New EEOC Guidance on the Use of Conviction Records

The EEOC yesterday published its long-awaited Enforcement Guidance on employers' Consideration of Arrest and Conviction Records in making employment decisions. You can access the lengthy document here.

My initial review of the document indicates that, while it is not as bad as many of us feared (the EEOC tends to extend its reach well beyond the scope of logic, in most cases), it continues the Department of Labor's disturbing trend of limiting employer discretion with respect to the implementation of general policies and rules across a workplace. In other words, the Commission continues to review and evaluate employer decisions as if they were all Americans with Disabilities Act situations-it's becoming increasingly difficult for an employer to have a consistent policy that applies across the board without running afoul of the EEOC's biases.

The Enforcement Guidance divides its analysis into two parts-one for disparate impact cases and one for disparate treatment cases. The disparate treatment analysis is fairly straightforward and commonsensical-you can't treat people with similar conviction records differently based on membership in a protected class.

The disparate impact analysis is another matter. The EEOC significantly overreaches here, and any employer using conviction records on its applications or as a screening device needs to be aware of the significant burden that the EEOC is imposing on the employment decision-making process.

As an initial matter, it is not hard to demonstrate that use of criminal conviction data has a disparate impact on protected populations. The Guidance itself notes that black and Hispanic populations are subject to arrest in numbers significantly disproportionate to their representation in the general population. These dissimilar numbers carry on through the rest of the criminal justice system, with disproportionate conviction and incarceration rates as well.

Once disparate impact is established, it is the employer that has the burden of production of persuasion to demonstrate that the challenged practice-use of conviction data-is job-related for the position in question, and consistent with business necessity. Arrest records are of particular concern, the Guidance clearly states that employment decisions based solely on arrest records are never job-related or consistent with business necessity. This is not surprising; the Commission has taken this position for many years because of the fact that arrests frequently do not result in convictions, and are not necessarily indicative of anything other than being at the wrong place at the wrong time. The Commission notes that an employer may inquire into the conduct underlying the arrest and determine that the conduct renders the applicant unfit for employment, and that such a decision would not be discriminatory.

Most employers have hiring policies inquiring about convictions, and typically will exclude employees for consideration if they have a felony conviction. As noted above, the Commission Guidance directly opposes any type of systematic screening based on such a straightforward test. Instead, the Guidance requires that an employer using conviction data (which the Commission refers to as a "criminal conduct exclusion") must establish a systematic, individualized inquiry for each employee affected, in order to avoid disparate impact claims. This inquiry can take one of two forms-the employer can validate that the job for which it is conducting the screening is directly affected by the criminal conduct at issue, as described in the Uniform Guidelines on Employee Selection Procedures (the intricate and highly complex statistical study for such a validation is described at 29 CFR Sec.1607.5); or the employer can develop a "targeted screen" considering the nature of the crime, the time elapsed, the nature of the job, and then providing the employee an opportunity to demonstrate that there were special circumstances in her case that show that she should not be excluded.

Either of these procedures imposes a huge burden on employers. The description of the individualized assessment required by the targeted screening process alone lists nine separate factors an employer should consider for each employee before a valid conviction record determination can be made. Of particular concern is the Commission's requirement that the employer demonstrate a job performance correlation between the specific criminal conviction and the specific position at issue; the Guidance lists several scenarios demonstrating that an employer that uses conviction data as a general screening device will simply not prevail in an EEOC inquiry.

The Guidance closes by delineating the EEOC's version of "best practices", which not surprisingly start with a recommendation that employers eliminate policies or practices excluding people from employment based on any criminal record. These "best practices" go on to describe extremely narrow and highly detailed policies and procedures that effectively preclude any type of generalized conviction policy. Given that this is an Enforcement Guidance, every human resources director involved in hiring policies should carefully review the requirements here and begin to incorporate them into company employment processes.

