On June 17, 2010, the Internal Revenue Service, the Employee Benefits Security Administration of the United States Department of Labor, and the United States Department of Health and Human Services issued interim final rules for grandfathered health plans under the Patient Protection and Affordable Care Act (PPACA, and commonly referred to as the Health Care Reform Act). See Fed'l Register, Vol. 75, No. 116, 34538 et seq. President Obama signed the PPACA into law on March 23, 2010.
Under the PPACA, group health plans and health insurance coverage existing as of March 23, 2010 are not subject to all PPACA provisions. The PPACA refers to these plans and coverage as "grandfathered health plans". For example, a grandfathered health plan is not required to provide the coverage of preventative health services without cost sharing as the PPACA mandates for non-grandfathered health plans, but the PPACA still prohibits grandfathered health plans from eliminating lifetime limits or rescinding coverage (other than on the grounds of fraud or misrepresentation). In subjecting grandfathered health plans to some, but not all, PPACA mandates, the PPACA seeks to balance maintaining existing coverage with the PPACA's goal of expanding access to and improving quality of health care. Permitting grandfathered health plans is designed to ease the transition of the health care industry into the PPACA.
To be a grandfathered health plan, the health plan or coverage must have provided continuous coverage to someone since March 23, 2010. If if coverage for all pre-March 23, 2010 participants and beneficiaries is terminated after March 23, 2010, the health plan would still be grandfathered if the health plan covered a new participant or beneficiary before the termination of the coverage of the former participants and beneficiaries. To maintain status as a grandfathered health plan, the health plan must include a statement in the plan materials provided to all participants and beneficiaries that it is a grandfathered health plan and must provide contact information for questions and complaints.
If health insurance coverage was maintained under a collective bargaining agreement prior to March 23, 2010, the coverage is a grandfathered health plan until the expiration of the collective bargaining agreement. The health plan remains grandfathered during the term of the agreement even if there is a change in the issuer of the health plan. If coverage is renewed with the issuer under a new collective bargaining agreement upon the expiration of the former collective bargaining agreement, the health plan would remain grandfathered, provided that there are no changes to the health plan that would cause the plan to cease to be grandfathered.
Employers may provide their comments on the proposed interim final rules by August 16, 2010 to the agencies that are issuing the rules. Employers should consult with their attorneys, accountants, and employee benefits providers to determine whether their current health plans or coverage will be grandfathered under the PPACA.
June 17, 2010
September 22, 2009
Protecting Electronic Files from Disgruntled Employees
One of the biggest threats to an employer's competitive edge is the potential theft of the employer's trade secrets. Trade secrets include an employer's customer list, vendor list, market research, and financial projections. With the proliferation of computer networks in the workplace, including remote access, a disgruntled employee could steal the employer's trade secrets simply by downloading them to a disc or emailing them to a personal email account.
When an employee steals trade secrets, many employers have turned to the Computer Fraud and Abuse Act ("CFAA"), 18 U.S.C. §1030, for injunctive relief and damages. The CFAA is essentially a criminal statute that permits some victims of computer hackers to maintain civil lawsuits against the hackers.
A person who accesses a computer "without authorization" or "exceeds authorized access" could be found liable under the CFAA. But while the CFAA provides a definition for the term "exceed authorized access" (to access a computer with authorization to obtain or alter information that the accesser is not entitled to obtain or alter), the CFAA does not provide a definition for the term "without authorization."
Because the CFAA has both criminal and noncriminal applications, courts are resolving any ambiguities in the statute in favor of lenity. See, e.g. LVRC Holdings v. Brekka, -- F.3d ----, 2009 WL 2928952 (9th Dist. Sept. 15, 2009, Case No. 07-17116) (employee who had emailed employer trade secrets to his personal computer did not violate the CFAA). The courts are narrowly construing the CFAA's terms so as to prevent convicting a criminal defendant under novel interpretations of the CFAA. Therefore, courts are generally interpreting "without authorization" as meaning with absolutely no permission to access the computer, such as an outside hacker. "Exceeds authorized access" generally means that the person had permission to access the computer but did not have permission to access the specific information.
If a disgruntled employee makes an electronic copy of an employer's trade secrets, these interpretations of the CFAA would not help the employer who gave the employee permission to access the trade secrets on the computer. Therefore, it is of the utmost importance that employers clearly define what information an employee is allowed to access. Employers should consult with their attorneys to prepare the documents that inform the employees which trade secrets they have permission to access.
