Wednesday, August 10, 2016

Debt Collectors Have a Whistleblower Protection

Last month, the Consumer Financial Protection Bureau (CFPB) announced its plans to issue new regulations for the debt collection industry.  CFPB’s notice states, “Debt collection generates more complaints to the CFPB than any other financial product or service.”

The CFPB’s proposed rules would help consumers by increasing the requirements that debt collectors must meet to document the correct amount of a debt, increasing the consumer’s opportunities to dispute a debt, making more specific the rules against repetitive and harassing contacts, and requiring that consumers requests to limit communications apply to subsequent collectors working on the same debt.

However, the CFPB’s notice makes no mention of a relatively new legal protection for the employees of debt collection firms.  Since the 2010 enactment of the Dodd-Frank Act (which created the CFPB), employees of debt collection firms have had a legal protection against retaliation whenever they raise concerns about violations of consumer rights.

The way that Congress enacted this protection has made it so obscure that hardly anyone has ever noticed it and I am not aware that anyone has ever used it.

Congress passed the Dodd-Frank Act in the wake of the 2007-08 fiscal crisis.  Our financial markets, here and around the world, ground to a halt as widespread fraud in the consumer mortgage market came to light. Within a decade of passing the Sarbanes-Oxley Act in 2002 (SOX), Congress was rightfully concerned that our systems were inadequate to detect the frauds that could be so harmful. 

As part of the Dodd-Frank Act, Congress created the Consumer Financial Protection Bureau (CFPB) believing that a dedicated watchdog could protect our markets from future crises in a way that SOX had not. CFPB would have independent power to protect consumers from frauds and other mistreatment and thereby have eyes and ears in the consumer financial markets.

As a young legal aid lawyer, I counseled many consumers who were distressed by harassment from debt collectors. They suffered symptoms of stress similar to those of domestic violence victims. They felt shame and embarrassment. They felt powerless to stop the abuse. They lose sleep, suffer medical problems and are constantly anxious about how to make it stop.  I could explain how the harassment was illegal, and sometimes that would lessen their immediate anxiety. A few clients were willing to let their harassment become the basis of a lawsuit to hold the collectors accountable for their actions. While my clients’ recoveries would be immensely satisfying for them, it became just a cost of doing business for the collections firms that continued their practices against other consumers who didn’t know or would not use their legal rights.

In creating the CFPB, Congress wisely understood that one of the best sources of information about frauds and violations would be the employees that companies use to carry out their misdeeds. Therefore, in Section 1057, Congress created a whistleblower protection for the employees in all the industries that CFPB would regulate. As I walk with you through this section of law, I suspect that you will quickly see that it is convoluted and difficult to discern the actual meaning.

Now codified at 12 U.S. Code § 5567(a), this protection bars any “covered person or service provider” from terminating or “in any other way discriminat[ing] against,” “any covered employee” “by reason of the fact that such employee or representative … has” —
(1) provided, caused to be provided, or is about to provide or cause to be provided, information to the employer, the Bureau, or any other State, local, or Federal, government authority or law enforcement agency relating to any violation of, or any act or omission that the employee reasonably believes to be a violation of, any provision of this title or any other provision of law that is subject to the jurisdiction of the Bureau, or any rule, order, standard, or prohibition prescribed by the Bureau;

(2) testified or will testify in any proceeding resulting from the administration or enforcement of any provision of this title or any other provision of law that is subject to the jurisdiction of the Bureau, or any rule, order, standard, or prohibition prescribed by the Bureau;

(3) filed, instituted, or caused to be filed or instituted any proceeding under any Federal consumer financial law; or

(4) objected to, or refused to participate in, any activity, policy, practice, or assigned task that the employee (or other such person) reasonably believed to be in violation of any law, rule, order, standard, or prohibition, subject to the jurisdiction of, or enforceable by, the Bureau.
The key to understanding the significance of this section, particularly subsections (1) and (4), is understanding the scope of “this title” and what is “subject to the jurisdiction of, or enforceable by, the Bureau.”  The answer is contained in 12U.S.C. § 5481(14). There, the Dodd-Frank Act lists all the laws that are now within CFPB’s jurisdiction. They are:

the Alternative Mortgage Parity Act of 1982, 12 U.S.C. § 2801; Consumer Leasing Act of 1976, 15 U.S.C. § 1667; most of the Electronic Funds Transfer Act, 15 U.S.C. § 1693; Equal Credit Opportunity Act, 15 U.S.C. § 1691; Fair Credit Billing Act, 15 U.S.C. § 1666; most of the Fair Credit Reporting Act, 15 U.S.C § 1681; Home Owners Protection Act of 1998, 12 U.S.C. § 4901; Fair Debt Collection Practices Act, 15 U.S.C. § 1692; parts of the Federal Deposit Insurance Act, 12 U.S.C. § 1831t(c)-(f); parts of the Gramm-Leach-Bliley Act, 15 U.S.C. § 6802-09; Home Mortgage Disclosure Act of 1975, 12 U.S.C § 2801; Home Ownership and Equity Protection Act of 1994, 15 U.S.C. § 1601 note; S.A.F.E. Mortgage Licensing Act of 2008, 12 U.S.C. § 5101; the Truth in Lending Act, 15 U.S.C. § 1601; the Truth in Savings Act, 12 U.S.C. § 4301; section 626 of the Omnibus Appropriations Act, Pub. L. No. 111-8; and the Interstate Land Sales Full Disclosure Act, 15 U.S.C. § 1701

For my purpose in this blog, this list explicitly includes the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692. Each of these laws, however, now has the same explicit whistleblower protections for any employees who want to raise concerns about the violations of the consumer’s rights.

