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Upon a motion for preliminary approval of the class-action settlement for $100 million, a federal court found that the settlement between Uber and drivers in two states was “not fair, adequate and reasonable” and denied approval. It ordered the parties to confer about how they wanted to proceed. A joint status report is due on September 8th and a status conference is scheduled with the court for September 15th.
The litigation involves current and former Uber Technologies Inc. drivers in Massachusetts and California who brought claims alleging that they were improperly classified as independent contractors rather than as employees. The actions cover about 385,000 drivers. After three years of contentious litigation, and on the eve of trial earlier this year, the parties reached a settlement of these two class-action lawsuits. Among other terms, Uber agreed to pay $84 million plus an additional $16 million depending if the company went public. Drivers would remain classified as independent contractors and Uber agreed to institute certain processes and procedures internally. See my previous post about some of the settlement terms.
In his review of the proposed settlement, Judge Edward Chen of the U.S. District Court for the Northern District of California cited case law noting that “whether a settlement is fundamentally fair…is different from the question whether the settlement is perfect in the estimation of the reviewing court.” But “when…the settlement takes place before formal class certification, settlement approval requires a ‘higher standard of fairness.'” As the judge explained, in this case, “because the Settlement Agreement covers the claims of both certified class members and drivers who fall outside the class definition and thus have not been certified (for example, all Massachusetts drivers and the California drivers who drove for a third-party transportation company or under a corporate name), this Court must apply the more ‘exacting’ standard in determining whether this settlement is fair, adequate, and reasonable.”
Of primary concern to the court was that the $1 million allocated to California’s “Private Attorneys General Act” (PAGA) claim was modest. PAGA is a law that allows private citizens to seek civil penalties for labor violations. The judge noted that the settled PAGA portion was .1% of the potential $1 billion-plus statutory penalty against Uber claimed in the lawsuit. “Here, the court cannot find that the PAGA settlement is fair and adequate in view of the purposes and policies of the statute.” Essentially, the federal court found that the amount of the settlement allocation to the state was not large enough.
The court also ruled that the arbitration provision on appeal deserved further consideration. The appeal pending at the 9th Circuit Court of Appeals on an earlier decision by Judge Chen involves a determination as to whether certain arbitration agreements signed by drivers are enforceable. Judge Chen recognized that if he were reversed on appeal, it would have a significant impact on the case as many of the drivers would need to proceed through arbitration.
Both sides have reported their disappointment in the ruling. This ruling by the federal court, however, does not prevent the parties from reaching a new settlement which addresses the judge’s concerns, particularly as to the PAGA.
This case is being watched closely by those companies using on demand workers. It is also a good reminder about the potential class-action liability employers face for the misclassification of a group of employees. All employers should be reviewing their independent contractor classifications to make sure those persons are not really employees under an incorrect label.
Ernst & Young, LLP, a global professional services firm, made an effort to stem the tide of challenging and expensive class action litigation by including in their employment agreements a clause by which employees waive their rights to file work-related claims as a collective group. The contracts require employees to arbitrate claims individually. Ernst & Young followed the actions of a number of companies large and small which are increasingly requiring employees to sign these waivers. Not only do such waivers purport to save employers a lot of money which would be used to defend class actions, they may very well dissuade employees from filing individual claims which might be costly and difficult to pursue on their own, especially if relatively small amounts of money are at issue.
In ruling this week, the 9th Circuit Court of Appeals became the second federal appellate court to bolster the NLRB’s position that such waivers are unenforceable and violate the National Labor Relations Act (the “Act’). The Act guarantees employees the right to engage in concerted activity which includes filing legal action against an employer as a group. It is noteworthy that two Circuit Courts have gone the other way, ruling that such waivers are indeed enforceable. This leads to the conclusion that this issue will end up before the United States Supreme Court for final resolution.
The case before the 9th circuit was brought by two former Ernst & Young employees who alleged on behalf of the purported class that the company failed to pay overtime in accordance with federal and state law. The court did not rule that arbitration clauses in and of themselves were unenforceable as to individual claims, only that the employees were entitled to pursue a class action on behalf of themselves and other similarly situated employees.
The case is Morris v. Ernst& Young, 9th U.S. Circuit Court of Appeals, No. 12-16599.