The Unsaintly Saints

I recall vividly the unglory days of the New Orleans football Saints; teams that were so bad that the fans started calling them the "Aints", and wearing paper bags on their heads to hide their embarrassment at being seen at games.  The team's recent Super Bowl victory and multiple winning seasons seemed to have wiped those ugly memories from the fan base's collective consciousness.

But there may be a whole new set of reasons to start wearing bags again, and this time the situation may be so bad that the fans will start using plastic bags in order to more permanently deal with their humiliation.

For it seems that there was some serious football cheating going on in the Big Easy.  We can start with the improper bounty system that targeted selected players on opposing teams, and was in play during the tenures of now suspended defensive coordinator Grggg Williams and head coach Sean Payton.  You can read the details and problems associated with that process below.  And then we have this latest gem from ESPN--that the Saints general manager, Mickey Loomis (who was also suspended for his role in the bounty system) was eavesdropping on opposing coaching staffs during games.  Allegedly, there was a hidden microphone system in the press box that the Saints' GM could monitor with the flip of a switch.  Obviously, this gave the Saints a potentially huge advantage--the ability to listen to the other side's analysis of the game, its planned adjustments, and comments on the opposing coaches's perceptions of your team's weaknesses would be invaluable.

Surreptitious electronic surveillance violates not only NFL rules, but a host of federal and state laws against eavesdropping, as well.  There appears to be some question of whether this practice stopped after Katrina hit the city in 2005, but the existence of such a practice certainly tells us a lot about what the Saints think of the rules that everyone else has to follow.  I'm sure the NFL Players Association is delighting in this news--it removes some of the pressure to discipline the players involved in Bounty-gate when the team management is so obviously over the top when it come to rule violations.

Those bags may be back a lot sooner than we thought.

Sex and Workers Compensation

In Australia, apparently, they let this stuff slide, so to speak.  A federal policy of providing insurance for this type of injury for civil servants gives new meaning to the term "safe sex."
I'm reasonably certain that most US jurisdictions would take a firmer stance that incidents like this are not work-related, and thank goodness for that. I can only imagine what one of those GSA trips would cost under Australian rules.
We wouldn't insure a card-playing accident, either, even in Vegas.

Exploding Cowsicles

File this one under unique job requirements--I'm guessing there is somebody in the Forest Service that responded to a help wanted ad that read something like this: "Must be proficient in the handling of explosives, and particularly competent in the placement and distribution of explosive charges to properly dissipate frozen animal remains. Experience with frozen cows a plus."
What's particularly noteworthy is that this is not a problem that is out of the normal ken of the Service--they apparently blow up animals all the time.

DC Circuit Kills NLRB Posting Requirement, At Least for Now

The District of Columbia Circuit Court of Appeals recently suspended the implementation of the NLRB's recent rule requiring  employers to post what is effectively a union endorsement notice in virtually every workplace (see the discussion below, here). In doing so, the Court of Appeals very sensibly determined that there was some confusion about a lower federal court ruling that suspended the enforcement mechanism of the NLRB rule, but allowed the posting requirement to go forward.  The Court also noted a recent South Carolina federal court decision that invalidated the rule in toto as a basis for enjoining the application of the posting requirement.
So as of now, and until the Court of Appeals gets through the issue, employers do not have to put up the new NLRB poster.  I'm guessing it will take at least a year for the briefing and oral argument to be completed, and perhaps another few months after that before a decision issues.

Reading--It's Fundamental

So is grammar, but not when we're talking NCAA championships and Kentucky.

Seriously, you can't make this stuff up.

Couples Retirement Planning

Here's a very good article from the Wall Street Journal about the differences between married couples who are looking at retirement. Specifically, the article talks about differences in when people want to retire, noting that the the subject is frequently not discussed in any depth until the decision is right on top of one member of the family.
As always, communication is key--partners should be talking about their post-retirement expectations in terms of lifestyle, location, and activities.
The article raises some interesting questions for employers with aging workforces.  Retirement planning, especially for high-value employees, is something that should not be a surprise for either the employee or the company.  But it's virtually impossible for a company to initiate such a discussion without being viewed as engaging in age discrimination.  So it might not be a bad idea for companies to bring in retirement planning speakers who can broach with the workforce the subject of coordinated retirement, without the employer looking like it's trying to encourage people to get out of the way.