When an employee steals trade secrets, many employers have turned to the Computer Fraud and Abuse Act ("CFAA"), 18 U.S.C. §1030, for injunctive relief and damages. The CFAA is essentially a criminal statute that permits some victims of computer hackers to maintain civil lawsuits against the hackers.
A person who accesses a computer "without authorization" or "exceeds authorized access" could be found liable under the CFAA. But while the CFAA provides a definition for the term "exceed authorized access" (to access a computer with authorization to obtain or alter information that the accesser is not entitled to obtain or alter), the CFAA does not provide a definition for the term "without authorization."
Because the CFAA has both criminal and noncriminal applications, courts are resolving any ambiguities in the statute in favor of lenity. See, e.g. LVRC Holdings v. Brekka, -- F.3d ----, 2009 WL 2928952 (9th Dist. Sept. 15, 2009, Case No. 07-17116) (employee who had emailed employer trade secrets to his personal computer did not violate the CFAA). The courts are narrowly construing the CFAA's terms so as to prevent convicting a criminal defendant under novel interpretations of the CFAA. Therefore, courts are generally interpreting "without authorization" as meaning with absolutely no permission to access the computer, such as an outside hacker. "Exceeds authorized access" generally means that the person had permission to access the computer but did not have permission to access the specific information.
If a disgruntled employee makes an electronic copy of an employer's trade secrets, these interpretations of the CFAA would not help the employer who gave the employee permission to access the trade secrets on the computer. Therefore, it is of the utmost importance that employers clearly define what information an employee is allowed to access. Employers should consult with their attorneys to prepare the documents that inform the employees which trade secrets they have permission to access.
September 20, 2009
Senator Baucus Mark-up of Senate Health Care Reform Bill
On September 16, 2009, Senate Finance Committee Chairman Sen. Max Baucus (D-Mt.) released his comments, or "marks", on a draft of the health care reform bill prepared by the Senate Finance Committee. It bans insurance companies from denying coverage based upon pre-existing conditions and mandates all Americans to obtain some form of health insurance. It does not include a public insurance option but allows the government to provide seed money to set up private, non-profit health care co-operatives.
The bill has not yet been introduced to the Senate or reconciled with the House's health care reform bill, America's Affordable Health Choices Act of 2009, H.3200, introduced July 31, 2009. Some marks of Sen. Baucus directly affect employers who offer health insurance coverage to their employees. The following is just a brief overview of some of those marks.
Safe Harbor Benefits received under a qualified small employer's cafeteria plans would still be eligible to be treated as a cafeteria plan if the plan excludes employees 1) under 21; 2) worked fewer than 1000 hours the preceding year or has worked less than one year; or 3) covered by a collective bargaining agreement. "Eligible small employers" would be employers who have employed an average of 100 or fewer employees a day for the past 2 years. If an employer is an eligible small employer and continues the cafeteria plan, it would remain an eligible small employer until it employs an average of 200 employees a day in one year.
Small Business Tax Credit Currently, the cost to an employer of providing health insurance coverage to its employees is tax deductible. Under Sen. Baucus's marks, the employer may be eligible for a tax credit instead of a deduction from gross income. To qualify for this tax credit, the employer would have to have 25 or fewer full-time employees during the year. Those employees could not earn an average of more than $40,000.00 a year. The phased-in tax credit would be up to 50% of the premiums the employer paid for employee coverage.
Employer Offer of Health Insurance Coverage Employers of 50 or more employees who do not offer coverage to employees would be required to pay a fee for each employee who qualifies for a tax credit for health insurance.
Excise Taxes In 2014, there would be an excise tax of 35% imposed upon employer-sponsored health coverage that exceeds threshold amounts: $8,000 for individual coverage and $21,000 for family coverage. The tax would be imposed pro rata on the issuers of the insurance and the plan administrator on amounts over the threshold. The employer must calculate the amount that is taxable to each insurance issuer and the plan administrator. Regardless as to whether an excise tax is imposed, employers would be required to report on the employee's W-2 form the value of the benefits the employee received from the employer.
Flexible Spending Arrangements An employee who reduces cash compensation to have that amount available for use as reimbursement for medical expenses (Flexible Spending Arrangement, or "Health FSA") currently does not pay any tax on the reduction in compensation. Under Sen. Baucus's marks, Health FSAs would be limited to $2,000 a year.