Effective October 1, 2016, “places of public accommodation” in Massachusetts are prohibited from discriminating against persons based on their gender identity. Under this new anti-discrimination law signed by Governor Charlie Baker this summer, places of public accommodation must allow individuals to use or access gender-segregated areas such as bathrooms and locker rooms consistent with their gender identity.
A place of public accommodation is “any place, whether licensed or unlicensed, which is open to and accepts or solicits the patronage of the general public,” including:
- Hotels, inns, motels, campgrounds, resorts;
- Restaurants, bars, and other establishments serving food or drink;
- Theaters, concert halls, sports stadiums, and other places of entertainment;
- Auditoriums, convention centers, lecture halls, houses of worship, and other places of public gathering;
- Sales and rental establishments, including stores, shopping centers, automobile rental agencies, and other retail establishments;
- Service establishments, including laundromats, dry-cleaners, banks, barber shops, travel agents, gas stations, funeral parlors, employment agencies, and providers of professional services such as lawyers, doctors, dentists, accountants, and insurance agents;
- Health care facilities, including dental and medical offices, pharmacies, clinics, hospitals, nursing homes, and other health facilities;
- Transportation vehicles of all types and transportation stations, terminals, depots, platforms and facilities appurtenant thereto;
- Museums, libraries, galleries, and other places of public display or collection;
- Parks, zoos, amusement parks, and other places of recreation;
- Child care centers, senior citizens centers, homeless shelters, food banks, adoption agencies, and other social service establishments;
- Gymnasiums, health spas, bowling alleys, swimming pools, beaches, golf courses, and other places of exercises or recreation.
The Massachusetts Commission Against Discrimination (MCAD) oversees enforcement of this law. It is authorized “to adopt, promulgate, amend, and rescind rules and regulations or to formulate policies and make recommendations to effectuate” its purposes.
Gender identity has been a protected category in the Commonwealth in employment, education, and housing since legislation in 2011. Employers with six or more employees are prohibited from discriminating against transgender individuals in the workplace. Following the adoption of that law, MCAD issued a fact sheet that advised employers that denying employees permission “to use the bathroom of one’s identifying gender could be viewed as discriminatory.”
The EEOC has also issued a fact sheet entitled “Bathroom Access Right for Transgender Employees Under Title VII of the Civil rights Act of 1964.” Under that publication, the EEOC takes the position that discrimination based on transgender status is sex discrimination in violation of Title VII. Thus, the EEOC would find the denial of equal access to a common restroom of the employee’s gender identity or requiring an employee to undergo or provide proof of surgery or other medical procedure as sex discrimination. That publication also cites to OSHA’s A Guide to Restroom Access for Transgender Workers. OSHA advises that the best restroom policies include options, which employees may choose from, and include:
- Single-occupancy gender-neutral (unisex) facilities; and
- Use of multiple-occupant, gender-neutral restroom facilities with lockable single occupant stalls.
OSHA has noted that, “Regardless of the physical layout of a worksite, all employers need to find solutions that are safe and convenient and respect transgender employees.”
Some businesses have expressed safety concerns about people accessing segregated facilities like bathrooms or locker rooms for improper reasons. In the education setting, my colleague Linda Johnson has written about the U.S. Supreme Court’s decision on August 3, 2016 to put on hold a lower federal court ruling that a transgender male student be allowed to use the bathroom of his gender identity until the Supreme Court rules on the School Board’s petition for appeal. My colleague Adam Hamel has also written about laws, and proposed laws, which seek to limit access to public restrooms based on the gender assigned to a person at birth and what those “bathroom bills” mean for employers.
Massachusetts employers who open their doors to the public should train their employees on this new law. Employees need to understand these gender identify protections for members of the public accessing their facilities. Companies should also review their non-discrimination policies to ensure that they are up-to-date.
On August 3, 2016, the US Supreme Court voted 5-3 to put on hold a lower federal court ruling that a transgender male student be allowed to use the bathroom of his gender identity.
The Virginia student, who was born a girl and now identifies as a male, had been granted the right to use the boys’ bathroom during the coming school year. The Supreme Court’s order on Wednesday now means that the student will not be able to use the restroom of his gender identity when school starts.
