Posts Tagged: court case

Independent Contractor v. Employee: Law of Economic Realities

In cases under the Fair Labor Standards Act, a question sometimes arises as to whether a worker is an independent contractor or an employee. The answer can be important, as an employee may have rights to minimum wage and overtime compensation that an independent contractor performing the same basic job tasks does not.  

To determine whether a worker is an employee under the FLSA, courts in the Fourth Circuit look to the “economic realities” of the relationship between the worker and the putative employer.

McFeeley v. Jackson St. Entm’t, LLC, 825 F.3d 235, 241 (4th Cir. 2016) (quoting Schultz v. Capital Int’l Sec., Inc., 466 F.3d 298, 304 (4th Cir. 2006)). The touchstone of the “economic realities” test is whether the worker is “economically dependent on the business to which he renders service or is, as a matter of economic [reality], in business for himself.” Id. If the practical economic reality is that the worker is “economically dependent” on the putative employer and not “in business for himself[,]” the worker will generally be considered an employee qualified for FLSA rights. Id

Economic Realities Test

In making this determination, courts applying the economic realities test consider six factors:

(1) [T]he degree of control that the putative employer has over the manner in which the work is performed;

(2) the worker’s opportunities for profit or loss dependent on his managerial skill;

(3) the worker’s investment in equipment or material, or his employment of other workers; 

(4) the degree of skill required for the work; 

(5) the permanence of the working relationship; and 

(6) the degree to which the services rendered are an integral part of the putative employer’s business. 

McFeeley, 825 F.3d at 241. These factors are often called the “Silk factors” in reference to United States v. Silk, 331 U.S. 704 (1947), the Supreme Court case from which they derive. See Schultz at 305.

Generally speaking, the greater the degree of control the putative employer has over the manner in which the work is performed, the greater the permanence of the working relationship, and the greater the degree to which the worker’s services are an integral part of the putative employer’s business, the more likely the worker is an “employee” under the economic realities test. Similarly, the fewer opportunities the worker has for profit or loss dependent on his managerial skill, the less the worker invests in equipment, material, or employment of other workers, and the lower degree of skill required for the work, the more likely the worker is an “employee” under the economic realities test. 

Application

For example, in Schultz, the plaintiff security workers worked jointly for a Saudi prince and a security firm. The Fourth Circuit found the prince and security firm exercised nearly complete control over how the workers did their jobs. Further, the workers had no opportunity for profit or loss dependent on their managerial skills, as they were paid a set rate per shift. Additionally, the firm and prince supplied the workers with all the necessary equipment, including cell phones, cars, firearms, and cameras. With respect to the fourth factor, although some security duties required special skills, others did not. As to the permanence of the relationship, the prince employed some workers for several years and preferred to hire workers who would stay with him over the long term. And the services rendered by the workers were integral to the security firm’s business, as the firm’s only function was to provide security for the prince, and workers were hired specifically to perform that task. Considering these facts under the economic realities test, the Fourth Circuit concluded the security workers “were not in business for themselves” and “thus were thus employees, not independent contractors.” Schultz, 466 F.3d at 309.

Similarly, in McFeeley, the plaintiff exotic dancers worked for dance clubs. The Fourth Circuit found that the clubs exercised significant control over how the dancers performed their work. That control included dictating dancers’ schedules, imposing written guidelines that all dancers had to obey during working hours, setting fees the dancers were supposed to charge patrons for private dances, and dictating how tips and fees were handled. Further, the dancers’ opportunities for profit or loss depended far more on the clubs’ management and decision-making than their own; the club owners’ investment in the clubs’ operation far exceeded the dancers’ investment; the job duty of dancing at the clubs required a relatively minimum degree of skill; and the dance clubs could not function without exotic dancers. Therefore, the dancers were employees of dance clubs under the FLSA, rather than independent contractors. McFeeley, 825 F.3d 235, 242-244.

And in Salinas v. Commercial Interiors, Inc., 848 F.3d 125 (4th Cir. 2017), the plaintiff drywall installers worked for a subcontractor of a larger company that offered general contracting and interior finishing services, including drywall installation, carpentry, framing, and hardware installation. The workers were economically dependent on the subcontractor alone, making them necessarily economically dependent on the contractor and subcontractor jointly. Due to the contractor’s daily supervision of these workers, it exercised greater control over their work than the subcontractor exercised alone. Further, the contractor provided all of the materials, supplies, tools, and equipment that workers used for their work. On these facts, the Fourth Circuit determined the drywall installers were employees covered by FLSA, rather than independent contractors, based on their entire employment for both the framing and drywall installation subcontractor and general contractor. Id. at 150-151.

Summary

In summary, Fourth Circuit courts determine whether a worker is an employee or an independent contractor by looking to the “economic realities” of the relationship between the worker and the putative employer. The outcome is important because an employee may have rights to minimum wage and overtime compensation under the FLSA that an independent contractor performing the same basic job tasks does not. The “economic realities” test turns on whether the worker is economically dependent on the business to which he renders service or is, as a matter of economic reality, in business for himself. If the practical economic reality is that the worker is economically dependent on the putative employer and not in business for himself, the worker will generally be considered an employee qualified for FLSA rights. 

This site is intended to provide general information only. The information you obtain at this site is not legal advice and does not create an attorney-client relationship between you and attorney Tim Coffield or Coffield PLC. Parts of this site may be considered attorney advertising. If you have questions about any particular issue or problem, you should contact your attorney. Please view the full disclaimer. If you would like to request a consultation with attorney Tim Coffield, you may call 1-434-218-3133 or send an email to info@coffieldlaw.com.

This blog was also published to TimCoffieldAttorney.net.

