Employer May Not Have Affirmative Defense to Harassment Claim even if Employee Fails to Report Harassment

Q:  Does my company have an affirmative defense to a sexual harassment claim if the company has a policy for reporting sexual harassment and an employee never makes a report of sexual harassment under that policy?

A:  Earlier this summer, in a case called Minarsky v. Susquehanna County, the United States Court of Appeals for the Third Circuit (governing employers in Pennsylvania, New Jersey, Delaware, and the Virgin Islands) ruled that “a mere failure to report one’s harassment is not per se unreasonable,” even though the Third Circuit had previously “often found that a plaintiff’s outright failure to report persistent sexual harassment is unreasonable as a matter of law.”

In Minarsky, Thomas Yadlosky was the former Director of the Susquehanna County Department of Veterans Affairs. Over the course of many years, he made unwanted sexual advances toward his part-time secretary, Sheri Minarsky.  Minarsky never reported the conduct, but the County was aware of Yadlosky’s inappropriate behavior regarding two other County employees and had warned him on at least two occasions to stop.  On a nearly weekly basis, Yadlosky engaged in conduct that was clearly inappropriate, including: attempting to kiss Minarsky on the lips, attempting to embrace Minarsky from behind, massaging Minarsky’s shoulders, calling Minarsky at home to ask personal questions; and sending sexually explicit messages from his work email account to Minarsky’s work email account. To make matters worse for Minarsky, she and Yadlosky worked in a building separate from many other County employees. Minarsky testified that she feared speaking up to Yadlosky or protesting the harassment because Yadlosky would become “nasty,” and had warned that Minarsky should not trust county administrators.

Nearly four years into her employment with the County, Minarsky (with the encouragement of her physician) eventually drafted an e-mail to Yadlosky demanding that he stop his conduct. She also confided in a co-worker regarding Yadlosky’s conduct.  The co-worker mentioned the conduct to another employee, a supervisor overheard this conversation, and the supervisor reported the conduct to the Chief County Clerk. The Chief Clerk then interviewed both Minarsky and Yadlosky, and Yadlosky admitted to the allegations. Yadlosky was immediately placed on paid administrative leave, and then terminated.  Minarsky alleged that she continued to feel uncomfortable in her role despite Yadlosky’s termination, however, because her workload increased and her new supervisor asked about what happened with Yadlosky and “who else she had caused to be fired.”

Under pertinent United States Supreme Court case law, an employer has an affirmative defense to a claim of harassment if the employee has not been subject to any adverse employment action (e.g. termination, demotion, etc.) and the employer can show that (a) it exercised reasonable care to avoid harassment and to eliminate it when it might occur, such as with a written harassment policy, employee training, by conducting a prompt and thorough investigation of any complaints, and promptly taking “remedial measures” reasonably calculated to address any inappropriate behavior, and (b) the employee failed to act with reasonable care to take advantage of the employer’s safeguards and otherwise prevent harm that could have been avoided.

In Minarksy, the trial court granted summary judgment in favor of the County, concluding that the employer proved the affirmative defense as a matter of law because the County maintained an anti-harassment policy and Minarsky had not complained about Yadlosky’s behavior.  On appeal, however, the Third Circuit disagreed and reversed the trial court.

The Third Circuit acknowledged that the County maintained a written anti-harassment policy of which Minarsky was aware. The Court disagreed, however, with the trial court’s conclusion that this fact, standing alone, satisfied the first prong of the affirmative defense. The Third Circuit held that there were factual questions about whether the County acted reasonably to prevent Yadlosky’s behavior and to take prompt remedial measures when it learned of his prior conduct toward other women.   According to the Court, the County had evidence that “Yadlosky’s conduct toward Minarsky was not unique,” and had “seemingly turned a blind eye toward Yadlosky’s harassment.” The Court concluded that a jury should determine whether the County had acted reasonably.

Even more disturbing for employers, the Third Circuit also concluded that there was a factual issue for the jury to decide on the second prong of the affirmative defense, even though it was undisputed that Minarsky failed to report Yadlosky or otherwise utilize the County’s reporting process. In an apparent nod to the #MeToo movement, the Court recognized the current climate of “national news regarding a veritable firestorm of allegations of rampant sexual misconduct that has been closeted for years, not reported by the victims.” The Court noted that, in many of these instances, “the harasser wielded control over the harassed individual’s employment or work environment,” and “the victims asserted a plausible fear of serious adverse consequences had they spoken up at the time that the conduct occurred.” Given this climate, and the facts of the case, the Court wrote that “a jury could conclude that [an] employee’s non-reporting was understandable, perhaps even reasonable.”