The bill has not yet been introduced to the Senate or reconciled with the House's health care reform bill, America's Affordable Health Choices Act of 2009, H.3200, introduced July 31, 2009. Some marks of Sen. Baucus directly affect employers who offer health insurance coverage to their employees. The following is just a brief overview of some of those marks.
Safe Harbor Benefits received under a qualified small employer's cafeteria plans would still be eligible to be treated as a cafeteria plan if the plan excludes employees 1) under 21; 2) worked fewer than 1000 hours the preceding year or has worked less than one year; or 3) covered by a collective bargaining agreement. "Eligible small employers" would be employers who have employed an average of 100 or fewer employees a day for the past 2 years. If an employer is an eligible small employer and continues the cafeteria plan, it would remain an eligible small employer until it employs an average of 200 employees a day in one year.
Small Business Tax Credit Currently, the cost to an employer of providing health insurance coverage to its employees is tax deductible. Under Sen. Baucus's marks, the employer may be eligible for a tax credit instead of a deduction from gross income. To qualify for this tax credit, the employer would have to have 25 or fewer full-time employees during the year. Those employees could not earn an average of more than $40,000.00 a year. The phased-in tax credit would be up to 50% of the premiums the employer paid for employee coverage.
Employer Offer of Health Insurance Coverage Employers of 50 or more employees who do not offer coverage to employees would be required to pay a fee for each employee who qualifies for a tax credit for health insurance.
Excise Taxes In 2014, there would be an excise tax of 35% imposed upon employer-sponsored health coverage that exceeds threshold amounts: $8,000 for individual coverage and $21,000 for family coverage. The tax would be imposed pro rata on the issuers of the insurance and the plan administrator on amounts over the threshold. The employer must calculate the amount that is taxable to each insurance issuer and the plan administrator. Regardless as to whether an excise tax is imposed, employers would be required to report on the employee's W-2 form the value of the benefits the employee received from the employer.
Flexible Spending Arrangements An employee who reduces cash compensation to have that amount available for use as reimbursement for medical expenses (Flexible Spending Arrangement, or "Health FSA") currently does not pay any tax on the reduction in compensation. Under Sen. Baucus's marks, Health FSAs would be limited to $2,000 a year.
September 16, 2009
Ohio House passes bill banning sexual orientation discrimination
On September 15, 2009, the Ohio House of Representatives passed Am.Sub.H.B.No. 176 which prohibits employment discrimination on the basis of sexual orientation or gender identity. The bill now moves on to the Ohio Senate where its fate is unclear.
If the bill becomes law, it would add "sexual orientation" and "gender identity" as protected traits in the workplace, similar to the protections that traits like race and religion currently have in the workplace. The term "sexual orientation" would not be limited to homosexuality under this bill. Rather, it would include "actual or perceived heterosexuality, homosexuality, or bisexuality."
The term "gender identity" in the bill would mean all gender-related characteristics of an individual, with or without regard to the individual's designated sex at birth. This definition would include the codification of the United States Supreme Court's holding in Price Waterhouse v. Hopkins, 490 U.S. 228, in which the Supreme Court allowed an accountant to proceed with her lawsuit that alleged she was passed over for partnership because she was not feminine enough.
The bill would exempt religious associations and parochial schools from some of its provisions on sexual orientation and gender identity. But the exemptions would not apply to the associations or schools' secular business activities unrelated to their religious and educational purposes.
Even though the bill anticipates gender transition, it would not require the construction of new or additional facilities. Under the bill, it would not be an unlawful employment practice based upon gender identity to deny access to shower or dressing facilities where being unclothed would be unavoidable. But the employer must provide reasonable access to these facilities based upon the employee's gender identity at the time of the initial employment or upon notification that the employee is undergoing, or has undergone, gender transition.
The Ohio Civil Rights Commission would not be permitted to collect statistics from employers on employees' sexual orientation or gender identity. The bill would also not permit "disparate impact" claims on the basis of sexual orientation or gender identity. "Disparate impact" claims are based upon a neutral policy that has a negative impact on people with a protected trait.