Integrity Staffing v. Busk: Principal Activities Law

In Integrity Staffing Sols., Inc. v. Busk, 574 U.S. 27 (2014), the Supreme Court held that under the Fair Labor Standards Act, time warehouse workers spent waiting for and undergoing security screenings was not compensable time. More broadly, the decision clarified the proper analysis of “principal activities” verses preliminary and postliminary activities. Principal activities are compensable under the FLSA. Purely preliminary or postliminary activities (like a commute) are not, but some activities before or after a shift might still be compensable principal activities. The term “principal activities” includes all activities which are an “integral and indispensable part of the principal activities.” An activity is “integral and indispensable to the principal activities” if it is an “intrinsic element of those activities and one with which the employee cannot dispense if he is to perform his principal activities.” 574 U.S at 33.

Facts

Busk worked for Integrity Staffing Solutions as an hourly warehouse worker. Integrity Staffing provided warehouse staffing to Amazon. Integrity Staffing’s warehouse workers retrieved and packaged products for delivery to Amazon.com customers. Integrity Staffing required these employees to undergo a security screening before leaving the warehouse each day, but did not pay them for the time (roughly 25 minutes each day) they spent waiting for and undergoing the screening. Busk and his co-workers filed suit under the Fair Labor Standards Act. They asserted, inter alia, they were entitled to compensation for the time they spent waiting to undergo and undergoing the screenings. They also argued the screenings were compensable because the company could have reduced the time involved to a negligible de minimis amount by adding screeners or staggering shifts, and because the screenings were conducted to prevent employee theft and, thus, for the sole benefit of the employers and their customers.

The District Court dismissed this claim. It held the screenings were not integral and indispensable to the employees’ principal activities but were instead postliminary and noncompensable under the Portal–to–Portal Act. The Ninth Circuit reversed that decision in part, holding that the postshift screening would be compensable as integral and indispensable to the employees’ principal activities if the screenings were necessary to the principal work and performed for the employer’s benefit. Integrity Staffing appealed. 

The Court’s Decision

The Supreme Court reversed. It held the time the warehouse workers spent waiting to undergo and undergoing security screenings was not compensable under the FLSA. 

First, the Court explained Congress passed the Portal–to–Portal Act in response to the “unexpected liabilities” created by a broad judicial interpretation of the FLSA’s undefined terms “work” and “workweek.” See 29 U.S.C. § 251(a). The Portal–to–Portal Act therefore exempted employers from FLSA liability for claims based on “activities which are preliminary to or postliminary to” the principal activities that an employee is employed to perform. 29 U.S.C. § 254(a)(2)

The Court had long held that the term “principal activities” includes all activities which are an “integral and indispensable part of the principal activities.” Steiner v. Mitchell, 350 U.S. 247, 252–253 (1956). In Integrity Staffing, the Court further explained that an activity is “integral and indispensable to the principal activities” if it is an “intrinsic element of those activities and one with which the employee cannot dispense if he is to perform his principal activities.” 574 U.S at 33.

For example, in Steiner, the Court held the time battery-plant employees spent showering and changing clothes was compensable because the chemicals in the plant were “toxic to human beings” and the employer conceded that “the clothes-changing and showering activities of the employees [were] indispensable to the performance of their productive work and integrally related thereto.” Id. at 34 (quoting Steiner at 249, 251). Similarly, in Mitchell v. King Packing Co., 350 U.S. 260, 262 (1956), the Court held compensable the time meatpacker employees spent sharpening their knives because dull knives would “slow down production” on the assembly line, “affect the appearance of the meat as well as the quality of the hides,” “cause waste,” and lead to “accidents.” 574 U.S. at 34 (quoting Mitchell at 262). By contrast, in IBP, Inc. v. Alvarez, 546 U.S. 21 (2005), the Court held noncompensable the time poultry-plant employees spent waiting to don protective gear because such waiting was “two steps removed from the productive activity on the assembly line.” 574 U.S. at 34 (quoting IBP at 42). The Court further noted Department of Labor regulations were consistent with this approach. See 29 CFR § 790.8(b) (“The term ‘principal activities’ includes all activities which are an integral part of a principal activity.”); 29 CFR § 790.8(c) (“Among the activities included as an integral part of a principal activity are those closely related activities which are indispensable to its performance.”); 29 CFR 790.7(g) (examples of preliminary and postliminary activities). 574 U.S. at 30-35.

The Court then held the security screenings at issue in Integrity Staffing were noncompensable postliminary activities. First, the Court determined the screenings were not the principal activities the employees were employed to perform. The workers were not employed to undergo security screenings. They were employed to retrieve goods from the warehouse and package them for shipment. Nor were the security screenings “integral and indispensable” to those activities. In support of this conclusion, the Court cited a 1951 Department of Labor opinion letter, which found noncompensable under the Portal–to–Portal Act both a preshift screening conducted for employee safety and a postshift search conducted to prevent employee theft. 

The employees in Integrity Staffing, like the Ninth Circuit, essentially took the position that if an activity was required by an employer it was compensable under the FLSA. The Court disagreed with this approach, noting that it would sweep into “principal activities” the very activities that the Portal–to–Portal Act was designed to exclude from compensation (like the time waiting to don protective gear held noncompensable in IBP). Finally, the Court rejected the employees’ argument that the screenings were compensable because Integrity Staffing could have reduced the time to a de minimis amount. Whether an employer could conceivably reduce the time employees spent on a preliminary or postliminary activity did not change the nature of the activity or its relationship to the principal activities that an employee is employed to perform. Therefore, that concern was properly addressed through bargaining, rather than in a suit under the FLSA. 574 U.S. at 35-37.

Analysis

In sum, Integrity Staffing clarified the analysis of “principal activities” verses preliminary and postliminary activities. Principal activities are compensable. The term “principal activities” includes all activities which are an “integral and indispensable part of the principal activities.” An activity is “integral and indispensable to the principal activities” if it is an “intrinsic element of those activities and one with which the employee cannot dispense if he is to perform his principal activities.” 574 U.S at 33. More specifically, Integrity Staffing stands for the proposition that time spent waiting for and undergoing security screenings was not a principal activity and therefore not compensable under the Fair Labor Standards Act. 