Per the Court: “Workplace sexual harassment is highly circumstance-specific, and thus the reasonableness of a plaintiff’s actions is a paradigmatic question for the jury, in certain cases. If a plaintiff’s genuinely held, subjective belief of potential retaliation from reporting her harassment appears to be well-founded, and a jury could find that this belief is objectively reasonable, the trial court should not find that the defendant has proven the second [element of the affirmative defense] as a matter of law. Instead, the court should leave the issue for the jury to determine at trial.”

Some lessons for employers?

  1.  Do not count on the affirmative defense recognized by the U.S. Supreme Court. The only way to eliminate the risk of lawsuits from sexually harassed employees is to actually prevent sexual harassment, and failing that, to take strong action when it occurs. It is not nearly enough for employers to merely have an anti-harassment policy in place. An ineffective or unutilized policy is just as bad as having no policy at all.
  2. Train your employees and managers on company harassment and non-discrimination policies. Foster a work environment that encourages individuals to make reports of harassment or discrimination when they observe inappropriate behavior and then investigate all allegations of discrimination and harassment. Consider creative ways to encourage employees to come forward, such as a method for reporting misconduct anonymously, and a strong non-retaliation policy and environment.
  3. Do not wait for somebody to make a complaint. If managers or human resources personnel are aware that inappropriate conduct is taking place, the company should take affirmative steps to stop the harassment (even if the victim does not want the company to be involved or does not want to “get the harasser in trouble”).
  4. When an investigation concludes that an employee engaged in unlawful harassment, take strong action. Termination may not be the appropriate remedial action in every case.  Minarsky v. Susquehanna County shows, however, that any action short of termination will leave the company exposed – at least to a jury trial—for any unlawful harassment by that employee in the future.
  5. If you currently have an unaddressed serial harasser in the workplace, partner with legal counsel to determine appropriate next steps.

Lee E. Tankle

 

New Maryland Law Requires Employers to Gather Information on Settlement of Sex Harassment Claims

Q.  Are there any laws related to settlement of sex harassment claims in Maryland that I should be aware of?

A.  In response to the many high-profile scandals in the news, several jurisdictions have enacted anti-sexual harassment legislation. To date, Vermont, New York, and Washington passed anti-sexual harassment laws. Maine, North Carolina, Ohio, and New Jersey introduced similar statutes in state legislatures. The new legislation aims to reduce sexual harassment in the workplace by prohibiting waiver provisions in employment contracts, preventing non-disclosure and other provisions in sexual harassment settlement agreements, and providing new avenues for employee reporting and disclosure. Maryland is the latest state to say “#MeToo.”

On May 15, 2018, Maryland Governor Larry Hogan signed into the law the Disclosing Sexual Harassment in the Workplace Act of 2018 (the “Act”). Designed for transparency, the Act prohibits jury trial waivers and also imposes reporting requirements related to settlement of sexual harassment claims by Maryland employers.  Unlike many of the other laws, the Maryland law does not expressly prohibit nondisclosure provisions in settlement agreements.

The Act takes effect October 1, 2018.

Prohibition on Waivers

The Act prohibits Maryland employers, regardless of size, from requiring employees to arbitrate sexual harassment claims. The Act renders mandatory arbitration provisions as void against public policy. In addition, the Act prohibits an employer from taking any adverse action against an employee because the employee refuses to enter into any agreement containing an invalid waiver.

As we have written previously, mandatory arbitration provisions are favored under the Federal Arbitration Act, despite state law to the contrary. In fact, in a recent United States Supreme Court opinion, Epic Systems Corp. v. Lewis, the Court confirmed previous rulings in favor of mandatory arbitration of employment claims, upholding the validity of class action waivers in arbitration agreements signed by employees.  It is therefore likely that the prohibition on mandatory arbitration clauses will be attacked on the grounds that it is preempted by federal law. Similar state statutory provisions prohibiting mandatory arbitration have been found to be preempted.

