Inconsistent Factual Accounts Could Support an Inference of Retaliation

Q.  Is there anything I should look out for in documenting my legitimate business reason for terminating an employee?

A.  The United States Appeals Court for the Seventh Circuit (covering Illinois, Indiana and Wisconsin) recently issued an opinion that serves as a warning that inconsistent explanations of an employer’s reason for an adverse employment decision could support an inference of retaliation. In Donley v. Stryker Sales Corp., No. 17-1195 (7th Cir. Oct. 15, 2018), the plaintiff filed an internal complaint with the company’s human resources department that a manager was harassing a female coworker. The human resources director investigated the complaint and the company then terminated the manager, albeit with a hefty severance package.  Shortly after the termination, however, the plaintiff also was terminated.  The company claims that it fired the plaintiff for taking improper photographs of the CEO of a vendor, who was drunk at a work event approximately six weeks prior to plaintiff’s harassment complaint.

This is where the story shifts. In its response to the EEOC charge, the company alleged that the plaintiff showed the pictures she had taken to her supervisor on the night of the party and that he told her to delete them.  At his deposition, however, the supervisor claimed that he did not see the pictures on the night of the party.  Rather, he heard about them from coworkers, and told the human resources director about them.  The human resources director, on the other hand, testified at her deposition, that she learned about the photographs from another employee during his exit interview and decided to investigate the issue.

Plaintiff claimed that her supervisor and the human resources director knew about the photographs prior to the investigation and approved of them. It was not until after plaintiff brought the harassment complaint – in fact one day after the manager was terminated – that the human resources director initiated an investigation into the purportedly improper photographs.  Plaintiff argued that this timing was suspicious, and supported her claim that she was terminated for bringing the harassment complaint to the attention of the human resources director.

The lower court granted summary judgment to the employer. The Seventh Circuit reversed, however, finding that there was a disputed issue of fact whether the employer used the photographs – which it had previously approved – as a pretext for the termination.  According to the Court:  “[A]n employer’s shifting factual accounts and explanations for an adverse employment decision can often support a reasonable inference that the facts are in dispute and that an employer’s stated reason was not the real reason for its decision.”

Lessons learned? Retaliation claims can be difficult to defend, particularly when the adverse employment action occurs close in time to the employee’s protected activity.  When executing an adverse employment decision, employers should make sure that the adverse action is supported by a legitimate business reason.  Moreover, when defending this decision in a subsequent agency proceeding and lawsuit, it is important to create a consistent factual record of the stated reason for the decision.

— Tracey E. Diamond

 

Delaware Passes Sexual Harassment Law Which Includes Training Mandates for Employees

Q.  Does Delaware have any laws requiring employers to train employees on their harassment policy?

A.  Yes. On August 29, 2018, Delaware enacted a sexual harassment law aimed to broaden protections for workers against sexual harassment. Among other things, the law requires employers to provide sexual harassment prevention training to all employees, with supervisors receiving additional training.  The law also instructs employers as to the content of the training.

Specifically, employers in Delaware with 50 or more employees must provide interactive training and education to employees regarding sexual harassment training. Such training shall be provided to new employees within one year of hire, and thereafter every two years, and to existing employees within one year of the effective date of the Act and thereafter every two years.  The training must include all of the following:

  1. The illegality of sexual harassment;
  2. The definition of sexual harassment using examples;
  3. The legal remedies and complaint process available to the employee.
  4. Directions on how to contact the Department.
  5. The legal prohibition against retaliation.

In addition, employers must provide supervisors with interactive training that includes: (i) specific responsibilities of a supervisor regarding the prevention and correction of sexual harassment; and (ii) the legal prohibition against retaliation. New supervisors must receive training within one year of employment and every two years thereafter, and existing supervisors must receive training within one year of the effective date of the Act (January 1, 2020), and every two years thereafter.  If an employer already provided training that meets the requirements of the law, the employer is exempt from training until January 1, 2020.