By placing the whistleblower protection in this provision of the Dodd-Frank Act, and making its application dependent on finding and understanding each reference, Congress did make it harder for practitioners to find and use the law.  In other whistleblower laws, the provision protecting whistleblowers is a part of the law that is being enforced.  For the FDCPA, one has to know to look in the CFPB statute to find the employee protection.

As a legal aid lawyer, I fantasized about how great it would be if the employees of the debt collectors I sued could have a legal protection for refusing to abuse and harass the debtors. Most of them are paid on commission, so it was in their interest to continue whatever tactics would get consumers to pay the most. Would the CFPB protection today allow a debt collector to refuse to engage in harassment, but still pursue a claim for the commissions that would have been earned but for that refusal?  This question remains unanswered as there are no reported cases enforcing this protection for debt collectors.

Perhaps the CFPB will consider an addition to their final rules for debt collectors.  They could require debt collection firms to post the Department of Labor’s fact sheet for CFPB whistleblower claims.  Then debt collectors could learn about their protections and the 180 day time limit to file retaliation complaints.

If there are debt collectors, or other employees in the consumer financial industry, looking for advice about their rights, or concerned that they have suffered retaliation, they are welcome to apply to our offices for legal advice and representation.

Friday, July 29, 2016

Title VII’s reach to protect employees is co-extensive with breadth of employers’ retaliation

A recent case out of California demonstrates that Title VII’s anti-retaliation protections of employees are just as broad as some employers’ destructive sweep to get rid of “problem” employees. In Equal Employment Opportunity Commission v. Zoria Farms, Inc., the court on July 22, 2016, ordered Z Foods, Inc., (the successor corporation to Zoria Farms) to pay $1,470,000 in compensatory and punitive damages to several female employees who had been sexually harassed by two supervisors, and to male and female employees who were terminated after they either complained about the harassment or were merely related to the persons who had complained.

Title VII makes it “an unlawful employer practice for an employer…to discriminate against any individual with respect to [her] compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin.” “‘Discriminatory conduct includes harassment,’” Zoria Farms (quoting Meritor Savings Bank v. Vinson), when that harassment occurs because of sex.” Id. (citing Oncale v. Sundowner Offshore Servs.). An employer violates Title VII when it subjects an employee to harassment that constitutes a hostile work environment. A hostile work environment based on sex exists when there is unwelcome conduct that is based on the plaintiff’s sex, which is sufficiently severe or pervasive to alter the plaintiff’s conditions of employment and to create an abusive work environment, and which is imputable to the employer. Boyer-Liberto v. Fontainebleau Corp. In measuring the severity of the harassing conduct, “the status of the harasser may be a significant factor–e.g., ‘a supervisor’s [harassment] impacts the work environment far more severely than use by co-equals.’” Id. “‘…[A] supervisor’s power and authority invests his or her harassing conduct with a particular threatening character.’” Id. (quoting Burlington Indus., Inc. v. Ellerth).

In Zoria Farms, the court granted the EEOC’s unopposed motion for default judgment and found that the EEOC had set forth prima facie claims of sexual harassment. Over a two-year period, Rosa Mendez’s supervisor Martin Ramirez made inappropriate comments to her, such as how good she looked in pants, he dreamed about having sex with her, she had a beautiful body, he desired her breasts, he liked the way her breasts moved when she walked, he was imagining her naked, and he thought about what it would be like to have sex with her. Ramirez also inappropriately touched Mendez: he would walk by and brush up against her or stand next to her while rubbing up against her; he would come up from behind her and grab her buttocks or fondle her breasts. He also often propositioned Mendez, telling her that if she had sex with him, he would offer her a better employment position. Ramirez also sent Mendez to remote areas of the work facility so that he could further harass her. This terrified Mendez, as she had heard rumors that he had raped other female employees in similar, isolated areas. In these isolated areas, he grabbed her from behind with both hands. Mendez complained about Ramirez’s behavior to Martha Sanchez, the Human Resources Manager, and to Jill Brooks, the Plant Manager. Mendez told them that she refused to go to isolated areas because she knew Ramirez was going to try to sexually assault her. Rather than defend or protect Mendez, Sanchez and Brooks told her that she was being insubordinate for refusing to obey Ramirez’ orders, and subsequently wrote her up for being insubordinate. Mendez was not the only female employee whom Ramirez sexually harassed.

That Ramirez’s harassment altered the conditions of Mendez’s employment was unquestionably clear to the court: His conduct caused her to experience feelings of anxiety and stress, which led to her having difficulties sleeping and recurring nightmares. After her complaints to Human Resources and the Plant Manager went unanswered, her feelings of depression, sadness, anxiety, stress, and humiliation continued. She had to force herself to go to work. Her feelings of depression became so intense that she attempted suicide in October 2007.

Supervisor Francisco Guerra sexually harassed Rocio Guevara and other female employees. Guerra placed harassing telephone calls to Guevara, solicited her to go on dates with him, made numerous comments about her body, told her he was in love with her, offered to promote her if she went out with him, and leered at her. With regard to the other female employees, Guerra identified which of them were good at oral sex, discussed sexual positions, propositioned female employees with offers of promotion in exchange for sex, threatened their continued employment unless they acquiesced to his advances, leered at their buttocks, subjected them to unwanted touching, and enlisted other female employees to solicit female employees on his behalf.

The court found the two supervisors’ harassing actions were imputable to the employer because it utterly failed to take appropriate remedial action to stop the harassment after numerous employees complained of the harassment. An employer is “strictly liable for the supervisor’s harassing behavior if it ‘culminates in a tangible employment action,’ but otherwise may escape liability if two conditions are met: (1) the employer exercised reasonable care to prevent and correct any harassing behavior, and (2) the plaintiff unreasonably failed to take advantage of the preventive or correction opportunities the employer offered. Boyer-Liberto.