This site is intended to provide general information only. The information you obtain at this site is not legal advice and does not create an attorney-client relationship between you and attorney Tim Coffield or Coffield PLC. Parts of this site may be considered attorney advertising. If you have questions about any particular issue or problem, you should contact your attorney. Please view the full disclaimer. If you would like to request a consultation with attorney Tim Coffield, you may call 1-434-218-3133 or send an email to info@coffieldlaw.com.

This blog was also published to TimCoffieldAttorney.com.

Law of Joint Employment

Law of Joint Employment

A worker’s joint employers are jointly and severally liable for any violations of the Fair Labor Standards Act. Salinas v. Commercial Interiors, Inc., 848 F.3d 125, 134 (4th Cir. 2017). This means that for purposes of the FLSA’s requirements that an employer pay minimum wages and overtime wages to non-exempt employees, a worker may have more “employers” than just the company who issues her paychecks. In short, if more than one entity has the ability to help determine the conditions of a workers’ employment, more than one entity may be liable if the worker is not paid the minimum wages or overtime compensation required by federal law.

DOL Joint Employment Regulations

The Department of Labor regulation implementing the FLSA distinguishes “separate and distinct employment” from “joint employment.” 29 C.F.R. § 791.2(a). “Separate employment” exists when “all the relevant facts establish that two or more employers are acting entirely independently of each other and are completely disassociated with respect to the” individual’s employment. Id. By contrast, “joint employment” exists when “employment by one employer is not completely disassociated from employment by the other employer(s).” Id. When two or more entities are found to jointly employ a particular worker, “all of the employee’s work for all of the joint employers during the workweek is considered as one employment for purposes of the [FLSA].” Id. (emphasis added). Thus, for example, all hours worked by the employee on behalf of each joint employer are counted together to determine whether the employee is entitled to overtime pay under the FLSA. Id; Hall v. DIRECTV, LLC, 846 F.3d 757, 766 (4th Cir. 2017).

Fourth Circuit Factors

In Salinas, the Fourth Circuit observed that the joint employment regulations speak to “one fundamental question: whether two or more persons or entities are ‘not completely disassociated’ with respect to a worker such that the persons or entities share, agree to allocate responsibility for, or otherwise codetermine — formally or informally, directly or indirectly — the essential terms and conditions of the worker’s employment.” 848 F.3d at 141 (quoting 29 C.F.R. § 791.2(a) and citing In re Enter. Rent-A-Car Wage & Hour Employment Practices Litig., 683 F.3d 462, 468 (3d Cir. 2012) (“[W]here two or more employers … share or co-determine those matters governing essential terms and conditions of employment — they constitute ‘joint employers’ under the FLSA.” (internal quotation marks omitted)).

With these principles in mind, courts in the Fourth Circuit consider six factors in determining whether entities constitute joint employers:

(1) whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate the power to direct, control, or supervise the worker, whether by direct or indirect means;

(2) whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate the power to, directly or indirectly, hire or fire the worker or modify the terms or conditions of the worker’s employment;

(3) the degree of permanency and duration of the relationship between the putative joint employers;

(4) whether, through shared management or a direct or indirect ownership interest, one putative joint employer controls, is controlled by, or is under common control with the other putative joint employer;

(5) whether the work is performed on a premises owned or controlled by one or more of the putative joint employers, independently or in connection with one another; and

(6) whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate responsibility over functions ordinarily carried out by an employer, such as handling payroll, providing workers’ compensation insurance, paying payroll taxes, or providing the facilities, equipment, tools, or materials necessary to complete the work. Id. at 141.

Salinas at 141.

The Fourth Circuit in Salinas observed that these six factors may not constitute an exhaustive list of all potentially relevant considerations. Id. at 142. “To the extent that facts not captured by these factors speak to the fundamental threshold question that must be resolved in every joint employment case — whether a purported joint employer shares or codetermines the essential terms and conditions of a worker’s employment — courts must consider those facts as well.” Id.

As these factors illustrate, the Fourth Circuit’s joint employer test turns on whether the entities in question codetermine the essential conditions of a worker’s employment. Salinas at 143. Thus, the existence of a general contractor-subcontractor relationship “has no bearing on whether entities … constitute joint employers for purposes of the FLSA.” Id. 143–44.

Application of Salinas Factors

For example, in Salinas, the Fourth Circuit held that a drywall installation subcontractor and general contractor were joint employers under the FLSA because, inter alia, the subcontractor provided staffing for the contractor based on the contractor’s needs; the employees performed the work for the contractor’s benefit; the contractor supervised the employees’ progress daily and provided feedback; and the employees wore uniforms bearing the contractor’s logo. 848 F.3d at 146.

For another Fourth Circuit case on the joint employer issue, see Hall v. DIRECTV, LLC, 846 F.3d 757, 762 (4th Cir. 2017). In that case, the plaintiff technicians sufficiently alleged DIRECTV as a joint employer, even though the technicians were nominally employed by a subcontractor. The court held that DIRECTV could be liable as a joint employer along with the subcontractor because, inter alia, the technicians were required to “obtain their work schedules and job assignments through DIRECTV’s centralized system,” to check in with DIRECTV after completing assigned jobs, and to “wear DIRECTV uniforms…when performing work for the company.” Similarly, in Young v. Act Fast Delivery of W. Virginia, Inc., 2018 WL 279996, *8 (S.D. W.Va. Jan. 3, 2018), the court held that under Salinas, a pharmaceutical delivery company was a joint employer of the plaintiff couriers, even though the couriers were nominally employed by a third party subcontractor.

As the Fourth Circuit emphasized in Salinas, “Separate employment exists when … ‘two or more employers are acting entirely independently of each other and are completely disassociated with respect to’ the individual’s employment.” 848 F.3d at 133-34 (emphasis in original) (quoting 29 C.F.R. § 791.2(a)). “By contrast, joint employment exists when ‘the facts establish … that employment by one employer is not completely disassociated from employment by the other employer.’” Salinas at 134 (emphasis in original).