In addition to the training requirement, the new Delaware law provides that an employer is responsible for the sexual harassment of an employee when (1) the supervisor’s sexual harassment results in a negative employment action of an employee; (2) the employer knew or should have known of the non-supervisory employee’s sexual harassment of an employee and failed to take appropriate corrective measures; or (3) a negative employment action is taken against an employee in retaliation for the employee filing a discrimination charge, participating in an investigation of sexual harassment, or testifying in any proceeding or lawsuit about the sexual harassment of an employee.

A “negative employment action” is defined broadly as “an action taken by a supervisor that negatively impacts the employment status of an employee.” It is unknown whether courts will interpret this to mean an “adverse action” that affects the terms or conditions of employment, or some broader type of “negative action,” such as a “hostile work environment.”  An action broader than what has been traditionally defined as a “adverse action” could significantly expand the situations in which employers can be held liable under the Act.

A Delaware employer can avoid liability based on a non-supervisory employee’s action if the employer: (1) exercised reasonable care to prevent and correct any harassment promptly; and (2) the employee unreasonably failed to take advantage of any preventative or corrective opportunities provided by the employer.

Notice Requirements for Employers

To comply with the notice requirements of the law, employers must distribute an information sheet, created by the Delaware Department of Labor, which includes information regarding employees’ right to be free from sexual harassment in the workplace.  New employees must receive the notice upon hire (beginning January 1, 2019).  Current employees must receive the notice by July 1, 2019.  The notice can be distributed electronically or physically.

Kali T. Wellington-James

New Pa. Guidance Interprets Anti-Discrimination Law to Cover LGBT Individuals

Q.  Does Pennsylvania State law protect employees against discrimination based on their sexual orientation and gender identity?

A.  The PHRC, however, recently released new guidance expanding the definition of the term “sex” under the Act to include LGBT status. The PHRC is an agency of the executive branch of the Pennsylvania government under the direction of Governor Tom Wolf. The new PHRC guidance broadens the definition of “sex” under the Act to include “sex assigned at birth, sexual orientation, transgender identity, gender transition, gender identity, and/or gender expression depending on the individual facts of the case.” As a result, the PHRC now takes the position that the Act prohibits “discrimination on the basis of sex assigned at birth, sexual orientation, transgender identity, gender transition, gender identity, and gender expression.” The guidance announces that the PHRC will accept sex discrimination complaints from individuals alleging discrimination based on their LGBT status, and employers will be forced to defend those complaints.

For more information, please click here.

Lee E. Tankle

Employers Must Utilize New Fair Credit Reporting Act (FCRA) Summary of Rights Form

Q: My company uses a third-party vendor to conduct background checks on prospective employees.  We heard there is a new model for the “A Summary of Your Rights Under the Fair Credit Reporting Act” notice.  Should we be using it?

A: Yes.

The Fair Credit Reporting Act (FCRA) establishes strict procedures that employers must follow when obtaining background check reports on applicants or employees from a third party “consumer reporting agency.” The FCRA requires employers to provide written disclosures to and seek affirmative consent from applicants and employees before procuring these types of background check reports.

The FCRA also imposes requirements on employers to provide notices to applicants and employees whom the employer intends to not hire, terminate, or demote based upon the results of a background check report. In complying with these notice requirements, employers are required to give applicants and employees a description of their rights under the FCRA.

The Consumer Financial Protection Bureau (CFPB) is responsible for enforcing certain aspects of the FCRA, and publishes a model notice entitled “A Summary of Your Rights Under the Fair Credit Reporting Act” that most employers utilize to comply with the FCRA.

Earlier this year, Congress adopted legislation called the Economic Growth, Regulatory Relief, and Consumer Protection Act. This law requires nationwide consumer reporting agencies to provide “national security freezes” free of charge to consumers, which restricts prospective lenders from obtaining access to a consumer’s credit report, thereby making it harder for identity thieves to open accounts in the consumer’s name.

