On the Legal Front: May You Live in Interesting Times

Rich Tonowski, EEOC

The opinions expressed in this article are those of the author and not necessarily those of any government agency. The article should not be construed as legal advice.

The apocryphal Chinese curse in this article’s title was popularized in a speech by Robert Kennedy in 1966.¹ It has renewed currency.

Uncertainly Interesting

Contributing to the interest is uncertainty regarding federal government policy and regulation. Here is a list as of this writing:

Pay Data Collection

The Equal Employment Opportunity Commission (EEOC) plans to collect pay data from employers via the EEO-1 workforce reports were put on indefinite hold as of August 29. The usual filing deadline of September 30, 2017 had been postponed to March 2018 in anticipation of the new reporting requirements. But the final clearance comes from the federal Office of Management and Budget, which reviews whether proposed regulations are unduly burdensome. The EEO-1 changes were approved previously, but there is a new administration in Washington these days. Employers provided plenty of negative comment regarding burden when the changes were proposed. Although the aim of the reporting requirements in supporting pay equity has been generally praised, opinion has been sharply divided on whether the data collection was worth the effort. Acting Chair Victoria Lipnic, who had opposed the plans when proposed, indicated that the hold did not mean a lessening of EEOC’s enforcement efforts regarding pay discrimination.

EEOC Merger With the Office of Federal Contract Compliance Programs (OFCCP)

This had been proposed in President Trump’s budget and had the effect of uniting antagonistic stakeholders: Civil rights advocates and employer groups joined in calling it a bad idea. Depending on one’s perspective, the proposed merger could create an agency that was too weak or too powerful. OFCCP is in the business of furthering affirmative action with contractors as a condition of doing business with the federal government. EEOC enforces EEO law, sometimes suing employers in federal courts. Similarities abound, but jurisdiction, activities, and enforcement authority are real differences. Now this plan seems to be on hold, although there may be further news in September when federal agencies must submit reorganization plans in accordance with a previous presidential directive (Casuga, 2017).

LGBT Coverage Under Title VII

The courts remained divided. The Seventh Circuit Court of Appeals (based in Chicago) reversed its previous position of no coverage in an en banc2 decision (Hivley, 2017). Judge Richard Posner, one of the federal judiciary’s most distinguished (and controversial) figures, made his own news in a concurring opinion on the role of the courts in updating the law. Meanwhile, back in New York, the Second Circuit is considering whether to reverse its no-coverage precedent. The court invited EEOC, which argues for coverage, to file a brief in the case. Then the Department of Justice announced that it would file a brief in opposition. This issue likely needs the Supreme Court for resolution.

Overtime Rules

The Department of Labor (DOL) had proposed raising the annual pay limit for overtime pay eligibility under the Fair Labor Standards Act (FLSA) to $47,476, from the current $23,660. Although the limit had not been raised in many years, the sharp jump had numerous organizations concerned about making payroll and possibly restructuring jobs and pay plans to deal with the new limit. Implementation was halted by court injunction in response to a suit filed by 21 states and about 55 business groups, which the Obama Administration appealed on DOL’s authority regarding the pay limit. On August 31, the court declared that DOL’s action was invalid (State of Nevada, 2017). The court held that to be exempt from overtime provisions, the employee must be salaried, have a salary above the established minimum set by DOL, and have “bona fide executive, administrative, or professional [EAP] capacity” duties. By raising the minimum salary level, DOL effectively negated the duties component. The salary limit protects employees who are paid so low that it was unlikely that they have bona fide EAP duties, but it should not make low-paid bona fide EAP employees eligible for overtime. Although further appeal is possible, on July 25 DOL had announced that it was seeking input on the pay level and other factors that have long made determining coverage or exemption for overtime a confusing affair. There are a few additional matters, such as indexing the pay level for automatic increases and having multiple levels depending on region and position (Yoshor, 2017).

“Persuader” Rule

This DOL regulation would have called for disclosure of advisors to management regarding union elections; it would include attorneys, which stirred concerns of compromising the attorney–client relationship. This also was put on the shelf by court injunction; DOL announced that it would start new rule making.