Summary

Therefore, under the Fourth Circuit’s framework, the “fundamental question” guiding the joint employment analysis is “whether two or more persons or entities are ‘not completely disassociated’ with respect to a worker such that the persons or entities share, agree to allocate responsibility for, or otherwise codetermine — formally or informally, directly or indirectly — the essential terms and conditions of the worker’s employment.” Id. at 140. If the facts show that two related companies were not “completely disassociated” or “acting entirely independently” with respect to a worker’s employment, they may be joint employers. If the entities shared control over the conditions of employment, they may both be potentially jointly and severally liable for FLSA violations as joint employers.

This site is intended to provide general information only. The information you obtain at this site is not legal advice and does not create an attorney-client relationship between you and attorney Tim Coffield or Coffield PLC. Parts of this site may be considered attorney advertising. If you have questions about any particular issue or problem, you should contact your attorney. Please view the full disclaimer. If you would like to request a consultation with attorney Tim Coffield, you may call 1-434-218-3133 or send an email to info@coffieldlaw.com.

McKennon v. Nashville Banner: Law of After-Acquired Evidence

McKennon v. Nashville Banner: Law of After-Acquired Evidence

What happens when an employer, having wrongfully terminated an employee (in violation of federal employment law), discovers in litigation that the employee did something that would have legitimately and lawfully lead to termination, had the employer known about it before wrongfully firing the employee? Does the employer still have to pay lost wages for the wrongful termination, or does this “after-acquired evidence” excuse the violation?

The Supreme Court addressed these questions in McKennon v. Nashville Banner Pub. Co., 513 U.S. 352 (1995). The Court rejected the argument that a legitimate reason for termination, discovered after an unlawful discharge, excuses the unlawful action or bars the employee from recovery. However, the Court also indicated that such after-acquired evidence may limit the employee’s ability to obtain reinstatement or recover all lost wages associated with the termination.

Facts

McKennon worked thirty years for Nashville Banner Publishing Company until she was terminated at age sixty-two. McKennon filed suit, alleging that her discharge violated the Age Discrimination in Employment Act of 1967 (ADEA). McKennon’s suit sought a variety of legal and equitable remedies available under the ADEA, including backpay. In her deposition, McKennon admitted that during her final year of employment she had copied and taken home several of the Banner’s confidential financial documents. 513 U.S. 354-56.

For the purposes of summary judgment, the Banner conceded that it had discriminated against McKennon because of her age. Id. The District Court, however, granted summary judgment for the company, holding that McKennon’s misconduct in taking the confidential documents was grounds for termination and that neither back pay nor any other remedy was available to her under the ADEA. The Court of Appeals affirmed on the same reasoning. McKennon appealed. Id. at 355-56.

The Court’s Decision

The Court reversed. It held that an employee who is fired in violation of federal employment law is not barred from all relief when, after her discharge, her employer discovers evidence of wrongdoing that would have led to her termination on lawful and legitimate grounds had the employer known of it. 513 U.S. 356-360.

After-Acquired Evidence Not a Complete Bar

First, the Court held that this kind of “after-acquired evidence” is not a complete bar to recovery. The Court reasoned that even if the employee engaged in misconduct that would have prompted a termination, the employer’s discrimination that actually prompted the discharge cannot be disregarded. The Court assessed the purposes of the ADEA’s remedial provisions, 29 U.S.C. § 626(b) and 29 U.S.C. § 216(b), which (like the remedial provisions of other employment laws) were designed both to compensate employees for injuries caused by unlawful discrimination and to deter employers from discriminating in the first place. The Court concluded that allowing after-acquired evidence to bar all relief would frustrate both of these important objectives. Therefore, the Court held that after-acquired evidence did not bar all relief for unlawful discrimination. Id. at 358-360.

Relevance to Crafting an Appropriate Remedy

Second, however, the Court observed that trial courts should take into account after-acquired evidence of an employee’s wrongdoing in determining the specific remedy for the employer’s discrimination. To hold otherwise, and bar any consideration of employee misbehavior in the relief analysis, would be to ignore the employer’s legitimate concerns about employee misconduct. The ADEA, like other employment laws, just prohibits discrimination. It does not limit employers from having legitimate rules and exercising appropriate lawful discretion in hiring, promoting, and firing employees. Therefore, the Court noted, employee wrongdoing is relevant in taking due account of such lawful prerogatives and the employer’s corresponding equities arising from the wrongdoing. Id. at 360-61.

General Rule: No Reinstatement or Front Pay

Third, the Court discussed how trial courts might balance these competing concerns — on one hand, the prohibition against unlawful discrimination, and on the other, the employer’s right to address legitimate employee misconduct in an appropriate manner. The Court decided that remedial relief in such cases should be addressed on a case-by-case basis. However, the Court stated that as a general rule, if the employer proves the employee engaged in misconduct that would have prompted a lawful termination had the employer known about it, neither reinstatement nor front pay is an appropriate remedy. Id. at 362. This is because “it would be both inequitable and pointless to order the reinstatement of someone the employer would have terminated, and will terminate, in any event and upon lawful grounds.” Id.

Possible Limitations on Back Pay

The Court indicated that the more difficult issue, in after-acquired evidence cases, is the proper measure of back pay. This is because even a guilty employer cannot be required to ignore information it learns about employee wrongdoing that would lead to a legitimate discharge, even if it is acquired during the course of a discrimination lawsuit and might have gone undiscovered in the absence of the discrimination that led to the lawsuit. Id. at 362. The Court stated that the “beginning point in formulating a remedy should therefore be calculation of backpay from the date of the unlawful discharge to the date the new information was discovered.” Id. In determining the appropriate relief, the court can consider extraordinary equitable circumstances that affect the legitimate interests of either party. But an “absolute rule barring any recovery of backpay, however, would undermine the [federal employment law’s] objective of forcing employers to consider and examine their motivations, and of penalizing them for employment decisions that spring from … discrimination.” Id. Thus, as a general rule, after-acquired evidence does not bar back pay, but it might limit the amount of back pay an employee can recover.

