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.
April 20, 2009
April 17, 2009
Changes to Ohio Mini-COBRA Premium Assistance
Many companies in Ohio employ less than 20 employees and are not subject to the federal COBRA law, which provides a qualified terminated employee the opportunity to continue his or her group health insurance. These smaller employers are covered by Ohio's "mini-COBRA" law, Ohio Rev. Code §3923.38.
Governor Strickland recently signed Sub. H.B. 2. This legislation amended Ohio's continuation coverage laws. Any group health insurance policy issued or renewed after April 1, 2009 must now include the following changes to Ohio continuation law:
Similar to the premium assistance for continuation coverage provided by the American Recovery and Reinvestment Act of 2009 (ARRA), an employee is determined to have been involuntarily terminated if he or she was given the option to resign or be fired, and elected to resign. Also similar to ARRA, an employee is terminated for gross misconduct if the misconduct involved criminal or highly unethical behavior. An employee's negligence or insubordination by itself would not render that employee ineligible for continuation coverage.
Like ARRA premium assistance for continuation coverage, under Ohio mini-COBRA, an employee needs to pay only 35% of the premium. But unlike ARRA, the employer will not have to advance the remaining 65% of the premium. Instead, the insurer receives a tax credit for 65% of the premium.
The Ohio Department of Insurance's website (www.ohioinsurance.gov) has additional information on the changes to Ohio mini-COBRA.
Governor Strickland recently signed Sub. H.B. 2. This legislation amended Ohio's continuation coverage laws. Any group health insurance policy issued or renewed after April 1, 2009 must now include the following changes to Ohio continuation law:
- Coverage has been extended to 12 months from 6 months.
- The participant is no longer required to be eligible for unemployment compensation benefits.
- Employees must be involuntarily terminated, other than for gross misconduct.
- Continuation coverage must include prescription drug coverage if it is included in the group coverage.
Similar to the premium assistance for continuation coverage provided by the American Recovery and Reinvestment Act of 2009 (ARRA), an employee is determined to have been involuntarily terminated if he or she was given the option to resign or be fired, and elected to resign. Also similar to ARRA, an employee is terminated for gross misconduct if the misconduct involved criminal or highly unethical behavior. An employee's negligence or insubordination by itself would not render that employee ineligible for continuation coverage.
Like ARRA premium assistance for continuation coverage, under Ohio mini-COBRA, an employee needs to pay only 35% of the premium. But unlike ARRA, the employer will not have to advance the remaining 65% of the premium. Instead, the insurer receives a tax credit for 65% of the premium.
The Ohio Department of Insurance's website (www.ohioinsurance.gov) has additional information on the changes to Ohio mini-COBRA.
April 12, 2009
COBRA Rights for the Voluntarily Resigned
During the current recession, many employers are offering severance packages to their laid-off employees. The employers offer the employees several weeks or months of pay if the employee agrees to release the employer from almost every imaginable claim. Under these severance agreements, the parties agree that the employee voluntarily resigned and was not laid-off or involuntarily terminated.
Under the American Recovery and Reinvestment Act of 2009 (ARRA) that President Obama signed on February 17, 2009, involuntarily terminated employees may be eligible for premium assistance for their COBRA continuation coverage. (The end result of this premium assistance is that the former employee pays 35% of the premium and the federal government picks up the remaining 65%.) But the term "involuntarily terminated" raises a question regarding former employees who accepted a severance package for their voluntary resignation - Are these former employees eligible for the ARRA premium assistance for COBRA coverage?
The answer to this question is - it depends on the circumstances. While the statements of voluntary resignation in severance packages usually prevent employees from receiving unemployment compensation benefits, the employee would still most likely be eligible for COBRA continuation coverage if the employee pays the entire premium. Under COBRA, an employee may be eligible for continuation coverage for any termination that was not the result of the employee's "gross misconduct". 29 U.S.C. §1163. Because a voluntary resignation is a termination, most of the voluntarily resigned would be eligible to participate in COBRA coverage.
Unlike COBRA, the ARRA premium assistance does not apply to all employees terminated for any reason besides gross misconduct. To be eligible for this premium assistance, the employee must have been involuntarily terminated. An involuntary termination and a voluntary resignation may appear to be terms that are mutually exclusive of each other. But the United States Department of Labor (DOL) recently provided guidance to employers and employees in Notice 2009-27 regarding premium assistance for COBRA benefits under ARRA.