Reporting Requirement

The Act also requires Maryland employers with 50 or more employees to submit a survey to the Maryland Commission on Civil Rights containing the following information:

  1. the number of settlements made by or on behalf of the employer after an allegation of sexual harassment by an employee;
  2. the number of times the employer has paid a settlement to resolve a sexual harassment allegation against the same employee over the past 10 years of employment;
  3. the number of settlements made after an allegation of sexual harassment that included a confidentiality provision; and
  4. information on whether the employer took any personnel action against the employee who was the subject of the settlement.

Employers must submit the first survey on or before July 1, 2020 and a second survey on or before July 1, 2022. The Commission will collect the employer-provided data and publish aggregate data on its publicly-accessible website, as well as provide, upon request, responses of individual employers to requirement number. 2.

Employer Action Items

With respect to the waiver prohibition aspect of the new Act, Maryland employers will have to decide whether to remove any provisions in employment agreements mandating arbitration of harassment claims, or take the position that the Maryland Act is preempted by federal law.

In addition, Maryland employers with 50 or more employees should prepare to comply with the survey requirements of the Act by coming up with a method to track and gather internal information on sexual harassment claims and settlements, as well as ensure that personnel files of the subjects of those sexual harassment claims are retained in order to complete the Commission survey.

Employers also should monitor for any future regulations or other guidance issued by the Commission that clarifies the Act’s employer reporting provision. For example, the Act does not address if the survey includes current and former employees and settlements outside of Maryland. Nor does the Act provide for any penalties or enforcement mechanisms if an employer fails to comply with the mandatory reporting requirements.

— Tracey E. Diamond and Sara Mohammed, Law Clerk

 

MASSACHUSETTS IS ON THE RISE! Increases in the Minimum Wage and Establishment of a Paid Family and Medical Leave Program Strengthen Massachusetts’ Competitive Economic Environment

Q.  Are there any new laws in Massachusetts that my company should be aware of?

A.  Massachusetts Governor Charlie Baker recently signed a bill that will serve as a turning point for working families. Referred to as the “Grand Bargain,” the bill represents a compromise among legislators, labor, community and business groups. The four main components of the bill will significantly impact all Massachusetts employers with at least one employee over the next five years.

Minimum Wage Increases

Currently, the Massachusetts minimum wage is $11 per hour. Under the new law, the minimum wage will increase incrementally to $15 per hour in 2023, tying New York, California and Washington, D.C. as having the highest statewide minimum wage in the country. Beginning January 1, 2019, the Massachusetts minimum wage will increase to $12 per hour, and will increase each year thereafter in $0.75 increments until 2023: $12.75 in 2020, $13.50 in 2021, $14.25 in 2022, and $15 in 2023. The Massachusetts current tipped minimum wage of $3.75 per hour will increase in $0.60 increments each year until it reaches $6.75 in 2023.

Premium Pay for Sunday Work and Work on Legal Holidays

Currently under Massachusetts law, employers must pay premium pay of 1.5 times the hourly rate for work performed on Sundays and Massachusetts’ legally-recognized holidays.  Under the new law, premium pay will be gradually phased out by 2023. Beginning January 1, 2019, workers will be paid 1.4 times their hourly rate as premium pay. The percentage will decrease annually by 10% until 2023, when workers will receive their regular hourly rate regardless of the day worked. Employers cannot require employees to work on Sundays or legally recognized holidays, nor can employees be punished for refusing to work on such days. Note: This decrease is for premium pay only, and is not to be confused with and does not relieve an employer of its obligation to pay one and one-half times an employee’s regular hourly rate for all hours worked in excess of 40 hours in a given work week.

Paid Family and Personal Medical Leave

Massachusetts will join New York, California, New Jersey, Rhode Island, Washington and Washington, D.C. in offering a paid family and medical leave program. Beginning in 2021, eligible employees will be permitted to take up to 12 weeks of job-protected paid leave to care for a sick family member or a newborn, up to 20 weeks of job-protected paid medical leave to attend to their own serious medical needs, and up to 26 weeks of job-protected paid family leave to care for a covered service member. However, an employee may only take a maximum of 26 weeks, in the aggregate, in a benefit year. Upon returning to work, employees must be restored to the same or equivalent positions held prior to taking leave. Employers will be required to post a notice regarding Paid Family and Personal Medical Leave, and newly hired employees must be provided with a notice of benefits within 30 days of their hire date. Note: Paid Family and Personal Medical Leave will run concurrently with leave taken under the Massachusetts Parental Leave Act and the federal Family and Medical Leave Act.