No Bar to General Compensatory, Punitive, or Liquidated Damages

It is also worth noting that McKennon did not state or suggest that compensatory damages for past or future emotional harm should be time-limited. The decision only addressed possible limitations on lost wages and reinstatement. Allowing full emotional distress damages even if the defendant prevails on an after-acquired evidence defense makes good sense in light of McKennon’s reasoning. This is because no legitimate business prerogative would be served by allowing a proven discriminator to avoid paying the full cost of the emotional damage caused by the discrimination. The same reasoning supports the conclusion that after-acquired evidence does not bar punitive damages or liquidated damages, in cases where the usual standards for awarding punitive or liquidated damages are met. Here is a link to EEOC’s guidance on this issue.

Employer’s Burden of Proof

Finally, the Court discussed the employer’s burden in attempting to prove an “after-acquired evidence” defense. When an employer seeks to use this defense, it must first establish that the wrongdoing was of “such severity that the employee in fact would have been terminated on those grounds alone had the employer known of it at the time of the discharge.” Id. at 362-63. The Court also expressed concern that, due to the possibility of uncovering after-acquired evidence, employers might routinely undertake extensive discovery into an employee’s background or job performance to resist employment discrimination claims. Id. at 363. However, the Court concluded the trial courts’ authority to award attorney’s fees under §§ 216(b) and 626(b) and to invoke the appropriate provisions of the Federal Rules of Civil Procedure would likely deter most abuses of the discovery rules. Id.

Analysis

The Court in McKennon rejected the notion that a legitimate reason for termination, discovered after an unlawful discharge, excuses the unlawful action or bars the employee from recovery. However, such after-acquired evidence may limit the employee’s ability to obtain reinstatement or recover all lost wages associated with the termination. To use this defense, an employer must prove that the employee engaged in misconduct of such severity that the employee would have been terminated on those grounds alone had the employer learned of it during her employment. As a general rule, if the employer meets this burden, reinstatement is not an appropriate remedy and back pay may be limited.

This site is intended to provide general information only. The information you obtain at this site is not legal advice and does not create an attorney-client relationship between you and attorney Tim Coffield or Coffield PLC. Parts of this site may be considered attorney advertising. If you have questions about any particular issue or problem, you should contact your attorney. Please view the full disclaimer. If you would like to request a consultation with attorney Tim Coffield, you may call 1-434-218-3133 or send an email to info@coffieldlaw.com.

Corning Glass Works v. Brennan: EPA Law Requires Equal Pay for Equal Work

In Corning Glass Works v. Brennan, 417 U.S. 188 (1974), the Supreme Court addressed the allocation of proof in pay discrimination claims under the Equal Pay Act of 1963. This was the first Supreme Court decision applying the Equal Pay Act. The Court held that to prevail on an EPA claim, the plaintiff must prove that the employer pays an employee of the one sex more than it pays an employee of the other sex for substantially equal work. The opinion addressed what it meant for two employees to perform “substantially equal work” for the purposes of the Equal Pay Act, including what it means for work to be performed under “similar working conditions.” 

Facts

Corning was a glassworks company. It employed night shift inspectors and day shift inspectors at its plants. For many years, Corning allowed only men to work the night shift, and it paid night shift inspectors more than it paid the day shift inspectors, who were women. In June 1966, three years after the passage of the Equal Pay Act, Corning began opening the night shift jobs to women, allowing female employees to apply for the higher-paid night inspection jobs on an equal seniority basis with men.  

In January 1969, Corning implemented a new “job evaluation” system for setting wage rates. Under that pay system, all subsequently-hired inspectors were to receive the same base wage (which was higher than the previous night shift rate) regardless of sex or shift. With respect to employees hired before the new pay system went into effect, however, the pay plan provided that those employees who worked the night shift would continue to receive a higher (“red circle”) rate. Because of this “red circle” rate, the new pay system perpetuated the previous difference in base pay between day and night inspectors, thereby also perpetuating the previous disparity in pay between female (day) inspectors and male (night) inspectors. 

The Equal Pay Act prohibits an employer from paying different wages to employees of opposite sexes “for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions,” except where the difference in payment is made pursuant to a seniority or merit system or one measuring earnings by quantity or quality of production, or where the differential is “based on any other factor other than sex.” 29 U.S.C. § 206(d)

The Secretary of Labor brought suit, asserting that Corning’s pay practices violated the EPA by paying male and female inspectors differently for equal work. 

The Court’s Decision

The Court addressed the question of whether Corning’s pay practices violated the EPA by paying different wages to employees of opposite sexes for “equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions[.]” The Court found that they did. 

First, the Court held that Corning’s pay practices from the passage of the EPA in 1963 to June 1966 violated the EPA, because during that period the night shift inspectors (all male) were paid more than the day shift inspectors (female) and the night shift and day shift inspectors performed equal work “under similar working conditions.” 29 U.S.C. § 206(d). Corning argued the difference between working at night and working at day meant the different positions did not entail similar working conditions. The Court rejected this argument, holding that the EPA’s legislative history established that the statutory term “working conditions,” as used in the EPA, encompasses only physical surroundings and hazards, and not the time of day worked. 417 U.S. 197-204.

Corning also argued that the pre-1966 pay disparity was lawful because the higher pay to (male) night inspectors was intended as additional compensation for the inconvenience of night work, and thus the pay disparity was based on a “factor other than sex[.]” 29 U.S.C. § 206(d). The Court rejected this argument, holding the evidence showed the pay disparity in fact arose because men would not work for the low rates paid to women inspectors. The pay disparity therefore “reflected a job market in which Corning could pay women less than men for the same work.” 417 U.S. 204-05.