Not only did Mendez and Rocia Guevara complain about the sexual harassment, but numerous other male and female employees complained as well. In April 2008, Mendez and several of her co-workers participated in a meeting to talk to management (Human Resources Manager Sanchez and Plant Manager Brooks) about Ramirez’s conduct. Ramirez was thereafter terminated. Sanchez and Brooks assured the employees that they should not worry about losing their jobs.

In order to establish a prima facie case of retaliation under Title VII, a plaintiff must demonstrate that: “(1) she engaged in a protected activity under Title VII; (2) defendants were aware of the activity; (3) plaintiff was subject to an adverse employment action; and (4) there was a causal nexus between plaintiff’s protected activity and the adverse employment action.” Burt v. Maple Knoll Communities, Inc. An “adverse employment action ‘constitutes a significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits.’” Id. (quoting Burlington Indus., Inc.).  The causal connection can be established when the employer treated the plaintiff differently than similarly-situated employees, or when the adverse action was taken shortly after the plaintiff’s exercise of protected rights. Id.

In June 2008, Mendez and all of her co-workers who participated in the April 2008 meeting were terminated. Another employee, Maria Coronado, complained to Human Resources about Ramirez sexually harassing her and other female employees. On one occasion in 2007, she saw Ramirez trying to grab and kiss Mendez against her will. Upon seeing Coronado, Ramirez released Mendez, but he thereafter began criticizing Coronado’s work. Coronado was terminated after she participated in the April 2008 meeting with management to discuss Ramirez’s conduct.

Mireya Torres, another Zoria Farms employee, witnessed Ramirez harassing Mendez. She was upset about Ramirez’ conduct towards Mendez and attempted to limit the time Mendez had to spend alone with him. She attended the April 2008 meeting with management to discuss Ramirez’ conduct. A few weeks later, she was terminated.

Bacilia Barajas also worked at Zoria Farms and witnessed Ramirez harassing Mendez. He encouraged Mendez to complain to Sanchez about Ramirez’s harassing conduct, which Mendez did. Nothing was done about Mendez’ situation, though. Barajas also saw Ramirez harassing other female employees. When Ramirez became aware that Barajas had witnessed his behavior, Ramirez became more aggressive toward Barajas and assigned him more strenuous work. Barajas attended the April 2008 meeting and was shortly thereafter terminated.

The court found that the EEOC had sufficiently pled the retaliation claims, as employees had reported Ramirez’ and Guerra’s conduct to Human Resources and the Plant Manager. See Brooks v. City of San Mateo (reporting sexual harassment to supervisor constitutes protected activity), and were shortly thereafter terminated.

What is most interesting about this case is the extent to which Z Foods went to eradicate not only the complaining employees, but also employees who were related to the complaining employees. Title VII allows for third-party retaliation claims for plaintiffs who are within the “zone of interests” sought to be protected by Title VII. See Thompson v. North Am. Stainless, L.P. Title VII’s “zone of interests” includes employees, as the purpose of Title VII is to protect employees from their employers’ unlawful actions. Id. In Thompson, the Supreme Court held that a third-party retaliation claim under Title VII was properly made by an employee who was terminated after his fiancée filed a claim of discrimination with the EEOC against the same employer. The Court reasoned that “Title VII’s antiretaliation provision prohibits any employer action that ‘well might have dissuaded a reasonable worker from making or supporting a charge of discrimination.’” Id. (quoting Burlington N. & Santa Fe Ry. Co. v. White). The Court in Thompson stated, “[w]e think it obvious that a reasonable worker might be dissuaded from engaging in protected activity if she knew that her fiancée would be fired.” Id. The Court declined to identify a fixed-class of relationships for which third-party reprisals are unlawful because “‘the significance of any given act of retaliation will often depend upon the particular circumstances.’” Id. (quoting Burlington).

In October 2008, Arnulfo Guevara reported Guerra’s sexual harassment of his sister Rocia Guevara to John Zoria, a manager with Z Foods. Zoria told Guevara to tell the women to find a way to submit a complaint against Guerra. Zoria then called Guevara back, asked him how long the harassment had been going on, then told Guevara not to say anything. In November 2008, Guevara was fired.
Carlos Garcia is Arnulfo Guevara’s brother-in-law, and also worked at Zoria Farms. In May 2009, the Assistant Plant Manager began asking Garcia questions about Guevara, and asked him whether he knew that Guevara had filed a charge of discrimination with the EEOC. In August 2009, Garcia was terminated. The court found that Garcia’s termination as a result of his association with Arnulfo Guevara was sufficiently pled to establish a third-party retaliation claim under Title VII and Thompson.

In awarding not only compensatory but also punitive damages against Z Foods, the court considered that it “did not have or did not enforce an anti-discrimination policy, failed to take action in response to numerous complaints, and permitted and ratified multiple violations of Title VII prohibitions on harassment and retaliation.” Z Foods. The court concluded that, “[a]s these intentional acts deprived these claimants of their civil rights, a punitive damages award of $200,000 per individual – or $1,800,000 total – is appropriate.” Because the predecessor employer, Zoria Farms, had already settled for $330,000, the court held Z Foods as the successor employer jointly liable for the balance of $1,470,000.

This case should send an unequivocal message to employers who insist on eradicating not only problematic complaining employees–but also their relatives– that such conduct is prohibited under Title VII and will result in significant damages awards against them.

This blog was written by Valerie Chastain. 

Tuesday, July 19, 2016

Knowing Where You Come From: Perception of National Origin Discrimination

It turns out it may be national origin discrimination even if the harassers don’t actually know where you’re from.

In June 2016, the EEOC issued Proposed Enforcement Guidance on National Origin Discrimination and opened the document for comments until July 5th.  Both the Proposed Guidance and the submitted comments are available online.