According to the DOL's Notice, an involuntary termination is a termination due to the employer's unilateral authority to terminate the employment where the employee was willing and able to continue his or her employment. Most severance agreements that indicate the employee voluntarily resigned are usually offered by an employer to protect the employer from wrongful termination claims. If the employer would have terminated the employee without the employee's voluntary resignation, and the employee knew he or she would be terminated if the employee did not agree to resign, then, according to the Notice, the termination is involuntary and the employee would be eligible for premium assistance.
Nevertheless, the employee would not be eligible if the employer's termination of the employment was the result of the employee's gross misconduct. "Gross misconduct" is not the equivalent of "terminated for cause". Gross misconduct usually involves behavior that is criminal or highly unethical, such as stealing from the employer or providing the employer's trade secrets to a competitor. An employer could terminate an employee for cause, such as the result of excessive absenteeism or insubordination, but such causes usually do not rise to the level of gross misconduct. Therefore, the employee would most likely still be eligible for COBRA continuation coverage and for the premium assistance.
For many loyal employees, being laid-off jeopardizes their health coverage and the coverage of their families. If an employer wants to allow these employees to maintain health coverage for a relatively reasonable premium payment during the current recession, the employer should contact an employment attorney to prepare severance agreements that would allow these employees to receive premium assistance for their COBRA continuation coverage.
Under the American Recovery and Reinvestment Act of 2009 (ARRA) that President Obama signed on February 17, 2009, involuntarily terminated employees may be eligible for premium assistance for their COBRA continuation coverage. (The end result of this premium assistance is that the former employee pays 35% of the premium and the federal government picks up the remaining 65%.) But the term "involuntarily terminated" raises a question regarding former employees who accepted a severance package for their voluntary resignation - Are these former employees eligible for the ARRA premium assistance for COBRA coverage?
The answer to this question is - it depends on the circumstances. While the statements of voluntary resignation in severance packages usually prevent employees from receiving unemployment compensation benefits, the employee would still most likely be eligible for COBRA continuation coverage if the employee pays the entire premium. Under COBRA, an employee may be eligible for continuation coverage for any termination that was not the result of the employee's "gross misconduct". 29 U.S.C. §1163. Because a voluntary resignation is a termination, most of the voluntarily resigned would be eligible to participate in COBRA coverage.
Unlike COBRA, the ARRA premium assistance does not apply to all employees terminated for any reason besides gross misconduct. To be eligible for this premium assistance, the employee must have been involuntarily terminated. An involuntary termination and a voluntary resignation may appear to be terms that are mutually exclusive of each other. But the United States Department of Labor (DOL) recently provided guidance to employers and employees in Notice 2009-27 regarding premium assistance for COBRA benefits under ARRA.
According to the DOL's Notice, an involuntary termination is a termination due to the employer's unilateral authority to terminate the employment where the employee was willing and able to continue his or her employment. Most severance agreements that indicate the employee voluntarily resigned are usually offered by an employer to protect the employer from wrongful termination claims. If the employer would have terminated the employee without the employee's voluntary resignation, and the employee knew he or she would be terminated if the employee did not agree to resign, then, according to the Notice, the termination is involuntary and the employee would be eligible for premium assistance.
Nevertheless, the employee would not be eligible if the employer's termination of the employment was the result of the employee's gross misconduct. "Gross misconduct" is not the equivalent of "terminated for cause". Gross misconduct usually involves behavior that is criminal or highly unethical, such as stealing from the employer or providing the employer's trade secrets to a competitor. An employer could terminate an employee for cause, such as the result of excessive absenteeism or insubordination, but such causes usually do not rise to the level of gross misconduct. Therefore, the employee would most likely still be eligible for COBRA continuation coverage and for the premium assistance.
For many loyal employees, being laid-off jeopardizes their health coverage and the coverage of their families. If an employer wants to allow these employees to maintain health coverage for a relatively reasonable premium payment during the current recession, the employer should contact an employment attorney to prepare severance agreements that would allow these employees to receive premium assistance for their COBRA continuation coverage.
April 5, 2009
Claims of Stereotyping
A recent case out of the federal Circuit Court in Boston illustrates the dangers that employers face when they make employment decisions based upon a commonly held belief about members in a subclass of a protected class, and not upon a member's qualifications or conduct. In Chadwick v. Wellpoint, Inc., the employee successfully argued to the Circuit Court of Appeals that she should have an opportunity to demonstrate to a jury that her employer's decision not to promote her was based upon the sex-based stereotype that mothers of young children are more likely than fathers of young children to neglect work duties in favor of childcare obligations.
