©2015 Seyfarth Shaw LLP Top 10 Pre-Trial Strategy and Employment-Law Issues From Plaintiff and Defense Perspectives June 5, 2015 – Bridgeport Continuing

©2015 Seyfarth Shaw LLP

Top 10 Pre-Trial Strategy and Employment-Law Issues From Plaintiff and Defense Perspectives

June 5, 2015 – Bridgeport Continuing Education• Steve Shardonofsky, Partner – Seyfarth Shaw LLP• Nitin Sud, Principal – Sud Law P.C.


No. 1 -- Expanding Same-Sex and LGBT Rights in the Workplace

2 | 4/29/15 Kenneth R. Dolin Presentation


FMLA Rights for Same-Sex Spouses

• In U.S. v. Windsor, U.S. Supreme Court (June 2013) extended FMLA rights to same-sex married couples if they resided in a state that recognized same-sex marriages

• DOL – Effective March 27, 2015, same-sex couples who are legally married must be treated the same as married opposite-sex couples (state of “celebration” rule) • Four states (including Texas) that do not recognize same-sex

marriages challenged the DOL’s definition of “spouse”

• In March 2015, the US District Court for the Northern District of Texas granted a preliminary injunction with respect to the DOL’s Final Rule

• The DOL is abiding by the injunction in these four states only.



New Protections for LGBT Employees of Federal Contractors

• New OFCCP rules effective April 8, 2015.

• Executive Oder 13762 prohibits federal contractors from discriminating against employees on the basis of sexual orientation or gender identity.• The same benefits must be provided to same-sex spouses as

non-same-sex spouses.• Restroom Access Policies -- OFCCP has explained that

employers must allow employees to use restrooms based upon their gender identity.

• OSHA – June 1, 2015 – Guide to Restroom Access for Transgender Workers



EEOC’s Enforcement Position

• (1) Discrimination against an individual because of a person’s sexual orientation or gender identity is discrimination because of “sex” and is prohibited under Title VII

• (2) Discrimination against LGBT individuals based on sex-stereotypes is discrimination on the basis of sex• EEOC v. Boh Bros. Constr. Co. LLC, 731 F.3d 444 (5th Cir.

2013). Fifth Circuit affirmed jury verdict for EEOC. A plaintiff alleging same-sex harassment can show that it occurred because of sex by showing that it was motivated by the harasser's subjective perception that the victim failed to conform to gender stereotypes.



Houston Equal Rights Ordinance

• Effective May 2015• Prohibits intentional discrimination based on sex, race,

color, ethnicity, national origin, age, familial status, marital status, military status, religion, disability, sexual orientation, genetic information, gender identity, or pregnancy.

• Covers employers with at least 25 employees as of May 28, 2015 (15 employees beginning May 2016).

• Employees of private companies have no independent right of action under the ordinance.

• Enforced by Office of Inspector General• Class C misdemeanor – $250 - $500 per day (maximum of $5,000)

• Employers may also loose city contracts6 | 4/29/15 Kenneth R. Dolin Presentation


No. 2 -- TWC Unemployment Claims and Importance of EEOC Process



EEOC Process

• Statements may be admissible in later proceedings

• Nasti v. CIBA Specialty Chemicals Corp., 492 F.3d 589, 594 (5th Cir. 2007) (“A court may infer pretext where a defendant has provided inconsistent or conflicting explanations for its conduct.”)

• Employee/Plaintiff

• Opportunity to conduct your own investigation and obtain statements from witnesses

• Employer/Defendant

• Opportunity to gather information and documents• Opportunity to dissuade a plaintiff’s attorney• If high potential for liability, take advantage of mediation


TWC Unemployment claims

• Statements made under oath (by either employer or employee) will likely be admissible in later proceedings

• Employee/Plaintiff• Can quickly and efficiently evaluate potential wrongful termination claim and cross

examine Employer’s representative

• Can better evaluate (and set up) wrongful termination / discrimination case

• Develop evidence to present to the EEOC

• Employer/Defendant• Just ignore the unemployment claim

• Prepare your witness

• If responding, make sure you are consistent at the EEOC stage and litigation

• Obtain TWC files at start of litigation


Remember MSJ Strategy

• Employer’s Good Faith Belief• Plaintiff’s subjective belief is irrelevant

• Reliability of documentation

• Decision made on incorrect information is not illegal

• Bad internal investigation is not pretext, but no investigation could be

• Who was decision maker• The Same Actor inference• Who is Similarly Situated?• Timing of decision• Object to or move to strike summary judgment evidence



No. 3 -- Accommodating Pregnant Employees

Recent EEOC guidelines and Supreme Court ruling



New EEOC Guidelines For Pregnancy “Accommodation”

• EEOC Guidance published July 14, 2014• Outlines reasonable accommodation requirements for

pregnant employees under the PDA (part of Title VII) regardless of whether any “impairment” rises to the level of a disability.