One point that drew considerable attention was the guidance on “Perception” discrimination, which the Proposed Guidance describes as follows:
Perception: Employment discrimination based on the belief that an individual (or her ancestors) is from one or more particular countries, or belongs to one or more particular national origin groups. For example, Title VII prohibits employment discrimination based on the perception that someone is from Middle Eastern countries or is of Arab ethnicity, regardless of how she identifies herself or whether she is, in fact, from one or more Middle Eastern countries or ethnically Arab.
Proposed Guidance, p. 6. In support, the Guidance cites a case of an Indian man inaccurately and derisively called at work an “Arab” or “Taliban.” Id. at note 26.  In that case, the Fifth Circuit reversed a Texas court’s summary judgment granted to the defendant because “none of the alleged harassment related to the fact that [the Appellant] is from India.”  E.E.O.C. v. WC&M Enterprises, Inc., 496 F.3d 393, 401 (5th Cir. 2007).  The Appeals Court, citing both the EEOC’s own guidelines and a number of district court cases, concluded that even erroneous conclusions as to a person’s place of origin can provide a basis for a national origin discrimination claim.  As one decision cited by the court said, “The plaintiff may still establish a cause of action under the Civil Rights Act despite the defendant’s mistaken belief that his ethnic characteristics are those of a person of Italian, rather than Greek, descent.”  Id.  (quoting Kanaji v. Children’s Hosp. of Philadelphia, 276 F. Supp.. 2d 399, 401-04 (E.D. Pa 2003) ).

In comments to the EEOC’s proposed guidelines, the Equal Employment Advisory Council (“a nationwide association of employers organized in 1976 to promote sound approaches to the elimination of employment discrimination”) objected that “perceived discrimination” was nowhere to be found by language or implication in Title VII.  EEAC comments, p. 4.  Quoting the language of the statute at 42 U.S.C. § 2000e-2(a), the EEAC declares that “Nowhere does the statute state explicitly, or even imply indirectly, that ‘perceived’ national origin is a legally-protected characteristic.”  Id.  While it is admittedly difficult to prove a negative, the EEAC does not even attempt to support the declaration that the implication of “perception discrimination” is lacking in the language of Title VII.

Moreover, the EEAC’s objections to the guidance on “perceived” national origin discrimination ignore last year’s Supreme Court decision in EEOC v. Abercrombie & Fitch Stores, Inc., 135 S.Ct. 2028 (2015), which placed on employers the burden of demonstrating that Title VII precludes the use of “perceived” discrimination.  In that 8-1 decision (Thomas dissented in part), the Court explained that, “It is significant that § 2000e–2(a)(1) does not impose a knowledge requirement.”  Id. at 2032.  Abercrombie’s defense that it had chosen not to hire a hijab-wearing applicant without knowing that  any religious significance attached to the hijab she wore was insufficient to defend against the EEOC’S claim of religion-based disparate treatment.  The Court made clear that Title VII’s prohibition of intentional discrimination “prohibits certain motives, regardless of the state of the actor’s knowledge.  Motive and knowledge are separate concepts.”  Id. at 2033.   Thus, an actor who intends to discriminate may do so even if his knowledge of the person’s protected category is imperfect.

This is not true, the Court reminded us in Abercrombie, in another civil rights law.  In the Americans with Disabilities Act, an employer’s knowledge of a worker’s disability is a prerequisite to a finding that the employer failed to accommodate that worker.  Id. at 2032-33 (“the Americans with Disabilities Act of 1990 defines discrimination to include an employer's failure to make “reasonable accommodations to the known physical or mental limitations” of an applicant. § 12112(b)(5)(A) (emphasis added)”).  However, the ADA expressly provides for disparate treatment claims based on a claim that the employee was “perceived” to be disabled, thus permitting a finding of intentional discrimination even when the employer’s conduct is based on faulty – and even incorrect – information.

Nevertheless, the Court’s holding in Abercrombie makes clear that the EEOC’s guidance on perceived national origin discrimination is sound.  Intentional discrimination requires intent, but not knowledge. The flawed perception of where a person is from or his or her ethnicity is sufficient to support a claim for discrimination.  As in many other areas of the law, ignorance is no defense.

Written by Mary Kuntz

Tuesday, July 12, 2016

Two appellate courts look at hostile work environments from the victim’s point of view

Two federal appellate decisions shed helpful light on claims arising from hostile work environments (HWEs).

On July 6, 2016, the Fourth Circuit issued its decision in Guessous v. Fairview Properties Investments, Inc. In reversing summary judgment for the defendant on all claims, the Guessous Court agreed with an amicus brief filed by the Equal Employment Opportunity Commission (EEOC).

Monica Guessous (pictured, in the middle position; photo courtesy of Ms. Guessous) is an Arab Muslim woman from Morocco. She was an assistant property manager and bookkeeper for FPI from 2007-2013. In 2008, Greg Washenko (a white Christian American) became FPI’s new Chief Financial Officer. During Washenko’s initial “meet and greet” session, he told Guessous that he had previously worked with “a bunch of Middle Easterners and they are a bunch of crooks, [who] will stop at nothing to screw you,” and he thereafter subjected Guessous to close supervision. Guessous testified that Washenko’s behavior upset her and made her feel that she did not belong. “He made me feel like an outsider,” she testified. “He put this disease in me, where I was more aware that I was a foreigner, that I was different.” Guessous frequently left the office to cry in her car or the restroom. She testified that the harassment affected her concentration and her ability to do her job.)

On December 6, 2012, Guessous confronted Washenko about his treatment of her. She told him that she felt targeted by him because she was an Arab Muslim woman from Morocco. She said, “I’m a new mom. I can’t do this. My work environment needs to be healthy. It has not been healthy. Please let’s put this behind us.” Washenko stated that he decided to fire Guessous around the time of this conversation. Washenko informed Guessous of her termination in March 2013.