Second, the Court held that Corning did not remedy its violation of the EPA in June 1966 simply by permitting women to work as night shift inspectors, because the violation could only be cured by increasing the base wages of female day inspectors to meet the higher rates paid to night inspectors. Corning’s action in allowing women to work the night shift did not accomplish this, as “Corning’s action still left the inspectors on the day shift — virtually all women — earning a lower base wage than the night shift inspectors because of a differential initially based on sex and still not justified by any other consideration[.]” 417 U.S. 207-08. In effect, “Corning was still taking advantage of the availability of female labor to fill its day shift at a differentially low wage rate not justified by any factor other than sex.” Id. Thus, Corning’s allowing women to work the night shift, without increasing base pay to the female day shift workers, did not remedy the EPA violation. 

Finally, the Court held the Corning did not remedy its violation of the EPA in January 1969 with its pay plan equalizing day and night inspector rates, because the plan’s higher “red circle” rate paid to employees who previously worked the night shift only perpetuated the previous unlawful pay disparity. This was because the previously-hired male night shift workers would receive the higher red circle rate based on their pre-1969 pay — before day and night wage rates were equalized. Thus, the pay plan had the unlawful effect of continuing the pay disparity between men and women for equal work. As the Court observed, “the company’s continued discrimination in base wages between night and day workers, though phrased in terms of a neutral factor other than sex, nevertheless operated to perpetuate the effects of the company’s prior illegal practice of paying women less than men for equal work.” 417 U.S. 209-10.

Analysis

This case was important because it marked the first time the Supreme Court addressed the requirements of the Equal Pay Act. The Court held that to prevail on an EPA claim, the plaintiff must prove that the employer pays an employee of one sex more than it pays an employee of the other sex for substantially equal work. The opinion addressed what it meant for two employees to perform “substantially equal work” for the purposes of the EPA, and held that the requirement for work to be performed under “similar working conditions” referred to physical surroundings and hazards, and not the time of day worked. If a male employee and a female employee perform equal work at different times of the day, they should therefore be given equal pay — unless the pay disparity is based on a seniority or merit system or one measuring earnings by quantity or quality of production, or where the differential is “based on any other factor other than sex.” 29 U.S.C. § 206(d). If an employer’s pay practices violate the EPA, the only way to cure the violation is to equalize wages between men and women — simply offering women the same job titles is not sufficient. And pay systems that have the effect of perpetuating prior discrimination may still violate the EPA — even if the pay system is neutrally-worded and made without intent to discriminate. 

This site is intended to provide general information only. The information you obtain at this site is not legal advice and does not create an attorney-client relationship between you and attorney Tim Coffield or Coffield PLC. Parts of this site may be considered attorney advertising. If you have questions about any particular issue or problem, you should contact your attorney. Please view the full disclaimer. If you would like to request a consultation with attorney Tim Coffield, you may call 1-434-218-3133 or send an email to info@coffieldlaw.com.

Price Waterhouse v. Hopkins: The Law of Stereotyping

In Price Waterhouse v. Hopkins, 490 U.S. 228 (1989), the Supreme Court recognized Title VII’s prohibition on sex discrimination necessarily includes a prohibition on gender stereotyping. The female employee in Price Waterhouse was denied a promotion because she was “macho,” “tough-talking,” and used “foul language,” and therefore failed to conform to certain gender stereotypes related to women. Id. at 235, 250-53. Six members of the Court held that adverse employment action like this, rooted in “sex stereotyping” or “gender stereotyping,” was actionable sex discrimination.

Facts

Hopkins worked for an accounting firm, Price Waterhouse, at its Office of Government Services in Washington, D.C. Despite several years of strong performance, she was denied partnership in the firm.

Price Waterhouse denied Hopkins partnership, in essence, because of her aggressive personality, which sometimes bordered on abrasiveness. For example, partners evaluating her work had counseled her to improve her relations with staff members. And although Hopkins’ evaluations later noted improvement, her perceived shortcomings in this area ultimately doomed her bid for partnership. In the firm’s consideration of Hopkins for a promotion to partner, virtually all of the firm’s partners’ negative remarks about her had to do with her “interpersonal skills.” Id. at 234-35. Both “[s]upporters and opponents of her candidacy … indicated that she was sometimes overly aggressive, unduly harsh, difficult to work with and impatient with staff.” Id.

The Court observed that there were “clear signs” that some of the partners reacted negatively to Hopkins’ personality because she was a woman. Id. One partner described her as “macho”; another suggested that she “overcompensated for being a woman”; a third advised her to take “a course at charm school.” Id. Several partners criticized her use of profanity; in response, one partner suggested that those partners objected to her swearing only “because it’s a lady using foul language.” Id. Another supporter explained that Hopkins “ha[d] matured from a tough-talking somewhat masculine hard-nosed mgr to an authoritative, formidable, but much more appealing lady ptr candidate.” Id. But the male supervisor who bore responsibility for explaining to Hopkins the reasons for the firm’s decision to not grant her partnership described her purported failings in terms of stereotypes about how women should behave: in order to improve her chances for partnership, the firm advised, Hopkins should “walk more femininely, talk more femininely, dress more femininely, wear make-up, have her hair styled, and wear jewelry.” Id. at 235.

In short, the record indicated Price Waterhouse denied Hopkins partnership because she did not behave the way Price Waterhouse believed women should behave.

Hopkins filed suit against Price Waterhouse under Title VII of the Civil Rights Act of 1964, on the grounds that she was unlawfully denied partnership because of her sex.

Applicable Law

As discussed in an earlier post, Title VII makes it unlawful for an employer to “discharge any individual, or otherwise discriminate against any individual … because of such individual’s race, color, religion, sex, or national origin.” 42 U.S.C. § 2000e-2(a)(1).

Sex need only be a motivating factor, and not the only reason for the discharge or other discrimination. “[A]n unlawful employment practice is established when … sex … was a motivating factor for any employment practice, even though other factors also motivated the practice.” 42 U.S.C. § 2000e-2(m).

This section clearly prohibits an employer from refusing to hire or promote a female because she is female and the employer would prefer a male. Price Waterhouse addressed the question of whether Title VII also prohibits an employer from discriminating against an individual because she or he does not conform to the employer’s (or society’s) stereotypes about how the different sexes should behave.