Wellness Programs

Just when we might have thought that this controversy was over, a federal court ordered EEOC to explain its rules on August 22. The issue is how much of a discount can employers give on health plans for voluntary participation in wellness programs and still maintain the program as voluntary. Initially EEOC took a relatively hard line on these incentives because of the Americans with Disabilities and Genetic Information Nondisclosure Acts. But employers complained that this position contradicted support for such programs in the Affordable Care Act (“Obamacare”). EEOC subsequently issued final rules that set the cap on incentives at 30% of the cost of the health plan; the Americans Association of Retired Persons objected that this was too high a cost for nonparticipation to be voluntary; the court ruled that EEOC did not provide an adequate explanation for its rules; so, the rules are not final yet. However, the court ordered that pending resolution they be kept in force to prevent confusion.

Joint Employer

This is an issue that crosses multiple agencies. A corporation may involve several independently owned franchises. Likely the parent corporation has contracts with the franchises that support standardization of operations to protect the corporate brand. If that standardization applies to employment issues (or, arguably, indirectly applies, or potentially applies), then the parent corporation may have responsibility for what the franchise is doing. This can greatly increase liability for the parent; the question is whether it should. In EEO law the issue can come up when a temporary employment agency cooperates with the client-employer in discrimination for work assignments. DOL had announced a rollback of 2015 and 2016 guidance on June 7 and will hold hearings toward rule making. The Save Local Business Act was introduced in the U.S. House of Representatives in July and would mandate a direct control standard for joint employer status under FLSA and the National Labor Relations Act.

Not-So-Free Speech

Then there is the uncertainty with how to deal with incivility in the workplace, a concern heightened by incivility that has generally infected discussion of public issues. One version of the concern is what to do with employees who openly support “hate groups,” a term likely open to interpretation. Federal law likely does not afford protection to employees in the private sector. The Constitutional guarantee of freedom of association is a possibility for government employees. State laws prohibiting “lifestyle discrimination,” sometimes associated with protecting employees who engage in lawful behaviors such as tobacco smoking at home, which may run afoul of an employer’s efforts to promote a healthy workforce, might also be a possibility, depending on the breadth of the state law (Smith, 2017). Perhaps the issue for the employer when some employees have such affiliations is the business need for to maintain a well-functioning workplace. Having an employee openly contemptuous of other employees because of their demographics might be disruptive.

If group affiliation is a hot issue, hotter is derogatory speech directed by some employees at others. When such speech is severe or pervasive,3 and directed against someone because of protected class, federal EEO law against harassment may apply. The employer, when put on notice that an employee’s conditions of employment are affected by discriminatory acts, is obliged to act.4 But an employer may want to put a stop to such behavior long before it becomes material for a lawsuit. The first question in such cases is whether the behavior violates law or employer policy. Unlawful behavior demands a corrective response. Policy may be more ambiguous, starting with how bright was the line between acceptable and unacceptable behavior for the perpetrator. Whether the behavior contradicted organizational values or impacted other employees can be considerations. Yet another perspective is whether the speech endorsed prejudicial workplace stereotypes or was a protest against perceived exclusion. The firing of a Google employee, James Damore, regarding his alleged views on the suitability of women for tech jobs captured national attention (Berman-Gorvine, 2017). Damore subsequently indicated that he was taking legal action against Google over diversity practices that he and others found objectionable. He filed a complaint with the National Labor Relations Board (NLRB). The specifics are not clear, but a strong possibility is that the complaint involves alleged suppression of protected concerted employee action: the right of employees to band together for mutual protection and support, and to speech that supports that action.

That brings us to NLRB’s stand on derogatory speech5 associated with concerted action. Previously the agency made news by ordering reinstatement of employees fired for making derogatory comments about management on social media. The most recent round had the Eighth Circuit upholding reinstatement of an employee (Cooper Tire and Rubber Co., 2017) who had shouted racial insults during a labor dispute.⁶ The employer had locked out the employees and brought in replacements, many of them African Americans, when negotiations to renew the collective bargaining agreement failed. The regular employees picketed the company and the insults came from an individual on the picket line. The employee was fired; an administrative law judge (ALJ) for the NLRB ordered reinstatement, overturning an arbitrator’s decision upholding the firing; the ALJ’s decision was upheld by the Board; and the company appealed. The appellate court majority held that judicial precedent cut some slack for picket line language; the objectionable behavior did not amount to incitement to violence or coercion against the replacements, nor did it rise to harassment under Title VII. On the latter point, the company had argued that it had a “legal obligation under Title VII to apply its lawful policy prohibiting harassment to racist statements.” The court ruled that, regardless, there was no obligation to fire the employee; a warning may have been sufficient.