The district court granted summary judgment and Guessous appealed. In its amicus brief, the EEOC urged reversal. The EEOC argued that the lower court failed to consider the “totality of the circumstances,” citing to Conner v. Schrader-Bridgeport Int’l, Inc. and Harris v. Forklift Sys., Inc. The hostility of Guessous’s working environment must be viewed “from the perspective of a reasonable person in her position.” The Commission’s brief continues:
Although Washenko’s comments were less frequent than those found to constitute a hostile work environment in some other cases, see, e.g., Amirmokri v. Baltimore Gas & Elec. Co., 60 F.3d 1126 (4th Cir. 1995), each comment carried a lasting impact. Guessous felt profoundly demeaned, and Washenko reinforced this feeling by obsessively checking up on her (and no one else)[.]
The Court of Appeals said that Washenko’s first comment to Guessous “set the stage for Guessous’ and Washenko’s working relationship from that point forward.” This holding makes clear that courts must consider how one hostile comment can affect the employee’s perception of other hostile comments and actions. Even though the other hostile actions might not be explicitly discriminatory, they can add to the material impact of another hostile action that is more clearly discriminatory. The Commission argued, “The question at the summary judgment stage is not whether a jury is sure to find a verdict for the plaintiff; the question is whether a reasonable jury could rationally so find.”

The appellate court agreed. The Court held that summary judgment was improper because the trial judge had limited his consideration to one comment (about “camel people”) that it considered overtly racial. The Court added that Washenko’s first comment to Guessous, “set the stage for Guessous’ and Washenko’s working relationship from that point forward.” “The manner in which Washenko delivered this statement left Guessous feeling less than human, a hallmark of racially insensitive conduct.” This is not a determination that is suitable for summary judgment and the district court erred when it “put itself in the place of the jury.”

As to whether the hostility was severe or pervasive, “the district court erred by failing to take into account the totality of the circumstances[.]” A trial court must consider “intimidating and intrusive management,” whether the victim “felt demeaned” and “the underlying assumption that she was not to be trusted.” “The evidence suggests Washenko thought Guessous was untrustworthy—and intended to make that clear to her—from the moment she disclosed her origins to him at their initial meeting.”

Courts have long held that “whether harassment was sufficiently severe or pervasive is quintessentially a question of fact,” and here Guessous has presented diverse evidence sufficient to create a material dispute as to the severity of the unwelcome conduct.

The Fourth Circuit also held that trial courts were required to consider whether the environment “unreasonably interfere[d] with [Guessous’] work performance”:
[Guessous] often left the office to cry and that she was concerned about how the stress from her work environment might affect her pregnancy—that Guessous’ “psychological well-being” was at risk, which “is, of course, relevant to determining whether the plaintiff actually found the environment abusive.”
In this analysis of the HWE claim, the issue is not whether the employee’s perception was objectively reasonable, but rather whether the employee “actually found the environment abusive.” This is a point that is often overlooked in HWE claims.

On February 10, 2016, the Sixth Circuit issued its decision in Smith v. Rock-Tenn Services, Inc., a same-sex harassment case. The Smith Court noted that:
The Supreme Court has construed Title VII to allow hostile work environment claims where the harasser and the victim are of the same sex. Oncale v. Sundowner Offshore Servs., Inc., 523 U.S. 75, 82, (1998).
Quoting Oncale, the Court continued:
The real social impact of workplace behavior often depends on a constellation of surrounding circumstances, expectations, and relationships which are not fully captured by a simple recitation of the words used or the physical acts performed. Common sense, and an appropriate sensitivity to social context, will enable courts and juries to distinguish between simple teasing or roughhousing among members of the same sex, and conduct which a reasonable person in the plaintiff’s position would find severely hostile or abusive.
Following Oncale, the Court held that a plaintiff alleging same-sex harassment in hostile work environment cases can establish the inference of discrimination based on sex in three ways:
(1) where the harasser making sexual advances is acting out of sexual desire; (2) where the harasser is motivated by general hostility to the presence of men [or women] in the workplace; and (3) where the plaintiff offers ‘direct comparative evidence about how the alleged harasser treated members of both sexes in a mixed-sex workplace.’
The Court also rejected the employer’s contention that the harassment was “horseplay” and not harassment, explaining that the issue is one for the trier of fact after hearing the evidence. This means that summary judgment is unsuitable in making this type of determination.

As to the severity or pervasiveness of the harassment, the Smith Court explained:
Like several of our fellow circuits, we consider whether harassment was so severe and pervasive as to constitute a hostile work environment to be “quintessentially a question of fact.” Jordan v. City of Cleveland, 464 F.3d 584, 597 (6th Cir. 2006); see also Mosby–Grant v. City of Hagerstown, 630 F.3d 326, 335 (4th Cir. 2010); E.E.O.C. v. PVNF, L.L.C., 487 F.3d 790, 798 (10th Cir. 2007).
(The Smith Court erred in referring to “severe and pervasive” harassment. Under Harris v. Forklift Sys., the legal standard is whether the harassment is severe or pervasive.) Again, this means that courts should not dismiss HWE claims when there is evidence that would permit a jury to find in favor of the victim.

By Richard Renner

Wednesday, July 6, 2016

Supreme Court decision clarifies constructive discharge claims

On May 23, 2016, the Supreme Court resolved an important split among the circuit courts of appeals regarding when the clock for filing a constructive discharge claim begins to run. In Green v. Brennan, the Supreme Court held that the time for employees to file a constructive discharge claim runs from the date they give notice of their resignation, not the date the employer took the action causing the resignation.