Laurie Chadwick believed that she was the frontrunner for a management position at Wellpoint. She received excellent reviews at her most recent performance evaluation. She was already performing several of the responsibilities of the management position. But Wellpoint gave the promotion to another woman who shared the same position as Chadwick, but for six years less than Chadwick. Also, the performance evaluations of the woman Wellpoint promoted were not as high as Chadwick's evaluations.
Shortly before Wellpoint decided to give the promotion to the other woman, the Wellpoint employee who made that decision discovered that Chadwick had three six-year-old triplets in addition to an eleven-year-old son. Chadwick was also taking one college course a semester during her employment. The woman that Wellpoint promoted had two children, ages nine and fourteen.
Chadwick brought suit under Title VII, claiming that Wellpoint discriminated against her on account of her sex. The Circuit Court found that Chadwick was entitled to a jury trial based upon three statements made by Wellpoint employees, each of whom was involved in the promotion decision:
The Circuit Court classified Chadwick's claim as a "sex plus" claim. The "plus" describes the case where the employer does not discriminate against all members of a protected class. In Chadwick, the "plus" refers to the allegation that Wellpoint discriminated against mothers of young children, as opposed to discriminating against all women. But regardless as to whether this case was a "sex plus" claim or just a sex discrimination claim, the Court noted that every sex discrimination case comes down to one simple question: Did the employer take an adverse employment action at least in part because of an employee's sex?
The United States Supreme Court has taken notice of the stereotype that women, not men, are responsible for family caregiving. Examining the specific facts of Chadwick reveals that this stereotype does not apply to this case. Chadwick's husband was the primary caretaker for the children. He worked off-hour shifts, nights, and weekends when Chadwick was home with the children.
Under Chadwick, an employer is not free to assume that family responsibilities would make a woman, because she is a woman, a poor worker. The Chadwick decisionmaker explained to Chadwick that the decision not to promote her had nothing to do with what Chadwick "did or didn't do." The Court found that a jury could interpret this statement to mean that Wellpoint was penalizing Chadwick not for something she did but for something she simply is. The Court further found that a jury could interpret the decisionmaker's "Bless you!" email as a statement that the decisionmaker felt badly for Chadwick because Chadwick's life apparently must have been so difficult as the mother of three young children.
Chadwick demonstrates that sex discrimination claims can arise from a variety of events. These claims do not always arise from boorish behavior, sexual comments, or requests/demands for sex. Sex discrimination claims could also arise from well-intentioned conduct that was premised upon sexual stereotypes. To reduce the risk of being the subject of a claim based upon stereotyping, an employer should examine its employment policies to assure that those policies are not based upon employees' characteristics, but are instead based upon employees' actual conduct and qualifications.
Laurie Chadwick believed that she was the frontrunner for a management position at Wellpoint. She received excellent reviews at her most recent performance evaluation. She was already performing several of the responsibilities of the management position. But Wellpoint gave the promotion to another woman who shared the same position as Chadwick, but for six years less than Chadwick. Also, the performance evaluations of the woman Wellpoint promoted were not as high as Chadwick's evaluations.
Shortly before Wellpoint decided to give the promotion to the other woman, the Wellpoint employee who made that decision discovered that Chadwick had three six-year-old triplets in addition to an eleven-year-old son. Chadwick was also taking one college course a semester during her employment. The woman that Wellpoint promoted had two children, ages nine and fourteen.
Chadwick brought suit under Title VII, claiming that Wellpoint discriminated against her on account of her sex. The Circuit Court found that Chadwick was entitled to a jury trial based upon three statements made by Wellpoint employees, each of whom was involved in the promotion decision:
- When the ultimate decisionmaker had discovered that Chadwick had triplets, she sent Chadwick an email stating, "Oh my - I did not know you had triplets. Bless you!"
- During Chadwick's interview, an interviewer asked her how she would respond if an associate did not complete a project on time. When Chadwick did not give an answer the interviewer liked, the interviewer replied, "Laurie, you're a mother. Would you let your kids off the hook that easy if they made a mess in their room? Would you clean it or hold them accountable?"
- When the ultimate decisionmaker informed Chadwick that she did not get the promotion, the decisionmaker stated, "It was nothing you did or didn't do. It was just that you're going to school, you have the kids and you just have a lot on your plate right now." In the same conversation, the decisionmaker stated that, "if the interviewers [all of whom were women] were in your position, they would feel overwhelmed."
The Circuit Court classified Chadwick's claim as a "sex plus" claim. The "plus" describes the case where the employer does not discriminate against all members of a protected class. In Chadwick, the "plus" refers to the allegation that Wellpoint discriminated against mothers of young children, as opposed to discriminating against all women. But regardless as to whether this case was a "sex plus" claim or just a sex discrimination claim, the Court noted that every sex discrimination case comes down to one simple question: Did the employer take an adverse employment action at least in part because of an employee's sex?