Because some Ohioans feel strongly that sexual orientation is a choice, a choice to which those Ohioans may have strong objections, passage of the bill in the Ohio Senate is not assured. Nevertheless, many Ohio employers have voluntarily adopted policies against discrimination on account of sexual orientation or gender identity. Employers adopted these policies because they want to keep good employees, regardless of an employee's orientation or gender identity. This bill would make those policies the law of Ohio. If you feel strongly about this bill - one way or the other, you should call your State Senator's office and let him or her know.
If the bill becomes law, it would add "sexual orientation" and "gender identity" as protected traits in the workplace, similar to the protections that traits like race and religion currently have in the workplace. The term "sexual orientation" would not be limited to homosexuality under this bill. Rather, it would include "actual or perceived heterosexuality, homosexuality, or bisexuality."
The term "gender identity" in the bill would mean all gender-related characteristics of an individual, with or without regard to the individual's designated sex at birth. This definition would include the codification of the United States Supreme Court's holding in Price Waterhouse v. Hopkins, 490 U.S. 228, in which the Supreme Court allowed an accountant to proceed with her lawsuit that alleged she was passed over for partnership because she was not feminine enough.
The bill would exempt religious associations and parochial schools from some of its provisions on sexual orientation and gender identity. But the exemptions would not apply to the associations or schools' secular business activities unrelated to their religious and educational purposes.
Even though the bill anticipates gender transition, it would not require the construction of new or additional facilities. Under the bill, it would not be an unlawful employment practice based upon gender identity to deny access to shower or dressing facilities where being unclothed would be unavoidable. But the employer must provide reasonable access to these facilities based upon the employee's gender identity at the time of the initial employment or upon notification that the employee is undergoing, or has undergone, gender transition.
The Ohio Civil Rights Commission would not be permitted to collect statistics from employers on employees' sexual orientation or gender identity. The bill would also not permit "disparate impact" claims on the basis of sexual orientation or gender identity. "Disparate impact" claims are based upon a neutral policy that has a negative impact on people with a protected trait.
Because some Ohioans feel strongly that sexual orientation is a choice, a choice to which those Ohioans may have strong objections, passage of the bill in the Ohio Senate is not assured. Nevertheless, many Ohio employers have voluntarily adopted policies against discrimination on account of sexual orientation or gender identity. Employers adopted these policies because they want to keep good employees, regardless of an employee's orientation or gender identity. This bill would make those policies the law of Ohio. If you feel strongly about this bill - one way or the other, you should call your State Senator's office and let him or her know.
September 14, 2009
Employer Liability for Contractor's Discrimination
Ohio employers should be concerned about a recent decision in the United States Second Circuit Court of Appeals. Even though the Second Circuit does not include Ohio, this case could be persuasive authority for district and common pleas courts in Ohio.
In Halpert v. Manhattan Apartments Inc., Case No. 07-4074, the Second Circuit reversed a summary judgment that the District Court had entered in favor of Manhattan Apartments in an age discrimination claim. Michael Halpert had interviewed with Robert Brooks for a position to show rental apartments. In the interview, Halpert alleged that Brooks told him he was "too old" for the position. Manhattan Apartments maintained that Brooks was an independent contractor and not its employee.
The Court found that an employer could potentially be held liable for discrimination by an independent contractor who acts for the employer. The Age Discrimination in Employment Act (ADEA) prohibits an employer from refusing to hire an individual because of the individual's age. The Court stated: "That prohibition applies regardless of whether an employer uses its employees to interview applicants for open positions, or whether it uses intermediaries, such as independent contractors, to fill that role." Title VII, the ADA, and the Ohio Civil Rights Act include similar prohibitions in regards to other protected traits.
The Court found that there was a factual issue as to whether Brooks was acting as the hiring agent for Manhattan Apartments when he interviewed Halpert or whether Brooks was simply hiring on his own. Even though Brooks and Manhattan Apartments submitted affidavits in which they stated that if Halpert had been hired, Brooks - not Manhattan Apartments - would have been compensating him, Halpert submitted evidence that could have indicated that Manhattan Apartments controlled the manner and means by which Brooks conducted interviews. Therefore, according to the Circuit Court, a jury had to determine whether Brooks was conducting interviews to hire for himself or for Manhattan Apartments. If a jury were to find that Brooks was conducting interviews to hire for Manhattan Apartments, Manhattan Apartments would be an employer under the ADEA and could be held liable under that law.