• Examples• Redistributing marginal or nonessential functions.

• Modifying policies.

• Modifying a work schedule.

• Allowing a pregnant worker placed on bed rest to telework where feasible.

• Granting leave in addition to what would normally be provided.

• Purchasing or modifying equipment.

• Temporarily reassigning an employee to a light-duty position.

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Young v. UPS

• A pregnant worker who seeks to show disparate treatment through indirect evidence can use the McDonnell Douglas burden-shifting framework.

• A plaintiff can show pretext by providing evidence that the employer’s policies impose a “significant burden” on pregnant workers and the employer’s legitimate, nondiscriminatory reasons are “not sufficiently strong” to justify the burden.

• E.g., Evidence that the employer accommodates non-pregnant workers while failing to accommodate pregnant workers.

• The Court disregarded and explicitly questioned the EEOC’s July 2014 Guidance (expect the EEOC to revise its guidelines again).

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No. 4 -- SCOTUS Take on Religious Accommodation



EEOC v. Abercrombie & Fitch Stores

• On June 1, 2015, the Supreme Court ruled in favor of the EEOC in this religious accommodation case.

• A job applicant only needs to show that his need for an accommodation was a motivating factor for an adverse decision

• Title VII’s “intentional discrimination provision prohibits certain motives, regardless of the [employer’s] knowledge. Motive and knowledge are separate concepts.”

• “[A]n employer who acts with the motive of avoiding accommodation may violate Title VII even if he has no more than an unsubstantiated suspicion that accommodation would be needed.”



No. 5 -- Accommodations Under the Americans with Disabilities Act



Attendance Policies and Extended Leave

• EEOC disfavors “no-fault” attendance and leave policies that provide no room for flexibility when the employee has exhausted available leave. • EEOC continues to bring suit and settle cases involving inflexible

leave policies

• John Hendrickson, EEOC Regional Attorney for Chicago Region:“The key to avoiding trouble under the Americans with Disabilities Act, is to be constantly asking the question ‘Can we get this employee back on the job with a reasonable accommodation?’ and certainly not to be asking only ‘Has this employee been on leave long enough for us to get rid of him?’”



What Actions Employers Should Take

• Add example of extended leave as an accommodation in your ADA policy. Maximum leave policy should include reasonable accommodation language.

• Send letter before expiration of leave re: possible termination and asking if accommodation is possible

• Engage in interactive process, including individualized assessment of employee’s situation & nature of the job.

• Ask employee for his/her proposed accommodation and consider it, either accepting or rejecting it for enumerated reasons, and proposing alternatives.

• This is an ongoing obligation.



Mental Impairments

• Mental illnesses are likely to be protected• Depression, anxiety, PTSD, bipolar disorder

• Limits on ability to sleep, eat, focus, remember• “Open and obvious” conditions may place burden on

employer to initiate the interactive process• The Fifth Circuit has stated that employers “have an

extra duty to explore the employee’s condition” and “the interactivity of the process may be of less importance” in cases involving mental illness because such “employees may not be fully aware of the limitations their conditions create, or be able to effectively communicate their needs to an employer”



No. 6 -- Depositions of Corporate Representatives in Employment Cases



30(b)(6) Depositions

“[A] party may name as the deponent a public or private corporation, a partnership, an association, a governmental agency, or other entity and must describe with reasonable particularity the matters for examination. The named organization must then designate one or more officers, directors, or managing agents, or designate other persons who consent to testify on its behalf; and it may set out the matters on which each person designated will testify….. The persons designated must testify about information known or reasonably available to the organization.”