The employee, Marvin Green, is a black man who had worked for the Postal Service for 35 years. In 2008, he was the Postmaster for Englewood, Colorado, a suburb of Denver. He applied for a promotion to the vacant Postmaster position in nearby Boulder—a bigger city—but was not selected. Green told his employer that he believed he was denied the promotion because of his race. Subsequently, Green’s relations with his supervisors “crumbled.” Two supervisors accused him of intentionally delaying the mail—a criminal offense. They told Green that the Postal Inspector was investigating the charge and that agents would soon interview him as part of the investigation. After Green met with the agents, his supervisors placed him on an off-duty status.

The Postal Inspector reported to Green’s supervisors that no further investigation was warranted. However, Green’s supervisors continued to tell him that “the OIG [wa]s all over this” and that the “criminal” charge “could be a life changer.” On December 16, 2009, Green and the Postal Service came to an agreement. The Postal Service promised not to pursue criminal charges in exchange for Green’s promise to leave his post in Englewood in one of two ways: effective March 31, 2010, Green could retire or report for duty in Wamsutter, Wyoming—population 451—at a much lower salary. Green chose to retire and submitted his resignation on February 9, 2010 (effective March 31st).

On March 22, forty-one (41) days after submitting his resignation, Green contacted an EEO counselor to report an unlawful constructive discharge. He contended that his supervisors threatened criminal charges and negotiated the agreement in retaliation for his original complaint. Green alleged that the Postal Service’s actions left him no choice but to resign, in violation of Title VII.

The federal district court in Colorado dismissed the case because Green’s March 22nd EEO complaint was filed 96 days after the December 16, 2009, resignation agreement. The district court held that Green missed the 45-day time limit set by an EEOC regulation, 29 CFR §1614.105(a)(1), which states: “[a]n aggrieved person must initiate contact with a Counselor within 45 days of the date of the matter alleged to be discriminatory or, in the case of personnel action, within 45 days of the effective date of the action.” The Court of Appeals for the Tenth Circuit affirmed but noted that, in the Second, Fourth, Eighth and Ninth Circuits, the time for filing a constructive discharge claim does not start to run until the employee actually resigns. The Supreme Court took the case to resolve the conflict.

Writing for the majority, including five other justices, Justice Sotomayor noted that the regulation only speaks of the “matter alleged to be discriminatory.” This language was not helpful because “the matter” could refer to the employer’s hostile actions or “all of the allegations underlying a claim of discrimination, including the employee’s resignation[.]” The Court did not address whether the constructive discharge was a “personnel action” because Green’s lawyers did not claim that it was. Perhaps some other plaintiff might later raise and preserve a claim based on “the effective date” of a “personnel action.”

The Court next looked to “the standard rule” for limitations periods. This rule says that a limitations period begins when the plaintiff has “a complete and present action.” A claim cannot be “complete and present” unless and until the plaintiff can file it. Although the Court did not use the word “ripe,” it well describes a claim that is fully ready to be filed. The Court held that a constructive discharge claim is not “complete and present” until an employee resigns; therefore, the clock cannot begin to run until the actual resignation.

The Court explained that its holding was consistent with the remedial purposes of the Civil Rights Act. “Starting the limitations clock ticking before a plaintiff can actually sue for constructive discharge serves little purpose in furthering the goals of a limitations period—and it actively negates Title VII’s remedial structure,” wrote Justice Sotomayor. She added that the Court had previously recognized “that the limitations perio[d] should not commence to run so soon that it becomes difficult for a layman to invoke the protection of the civil rights statutes.” Quoting Delaware State College v. Ricks, the Court concluded that nothing in the regulations suggests it intended to require a layperson to follow a difficult two-step process to preserve a constructive discharge claim.

In his dissent, Justice Thomas expressed his belief that “only an employer’s actions may constitute a ‘matter alleged to be discriminatory.’” Justice Thomas cited National Railroad Passenger Corporation v. Morgan for the proposition that discrete adverse actions occurring outside the filing period were not actionable, even if they are connected to other acts within the filing period. The majority opinion rejected this interpretation by making clear that even discrete and time-barred adverse actions “could still be used as part of the basis for a hostile-work-environment claim, so long as one other act that was part of that same hostile-work-environment claim occurred within the limitations period.” Justice Thomas’ dissent thus prompted the Court to make crystal clear that even discrete adverse actions can be considered part of a hostile work environment claim.

The majority also rejected the dissent’s argument that victims of discrimination would manipulate the new rule by delaying their resignations to extend the filing period. To the contrary, the Court argued that any federal employee who is aware of the Court’s rule could easily meet it by resigning and promptly sending an email to the Agency EEO office to commence the complaint process. Moreover, a victim of a hostile work environment would hardly wait any longer in such conditions, wrote the majority.

Justice Alito would not go as far as Justice Thomas. He filed a concurring opinion arguing that the time limit should start to run from the resignation only if the employee can prove that the employer intended to cause the employee to quit. This is a high hurdle for employees to meet and addresses discrimination claims from an employer point of view. From this viewpoint, if the employer intended to cause the resignation, then it is fair to the employer to start the clock with that resignation. The majority noted that the law has never required constructive discharge claimants to prove that the employer intended to force the employee to quit. In Pennsylvania State Police v. Suders, the Court held that when the workplace becomes “so intolerable that a reasonable person would resign, we treat the employee’s resignation as though the employer actually fired him.” Thus, the prevailing rule is that constructive discharge claims are assessed from an employee’s point-of-view, not an employer’s.

Green’s lawyers previously argued that the time limit should start to run from the date Green provided notice of his resignation. The parties disagreed, however, on the date the resignation was submitted: December 2009 or February 2010. The Court declined to decide this factual question and returned the case to the Tenth Circuit for further proceedings.

The intricacies of this case show the real value of having experienced employment lawyers from the very beginning of any legal claim. With legal advice from experienced lawyers, employees can identify and preserve their best claims. To speak with an experienced employment lawyer about your case, contact Kalijarvi, Chuzi, Newman & Fitch.