The newly enacted law requires that whenever an applicant or employee (“consumers” for purposes of the FCRA) is provided a summary of their rights under the FCRA, they must also be informed of the new right to a security freeze.

Earlier this month, the CFPB released a new model “A Summary of Your Rights Under the Fair Credit Reporting Act” notice, which incorporates information about consumers’ right to a security freeze. The new form (“Summary of Consumer Rights”) can be found here. As this new form went into effect on September 21, 2018, employers should begin utilizing the new form immediately.

If you have any questions or concerns about the new form or your business’s compliance with the Fair Credit Reporting Act, please contact any member of the Pepper Hamilton Labor and Employment team.

–Lee Tankle

NLRB Proposes New Rule on Joint Employer Standard

Q.  What is the current rule for determining whether two employers are considered to be “joint employers” under the National Labor Relations Act?

A.  On September 14, 2018, the National Labor Relations Board (NLRB) proposed a new regulation that would make it more challenging to establish joint employer status under the National Labor Relations Act. The proposed rule dictates that two entities will be joint employers only if each exercises substantial direct and immediate control over employees.

As we reported previously, in 2015, the NLRB significantly relaxed the standard for proving that two entities are joint employers in Browning-Ferris Industries of California, Inc. d/b/a BFI Newby Island Recyclery, 362 NLRB No. 186 (2015). In Browning-Ferris, decided during the Obama administration, the NLRB ruled that entities could be joint employers even if one had only indirect, limited and routine control or the unexercised right to control employees’ terms and conditions of employment. The NLRB reversed course in December 2017 during the Trump administration, overruling Browning-Ferris and reinstating the standard for joint employer status that had existed previously – that entities are joint employers only if each has exercised direct and immediate control over employees. See Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (2017). The Hy-Brand ruling was short-lived, however. The NLRB vacated that ruling earlier this year due to the conflict of interest of one of the NLRB’s members who participated in the decision. In the meantime, a petition for review of Browning-Ferris is pending in the D.C. Circuit Court of Appeals.

Now, the NLRB seeks to establish a stricter joint employer standard by regulation. Doing so would add more permanence to the joint employer standard than interpreting it through case law, which often changes from one presidential administration to the next. The NLRB explained in its Federal Register notice that it would benefit from public comment on the joint employer standard “given the recent oscillation on the joint-employer standard, the wide variety of business relationships that it may affect (e.g., user-supplier, contractor-subcontractor, franchisor-franchisee, predecessor-successor, creditor-debtor, lessor-lessee, parent-subsidiary, and contractor-consumer), and the wide-ranging import of a joint-employer determination for the affected parties.”

The NLRB’s proposed rule enunciates the following test for joint employer status:

An employer, as defined by Section 2(2) of the National Labor Relations Act (the Act), may be considered a joint employer of a separate employer’s employees only if the two employers share or codetermine the employees’ essential terms and conditions of employment, such as hiring, firing, discipline, supervision and direction. A putative joint employer must possess and actually exercise substantial direct and immediate control over the employees’ essential terms and conditions of employment in a manner that is not limited and routine.

The NLRB included 10 examples with the proposed rule “to help clarify what constitutes direct and immediate control over essential terms and conditions of employment.” For example, the NLRB concluded that the following scenario reflects one company’s direct and immediate control over another company’s employees: Company A supplies labor to Company B and, pursuant to the contract between them, Company A is required to pay a particular wage rate. In that situation, Company B exercises direct and immediate control over wage rates. In another example, a franchisor requires its franchisee to operate the franchisee’s store between specified hours. The franchisor does not exercise direct and immediate control over the essential terms and conditions of employment of the franchisee’s employees because the franchisor is not involved in scheduling the franchisee’s employees or in determining shift durations.

The NLRB’s proposed rule will now go through the time-consuming rulemaking process. As employers wait for the publication of a final rule, companies can minimize the risk of joint employer status by avoiding involvement in decisions regarding another company’s employees, including decisions regarding pay, hiring, discipline or termination.

–Susan K. Lessack