The Court’s Decision

Addressing the facts in Price Waterhouse, the Supreme Court held, inter alia, that Title VII’s prohibition on sex discrimination necessarily includes a prohibition on gender stereotyping. The Court noted that Hopkins was denied a promotion because she was “macho,” “tough-talking,” and used “foul language,” and therefore failed to conform to certain stereotypes related to women. Id at 235, 250-53. Six members of the Court held that adverse employment action rooted in such “sex stereotyping” or “gender stereotyping” was actionable sex discrimination. Id. at 250–52 (plurality; “an employer who acts on the basis of a belief that a woman cannot be aggressive, or that she must not be, has acted on the basis of gender”); see also id. at 258 (White, J., concurring); id. at 272–73 (O’Connor, J., concurring).

Analysis

This case is important in the context of developing and understanding Title VII’s prohibition against employment discrimination “because of sex.” Under Price Waterhouse, a discharge (or other adverse employment action) based at least partly on gender stereotyping is unlawful sex discrimination under Title VII. As the Fourth Circuit Court of Appeals explained in G.G. ex rel. Grimm (Grimm II), “the Supreme Court has expressly recognized that claims based on an individual’s failure to conform to societal expectations based on that person’s gender constitute discrimination ‘because of sex’ under Title VII[.]” 654 Fed. Appx. 606, 606–07 (4th Cir. 2016) (Davis, J., concurring) (internal citations omitted).

As the American Psychological Association explained in its amicus brief in Price Waterhouse, sex stereotyping can create discriminatory consequences for stereotyped groups — for example, where they shape perceptions about women’s typical and acceptable roles in society. The APA further explained, as seen in the circumstances surrounding Hopkins’ partnership denial, how sex stereoptyping can have negative effects on women in work settings. The Supreme Court’s decision in Price Waterhouse allowed Title VII to be applied in a manner that seeks to address and remedy these issues.

Following the reasoning in Price Waterhouse, courts around the country have consistently held that an employer violates Title VII when it takes adverse action against an employee because she or he does not behave the way the employer believes the different sexes should behave. For example, Stegall v. Citadel Broad. Co., 350 F.3d 1061, 1072 (9th Cir. 2003), as amended (Jan. 6, 2004) characterized employer complaints about “assertive, strong women” as “difficult,” “having a negative attitude,” “not a team player,” and “problematic” as sex stereotypes that show discrimination. For similar reasons, in Hively v. Ivy Tech Cmty. Coll., 853 F.3d 339, 351–52 (7th Cir. 2017) (en banc) the Seventh Circuit held that a female plaintiff could state a Title VII claim under a sex stereotyping theory. In Christiansen v. Omnicom Grp., Inc., 852 F.3d 195, 200–01 (2d Cir. 2017) (per curiam) the Second Circuit likewise held that the plaintiff employee stated a plausible Title VII claim based on a gender stereotyping theory. As did the Third Circuit, in Prowel v. Wise Bus. Forms, Inc., 579 F.3d 285, 290 (3d Cir. 2009) (collecting cases, noting “the Supreme Court held that Title VII prohibits discrimination against women for failing to conform to a traditionally feminine demeanor and appearance”). In Nichols v. Azteca Rest. Enters., Inc., 256 F.3d 864, 874–75 (9th Cir. 2001), the Ninth Circuit applied Price Waterhouse in the context of sex discrimination against a male employee, observing that “the holding in Price Waterhouse applies with equal force to a man who is discriminated against for acting too feminine.” Similarly, in Schwenk v. Hartford, 204 F.3d 1187, 1202 (9th Cir. 2000), the court noted that Title VII forbids “[d]iscrimination because one fails to act in the way expected of a man or woman”). The First Circuit applied Price Waterhouse in Higgins v. New Balance Athletic Shoe, Inc., 194 F.3d 252, 261 n.4 (1st Cir. 1999), observing that “a woman can ground an action on a claim that men discriminated against her because she did not meet stereotyped expectations of femininity.”

For some additional examples of stereotyping discrimination in the trial courts, see Grimm v. Gloucester Cty. Sch. Bd., 302 F. Supp. 3d 730, 746 (E.D. Va. 2018) (discussing the gender-stereotyping theory of Price Waterhouse, collecting cases, and concluding claims of discrimination on the basis of failure to conform with gender-based societal expectations are “per se sex discrimination under Title VII[.]”); and Klings v. New York State Office of Court Admin., 2010 WL 1292256, *11, *15-16 (E.D.N.Y. Apr. 5, 2010) (complaints that the female plaintiff had an “abrasive personality” and was “condescending” could reflect a “gender bias: that women do not have leadership and motivational skills, [and] cannot manage aggressively[.]”).

In summary, Price Waterhouse was an important case because, among other things, it confirmed that Title VII’s language prohibiting discrimination “because of sex” includes a prohibition on gender stereotyping.

This site is intended to provide general information only. The information you obtain at this site is not legal advice and does not create an attorney-client relationship between you and attorney Tim Coffield or Coffield PLC. Parts of this site may be considered attorney advertising. If you have questions about any particular issue or problem, you should contact your attorney. Please view the full disclaimer. If you would like to request a consultation with attorney Tim Coffield, you may call 1-434-218-3133 or send an email to info@coffieldlaw.com.

Griggs v. Duke Power: Disparate Impact Without Discriminatory Intent

The Supreme Court’s decision in Griggs v. Duke Power Company, 401 U.S. 424 (1971), addressed the Title VII issues created by employer policies that are facially neutral, but which adversely impact employees on the basis of race, sex, or religion. In short, the Griggs Court decided that where an employer uses a neutral policy or rule, or utilizes a neutral test, and this policy or test disproportionately affects minorities or women in an adverse manner, then the neutral rule or test violates Title VII unless the employer proves it is justified by “business necessity.”

