Thursday, October 28, 2010

In the "Long Overdue" Department: Scrutiny for Alaskan Native Corporations

Last month, the Washington Post ran a series of articles about Alaskan Native Corporations. ANCs are the progeny of the Alaska Native Claims Settlement Act of 1971, which Congress passed to settle any and all future lawsuits by indigenous Alaskan tribespeople against the United States. Under the ANCSA, Alaska was divided into regions represented by native-owned corporations which were given preferences for federal contracting. All Alaskan natives were entitled to shares in their regional corporations as a birthright. Ownership of these shares entitles Alaskan natives to payments based on the earnings of the regional corporations. These payments are intended to help raise the standard of living in the undeveloped Alaskan wilderness, where many native people continue to live close to the land and sea but also in shocking poverty. On its face, this would all seem to be a good thing.

Unfortunately, as the Post articles point out, problems have developed. To summarize, many ANCs have developed into little more than fronts for regular, non-native federal contractors who actually perform the work which the government is trying to give to ANCs. Certain ANCs or their shell-game subsidiaries are awarded no-bid contracts by the Pentagon and other federal agencies in a hurry, but the work then gets sub-contracted to non-native companies to perform, and the ANCs simply take a cut of the proceeds. Many of the executives running ANCs are not Alaskan natives, and relatively little of the profits from the ANCs’ huge federal contracts is actually being sent back to Alaska in the form of dividend payments. Needless to say, no-bid contracts tend to cost the taxpayer a lot more than competitive ones. Thus, the beneficial purposes of the ANCs have been subverted, and unnecessary extra billions of federal tax dollars have been going to contractors who are not Alaskan Natives or working for their benefit.

The Post focused on the lack of regulatory or financial scrutiny for ANCs, as well as the continuing poverty of many Alaskan natives. However, there is another odious aspect of ANCs which doesn't get much coverage: they are exempt from Title VII, the federal law which prohibits employment discrimination based on race, color, gender, religion, and national origin. Apparently Congress thought the best way to allow ANCs to have a hiring preference for Alaska natives was to give them a get-out-of-jail-free card for any Title VII lawsuits. Why didn’t Congress simply write a native hiring preference into the ANCSA, instead of writing ANCs out of Title VII? It must have made sense at the time. Of course, in light of the contracting shenanigans the Post reported, the exemption means that companies which have done little or nothing to help native Alaskans are nevertheless getting the benefit of the Title VII exemption and are therefore free to discriminate against their employees based on sex, religion, color, and national origin - while raking in billions of taxpayer dollars pursuant to no-bid federal contracts.

This deplorable state of affairs came to our attention a few years ago when a client of ours filed a private-sector charge with the EEOC alleging that she had been terminated based on her pregnancy. She was working under a contract with the Army. Her employer of record was an ANC. The EEOC determined it did not have jurisdiction over her complaint against the ANC, and indeed, there appeared at first glance to be no way she could sue, though pregnancy discrimination has rightly been illegal for decades. She would have been left with no remedy except that, fortunately, the EEOC eventually also agreed with our arguments that the Army had exercised sufficient control over her daily work that it could also be regarded as her employer, along with the ANC, under “joint-employer” theory. Our client was therefore eligible to have her complaint of pregnancy discrimination proceed using the federal sector EEO process, with the Army being named as an employer for purposes of Title VII.

It seems the federal courts are starting to catch on, too: a District Court in Delaware recently concluded that, while ANCs are indeed exempt from Title VII, they are not exempt from the Family and Medical Leave Act or from Title I of the Americans With Disabilities Act. The Court explained:
Turning to the ADA, its broad language and legislative history emphasize its sweeping authority and national scope. Title I of the ADA lacks an ANC exemption; moreover, case law circumscribes its tribal exemption to tribal organizations functioning in a governmental role. While the boundary of the ADA's tribal exemption is imprecise, it is clear that for-profit tribal corporations operating in the ordinary course of interstate commerce fall outside that boundary. . .

The Court rejects Defendants' contention that the Title VII exemption for ANCs also bars employer liability under the FMLA. As the Court stated earlier, supra, the language and legislative history of ANCSA support a narrow construction of the ANC exemption, limiting it to Title VII claims. Further, compared to Title VII and the ADA, the FMLA defines "employer" in broader terms and provides no exemption for ANCs, or even Native American tribes. Additionally, unlike Title VII and the ADA, Title VII and the FMLA do not share statutory language, procedures, or remedies that would support an exemption by inference. Moreover, there is almost no overlap in coverage between the FMLA and Title VII. In the end, there is no substantial evidence suggesting a ANC exemption from Title VII claims as provided for in the ANCSA is somehow expanded to include the FMLA. Therefore, because of the narrow purpose for the ANC exemption—to protect tribal self-governance and to permit an Alaskan Native employment preference—and the FMLA expansive scope, and their divergent purposes, the Court concludes that Alaskan Native Corporations are subject to employer obligations under the Family Medical Leave Act.
Pearson v. Chugach Government Services, Inc., 669 F. Supp.2d 467, 476-77 (D.Del.2009). The Court in Pearson cited a 2007 decision by the U.S. Fourth Circuit which concluded that an ANC employee was not barred from suing his employer under 42 U.S.C. § 1981 (part of the Civil Rights Act of 1866) even though that claim was based on the same facts underlying a Title VII claim, which was barred. See Aleman v. Chugach Support Services, Inc., 485 F.3d 206 (4th Cir.2007).