Some Unsolicited Advice to Those Contemplating Making High Profile, Public Comments

Please insure that you haven't engaged in other high profile conduct that might call your judgement into question.  Conduct such as, I don't know, dating a Russian spy.

Otherwise, just lay low.

More Pizza Stuff

I recycle everything I can, and due to my dietary preferences, the issue of what to do with pizza boxes arises with regularity.
Here's the answer--don't recycle them, at least not with regular paper.  To create a recyclable pizza box, you need a pizza without oil, grease, cheese, pepperoni, sausage, etc.  I mean, what's the point in that case?

More on the NFL's Bounty-Gate

It's going to be pretty hard for Gregg Williams to argue that he was doing anything other than exhorting his players to try to injure the Saints opponents following the revelation of this little gem of an audiotape.

I understand that part of football is hitting people hard enough to hurt them. But when you start talking about aiming for specific body parts as part of your game strategy, then you are going too far, at least for me, and probably for the NFL.

And what the heck was the Saints coach thinking? He allows a guy with an audio recording device into the locker room while the speeches are being made, and doesn't think to tone it down a little?

UPDATE: And the NFLPA is taking this seriously, now--its hired a DC white shoe firm for the players accused of participating in the bounty system.  Interestingly, the lawyer identified is a white collar crime guy--I would have gone with a traditional labor lawyer with a ton of experience in collective bargaining relationships.  That's where this thing has to be litigated.

UPDATE #2:  In what has to be the most unsurprising sports story of the year, Goodell decided he did not make a mistake when he suspended the New Orleans coaches, and also fined the club.

UPDATE #3:  And in what has to be an even more unsurprising story, the union is actually trying to block the NFL from disciplining the players who put down money for their teammates to go out and injure other union members.  Conflict of interest, anyone?

UPDATE #4:  And the other shoe drops and squashes the seasons of four players.  There will be appeals, of course, but I'm wondering exactly what the union plans--federal courts are loathe to involve themselves in labor disputes where the parties have set an agreed on dispute resolution procedure.  Claims by the guys who were injured, on the other hand, are an entirely different matter.

UPDATE #5:  First round int the appeals process goes to the NFL.

Some Important Class Action Guidance for Discrimination Cases

As previously predicted (you read it here first!!), plaintiffs’ lawyers are moving from litigating individual plaintiff discrimination cases to attempting to craft wide-ranging class actions based on disparate treatment claims. Despite the Supreme Court’s decision in the Dukes v. Walmart case last summer, we are seeing more and more attempts to link hundreds of plaintiffs together in huge cases that will be expensive nightmares to defend.

Of course, that’s the point.  Most employers, when confronted by a lawsuit that will cost them more than a million dollars just to prepare for trial, will immediately settle. That’s why it is so important to understand what the courts consider to be valid classes, and think about how a company’s employment practices can be structured and make it as difficult as possible to create such a class.

A recent federal case (note:  Pacer needed for viewing) out of Illinois provides some useful guidance in the creation of disparate treatment and class actions. Twelve construction workers originally filed a case against a large construction company alleging race discrimination across the company. In a shotgun approach, the Plaintiff sought to certify four separate classes – a hostile work environment class, (which encompassed all black employees over a period of approximately 10 years), a hiring and promotion class (comprising all black employees denied hiring , rehiring, or promotions), a work hours and compensation class (made up of black employees denied opportunities to work, not afforded overtime hours, or premium pay hours), and a layoff and termination class (comprising all black employees laid off or terminated). The potential class size ranged in the thousands of employees, and because of the extended duration of the case, presumed to be a litigation hornets nest for the company.