In April of this year, the 4th Circuit Court of Appeals had ruled that not allowing the student to use the bathroom of his gender identity was a violation of Title IX, a federal law which prohibits sex or gender discrimination at any educational institution that receives federal funds. The school board asked the US Supreme Court to block the ruling arguing that it deprived parents of the right to direct the education and upbringing of their children.
The Supreme Court will take this up in the fall but, in the meantime, it would appear that this young man cannot use the school restroom of his gender identity.
For further reading, click the links below:
Co-written by: Jacqueline Botchman, a third year law student at the University of New Hampshire School of Law
The U.S. Equal Employment Opportunity Commission on Wednesday, July 13, 2016 publicized a revised proposal to expand pay data collection through the Employer Information Report (EEO-1). The proposed revision would require private employers and federal contractors with 100 or more employees to include pay and hour data by sex, race, and ethnicity as well as job category to their EEO-1 starting in 2017. Data collected will help the EEOC better understand the scope of the pay gap and focus enforcement resources on employers that are more likely to be out of compliance with federal laws.
The proposal, if accepted, will require employers to collect data on ten job categories by both gender and race and ethnicity.
- The ten EEO-1 job categories are: Executive/Senior Level Officials and Managers; First/Mid-Level Officials and Managers; Professionals; Technicians; Sales Workers; Administrative Support Workers; Craft Workers; Operatives; Laborers and Helpers; Service Workers.
- The seven race and ethnicity groups are: Hispanic or Latino; White (Not Hispanic or Latino); Black or African American (Not Hispanic or Latino); Native Hawaiian or Other Pacific Islander (Not Hispanic or Latino); Asian (Not Hispanic or Latino); American Indian or Alaska Native (Not Hispanic or Latino); and Two or More Races (Not Hispanic or Latino).
The proposal’s goal is to combat pay discrimination by assisting the agencies in identifying possible pay discrimination and helping employers in promoting equal pay in their workplaces.
In the press release, EEOC Chair Jenny R. Yang stated, “More than 50 years after pay discrimination became illegal, it remains a persistent problem for too many Americans.” “Collecting pay data is a significant step forward in addressing discriminatory pay practices. This information will assist employers in evaluating their pay practices to prevent pay discrimination and strengthen enforcement of our federal anti-discrimination laws.”
U.S. Secretary of Labor Thomas E. Perez added, “Better data means better policy and less pay disparity. As much as the workplace has changed for the better in the last half century, there are important steps that we can and must take to ensure an end to employment discrimination.”
Employers must be careful as there are laws protecting employees from sharing information or complaining about pay. As of January 1, 2015, New Hampshire prohibits employers from retaliating against employees for disclosing their wages to another employee. (To view this statute, click here.) Additionally, an employer is prohibited from discharging or discriminating against an employee in retaliation for making a complaint, instituting a proceeding, or testifying in a proceeding concerning New Hampshire’s equal pay laws. Under these laws, an employer may not discriminate on the basis of sex in the payment of wages. An employer who retaliates against the employee could be charged with a misdemeanor. (To view this statute, click here.) Employers should train managers and supervisors on this law.
Members of the public have until August 15, 2016, to submit comments on the revised rule proposal to the United States Office of Management and Budget. The link to provide information to the EEOC is http://www.regulations.gov, which is the Federal eRulemaking Portal. Members can also submit a comment by e-mail or mail.
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In a historic moment, yesterday, Governor Charlie Baker signed into law a comprehensive pay-equity bill aimed at eradicating the wage gap in Massachusetts. With the bill’s passage, Massachusetts has become the first state in the nation to prohibit employers from asking job applicants to provide a salary history during the interview process.
Supporters of the law argued that the practice of requesting a salary history has been shown to disadvantage women, who, on average, are paid less than men. The bill aims to eliminate discrimination in the payment of wages on the basis of gender, promote salary transparency, and encourage employers to review salaries to identify pay disparities within their organizations.
The new law is discussed in more detail here. The legislation goes into effect on July 1, 2018.
Employers have a new resource document to use when determining when and how to grant employees leave as a reasonable accommodation under the Americans with Disabilities Act. The document, published by the EEOC, is entitled Employer-Provided Leave and the Americans with Disabilities Act.
The ADA applies to employers with 15 or more employees. It requires employers to provide disabled employees with reasonable accommodations that allow them to perform the essential functions of their jobs unless doing so would cause an undue hardship. Reasonable accommodations may include providing employees with leave from work or modifying a company’s leave policy for an employee with a disability.