The United States Supreme Court has taken notice of the stereotype that women, not men, are responsible for family caregiving. Examining the specific facts of Chadwick reveals that this stereotype does not apply to this case. Chadwick's husband was the primary caretaker for the children. He worked off-hour shifts, nights, and weekends when Chadwick was home with the children.
Under Chadwick, an employer is not free to assume that family responsibilities would make a woman, because she is a woman, a poor worker. The Chadwick decisionmaker explained to Chadwick that the decision not to promote her had nothing to do with what Chadwick "did or didn't do." The Court found that a jury could interpret this statement to mean that Wellpoint was penalizing Chadwick not for something she did but for something she simply is. The Court further found that a jury could interpret the decisionmaker's "Bless you!" email as a statement that the decisionmaker felt badly for Chadwick because Chadwick's life apparently must have been so difficult as the mother of three young children.
Chadwick demonstrates that sex discrimination claims can arise from a variety of events. These claims do not always arise from boorish behavior, sexual comments, or requests/demands for sex. Sex discrimination claims could also arise from well-intentioned conduct that was premised upon sexual stereotypes. To reduce the risk of being the subject of a claim based upon stereotyping, an employer should examine its employment policies to assure that those policies are not based upon employees' characteristics, but are instead based upon employees' actual conduct and qualifications.
April 4, 2009
Interference with Employee Benefits
A recent decision by the Sixth Circuit Court of Appeals provides some guidance to employers to avoiding unlawful interference with employees' benefits. The Circuit Court ruled that even though the unionized employer did not deny that its desire to reduce pension benefits played a role in its decision to shut down a plant, this desire, in and of itself, was not enough for the employees to satisfy their burden of proof that the employer's other reasons for shutting the plant down were merely a pretext.
In Crawford v. TRW Automotive U.S. LLC, the employer closed one of its manufacturing plants due to overcapacity. The employer was using only 10% of the plant's square footage, but still paying high fixed costs and overhead to maintain the plant. At the time of its closure, three employees at the plant were less than one year away from being fully vested in the pension plan and four other plant employees were less than two years away from fully vesting. Most of the plant's employees needed more than five years for their pension benefits to fully vest. The employer did recall two of the laid-off employees, based upon seniority, to work at another plant owned by one of the employer's subsidiary. The recalled employees established their pension benefits eligibility while working at the other plant.
Despite the employees' contention that the employer poorly ran their plant and could have placed some new work at that plant instead of at another plant, the Circuit Court found that the employer's stated reason for closing the plant - unused capacity and high maintenance costs - was not a pretext for interfering with the employees' pension benefits. Even though the reduction of the pension benefits was incidental to the employer's decision to close the plant, the employees were unable to prove that the reduction in pension benefits was a motivating factor in that decision.
Crawford provides valuable lessons for employers in the present economic climate. It is unfortunate that due to circumstances beyond an employer's or employee's control, an employer may have to lay off many loyal, hard-working employees. To reduce the risk that some of the laid-off employees might sue the employer for wrongful interference with pension benefits, an employer should consult with an employment attorney and consider offering severance packages to the laid-off employees.
In Crawford v. TRW Automotive U.S. LLC, the employer closed one of its manufacturing plants due to overcapacity. The employer was using only 10% of the plant's square footage, but still paying high fixed costs and overhead to maintain the plant. At the time of its closure, three employees at the plant were less than one year away from being fully vested in the pension plan and four other plant employees were less than two years away from fully vesting. Most of the plant's employees needed more than five years for their pension benefits to fully vest. The employer did recall two of the laid-off employees, based upon seniority, to work at another plant owned by one of the employer's subsidiary. The recalled employees established their pension benefits eligibility while working at the other plant.
Despite the employees' contention that the employer poorly ran their plant and could have placed some new work at that plant instead of at another plant, the Circuit Court found that the employer's stated reason for closing the plant - unused capacity and high maintenance costs - was not a pretext for interfering with the employees' pension benefits. Even though the reduction of the pension benefits was incidental to the employer's decision to close the plant, the employees were unable to prove that the reduction in pension benefits was a motivating factor in that decision.
Crawford provides valuable lessons for employers in the present economic climate. It is unfortunate that due to circumstances beyond an employer's or employee's control, an employer may have to lay off many loyal, hard-working employees. To reduce the risk that some of the laid-off employees might sue the employer for wrongful interference with pension benefits, an employer should consult with an employment attorney and consider offering severance packages to the laid-off employees.
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