There are several variations of class actions at play in this case, all under Rule 23 of the Federal Rules of Civil Procedure. Class actions have two key requirements – numerosity and commonality. Specifically, there must be so many potential plaintiffs affected by a common practice or procedure that adjudication of all the claims together is more efficient and proper than try each claim separately. In disparate treatment discrimination cases, class certification traditionally has been very difficult because each employment decision tends to be the result of highly specific factual considerations by an individual manager. Disparate impact class actions are far easier to fit into the class action scheme because a plaintiff doesn't have to prove discriminatory intent – the only inquiry the court makes is whether there is a legitimate basis for the employment policy that has an unintentional impact on a protected class.

With respect to the question of commonality – i.e. is there a question of law or fact that is common to all of the black construction workers – the court looked at the company’s practice of delegating to individual jobsite superintendents discretionary authority to make employment decisions. In assessing the propriety of the class claim, the trial court determined that distinguishing characteristics of the Walmart decision was that the size of the potential class (over 1 million employees) overwhelmed any potential common issue based on delegation of authority. Because the numbers in this case were not nearly so significant, the court determined that there could be a class affected by the company’s policy of delegating discretionary authority to job site superintendents, if the plaintiffs can show evidentiary basis  for their class definition.

I don’t think the court did a good job of differentiating Walmart from this case, but the issue was not significant because the court determined that the plaintiff’s statistical evidence discrimination was insufficient to certify the class. Although the plaintiffs pointed to some evidence that there was a company wide difference in the distribution of jobs and overtime for African Americans, it could not refine that evidence down  to show there was a common practice of intentional discrimination at the individual work sites. In fact there was only limited anecdotal evidence of discriminatory work hours and overtime practices at 7 of the 262 construction sites that the company operated.  Discriminatory layoff and termination practices contained anecdotes from only 5 construction sites. This was not enough to show that there was a common question as to whether the delegation of authority to supervisors at all of the company’s sites resulted in discrimination against African American employees and so the court did not certify the disparate treatment class.

As alluded to above, the disparate impact class, which included a claim focusing on assignment of work hours, overtime, and terminations, faired better in the court’s analysis. Because the plaintiffs did not have to show that there was an intent to discriminate, the wide discretion allowed to site managers appeared to result in significantly lower overtime and work hours to black employees and created an issue for class resolution.  The court certified a class with respect to the work hours claims, but gave no credence to the statistical analysis relating to hiring and termination data. The court’s discussion of the shortcomings of the Plaintiffs’ statistical expert are noteworthy because they highlighted the fact that the Plaintiffs’ expert failed to properly assess the availability of qualified black construction workers in the target metropolitan area. The court removed that evidence from its consideration and the resulting limited anecdotal evidence of hiring and termination was not sufficient to show a class wide pattern.

The court certified a class subject to hostile work environment because it found that the record contained “voluminous” evidence alleging that supervisors at two work sites engaged in overtly racist conduct that was likely known to company management . This fact alone, even though it was only identified at two sites, was enough for the court to find that there was sufficient evidence to certify a common issue of fact for all black construction workers throughout the company.

The court next determined that the claims of the identified class representatives were sufficient to allow them to proceed under the disparate impact and hostile work environment claims although the court determined that there were no remaining plaintiffs that were denied a promotion so that this claim was invalid. The court then ruled that the parties could not certify a Rule 23(b)(2) class (which is typically an easier class to certify) because there was no overriding claim for injunctive relief. Instead, the court determined that money damages were the major remedy sought by the class, and held the employees to a stricter Rule 23(b)(3) class standard. Under this analysis, the court determined that the disparate impact claims with respect to work hours and compensation were proper, as were the hostile work environment claims. Those claims would be allowed to go forward  as class claims through discovery and trial.

What are the lessons here?

The first is that, for better or worse, the courts are not enamored of so called “push down” management styles in which a company provides general guidance and unlimited discretion to low level managers to run their own operations. Systematic and regular reviews of hiring practices, promotion practices, and terminations and lay offs are absolutely essential for large companies that provide little in the way of continuing oversight of their remote operations. Second, companies absolutely can not turn a blind eye to potential discrimination issues in their supervisory work force. The main reason why the hostile work environment claim was certified here, even though it was only identified at 2 work sites, is that there was evidence that management was aware of what was going on. Management’s tolerance of blatant racist conduct (or at least alleged racist conduct) at two sites meant that the court could certify the hostile work environment across all the work sites, because of the presumption  such conduct wasn't an issue for the company management.