Additional Payroll Tax

The Massachusetts Paid Family and Personal Medical Leave Act will be financed through an additional 0.63% payroll tax, commencing July 1, 2019. Employers are required to deduct this additional tax from an employees’ wages and employers with more than 25 employees are responsible for contributing 60% of the contributions for personal medical leave. Note: Employers may elect to opt out of paying the employer portion of this payroll tax if they provide benefits that equal or exceed those provided by the Massachusetts Paid Family and Personal Medical Leave Program.

Rebecca Alperin

 

Supreme Court Rules Public Sector NonMember Union Dues Are Unconstitutional

Q: Can public employees, who are not members of a union, be forced to pay union dues?

A: No. On June 27, 2018, in a 5-4 opinion, the United States Supreme Court overturned more than 40 years of precedent, ruling that it is unconstitutional to force public employees to pay agency fees.

In Janus v. AFSCME, Council 31, Mark Janus, a state employee of Illinois, refused to join AFSCME (the “Union”).  Mr. Janus strongly objected to several of the public policy positions taken by the Union.  Despite his refusal to join the Union, however, he was still required to pay a portion of the Union’s fees.  Under the Illinois Public Labor Relations Act, employees who do not wish to join the union are not required to pay full union dues, but rather must pay a percentage of the dues.  These fees, commonly referred to as agency fees, are automatically deducted from nonmembers’ wages in order to compensate the union for the costs of the collective bargaining process and related activities.

The central point of Mr. Janus’ argument was that the nonmember fee deductions are coerced political speech, violating the First Amendment. The Court held that since unions take positions on matters of public importance, requiring public employees to provide financial support to a union would infringe upon their First Amendment rights.  By acting as the exclusive representative of the employees, a union is essentially speaking for all of the employees.  Thus, when a union speaks about matters of public concern, it violates employees’ First Amendment rights, because the union is forcing individuals to endorse views that they find objectionable.

AFSCME argued that agency fees are necessary to prevent nonmembers from taking advantage of the benefits of union representation without bearing the cost. The Court explained that unions receive several benefits simply from being designated as the exclusive representative of the employees.  For example, unions are given a privileged place in negotiations with employers over wages, benefits, and working conditions.  Therefore, it is in the union’s best interest to represent even nonmembers because it allows them to retain their power and control over the administration of the collective-bargaining agreement.  In addition, the union argued that the nonmembers’ First Amendment rights were not restricted because the fees collected by unions only cover collective bargaining, and not political and ideological activities.

The Court found in favor of the nonmembers, stating that it is unconstitutional to force those nonmember employees to pay agency fees. The majority opinion, written by Justice Samuel Alito, ruled that states and public-sector unions “may no longer extract agency fees from nonconsenting employees … The procedure violates the First Amendment and cannot continue.”

Although this decision applies directly to public-sector unions, it could result in a decline in the labor movement generally. Twenty-eight states already have “right to work” statutes in place, banning unions from requiring nonmembers to pay agency fees.  However, unions are steadfast in many of the remaining states, including Pennsylvania.  The elimination of mandatory agency fees for nonmembers may reduce membership across the country, and thus, weaken unions generally.  Justice Alito seemed to recognize this, stating:  “We recognize that the loss of payments from nonmembers may cause unions to experience unpleasant transition costs in the short term, and may require unions to make adjustments in order to attract and retain members.”

— Tracey E. Diamond and Lula T. Weldekidan, Law Clerk

 

Using Employees’ Fingerprints for Timekeeping: Protecting Employee Data and Minimizing Risk

Q.  Can my Company institute a timekeeping system that uses fingerprints to track time?

A. Employers increasingly maintain timekeeping systems that require employees to clock in and out of work using their fingerprints to reduce the risk of coworkers clocking in for each other (so-called “buddy punching”) and to increase the accuracy of time reporting. Fingerprints are biometric data, and some employees fear that their data could be stolen or sold, leading to identity theft. The damage caused by identity theft is greater when biometric data is stolen because, unlike Social Security numbers or other personally identifiable information, an individual’s biometrics cannot be changed.

At present, there is no federal statute regulating employers’ use of employees’ biometric data, and just three states — Illinois, Texas and Washington — have laws that specifically regulate biometric privacy.1

For more information about this topic, click here.

Susan K. Lessack