Connecticut Employment Law Blog : Connecticut Employment Lawyer & Attorney : Daniel Schwartz : Stamford, Hartford New Haven, CT

Over the last week or so, various blogs have discussed a proposed rule released by the EEOC which discusses and defines what is meant by the "reasonable factor other than age" (RFOA) defense under the Age Discrimination in Employment Act (ADEA).

Not familiar with it? The Employer Law Report sums it up nicely here:

In Smith v. City of Jackson and Meacham v. Knolls Atomic Power Company, the Supreme Court held that the RFOA defense acts as a complete bar to disparate impact liability where an employer demonstrates that its facially neutral policy or practice, which had a disparate impact on older workers, was based on a reasonable factor other than the plaintiff’s age. Although the RFOA defense operates similarly to Title VII’s business necessity defense, this defense under the ADEA has traditionally been more “employer-friendly” because it preserves an employer’s right to make reasonable business decisions while protecting older workers from facially neutral employment criteria that arbitrarily limit their employment opportunities without requiring a showing of business necessity.

Here the EEOC has proposed a "prudent" employer standard with several (non-exhaustive) factors to figure out if the employer's decision makes sense.

Public comment is open until April 19, 2010.  

The World of Work blog suggests that:

an employer who is considering a change in employment practices -- such as a layoff, change in employment qualifications, etc. -- should examine the impact of the change to determine whether it may create an adverse impact based on age. If it appears that it may, the employer should then apply the EEOC's six factors to see if it can adequately defend the change as based on reasonable factors other than age. If the change does not appear to pass each of the EEOC's six factors, the employer may want to consider altering the change to reduce the impact or abandoning it altogether.

That seems like a sensible solution for now.  But there's also the tried and true view as well: If your layoff is going to have a disparate impact on older workers, you better have a really good reason for your decision. Otherwise, take a look at the underlying data again.  

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"Progressive Discipline" is a policy or practice that, over the years, has fallen out of favor with some employers.

What is it? It's a practice -- found also in some collective bargaining agreements -- that typically provides a multi-step disciplinary process for many employment policy violations: a verbal warning, a written warning, a suspension, and finally termination.

Why has it fallen out of disfavor? Because for employers, it can be used to tie their hands.  If an employer is not free to terminate the employee for a violation, it runs the risk of having a few serial offenders who do just enough not to get fired, but not enough to satisfy the employer.  

Thus, some employers now draft disciplinary policies to state that the violations of policies and procedures of the company may lead to discipline "up to and including termination of employment."

A recent case out of the Second Circuit illustrates how one employer has gotten tied up in the legal system because of the perceived failure of the company to follow such a progressive discipline practice consistently. 

In Berube v. Great Atlantic & Pacific Co. (decided in October 2009), the Second Circuit vacated judgment in favor of the employer and found that there was sufficient evidence that the employer applied a progressive discipline practice differently towards an older worker. 

(Readers are cautioned that at the summary judgment stage, facts are to be seen in a light most favorable to an employee; a jury will now decide the actual merits of the case.)

In doing so, the Court took pains to note that the other individuals that were allegedly not fired (and who were younger than the employee) need not have the same supervisor or have engaged in the same activity. Rather, the actions must only be of "comparable seriousness" to be sufficient for use to establish a claim of age discrimination. 

The case has now returned to the District of Connecticut where is apparently awaits a trial date. (If you'd like to read the original district court decision granting the employer's motion for summary judgment in February 2008, you can download it here.) 

So what's the takeaway for employers? Consistency in discipline.   And if there isn't consistency, there ought to be good documentation and support for the reasons for inconsistency.  Moreover, if the employer has a handbook with policies regarding discipline, making sure those policies are actually followed in practice is another way to provide further support to any discipline handed out.

And while I'll leave it to others to debate the merits of a progressive discipline policy, an employer ought to make sure that if it has such a policy, it understands the consequences.  