In other words, the Dukes v. Walmart legacy is going to be limited to cases where there are huge numbers of employees that make a system wide adjudication almost impossible. In all other circumstances, companies need to look carefully at what’s coming out of the employment policy pipeline when they are giving large amounts of discretion to local management officials.

Disparate Impact and Age Discrimination Cases –The EEOC Speaks

At the end of March, the EEOC put out a so-called Final Rule dealing with a key affirmative defense for employers in disparate impact age discrimination cases. The Rule is important, because they provide at least some, limited value guidance what an employer has to do to establish a so-called “reasonable factor other than age” as a basis for its employment decisions.  An RFOA is a recognized defense to a disparate impact claim.

It's only been recently that disparate impact claims were even allowed in an age discrimination case. In allowing disparate impact age claims to proceed, the Supreme Court held that there would be no liability for an employer if the disparate impact was attributable to a reasonable factor other than age. Thus, the EEOC began fashioning a rule that would describe considerations that an employer faces when asserting an RFOA defense. And it only took the Commission seven years to figure out what to say.

As a quick refresher, disparate impact claims result when an employer engages in a practice that unintentionally damages members of a protected class. The EEOC rule attempts to provide guidance in assessing whether an employment practice that has a disparate impact on the elderly (that is, anyone over 40 in the Alice in Wonderland of employment discrimination) is reasonably designed to achieve a legitimate business purpose, and administered in a way that reasonably achieves that purpose. The Commission went on to list some examples (the list is not exhaustive) of things that could be taken into account to measure the reasonableness of the employment policy.

For example, the Commission (and presumably a court) will examine the employment practice to see whether the practice is related to the employer’s stated business objective. So far so good – one of the elements of a disparate impact claim is that the employee must, with specifity, identify the challenged employment policy. Ideally, the policy will have some relationship to better business for the employer. Another factor that the Commission will consider is whether the employer has applied the factor fairly and accurately with respect to the protected workforce. This particular criterion also considers whether managers and supervisors have been given guidance and training on how to apply the policy so as to avoid discrimination.  I'm not exactly sure where this requirement comes from-it's not consistent with Supreme Court language, which says that an employer only has a responsibility to base his decisions on a reasonable factor other than age.

As you are probably aware, the Commission and most plaintiffs’ lawyers take the position that giving supervisors too much discretion in terms of their decision making is a recipe for illegal discrimination. It appears that the regulation presumes that supervisors will try to act in a discriminatory manner, and that the smart employer will take sufficient steps to limit a supervisor’s discretion so that a disparate impact is less likely to occur.

Obviously, the Commission's position is at odds with most modern management practices, which focus on giving supervisors more authority and discretion, not less. Employers are also advised to take steps to measure the adverse impact of any employment practice and to take steps to mitigate the harm to any members of a protected class.  Viva additional layers of unnecessary bureaucracy!! As if most companies had little else to spend money on other than checking and rechecking supervisors all day.

Here's an important safety tip, while we are talking about ADEA defenses:  The RFOA defense should not be confused with the bona fide occupational qualification affirmative defense, which the Commission notes applies to facially discriminatory, rather than neutral employment policies.  The RFOA defense is not available in a disparate treatment type of case, but rather only when there is no intent to discriminate.  The key difference between the two is that a bona fide occupational qualification requires an employer to establish and use the business alternative that has the least impact on a protected class.  An RFOA does not.  The Commission tries to dance around this issue in the guidance, but it should be clear that there is no requirement that an employer choose an RFOA alternative that has less impact on the age protected workforce.

Age discrimination case numbers are likely to rise as the working population gets older. Employers should be aware of the impact of the particular policies that they undertake, with an eye to establishing an RFOA  defense down the road.