In issuing this technical assistance, the EEOC noted the increase in disability charges. 2015 hit a new high for disability discrimination claims brought before the agency. The EEOC intends this resource document as a way to educate employers about leave as an accommodation. For each category addressed, the EEOC provides examples or scenarios to assist employers.
As noted in its release of this document, “[o]ne troubling trend the EEOC has identified in ADA charges is the prevalence of employer policies that deny or unlawfully restrict the use of leave as a reasonable accommodation. These policies often serve as systemic barriers to the employment of workers with disabilities. They may cause many workers to be terminated who otherwise could have returned to work after obtaining needed leave without undue hardship to the employer. EEOC regulations already provide that reasonable accommodations may include leave, potentially including unpaid leave that exceeds a company’s normal leave allowances.”
Commissioner Victoria Lipnic added, “Leave issues often present some of the toughest situations for employers and employees to deal with in our workplaces. This document provides needed one-stop guidance on how the EEOC approaches many of the common issues we see.”
The key topics addressed include:
- Equal Access to Leave Under an Employer’s Leave Policy. Employers must provide employees with access to leave “on the same basis as other similarly-situated employees.” Policies may require all employees to provide documentation to substantiate the need for leave — like a doctor’s note.
- Granting Leave as a Reasonable Accommodation. Employers must provide employees with leave as a reasonable accommodation. This includes providing unpaid leave to an employee with a disability so long as doing so does not create an undue hardship for the employer. An employer is not required to provide paid leave beyond its paid leave policy. Employers may also not penalize an employee for taking leave as a reasonable accommodation.
- Communication after an Employee Requests Leave. This is also referred to as the “interactive process.” Employers must engage in the interactive process after a disabled employee requests leave, or additional leave, for a medical condition. Employers must treat the request as a request for a reasonable accommodation. As the EEOC explains, the interactive process is “a process designed to enable the employer to obtain relevant information to determine the feasibility of providing the leave as a reasonable accommodation without causing an undue hardship.” At times, the employer may need more information so that it can understand the amount and type of leave, the need for leave, and whether there is a reasonable accommodation available other than leave.
- Communication During Leave and Prior to Return to Work. Employers should continue to engage in the interactive process if the disabled employee seeks additional leave due to a medical condition. Employers may also ask for information from the employee as to the leave and the employee’s return to work.
- Maximum Leave Policies. Employers will be found in violation of the ADA if they enforce maximum leave policies. While employers may have policies that set a maximum amount of leave the employer will allow, employers may need to grant exceptions to disabled employees and allow them additional leave beyond the maximum as a reasonable accommodation.
- Return to Work and Reasonable Accommodation (Including Reassignment). Employers will be found in violation of the ADA if they require employees to be 100% recovered or have no restrictions before they can return to work. Employers should continue engaging in the interactive process if employees return to work with restrictions. This allows discussion as to reasonable accommodations that will allow an employee to perform the essential functions of the job or consider reassignment to a vacant job position for which the employee is qualified.
- Undue Hardship. Employers may determine whether granting leave, or additional leave, is an undue hardship. Factors that may be considered include impact on the employer’s operations and ability to serve customers, impact on co-workers and duties of job, whether intermittent leave is predictable or unpredictable, whether there is flexibility on when leave is taken, frequency of the leave, and amount and/or length of leave.
The EEOC’s resource document ends with citations to additional guidance on leave laws under the ADA, Family and Medical Leave Act (FMLA), and worker’s compensation.
Companies should review their policies and procedures on leave so that they can make sure they are properly considering requests for leave by disabled employees. Training on leave laws, leave requests, and the interactive process are also considered best practices. Consultation with counsel is also advisable as properly considering leave or extended leave requests and documenting the interactive process may avoid liability.
In a 158-0 vote, the Massachusetts House of Representatives voted to approve the so-called Pay Equity Act. The Act makes it unlawful for any employer to discriminate “in any way on the basis of gender in the payment of wages,” or to pay someone of a different gender less for comparable work. The term “comparable work” is defined as work which requires substantially similar “skill, effort and responsibility,” and is performed under similar working conditions. These somewhat fuzzy concepts may present substantial liabilities to the unwary employer.