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Late today, Fox61 (also known as WTIC-TV) released the following statement in response to the publicity surrounding the complaint brought by Shelly Sindland (which I covered last night):

Although WTIC-TV typically does not comment on personnel matters, in this case, because of the personal nature of Ms. Sindland’s attacks on the station and her colleagues, we feel we must respond by saying emphatically that this complaint has no merit and that WTIC-TV will vigorously defend itself in this matter. WTIC-TV takes very seriously allegations of discrimination, harassment and retaliation, all of which are prohibited by company policy.

The company's strong denial of such claims is of no surprise.  Indeed, because of the Tribune Company's strong "zero tolerance" for discrimination and harassment, anything less from the company would have signaled that the company had issues it wanted aired out.

Various press coverage of the complaint has been slowly trickling, with the Hartford Courant finally releasing a story about the complaint on its website late this afternoon.

The story has also been picked up in various legal circles as well, including the national Above the Law legal tabloid, which featured this blog's post prominently. Moreover, the Law and More blog suggests that the story falls serves as a nice bookend to the Connecticut media's coverage of "Travis-gate".

I'll have more about the legal implications of this matter in the coming days.  

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Leave it to the Supreme Court to come out with a decision on discrimination while I'm attending the ABA Presidential Summit on Diversity (which I'll be live-tweeting and blogging from starting on Friday). 

So, while I've been tied up for most of the day, the news sites and employment law blogs have been a buzz with summaries of Gross v. FBL Financial Services.  (You can view my prior coverage of the case here.)  

Each of the blogs has done a good job wrapping up the case, including the Jottings from an Employer's Lawyer, LawMemo, The Laconic Law Blog. 

What's the case about technically? The Washington Employment Law Update sums it up:

In a 5-4 decision delivered by Justice Clarence Thomas, the U.S. Supreme Court in Gross v. FBL Financial Services, Inc. has held that a plaintiff bringing a claim under the Age Discrimination in Employment Act (ADEA) must show by a preponderance of the evidence that age was the “but for” cause of the employer’s adverse employment decision, and that an employer need not show that it would have made the same decision regardless of age, even if the employee produces some evidence that age may have been a contributing factor in the decision. Thus, the burden-shifting framework in mixed motive Title VII cases does not apply to age discrimination claims under the ADEA.

But I like the Manpower blog's summary even better:

Plaintiffs used to be able to state a claim if age was a factor in a decision. Now, they must prove it was the factor.

My quick read of the decision and the impact to employers in Connecticut leads me to three quick notes:

1. For employers, yes, this decision will make it "technically" harder for an employee to establish a claim of discrimination, but only marginally so. The vast majority of ADEA cases never used the mixed motive analysis anyways.  If there is circumstantial evidence of discrimination, courts traditionally allow those claims to proceed to trial. 
2. The conventional wisdom is that, like the Ledbetter decision before it, we're likely to see some "corrective" legislation by Congress that builds this back into it.
3. Employers in Connecticut also have to be concerned about claims of age discrimination brought under state law; those claims are going to be more difficult for employers to dismiss before trial.

So, let the professors discuss the theoryt of this decision; from a practical perspective, I don't expect a huge shift on how employers defend cases or how age discrimination cases are brought. 

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Record numbers of discrimination complaints were filed with the Equal Employment Opportunity Commission, according to a MSNBC column:

Discrimination claims filed with the Equal Employment Opportunity Commission jumped 15 percent in fiscal 2008 to 95,402 — the highest level since the agency opened in 1965, said spokesman David Grinberg. That is up from 82,792 claims filed the year before by workers who believe they were discriminated against because of age, race, religion, gender or other reasons.

Those are truly stunning statistics because the unemployment numbers for 2008 didn't even start to spike until the last few months and this is for the fiscal year ending September 30, 2008.  If you were to extrapolate that trend for 2009, it's entirely plausible that we could hit 100,000 claims filed during 2009. 

The formal numbers will be released later this week, but already, the EEOC spokesman has his interpretation: "It's possible we have yet to see the full impact of the recession on discrimination charge filings as the economy continues to spiral downward since fiscal year 2008,” Grinberg said.