Halpert demonstrates that employers cannot isolate themselves from discrimination liability by simply using independent contractors who then hire employees for themselves. Employers need to be careful that they are not presenting these independent contractors as employees to prospective hirees. Wise employers should have an attorney review the degree of independence the contractors have and the hiring processes of the contractors.
In Halpert v. Manhattan Apartments Inc., Case No. 07-4074, the Second Circuit reversed a summary judgment that the District Court had entered in favor of Manhattan Apartments in an age discrimination claim. Michael Halpert had interviewed with Robert Brooks for a position to show rental apartments. In the interview, Halpert alleged that Brooks told him he was "too old" for the position. Manhattan Apartments maintained that Brooks was an independent contractor and not its employee.
The Court found that an employer could potentially be held liable for discrimination by an independent contractor who acts for the employer. The Age Discrimination in Employment Act (ADEA) prohibits an employer from refusing to hire an individual because of the individual's age. The Court stated: "That prohibition applies regardless of whether an employer uses its employees to interview applicants for open positions, or whether it uses intermediaries, such as independent contractors, to fill that role." Title VII, the ADA, and the Ohio Civil Rights Act include similar prohibitions in regards to other protected traits.
The Court found that there was a factual issue as to whether Brooks was acting as the hiring agent for Manhattan Apartments when he interviewed Halpert or whether Brooks was simply hiring on his own. Even though Brooks and Manhattan Apartments submitted affidavits in which they stated that if Halpert had been hired, Brooks - not Manhattan Apartments - would have been compensating him, Halpert submitted evidence that could have indicated that Manhattan Apartments controlled the manner and means by which Brooks conducted interviews. Therefore, according to the Circuit Court, a jury had to determine whether Brooks was conducting interviews to hire for himself or for Manhattan Apartments. If a jury were to find that Brooks was conducting interviews to hire for Manhattan Apartments, Manhattan Apartments would be an employer under the ADEA and could be held liable under that law.
Halpert demonstrates that employers cannot isolate themselves from discrimination liability by simply using independent contractors who then hire employees for themselves. Employers need to be careful that they are not presenting these independent contractors as employees to prospective hirees. Wise employers should have an attorney review the degree of independence the contractors have and the hiring processes of the contractors.
August 23, 2009
Unconditional Employment Offers Reduce Plaintiffs' Damages Claims
In wrongful termination cases, employers face risks of large jury awards that include several months, and sometime years, of back pay - from the date of termination to the date of the jury award. In some cases, a jury could also award the plaintiff front pay for wages that the plaintiff would have earned after the date of the jury award had the plaintiff not been wrongfully terminated. Because wrongful termination cases do not usually go to trial until at least 18 months after the plaintiff filed the lawsuit (which is usually a year or more after the termination of employment), an employer could have significant exposure to a large jury award of anywhere from 2 to 5 years of the wages the plaintiff could have earned, plus interest, if the employer had not engaged in the allegedly discriminatory conduct.
Fortunately, an employer can perform a simple act which could eliminate the employee's claim for front pay and severely limit the claim for back pay. The employer could make an unconditional employment offer to the former employee of reinstatement to the employee's former position upon the same terms and condition of employment.
An unconditional offer does not resolve the employee's claim of wrongful termination. Nor does it eliminate the employee's claim for back wages. Instead, the unconditional offer could limit the claim for back pay from the termination date to the date of the offer or its rejection, but not beyond.
The United States Supreme Court examined unconditional employment offers in Ford Motor Co. v. E.E.O.C., 458 U.S. 219 (1982). In Ford Motor, three women filed charges with the EEOC claiming that Ford did not hire them because of their sex. Approximately two years after the women filed their charges, Ford offered positions to two of them. Ford's offers did not require the women to abandon or compromise their Title VII claims. Nevertheless, the women rejected Ford's employment offers.
The Supreme Court held that the women's claims to back pay could run up to, but not beyond, the date that they rejected Ford's employment offers, reasoning that the women could have mitigated their damages by accepting Ford's employment offers. The Court rejected the EEOC's argument that an employment offer that ends continuing liability for back pay must also include an offer of seniority retroactive to the date of discrimination.
An unconditional offer of employment or reinstatement can be an effective means by which an employer can drastically reduce the amount of damages that a court may award to an employment discrimination plaintiff. The unconditional offer cannot include any terms that would require the plaintiff to settle, compromise, or withdraw the discrimination claim. Employers facing discrimination claims should consult with their attorneys and strongly consider extending unconditional employment offers to the complaining parties.