This was a split decision. The dissenting opinion begins, “No employer in America is or can be required to employ a racial bigot. … [I]n this case the Board predictably decided not to defer [to the arbitration decision], relying upon strained pretenses and a contorted review of the arbitrator's award to reach its desired result.” The opinion continues by noting that the language was racist, the union had warned picketers not to use such language, and despite the absence of a collective bargaining agreement labor and management had agreed to arbitration regarding the firing. The arbitrator’s decision should have ended the matter. “Finally, I note that this court again improperly expands the list of cases that support the NLRB's pattern and practice of reconciling facts and construing issues most favorably to labor-union interests, usually by means of its cadre of ALJs, as here. … Thus, this untethered course of action by the NLRB should be aggressively repulsed” [case citations omitted]. This concluding comment indicates a context for evaluating the employee’s behavior beyond the picket line context. Having to consider the contexts of racist speech does not allay the uncertainty of what the proper response should be regarding the offending employee’s status in the workplace.

NLRB’s tolerance for derogatory language in the service of concerted employee action also drew negative attention in the EEOC’s report on workplace harassment (Feldblum & Lipnic, 2016). Civility matters. One argument of the report was that diversity efforts directed toward harassment tend to be oriented toward reporting bad behavior and containing employer liability; there is not enough done with organizational culture so that bad behavior is generally regarded as unacceptable and so does not occur, or is called out if it does occur.

There is reason for employers to do more, above the legal and ethical considerations. Derogatory behavior directed at individuals because of their demographics harms the performance of the individual and ultimately of the organization. See Jones, Peddie, Gilrane, King, and Gray (2016) for a meta-analysis of subtle and overt discrimination correlates. The subtle form can be as deleterious as the more overt kind.

Implications for I-O

This article is not going to resolve the uncertainty it has presented. Resolution of regulatory matters depends on government action. What to do about the underlying substantive issues is I-O work and very interesting—no curse intended.

Whether or not pay data becomes part of the EEO-1 reporting process, data can afford practitioners the opportunity to examine proactively organizations’ pay practices, forestalling litigation and improving the effectiveness of the practices where deficiencies are discovered.⁷ FLSA has been discussed in this column (Banks and Hanvey, 2016) as having opportunities for I-Os. Job analysis, establishing bona fide EAP duties, and promoting employer compliance are some areas; should DOL revise the complex process of determining who is exempt for overtime, surely there will be a need to help organizations get in sync with the revisions. I-O has something of a reputation for being a “persuader” against unionization efforts; arguably, helping implement personnel systems that promote both organizational effectiveness and justice such that unionization loses its appeal is not going over to the Dark Side. In any event, practitioners in this area may have an interest in how much their role gets reported. The attractiveness of employee benefit programs, including wellness, to employees and the effectiveness of those programs to management are also in our professional bailiwick. Whether our activities get caught in a joint employer bind is another feature of our professional environment. The legal status of LGBT discrimination may be in the hands of the courts, but promoting an inclusive workplace is very much in the hands of our profession.

Impetus for a renewed look at inclusiveness comes from several sources. If “diversity” was about getting previously excluded people in the organizational door, “diversity and inclusion” extends the concern to what happens once they are in, an extension from a diverse workforce to a diverse workplace. The above-mentioned EEOC harassment report noted that antiharassment compliance training is a necessary but not sufficient component of ending harassment; the ultimate measure of success is changes in attitudes and behaviors. There is a line of legal scholarship that has been critical of diversity programs because they have little to show in achieving those attitudinal and behavioral changes.⁸ Rather, the criticism is that these efforts are used in litigation by employers to indicate that they are doing something about discrimination when the programs are ineffective. Presumably I-Os would be well situated to take on this issue.

How various forms of discrimination that do not rise to the level of legal harassment undercut employee engagement and efforts to recruit and retain talent is a promising area for research and practice. Attaining positive results without imposing a “political correctness” that could defeat the very change it was supposed to advance will be a challenge.

Robert Kennedy said that his times were characterized by danger and uncertainty. If that applies to our present situation at the intersection of I-O psychology and employment law, then this writer hopes that his observation that such times are more open to creative energy also holds.

Notes 

1  “There is a Chinese curse which says 'May he live in interesting times.' Like it or not we live in interesting times. They are times of danger and uncertainty; but they are also more open to the creative energy of men than any other time in history.” Retrieved from http://www.phrases.org.uk/meanings/may-you-live-in-interesting-times.html.