What is the makeup of these increases? Well, according to the MSNBC report, retaliation claims are up nearly 23%, age claims up nearly 29% and gender and religion claims up 14%.  By contrast, race claims are up only 11%, while disability claims are up a mere 10%.  Interestingly, Equal Pay Act claims -- which will get a boost from the Lilly Ledbetter Fair Pay Act -- were already up nearly 17% last year, before the passage of that bill.

What Does This Mean For Employers?

While the CHRO has yet to release its statistics for Connecticut, the EEOC numbers indicate that claims are on the rise..and in a big way.  Every decision to terminate an employee carries an even greater risk of a complaint.  With jobs becoming scarcer by the day, laid-off or terminated employees may view a complaint as their own way to stay afloat and their only option. 

These numbers emphasize the point that decisions to terminate employees should be made cautiously and carefully.  What are the consequences? You could end up being part of next year's statistics.

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A very big day in labor & employment law and ERISA cases at the U.S. Supreme Court this morning  I'll post more detailed updates as warranted (and when time allows), but for now, here are the brief highlights (H/T ScotusBlog) .

• In Meacham v. Knolls Atomic Power Laboratory (06-1505), the court was asked to decide, in an ADEA disparate impact suit, whether workers or employers bear the burden of persuasion in determining whether the employment decision was based on “reasonable factors other than age.” The Court concluded that an employer defending a disparate-impact claim under the ADEA bears both the burden of production and the burden of persuasion for the “reasonable factors other than age” (RFOA) affirmative defense under §623(f)(1). The court also rejects a "business necessity" defense for the employer, saying it has no place under ADEA.  For more background on the case, see the ScotusWiki . 
  
• In MetLife v. Glenn (06-923), the Court was asked to whether a claim administrator of an ERISA plan who also funds the plan benefits constitutes a “conflict of interest” that must be weighed in a judicial review of the administrator’s benefit determination. The Supreme Court concluded that it does.  In the court's view, a plan administrator’s dual role of both evaluating and paying benefits claims creates the kind of conflict of interest referred to in the Firestone case.   That conclusion is clear where it is the employer itself that both funds the plan and evaluates the claim, but a conflict also exists where, as here, the plan administrator is an insurance company.  Again, for more background, see the ScotusWiki.
  
• In Kentucky Retirement Systems v. EEOC (06-1037), the Court was asked to decide on the relevance of age as a potential factor in the distribution of retirement benefits to disabled workers establishes a prima facie case of discrimination under the ADEA. In other words, could "pension status" been seen as a proxy for "age". The Court held, under the circumstances of the case, that pension status was not a proxy for age.  in other words, where an employer adopts a pension plan that includes age as a factor, and that employer then treats employees differently based on pension status, a plaintiff, to state a claim under the ADEA, must adduce sufficient evidence to show that the differential treatment was “actually motivated” by age, not pension status.  As usual, the ScotusWiki has the detailed background on the case.  
  
• In Chamber of Commerce v. Brown (06-939), the Court was asked to decide whether federal labor law preempted a California state law that barred employers from using state money to influence union organizing campaigns. The Court found that the California law was pre-empted by federal law, meaning, in essence, that the state law cannot be enforced.  Although Connecticut does not have a similar law, it provides a framework for looking at any other proposed legislation that would place limits on the effect of the NLRA.  Background on that case is available from the ScotusWiki here.
  

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Lawyers representing the class of retirees from CIGNA will argue that their clients are entitled to "hundreds of millions" of dollars in retirement benefits as a result of misrepresentations made by CIGNA, according to a report in yesterday's Hartford Courant. 

The Courant -- which finally reported on the decision 5 days after it came out and well after we posted on it  -- barely mentions the argument of whether the new cash balance plan is age discriminatory (which the court found it wasn't). Instead, it focuses on the fact that CIGNA failed to mention that the benefits could be subject to "wear-away". 