• Employer/Defendant• Must educate and prepare the witness(es) designated (very

burdensome); may have to present multiple witnesses• Witness cannot claim lack of knowledge during deposition• Opportunity to “cherry-pick” experienced and favorable witness• Object to overbroad/vague topics

• Employee/Plaintiff• No need to chase down several company witnesses• Sample 30(b)(6) deposition topics:

• The factual bases of all affirmative defenses

• The factual bases of denials of any Requests for Admissions

• The factual bases of denying allegation #___ in Plaintiff’s Original Complaint



• In a class/collective action case, a 30(b)(6) witness should be trained to recite three central themes:• (1) our policies are lawful, consistently enforced, and we don’t

tolerate violations; and• (2) when determining if there has been a violation of our policies,

we have to look at the individual facts and circumstances of each individual situation.



No. 7 -- Imminent and Sweeping Changes to the FLSA “White-Collar” Exemptions



Wage & Hour Federal Court Lawsuits*

* Fiscal year ending September 30th per the Annual Report of the Director, Administrative Office of the United States Courts

19931994

19951996

19971998

19992000

20012002

20032004

20052006

20072008

20092010

20112012

20132014

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

1,457 1,545 1,580 1,558 1,633 1,5621,717

1,935 1,960

3,904

2,751

3,617

4,0394,207

7,310

5,393

6,073

6,825

6,336

8,125

7,500

8160


Presidential Directive

• Presidential Memorandum issued March 13, 2014 instructing Secretary of Labor to: • Consider how to revise regulations to update existing protections • Simplify the regulations to make them easier to understand/apply

• On May 5, 2015, the Secretary of Labor submitted its proposed rule changes to the Office of Management and Budget (OMB) for review.• Proposed rule changes will soon be published, and public will

have opportunity to comment.• Expect publication of final rule in early 2016, with effective date

60-120 days thereafter.

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Stakeholder Meetings/Anticipated Areas of Revision

• Salary Level (options mentioned in media):• New York: $600 per week /$675 in 2016• California: $640 per week/$800 in 2016• EPI: $984 per week (Bernstein/Eisenbrey)

• Primary Duty• “[T]he principal, main, major or most important duty…”; nothing

requires employees spend 50%+ of time on exempt work.• Proposal may be modeled after CA “primarily engaged in”

standard, which is based on percentage of time spent on duties.

• Suggestions for “Clarifying” Exemptions• Administrative exemption seems to be most likely target

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Other FLSA Hot Topics

• Second, Third, Ninth, and Eleventh Circuits issued decisions tightening the pleading standard (2014/2015)• Generically alleging that the plaintiff “typically” worked extra hours is insufficient• To state a valid claim, plaintiff must provide factual allegations with more detailed

estimates of hours worked or provide facts to support the number of hours worked in a week

• Mooting Claims with Offers of Judgment• The problem for a defendant? Small damages / Lots of potential claimants / Lots

of attorneys fee• Possible solution? Tender full relief under Rule 68 or otherwise• BUT SCOTUS has not answered what happens in FLSA cases if offer is rejected

(Genesis Healthcare v. Symczyk (2013))

• Private settlements – Bodle v. TXL Mortg. Co. (5th Cir. June 1, 2015)



No. 8 -- The Arbitration Solution? (and class-action waivers)



The Arbitration Solution?

• Arbitration agreements and class/collective action waivers may be an effective way for employers to protect themselves against large wage-hour lawsuits

• Enforcement of waivers is not guaranteed

• Courts and agencies fighting back• But Supreme Court has issued rulings that favor individual over

class arbitration (Fifth Circuit has also enforced them)

• Potential pitfalls

• Class arbitration, including AAA Supplemental Class Action Rules, possibly even for collective actions

• Converting an opt-in collective action to an opt-out class action• But, risk of numerous individual arbitration claims

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Evolution of Supreme Court precedent

• Class arbitration cannot be compelled when agreement is silent about class arbitration; class arbitration may not be compelled absent evidence that the parties agreed to it. (Stolt – Nielsen S.A. v. Animalfeeds (2010))

• FAA preempts California law barring enforcement of class action waivers in consumer cases. ( AT&T Mobility v. Concepcion (2011)

• Class action waivers are enforceable under the FAA even if individual arbitration is economically unfeasible; concerns do not arise due to high costs; as Justice Kagan said in her dissent, that’s “too darn bad.” (American Express Co. v. Italian Colors Rest. (2013))