Summary

Title VII of the Civil Rights Act of 1964 prohibits employers from treating employees differently because of their race, sex, or religion. This means, obviously, that an employer cannot refuse to hire an applicant because of the applicant’s race. But sometimes employers may implement policies, or require applicants to take tests, that work to disadvantaged members of one sex, race, or religion over others — even though the employer may not have intended the policy or test to have that effect. For example, in Griggs, Duke Power had a policy that required employees in all but its lowest-paying jobs to have a high school diploma or pass “intelligence” tests. There was no evidence Duke Power intended this policy to discriminate against minority workers. The employees in Griggs argued this policy violated Title VII because it disproportionately impacted black workers.

The Griggs Court reasoned that Congress designed Title VII to address the consequences of employment practices and not just the employer’s motivation. Therefore, a neutrally-worded employment policy or test that has the effect of disproportionately impacting employees of one sex, race, or religion, may be unlawful under Title VII even if the employer did not intend that policy or test to be discriminatory in that way. The Griggs decision made it possible for employees to challenge employment practices that disadvantage certain groups if the employer cannot show the policy is justified by business necessity and paved the way for the Civil Rights Act of 1991, which codified the “disparate impact” theory of discrimination endorsed by Griggs.

Facts

Before Congress passed the Civil Rights Act of 1964, Duke Power intentionally discriminated against African-American employees by only allowing these employees to work in the company’s low-paying labor department. In 1955, the company implemented a policy requiring potential employees to have a high school diploma before they could work in any department except for the labor department. After the Civil Rights Act went into effect in 1965, Duke Power extended this policy to block employees who had not graduated high school from transferring or being promoted from its labor department to other departments within the company. Duke Power later amended this policy to allow employees who had not graduated high school to transfer from labor to other departments provided they were able to garner certain scores on “intelligence” tests. Here’s an article about the history behind this case.

Griggs filed a class action on behalf of twelve African American employees, claiming this diploma/testing policy violated Title VII by disproportionately impacting black workers. The case did not involve evidence that Duke Power intended its policy to harm black workers. The issue, then, was whether an employer’s facially neutral policy or test could violate the anti-discrimination provisions of Title VII on the grounds that the policy had the effect of disadvantaging minority workers.

Procedural Posture

The trial court dismissed the complaint. Griggs appealed. The Fourth Circuit affirmed in part, reversed in part, and remanded, holding that in the absence of a discriminatory purpose, Duke Power’s policy requiring a high school diploma or passing an “intelligence” test as a condition of employment was lawful under the Civil Rights Act. The Fourth Circuit, therefore, rejected Griggs’ claim that because Duke Power’s policy operated to render ineligible for employment a disproportionately high number of minority workers, the policy violated Title VII’s anti-discrimination provisions unless the employer proved the policy was job-related.

The Court’s Decision

The Court reversed. It held that Title VII prohibited Duke Power from requiring employees to produce a high school diploma or pass an “intelligence” test as a condition of employment, because Duke Power failed to show that these standards were significantly related to successful job performance, and both requirements operated to disqualify minority workers at a substantially higher rate than white applicants. The Court also observed that the jobs in question formerly had been filled only by white employees as part of Duke Power’s long-standing practice of giving preference to whites.

The Court pointed out that Congress’ objective for Title VII was to “achieve equality of employment opportunities and remove barriers that have operated in the past to favor an identifiable group of white employees over other employees.” 401 U.S. at 429–30. Therefore, under Title VII, “practices, procedures, or tests neutral on their face, and even neutral in terms of intent, cannot be maintained if they operate to ‘freeze’ the status quo of prior discriminatory employment practices.” Id. at 430. Intent is not dispositive. Title VII requires “the removal of artificial, arbitrary, and unnecessary barriers to employment when the barriers operate invidiously to discriminate on the basis of racial or other impermissible classification.” Id. at 431.

The critical point here was the Court’s understanding that “good intent or absence of discriminatory intent does not redeem employment procedures or testing mechanisms that operate as ‘built-in headwinds’ for minority groups and are unrelated to measuring job capability.” Id. at 432; see also Civil Rights Act of 1964, §§ 701 et seq., 703(a) (2), (h), 42 U.S.C. §§ 2000e et seq., 2000e–2(a) (2), (h). Title VII “proscribes not only overt discrimination but also practices that are fair in form, but discriminatory in operation.” 401 U.S. at 431.

After all, Congress intended Title VII to address “the consequences of employment practices, not simply the motivation.” Id. at 432. More than that, Title VII places on the employer “the burden of showing that any given requirement must have a manifest relationship to the employment in question.” Id. Therefore, an employer’s facially-neutral policy or test can violate the anti-discrimination provisions of Title VII if the policy has the effect of disadvantaging minority workers, and the employer fails to prove the policy or test is justified by “business necessity.” Id. at 431. “If an employment practice which operates to exclude [minority workers] cannot be shown to be related to job performance, the practice is prohibited.” Id.

Analysis

After Griggs, a neutrally-worded employment policy or test that has the effect of disproportionately impacting employees of one sex, race, or religion, may be unlawful under Title VII even if the employer did not intend that policy or test to be discriminatory in that way. The Griggs decision made it possible for employees to challenge employment practices that disadvantage certain groups if the employer cannot show the policy is justified by business necessity. Griggs also paved the way for the Civil Rights Act of 1991 (text here) which codified the “disparate impact” theory of discrimination endorsed by Griggs. In contrast to disparate treatment cases, which often turn on evidence of the employer’s intent, disparate impact cases commonly use statistical analyses to assess whether an employer’s policy or test runs afoul of Title VII by disproportionately harming employees of a certain race(s), sex, or religion.

This site is intended to provide general information only. The information you obtain at this site is not legal advice and does not create an attorney-client relationship between you and attorney Tim Coffield or Coffield PLC. Parts of this site may be considered attorney advertising. If you have questions about any particular issue or problem, you should contact your attorney. Please view the full disclaimer. If you would like to request a consultation with attorney Tim Coffield, you may call 1-434-218-3133 or send an email to info@coffieldlaw.com.