Fortunately, an employer can perform a simple act which could eliminate the employee's claim for front pay and severely limit the claim for back pay. The employer could make an unconditional employment offer to the former employee of reinstatement to the employee's former position upon the same terms and condition of employment.
An unconditional offer does not resolve the employee's claim of wrongful termination. Nor does it eliminate the employee's claim for back wages. Instead, the unconditional offer could limit the claim for back pay from the termination date to the date of the offer or its rejection, but not beyond.
The United States Supreme Court examined unconditional employment offers in Ford Motor Co. v. E.E.O.C., 458 U.S. 219 (1982). In Ford Motor, three women filed charges with the EEOC claiming that Ford did not hire them because of their sex. Approximately two years after the women filed their charges, Ford offered positions to two of them. Ford's offers did not require the women to abandon or compromise their Title VII claims. Nevertheless, the women rejected Ford's employment offers.
The Supreme Court held that the women's claims to back pay could run up to, but not beyond, the date that they rejected Ford's employment offers, reasoning that the women could have mitigated their damages by accepting Ford's employment offers. The Court rejected the EEOC's argument that an employment offer that ends continuing liability for back pay must also include an offer of seniority retroactive to the date of discrimination.
An unconditional offer of employment or reinstatement can be an effective means by which an employer can drastically reduce the amount of damages that a court may award to an employment discrimination plaintiff. The unconditional offer cannot include any terms that would require the plaintiff to settle, compromise, or withdraw the discrimination claim. Employers facing discrimination claims should consult with their attorneys and strongly consider extending unconditional employment offers to the complaining parties.
April 20, 2009
Expanding coverage of sex discrimination laws
The legal definition of "sex discrimination" in the workplace has been rapidly expanding. "Sex discrimination" used to mean denying a woman equal opportunities in the workplace or demanding sex from a subordinate. "Sex discrimination" then came to include hostile work environment claims arising from boorish behavior in the workplace, such as hanging pornographic pictures or making lewd sexual comments.
There are now several cases that hold that sex discrimination claims may arise when an employee does not "act" the way the employee's gender is supposed to act, or if an employee is gay, or if an employee has been diagnosed with Gender Identity Disorder ("GID"), a condition recognized by the American Psychiatric Association, and is commonly referred to as transsexualism. Employers need to be mindful of the wide interpretation courts are giving to Title VII sex discrimination claims.
This trend to expand the definition of sex discrimination perhaps began in 1989 when the United States Supreme Court decided Price Waterhouse v. Hopkins, 490 U.S. 228. In Price Waterhouse, Ann Hopkins claimed that she was passed over for partnership in the accounting firm because of her sex. She claimed that the partners believed that she acted too aggressive because she was "overcompensating for being a woman." One partner advised her to "walk more femininely, talk more femininely, dress more femininely, wear make-up, have her hair styled, and wear jewelry." She sued claiming that sexual stereotyping had played a role in the firm's decision to not admit her to the partnership.
The Supreme Court agreed with Hopkins. According to the Supreme Court, "gender must be irrelevant to employment decisions." The Supreme Court found that the other partners' comments were made not only because Hopkins was a woman, but also because she did not conform to the stereotype of how a woman supposedly should behave in an office. According to the Supreme Court, Price Waterhouse discriminated against her because she failed to act like a woman.
In 2004, the Sixth Circuit applied the holding of Price Waterhouse to transsexualism and found that Title VII protects employees who have been diagnosed with GID. In Smith v. City of Salem, Ohio, 378 F.3d 566, Jimmie Smith claimed that the City of Salem violated Title VII when it fired him from the Salem Fire Department after he began "expressing a more feminine appearance on a full-time basis." Smith had been diagnosed with GID and he informed his immediate supervisor that his treatment could include the eventual physical transformation from male to female. According to Smith's complaint, the City then conspired to terminate his employment by requiring him to take a series of psychological tests, hoping that he would resign or refuse to take the tests, which would be grounds for termination.
The Trial Court dismissed Smith's case, claiming that his complaint did not state a claim under Title VII. The Sixth Circuit reversed, finding that his complaint stated a Title VII claim by alleging that his failure to conform to sex stereotypes regarding how a man should look and act was the driving force behind his termination. According to the Sixth Circuit, his complaint adequately pleaded claims of sex stereotyping and gender discrimination. The Sixth Circuit in Smith held that Price Waterhouse established that Title VII's reference to "sex" includes both the biological differences between the genders AND gender discrimination - discrimination based on a failure to conform to stereotypical gender norms. On remand, the case was dismissed by agreement of the parties shortly after a settlement conference.