Since ANCs are not tribal governments - and, per the Post, many barely involve Alaskan natives at this point - the courts act well within reason and the long-standing American public policy against employment discrimination when they construe the Title VII exemption narrowly when deciding whether ANC employees alleging discrimination are even allowed through the courthouse doors.

Tuesday, October 12, 2010

Supreme Court Preview: Kasten v. Saint-Gobain Performance Plastics

By now, Supreme Court watchers who pay attention to employment retaliation cases should be very familiar with Professor Eric Schnapper of the University of Washington School of Law. Professor Schnapper has served as co-counsel in a number of recent decisions favorable to employees. In particular, employees represented by teams which have included Professor Schnapper have won some important victories for employees who suffer reprisal for exercising their rights under federal statutes intended to protect workers.

The best known is probably Burlington Northern & Santa Fe Railway Co. v. White, a 2006 decision in which the Supreme Court held that the definition of retaliation includes employer actions which would chill or deter a reasonable employee from engaging in protected activity. Thus, an employer may be found to have retaliated even if it has not terminated, demoted or otherwise taken a "tangible employment action" against an employee. Also, even if an employee is eventually made whole for an adverse employer action intended to punish him or her for engaging in protected activity, the employee is still aggrieved by the fact that s/he was subjected to the treatment at all, and may seeks damages therefor. Thus, a female track worker employed by Burlington Northern was able to show that reprisal occurred when she was

(1) reassigned to a dirtier and more difficult set of duties after she complained of sexual harassment, and

(2) suspended for 37 days without pay after she filed an EEO charge about the reassignment.

The employer had argued that because the employee's change in duties did not result in any lowering of pay, it could not be regarded as the kind of “adverse action” barred by the statute. The employer also argued that because Ms. White eventually received back-pay for the 37-day suspension, she could not claim to have been harmed by the suspension. Wrong, and wrong.

In Crawford v. Metropolitan Government of Nashville and Davidson County, Tennessee, decided in 2008, the Supreme Court found that Title VII’s prohibition on retaliation against employees who report race or gender discrimination applies to employees who speak out about discrimination only after being asked about it during an investigation. Ms. Crawford was terminated after she was asked about a manager’s harassing activity in an investigation triggered by another employee’s complaint. The employer argued that because Ms. Crawford did not herself file a complaint, but instead only reported the harassing manager’s repulsive conduct after being asked about it, she wasn’t covered by Title VII. Wrong, thank goodness.

Also in 2008, in CBOCS West v. Humphries, where Professor Schnapper was part of the team representing the respondent, the Supreme Court found that 42 U.S.C. §1981, enacted shortly after the Civil War to help codify the end of slavery, permits retaliation complaints. Section 1981 states that all persons within the jurisdiction of the United States “shall have the same right in every State and territory to make and enforce contracts . . . as is enjoyed by white citizens.” Mr. Humphries was terminated from his assistant manager position at a Cracker Barrel after complaining to managers that another assistant manager had been terminated based on race. The lower court concluded that Mr. Humphries had the right to sue under §1981 because he alleged that his termination was motivated by his complaints about the other employee’s rights being violated. CBOCS WEST, which owned the Cracker Barrel in question, argued that §1981 does not permit retaliation claims because retaliation is not expressly mentioned in the text of the statute. Wrong! The Supreme Court relied on an earlier decision which found that 42 U.S.C. §1982, which bans housing discrimination and was enacted at the same time as §1981, also barred retaliation against those who advocate the rights of groups protected by that prohibition. The Court further found that §1981 and §1982 should be interpreted similarly. Finally, the Court noted that the Civil Rights Act of §1991 overruled a 1989 case where the Court had concluded that §1981 does not include retaliation claims. For all these reasons, the Court concluded that Mr. Humphries did have the right to sue under §1981, and sent the case back for trial.