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Additional Considerations

• Lower courts are enforcing express collective and class actions waivers in arbitration agreements

• Class Action Waivers

• Clear and conspicuous• Explicitly prohibits arbitrators from presiding over class claims• Consider a severability provision

• Texas / Fifth Circuit

• Jury waivers are enforceable in Texas and can be a condition of employment

• Agreement to arbitrate must be reciprocal • Employer must agree to pay arbitrator’s fees• Employer cannot have a unilateral right to rescind agreement to

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No. 9 -- Avoiding Liability in the Background Check Process

• EEOC Guidance on Use of Criminal History In Employment

• Compliance with Fair Credit Reporting Act Requirements


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EEOC’s Criminal Hist. Guidance (2012)

• Use of criminal history has “disparate impact” on certain minority groups based on race and national origin.

• “We don’t hire felons” policy per se unlawful

• Criminal History Question• Employers should not consider expunged or sealed convictions

• Recommends not asking about arrest or convictions on job applications

• Recommends only asking about convictions relevant to a specific job

• Use of arrests has a per se disparate impact

• But – employers may base a hiring decision on underlying conduct if the conduct makes the individual unfit for a position

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Employers May Consider Convictions

• Excluding candidates based on convictions:• Nature and gravity of the offense• Time since the conviction and/or complete of the sentence• Nature of the job held or sought

• All convictions or only specific types?

• Timing? (7 years or some other or all?)

• EEOC recommends an “individualized assessment” of applicants


FCRA Adverse Action Requirements

• Before adverse action is taken employer must provide:• A copy of the consumer report• A summary of the consumer’s rights under the FCRA• Any state law right disclosures/information

• Waiting period:• Between pre-adverse and adverse action an employer must WAIT• FTC has opined that 5 business days is reasonable• To allow consumer to dispute accuracy of report BEFORE adverse action

• Adverse Action:• Notice of the adverse action

• Name, address, and toll-free number of the CRA that furnished the consumer report

• Various other statutory disclosures

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Disclosure forms not being “solely” or “stand alone”

Release of liability language (see Reardon v. Closetmaid and Singleton v. Dominoes and others)

State law language in forms

Failure to provide Summary of Rights

Failure to provide Disclosure AND Authorization (if separate them)

Increased Class Action Litigation Under FCRA

Disclosure and Authorization Challenges

Is the FCRA the next FLSA from a litigation perspective?


No. 10 -- JOINT EMPLOYMENT LIABILITY AND MISCLASSIFICATION OF INDEPENDENT CONTRACTORS


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How Joint Employment Issues Arise

• Contractor files unemployment claim upon contract termination

• Contractor gets injured and files workers’ comp. claim

• Audits can be conducted randomly by any agency or taxing authority (IRS/DOL random audit)

• Audits can be triggered by a worker filing a complaint that he/she is misclassified

• Contractor is disgruntled or wishes to challenge termination of contract

• Fanchisor/Franchisee issues

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Potential Liability

• Tax Perspective

• Federal Taxes

• Back taxes if tax unpaid, 1.5% penalty for failure to withhold

• Social Security & FICA

• 6.2% of wages for failure to withhold

• State and Federal Unemployment Tax

• State = approximately 5%; Federal = 0.8% of wages, interest & penalties

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Potential Liability(cont’d)

• Employment Law Perspective

• Unemployment Claims

• Workers’ Compensation Issues

• Employee Benefit Coverage (Contractor claims 401(k), severance, health/welfare coverage, ESPPs)

• FMLA

• Denials of benefits to misclassified workers could lead to unnecessary litigation

• Wage and Hour Laws

• Misclassified independent contractors could potentially seek overtime compensation, unpaid wages, penalties and liquidated damages

• Others: state laws, anti-discrimination laws and other common law theories could apply unexpectedly


42 | © 2014 Seyfarth Shaw LLP

Questions??


THANK YOU!!

Steve Shardonofsky Nitin SudSeyfarth Shaw LLP Sud Law [email protected] [email protected]

(713) 225-1001 (832) 623-6420

Documents

©2015 Seyfarth Shaw LLP Top 10 Pre-Trial Strategy and Employment-Law Issues From Plaintiff and Defense Perspectives June 5, 2015 – Bridgeport Continuing