Employers need to be aware of the expanding coverage courts are finding for Title VII cases, especially in the area of sex discrimination. The reasoning in Smith could easily apply to claims of sex discrimination based upon orientation. Many people have strong opinions regarding sexuality. But many people also have strong opinions regarding religion. A smart employer does not allow differences in religion to have any affect upon the work place. If an employer or employee is uncomfortable about a co-worker's religion, that discomfort must not play a role in any employment decisions. And an employer must enforce policies against creating a hostile work environment. Similarly, an employer should not allow discomfort regarding a co-worker's sexuality - whether it's orientation or identity - to play any role in employment decisions and should enforce anti-harassment policies so as to reduce the risk of creating a hostile work environment.
There are now several cases that hold that sex discrimination claims may arise when an employee does not "act" the way the employee's gender is supposed to act, or if an employee is gay, or if an employee has been diagnosed with Gender Identity Disorder ("GID"), a condition recognized by the American Psychiatric Association, and is commonly referred to as transsexualism. Employers need to be mindful of the wide interpretation courts are giving to Title VII sex discrimination claims.
This trend to expand the definition of sex discrimination perhaps began in 1989 when the United States Supreme Court decided Price Waterhouse v. Hopkins, 490 U.S. 228. In Price Waterhouse, Ann Hopkins claimed that she was passed over for partnership in the accounting firm because of her sex. She claimed that the partners believed that she acted too aggressive because she was "overcompensating for being a woman." One partner advised her to "walk more femininely, talk more femininely, dress more femininely, wear make-up, have her hair styled, and wear jewelry." She sued claiming that sexual stereotyping had played a role in the firm's decision to not admit her to the partnership.
The Supreme Court agreed with Hopkins. According to the Supreme Court, "gender must be irrelevant to employment decisions." The Supreme Court found that the other partners' comments were made not only because Hopkins was a woman, but also because she did not conform to the stereotype of how a woman supposedly should behave in an office. According to the Supreme Court, Price Waterhouse discriminated against her because she failed to act like a woman.
In 2004, the Sixth Circuit applied the holding of Price Waterhouse to transsexualism and found that Title VII protects employees who have been diagnosed with GID. In Smith v. City of Salem, Ohio, 378 F.3d 566, Jimmie Smith claimed that the City of Salem violated Title VII when it fired him from the Salem Fire Department after he began "expressing a more feminine appearance on a full-time basis." Smith had been diagnosed with GID and he informed his immediate supervisor that his treatment could include the eventual physical transformation from male to female. According to Smith's complaint, the City then conspired to terminate his employment by requiring him to take a series of psychological tests, hoping that he would resign or refuse to take the tests, which would be grounds for termination.
The Trial Court dismissed Smith's case, claiming that his complaint did not state a claim under Title VII. The Sixth Circuit reversed, finding that his complaint stated a Title VII claim by alleging that his failure to conform to sex stereotypes regarding how a man should look and act was the driving force behind his termination. According to the Sixth Circuit, his complaint adequately pleaded claims of sex stereotyping and gender discrimination. The Sixth Circuit in Smith held that Price Waterhouse established that Title VII's reference to "sex" includes both the biological differences between the genders AND gender discrimination - discrimination based on a failure to conform to stereotypical gender norms. On remand, the case was dismissed by agreement of the parties shortly after a settlement conference.
Employers need to be aware of the expanding coverage courts are finding for Title VII cases, especially in the area of sex discrimination. The reasoning in Smith could easily apply to claims of sex discrimination based upon orientation. Many people have strong opinions regarding sexuality. But many people also have strong opinions regarding religion. A smart employer does not allow differences in religion to have any affect upon the work place. If an employer or employee is uncomfortable about a co-worker's religion, that discomfort must not play a role in any employment decisions. And an employer must enforce policies against creating a hostile work environment. Similarly, an employer should not allow discomfort regarding a co-worker's sexuality - whether it's orientation or identity - to play any role in employment decisions and should enforce anti-harassment policies so as to reduce the risk of creating a hostile work environment.
Subscribe to:
Posts (Atom)
Posts