2  This is a “legal French” expression meaning “in the bench,” i.e., involving all the regularly active, nonrecused judges on the court; usually cases before a U.S. Circuit Court of Appeals are heard by a three-judge panel.

3  “Or” is important; a single instance may suffice for a legal claim.  That standard was recently reinforced in the Third Circuit in Castleberry (2017).  Bernstein, Slocum, and Lesica (2017) noted this case and two similar recent nonprecedential orders in the Second Circuit.

4  Factors that affect liability could include whether the harasser was a supervisor, coworker, or nonemployee; whether the employer had a sufficiently effective mechanism for reporting and remedying the problem; and whether the victim invoked that mechanism such that the employer was aware of the problem and (should have) acted to resolve it. 

5  The decisions discussed here involved NLRB’s composition prior to President Trump’s administration.

6  The court mentioned the statutory basis for the protection of concerted activity in this case: “Section 7 of the Act guarantees employees the right to “assist labor organizations … and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”  29 U.S.C. § 157.   Section 7 gives locked-out employees the right to picket.  Section 8(a) prohibits an employer from interfering with, restraining, coercing, or discriminating against employees in the exercise of their Section 7 rights.  § 158(a)(1)-3)” [case citation omitted].

7  In the absence of a government reporting regulation, the organization can use “better” data and analytic techniques than might have been mandated.  But when unearthing material that could potentially fuel a lawsuit, the usual advice is to have legal consultation before digging.

8  See King and Gilrane (2015) for an introduction to some evidence-based approaches.  King and her colleagues have also has published research on diversity program effectiveness.

References

Banks, C. & Hanvey, C. (2016). Wage and hour litigation developments and trends.  The Industrial-Organizational Psychologist, 53, 80-87.

Berman-Gorvine, M. (2017, August 14). Employers walk fine line when diversity challenged from within. Bloomberg BNA Labor and Employment Law Resource Center.  Retrieved from https://www.bna.com/employers-walk-fine-n73014463117/.

Bernstein, R. H., Slocum, M. J. & Lesica, N. A. (2017, July 26). Third Circuit “clarifies” that a single racial slur may be sufficiently “severe”’ to create a hostile work environment. Greenberg Taurig GT Alert. Retrieved from https://www.gtlaw.com/en/insights/2017/7/third-circuit-clarifies-that-a-single-racial-slur-may-be-sufficiently-severe.

Castleberry v. STI Group, No. 16-3131 (3^rd Cir. July 14, 2017).

Casuga, J-A. B. (2017, August 29). Merger of EEOC, Labor Department auditor delayed for now? Bloomberg BNA Daily Labor Report. Retrieved from https://www.bna.com/merger-eeoc-labor-n73014463850/.

Cooper Tire & Rubber Company v. National Labor Relations Board, No. 16-2721 (8^th Cir. August 8, 2017).

Feldblum, C. R. & Lipnic, V. A, (2016). Select task force on the study of harassment in the workplace: Report of co-chairs Chai R. Feldblum & Victoria A. Lipnic. EEOC. Retrieved from https://www.eeoc.gov/eeoc/task_force/harassment/report.cfm.

Hivley v. Ivy Tech Community College, No. 15-1720 (7^th Cir. April 4, 2017 en banc).

Jones, K. P., Peddie, C. I., Gilrane, V. L., King, E. B., & Gray, A. L. (2016).  Not so subtle: A meta-analytic investigation of the correlates of subtle and overt discrimination.  Journal of Management, 42, 476-502.

King, E. & Gilrane, V. (2015). Social science strategies for managing diversity: Industrial and organizational opportunities to enhance inclusion. SHRM-SIOP Science of HR White Paper Series. Retrieved from http://www.siop.org/SIOP-SHRM/SHRM_SIOP_Diversity.pdf.

Smith, A. (2017, August 15). Can or should employers fire employees who participate in hate groups? Society for Human Resource Management.  Retrieved from https://www.shrm.org/resourcesandtools/legal-and-compliance/employment-law.

State of Nevada et al. v. U.S. Department of Labor et al., No. 4:16-cv-00731 (E.D. Tex. August 31, 2017).

Yoshor, S.R. (2017, August 16). Employment law changes leave employers in limbo.  Greenberg Taurig GT Alert. Retrieved from https://www.gtlaw.com/en/insights/2017/8/employment-law-changes-leave-employers-in-limbo.