By Richard Renner and Alex Kutrolli

Wednesday, June 22, 2016

Fathers Need More Than A Day

In the wake of Father’s Day, it seems apt to reflect on the state of paid paternity leave in the United States and the resounding negative effects that result from having piecemeal policies—where policy exists at all.

It is the Equal Employment Opportunity Commission’s position that leave related to pregnancy, childbirth, and/or related medical conditions can be limited to women affected by those conditions.  “However, parental leave must be provided to similarly situated men and women on the same terms.”  Id.  For example, if an employer extends leave to new mothers beyond providing medical leave for women with pregnancy-related conditions (e.g. to provide mothers with time to bond with and/or care for their newborns), the employer cannot lawfully fail to provide an equivalent amount of leave to new fathers for the same purpose.  Id.  “Although Title VII does not require an employer to provide pregnancy-related or child care leave if it provides no leave for other temporary illness or family obligations,” the Family and Medical Leave Act (FMLA) requires covered employers to provide such leave.  Id.

Under federal law—through the FMLA—fathers have access to 12 weeks of unpaid leave.  Because of restrictions, however, (e.g., businesses that have fewer than 50 employees are exempt from the rule), not all working fathers are eligible.  Moreover, many parents cannot afford to take unpaid time off work.1

“[A]t least 66 countries guarantee a father’s right to paid paternity leave – 31 offer 14 weeks or more.”  Id.  The U.S. is the only industrialized nation that does not require any paid time off for new parents.  Moreover, the policies that do exist “are all over the place."2

In the past year, there has been an unprecedented rate of expansion in the number of employers either introducing or expanding paid leave options for new fathers:

6 weeks, up from 0
Credit Suisse
20 weeks, up from 12
12 weeks, up from 0
26 weeks during the first two years, up from 12 weeks (primary caregivers) or 5 weeks (secondary caregivers)
16 weeks, up from 6
4 months worldwide, up from 4 weeks
6 weeks, up from 2
2 weeks, up from 0
Honest Company
16 weeks, up from 10
12 weeks, up from 4
Unlimited during first year for salaried workers; 12 to 16 weeks for hourly workers
12 weeks, up from 6
8 weeks, up from 0 (in all states but California)
6 months (prior policy not specified)
20 weeks, up from 10
Winston & Strawn LLP
20 weeks, up from 10 (for associates and of counsel attorneys)
8 weeks, up from 0

Paid time off for fathers, however, is not commonplace.  Fewer than 20% of U.S. employers offer paid paternity leave.  Id.  In an online poll of 1,000 employed adults across the U.S. with access to employer benefits:  more than 1/3 thought taking leave would “jeopardize their position” at work; more than 1/2 thought spending time with their newborn would be perceived as a lack of commitment; and 41% feared losing opportunities on assignments at work.

Family leave has often been framed as a “women’s issue”, an assumption that fuels workplace discrimination against both genders:  “Mothers are seen as caretakers who prioritize home life, and fathers who take more than a week or two off are perceived as less serious about their careers.”   In fact, economists attribute the gender wage gap and lack of women in top leadership positions in part to this parenting imbalance:  fatherhood is associated with a 6% wage bonus, while motherhood carries a 4% wage penalty.  Id.

This perception, however, may start to change as more employers begin offering paid paternity leave, “in large part because companies are in an arms race with competitors to attract Millennials and keep their best talent on board.”  For example, one of the most publicized expansions of paid paternity leave came at Facebook, which now allows men and women to take four months of paid parental leave following the birth of a baby (up from 4 weeks previously). Notably, Facebook CEO Mark Zuckerberg announced on Facebook that he would be taking two months of paternity leave when his daughter was born—noting that “[s]tudies show that when working parents take time to be with their newborns, outcomes are better for the children and families.”

Additionally, men might have less to worry about than they think.  Research has found that having a child improves men’s careers, their earnings increasing by more than 6% for each child they have.  While part of that narrative stems from fathers being seen as responsible (while moms are viewed as distracted), it also results from fathers not taking time off to have kids.

Despite the numerous potential benefits of paternity leave3, the Department of Labor reports that “70 percent of men taking leave for parental reasons took 10 days or less.”   A 2012 Department of Labor study found that fewer employers offer paid parental leave for men than women:  Only 13% of men who took parental leave received pay compared with 21% of women.  Id.  Only California, New Jersey, Rhode Island, and New York4 provide paid family leave to both parents on an equal basis.5  Id.  Encouragingly, “[t]here are ongoing efforts to do the same at the federal level and in at least 15 other states.”

“California’s paid family leave program shows how broad and equal access to paid parental leave for mothers and fathers can substantially increase the number of fathers taking leave.  This program more than doubled the odds that men would take parental leave after the birth of a child, and the proportion of men filing claims for bonding leave increased from 17% in the first year to 26% after five years.”

Although “parental leave policies are designed to level the playing field between parents, they only work as intended if men take advantage of the time they’re given to devote to childcare.”  Cognizant of the fact that having access to paid paternity leave is not the same as taking it, “[s]ome European countries and the Canadian providence of Quebec have begun offering up to several months of paid parental leave specifically designated for fathers, instead of providing couples with shared parental leave to divide as they choose.”  Fathers with access to specifically-designated paid parental leave take paternity leave at higher rates than those where leave is discretionary for either parents—especially when that leave also has higher levels of income replacement.

Beyond the problems with the U.S. not requiring paid leave for new parents, the notion that a child has one parent who is a primary caregiver and another who is secondary is “startlingly outdated.”   About 60 percent of families with children at home have two working parents who share caregiving responsibilities.  Workplaces should be doing what they can to encourage an even distribution of those responsibilities, not encoding the idea that one parent will do more.”  Id.  Tellingly, 78% of Millennials are part of a dual-career couple (compared to 47% of Baby Boomers).  “Unless and until men and women share the responsibilities of parenting equally, gender parity in the labor market will remain out of reach.”