Eager to claim victory, the class representative attorneys now say that the disclosure argument is vitally important to the case:

Friday's ruling will serve as "an excellent blueprint for other courts to scrutinize these disclosures" that companies make concerning conversion to cash balance plans, said Tom Moukawsher in Hartford, co-counsel representing the CIGNA employees. "This court decision is a precedent for looking at the underbelly of the disclosures for basic honesty."

Certainly the court was disturbed by communications by CIGNA. For example, in a Newsletter discussing the changes, the Court found that: "nothing in the Newsletter indicated to plan participants that their rate of benefit accrual might decrease, much less by a significant margin. And yet that is exactly what happened." (Decision at 80.) Indeed, as the Court said later:

Taking all of this information into consideration, the Court concludes that CIGNA was aware of the significant reduction in the rate of future benefit accrual that would affect at least a substantial proportion of its employees as a result of the transition to Part B, that CIGNA wished to avoid the employee backlash likely to result from a thorough discussion of these aspects of Part B, and that CIGNA sought to negate the risk of backlash by producing affirmatively and materially misleading notices regarding Part B. As a result, its § 204(h) notice failed to meet ERISA's stringent standards.

As I indicated previously, both parties have until March 17th to brief the issue of what the appropriate remedy would be in this situation. 

Although the lawyers for the class have reason to be pleased with the decision, certainly CIGNA and other companies nationwide must be relieved that the underlying conversion from a defined benefit plan to a cash balance plan itself has been upheld.  If the court had found that the conversion was discriminatory, it could have had an impact nationwide; the decision here may have a more modest impact given the evidentiary findings of the court that are particular to this case.

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As with other U.S. Supreme Court cases this term, there's been more virtual ink spilled this week over two oral arguments scheduled for the U.S. Supreme Court this week that will examine some of the parameters of  when it is illegal for an employer to retaliate against an employee for complaining about discrimination.  For most employers, however, these cases may not have nearly the practical impact that some commentators seem to suggest.

I'll leave it to others, such as Ross's Employment Law Blog to explain the cases. 

• In Gómez-Pérez v. Potter, to be argued today, the question for the court is whether for federal employees, the ADEA prohibits retaliation for filing an EEO complaint.  ADEA already prohibits retaliation by private employers.  Even if the U.S. Supreme Court decides that the statute does not explicitly cover retaliation claims by federal employees, it is hard to imagine that Congress would not take up this issue immediately with bi-partisan support.
• In CBOCS West, Inc. v. Humphries , to be argued tomorrow, February 20th, the question for the court is whether 42 U.S.C. Sec. 1981 (which prohibits race discrimination in the "making, performance, modification, and termination of contracts...") provides a cause of action for retaliation as well.   However, as readers are no doubt aware, Title VII already prohibits retaliation on the basis of race, so there is and has always been some overlap between the two claims. 

Emily Bazelon, over at Slate, suggests that this is a "Big Discrimination Case."  Unless the decision's rationale is broad, that seems to be an overstatement at this point.  Most discrimination and retaliation claims, as a practical matter, are brought under Title VII, not Section 1981.  Indeed, the only reason the Humphries case is not a Title VII claim is that the Plaintiff missed the statute of limitations.  Section 1981 mostly gets used when an employee bringing a retaliation or discrimination claim misses that deadline.  Thus, even if the court were to rule against the employee in this case, it will have no impact on the vast majority of race retaliation cases out there that are being filed under Title VII.

Jon Hyman, at Ohio Employer's Law Blog, has some additional thoughts on the Humphries case as does Workplace Prof.  A decision on these cases is expected by June 2008.

For employers in Connecticut, I would ignore the hype about these cases.  Retaliation against employees for filing race and age discrimination claims would still violate state law, under Conn. Gen. Stat. 46a-60(a)(4).  Regardless of how the Supreme Court decides, state law will continue to apply.  If and when an employee claims discrimination at the workplace, take steps to avoid a retaliation lawsuit, and don't worry about whether federal or state law will ultimately apply. 

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