the agreement.

17. Entire Agreement Clause

Severance agreements should contain a statement that the severance agreement encompasses the entire agreement between the parties. Essentially, this provision means that there is no other agreement between the parties. Oftentimes, employers may have separate agreements (e.g. noncompetition agreements) that they wish to continue to enforce and may also be referenced in this section.

18. Statement of Legal Competence

Agreements generally include a provision that the signee has legal competence; they are of sound mind and understand what they are signing.

Conclusion

Severance agreements are an important part of ensuring a smooth departure for both the employees and the companies. In the times of the coronavirus, they are critical to ensure that companies reduce potential liability and to ensure that employees get some payment as their service to a company ends. All companies can benefit from using a severance agreement checklist to ensure that they include all the needed or wanted provisions within their severance agreement.

The information provided in this blog is for educational purposes only and is not legal advice. If you need legal advice, then you should speak with a lawyer about your specific issues. Every legal issue is unique. A lawyer can help you with your situation. Reading the blog, contacting me through the site, emailing me or commenting on a post does not create an attorney-client relationship between any reader and me.

The information provided is my own and does not reflect the opinion of my firm or anyone else.                                                                                                                                                                                   

Brett Holubeck (of Houston, Texas) is the attorney responsible for this site.