An employer who is non-compliant must pay the employee the unpaid wage differential, as well as an additional amount equal to the unpaid wages – in essence, double damages measured by the amount of unpaid wages for comparable work. The aggrieved employee can sue in Superior Court, and the court may award a prevailing employee his costs and attorneys’ fees. The Act also expressly contemplates class actions. Any agreement to pay employees less than that to which they are entitled under the Act is not a defense to liability.
The Act does allow for wage variations if based upon the following factors:
- a merit system
- earnings measured by quantity/quality of production, sales or revenue
- geographic location
- education, training or experience if related to a particular job
- travel if regular and necessary.
Of course, if the wage payment is challenged in court, the employer would have to prove that the pay differential was the result of one or more of these factors.
The Act also prohibits an employer generally from requiring a prospective employee to refrain from inquiring about or disclosing the employee’s own wages or that of another employee. The Act also allows for an affirmative defense to liability if the employer has completed a self-evaluation of its pay practices, and has made reasonable progress in eliminating wage differentials based upon gender.
Given the momentum on Beacon Hill for this Act, there is a very good chance it will become law. Employers will need to review their pay policies and any variations to ensure compliance.
Former Fox News Anchor and commentator Gretchen Carlson filed a sexual harassment suit against CEO Roger Ailes alleging that her contract was not renewed because she refused Ailes’ sexual advances. Carlson also alleged that the harassment she endured was severe and “very pervasive”, that Ailes repeatedly “injected sexual and/or sexist comments” into conversations and made “sexual advances.” Finally, when she told him last fall to stop, a preventative measure women are often urged to take, Ailes is alleged to have responded, “ I think you and I should have had a sexual relationship a long time ago and then you’d be good and better and I’d be good and better.”
Carlson’s lawsuit contains the following additional allegations:
- She tried to complain unsuccessfully about how male colleagues, including Fox & Friends co-host Steve Doocy treated her.
- Doocy “engaged in a practice of severe and pervasive sexual harassment of Carlson, including, but not limited to, mocking her between commercial breaks, shunning her off air, refusing to engage with her on air, belittling her contributions to the show, and generally attempting to put her in her place by refusing to accept and treat her as an intelligent and insightful journalist rather than a blond female prop.”
- Following her complaint about Doocy, she was removed from the popular morning show Fox & Friends and relegated to a less desirable 2:00 p.m. time slot.
- Ailes referred to her as a “man hater” and told her to “get along with the boys.”
This is not a story from the 1970’s; this is a story from this week. It also comes on the heels of a June 2016 report issued by an EEOC task force which concluded that workplace sexual harassment training initiatives are often ineffective in stopping misconduct. “Much of the training done over the last 30 years has not worked as a prevention tool,” the EEOC commissioners wrote, adding that “ineffective training can be unhelpful or even counterproductive”. The clear message of the report is that the most common trainings are designed to minimize legal risk to companies rather than change behavior in supervisors or employees. “Sexual harassment training protects organizations, not employees” according to Berkeley Law Professor Lauren Edelman.
Carlson is not a young innocent ingénue; she is a 50 year old professional woman, a graduate of Stanford University and someone who has reached a coveted spot in her chosen field by hosting a program on a national news network. Even though she is constantly referred to in the media as a former Miss America, she has done quite a few things with her life since.
What do Carlson’s suit and the EEOC’s report tell us about today’s workplace for women? Maybe that we haven’t come as far as we thought we had. Assuming Carlson’s allegations to be true, and it should be noted that they are currently being vigorously disputed, it signals the need for careful reexamination of workplace culture, expectations and action. Those of us who devote a large percentage of our professional work lives to risk management and training, need to take the initiative to develop programs which will help to shift workplace culture and truly influence the way people treat each other. Perhaps even more important, employers must not only invest in training, they must “walk the walk.” Employees need to feel that they can trust management to act when they report that bad things happen to them, rather than to stand in fear of retaliation. Supervisors who protect employees who breach policy need to held accountable for what they are doing (or not doing).
What does Gretchen Carlson say about her lawsuit?
“Although this was a difficult step to take, I had to stand up for myself and speak out for all women and the next generation of women in the workplace.” You’ve come a long way baby, but you still have a long way to go.