Well, Professor Schnapper is back, this time with a case involving retaliation under the Fair Labor Standards Act. That’s the federal statute which, among other things, requires employers to pay their employees at least a minimum wage, to pay wages on time, to pay overtime for non-exempt workers when they work past their regular hours, and other major aspects of a civilized workplace. The FLSA also permits employees who suffer retaliation after they engage in protected activity under the Act to file suit. In Kasten v. Saint-Gobain Performance Plastics, the question presented is whether the law applies to an employee who was fired after verbally complaining that his employer was violating the FLSA by requiring employees to don special protective clothing without paying them for the time that took. (The FLSA requires employer to compensate employees for the time it takes to “don and doff” mandatory uniforms or safety equipment.) Do the employee’s verbal-only complaints render him “protected” within the meaning of the Act? The employer argues that because Mr. Kasten did not file a written complaint before his termination, he cannot be considered to have “filed” an FLSA complaint at all and thus has no right to claim retaliation under that statute. Both the EEOC and the Department of Labor, which enforces the FLSA, support Mr. Kasten’s argument that the FLSA’s language about “filing” a complaint includes verbal complaints like the ones Mr. Kasten made. In his brief, Mr. Kasten points to numerous other statutes where the Court has treated retaliation as applying both to written and verbal complaints, even where it is not expressly stated in the laws.

Given the Court’s recent track record of interpreting the law on retaliation broadly, Mr. Kasten has reason to be optimistic. Let’s hope Professor Schnapper’s winning streak continues.

Monday, October 4, 2010

Avoiding the Matrix: NASA v. Nelson

On October 5, 2010, the U.S. Supreme Court will hear oral arguments in a very interesting case concerning the right - or, more likely, the lack thereof - of federal contractors to informational privacy. The U.S. Court of Appeals for the Ninth Circuit, based in San Francisco, granted a preliminary injunction against a new NASA requirement, starting in 2007, that employees at California Institute of Technology’s Jet Propulsion Laboratory, complete questionnaires for a NACI review of their suitability to have long-term access to federal facilities. NASA has a contract with Caltech and owns the JPL, but the people who work there are employees of Caltech, not NASA. The NACI questionnaire is part of a process whereby the government reviews employee-submitted information and solicits information about the employee from former landlords, employers, neighbors and other references. JPL employees were told that their continued access to the JPL facility required them to complete the NACI questionnaire, and that a failure to complete it would constitute a resignation. The employees, many of whom are scientists who have worked at JPL for decades, asked how exactly NASA would use the information gathered in the NACI process to assess their “suitability.” NASA management responded by posting on its website a “suitability matrix” which listed various factors which would be used to determine suitability. The factors which NASA said it would treat as suitability criteria included:

carnal knowledge, sodomy, indecent exposure, voyeurism, obscene telephone calls, indecent proposals, incest, bestiality, homosexuality, cohabitation, adultery, illegitimate children, and mental, emotional, psychological, or psychiatric issues.


Yikes! Should being gay really affect your access to the building where your job is located? How about having children out of wedlock? Or shacking up before you get married? Or seeking mental health care for depression or other common psychiatric conditions?

A group of 28 JPL employees sued, arguing that requiring them to complete the NACI questionnaire violated their right to informational privacy - the right not to have to disclose certain private information (about medical treatment or sexual relationships) to the government. The district court denied their request for an injunction to protect them from having to complete the questionnaires until the case was resolved, but on appeal the Ninth Circuit reversed and granted an injunction. Thus, so far JPL employees have been able to avoid submitting NACI questionnaires while their case proceeds to trial.

Injunctions are not granted lightly. In this case the Court did so after finding that the employees “had raised serious questions as to the merits of their informational privacy claim and the balance of hardships tips sharply in their favor” - after all, if the suitability reviews were not stayed, JPL employees would face the unpalatable choice of either filling out the mandatory questionnaires and thereby probably having their constitutional rights violated, or losing their jobs. Oh, and unlike federal employees, the JPL employees who are determined to be “unsuitable” would not have any due process rights to be told why they were found unsuitable or an opportunity to respond to unfavorable determinations.

The question presented to the Supreme Court is whether two parts of the NACI process:

(1) a requirement to disclose any recent treatment or counseling for illegal drug use, and

(2) a questionnaire which is sent to pretty much everyone you’ve ever known which asks them to provide any adverse information which should be considered as part of the suitability review process,

violate the right to avoid disclosing certain private information to the government.

Based on the briefs, the Solicitor General will be arguing that the government, like any other employer, has the right to conduct background checks. The government will also argue that it is not eliciting private sexual information and is only seeking standard background check information, i.e., verifying residences, educational claims, and former employment. However, the JPL employees point out that they already passed standard-issue background checks when they were hired by Caltech, and that the NACI process goes far beyond verifying their identities and work histories: it collects information for a review of their “suitability.” Complicating the government’s claim that it is not concerned with private sexual information, there is that rather disturbing “matrix” which NASA itself provided when asked how the NACI information would be used. The matrix suggests that the agency is very interested in the JPL employees’ sexual practices, sexual orientations, and intimate relationships, and that it intends to make employment decisions based on that information.

Information about psychotherapy and consensual sexual relationships is about as “private” as it gets. Is there a legitimate government interest in delving into these areas when deciding whether long-time JPL employees will continue to be given access to their own offices in a federal facility? Should the fact that some JPL employees are working on super-cool space and robotics projects make a difference? Only time and the Supremes will tell.