Ensuring that both parents are provided some form of paid paternity leave is something that needs to be stressed as a culture.  Certainly, fathers—and the families that they share in raising—need more than a day.

Written by:  Aaron Herreras

[1] “Nearly half of workers surveyed in 2012 who needed leave but didn’t take it reported not taking leave for economic reasons.  More than three in ten individuals who received partial or no pay reported cutting their leave short of what was needed, and more than four in ten would have taken longer leaves if they had received more pay.”  Dep’t of Labor, DOL Policy Brief:  Paternity Leave, Why Parental Leave For Fathers Is So Important For Working Families, June 18, 2015, at 3.
[2] Employers vary in the amount of time offered.  “But even within a company, a policy may not apply equally to all fathers at a firm.  Sometimes hourly employees aren’t included or their benefits are less generous than those of salaried workers.”  Jeanne Sahadi, Reinventing Work:  Dads get more of a (paid) break at work, CNN Money, June 17, 2016.

[3] A more equal division of labor in terms of parenting and childcare; more equal sharing of domestic labor, including housework; less stress on the family; closer father-infant bonding—leading to better developmental outcomes for their children (including fewer behavioral problems and improved cognitive and mental health outcomes), id. at 2; and higher pay for mothers (according to a Swedish study, future income for new mothers rises by 7% on average for every month of paternity leave taken by the father).  Richard V. Reeves, Give fathers more than one day:  The case for paternity leave, Brookings, June 17, 2016.

[4] The new legislation passed in early April 2016.  “When fully implemented, the state’s program will compensate parents for up to 12 weeks of leave.”  Camila Domonoske, A Big Week For Parents:  New York State, San Francisco Establish Paid-Leave Laws, NPR, April 6, 2016.

[5] “California covers 55 percent of an employee’s wages for up to six weeks; New Jersey, up to about 67% for six weeks; Rhode Island covers a portion of wages for up to four weeks, based on the employee’s income.  Each state’s program is funded through an employee payroll deduction, and payouts are capped.”  Id.  Although Washington State passed a paid-parental-leave law 10 years ago, it has not gone into effect due to lack of funding.  Id.

Tuesday, June 14, 2016

A Win for Whistleblowers in the Fourth Circuit

Recently, the U.S. Court of Appeals for the Fourth Circuit affirmed the Department of Labor’s Decision in Deltek, Inc. v. Department of Labor, which found that Deltek retaliated against its former employee when she blew the whistle on what she perceived to be improper accounting practices.

Deltek, a global provider of enterprise software and information solutions, hired Dinah Gunther as a Financial Analyst in October 2008. She worked in the Information Technology (IT) department, which mostly dealt with the company’s billing disputes with Verizon, one of its vendors for IT services. By spring 2009, Gunther became convinced that Deltek was engaging in gross fraud concerning its disputes with Verizon. She reported her concerns to her management, and almost immediately faced hostility and worsening performance reviews. As a result, on April 20, 2009, Gunther elevated her concerns to Deltek’s General Counsel, Deltek’s Audit Committee, and the United States Securities and Exchange Commission (SEC).

The increasing hostility took a toll on Gunther’s health, and in May 2009, Gunther was placed on paid leave, with the condition that she could return to work at any time as long as she provided 24-hour notice. Nevertheless, the employment relationship between Gunther and Deltek continued to deteriorate. In October 2009, Gunther discovered that her latest check from Deltek was reversed, and that she was being placed on COBRA (an obvious sign that her employer had terminated her health benefits). She promptly notified Deltek that she was returning to work. Unsurprisingly, Deltek seized upon Gunther’s first and only day in the office to accuse her of being “confrontational”, “disruptive”, and “demanding” in a 15-20 minute meeting, and promptly fired her.

Gunther’s case came before a Department of Labor Administrative Law Judge (ALJ), who ultimately presided over an exhaustive 12-day hearing on whether Deltek retaliated against Gunther in violation of the Sarbanes-Oxley Act. First, the ALJ found that Gunther successfully established a prima facie case of whistleblower retaliation, because:
  1. She engaged in protected whistleblower activity;
  2. Deltek was aware of the activity;
  3. Deltek subjected her to an unfavorable personnel action; and
  4. Her protected activity was a “contributing factor” to the unfavorable personnel action.
Thus, under Sarbanes-Oxley, Deltek could escape liability only if it produced “clear and convincing” evidence that it would have taken the same unfavorable personnel action in the absence of Gunther’s protected whistleblower activity. Unbeknownst to Deltek, Gunther had secretly recorded the meeting upon which Deltek premised her removal—and through her careful review of the recording, the ALJ determined that Gunther was “[a]t all times . . . calm, quiet, and (although she repeated herself) polite.” Taking into account the temporal proximity between Gunther’s whistleblowing and the removal, as well as Deltek’s inability to substantiate its allegations against Gunther, the ALJ found that Deltek did not meet its high burden. She awarded Gunther back pay, back benefits, and approximately four years of front pay, for a total award in excess of $300,000. The Fourth Circuit affirmed.

The Sarbanes-Oxley Act provides valuable protection for whistleblowers. Originally passed in 2002 as a response to the catastrophic collapse of energy giant Enron, Sarbanes-Oxley’s reach was extended in 2014 by the Supreme Court in Lawson v. FMR LLC. Sarbanes-Oxley now covers employees of privately owned contractors who work for publicly traded companies. The Act also protects employees who report a wide range of fraud, non-compliance, and cover-up issues. The time limit to file Sarbanes-Oxley retaliation complaints is 180 days. To learn more about whistleblower rights, please contact Kalijarvi, Chuzi, Newman & Fitch, P.C.

Written by Nina Ren.