Even If Not Subject To Federal Law, Virginia Small Businesses May Still Be Prohibited From Discrimination Under Virginia Law
Although employers with less than 15 employees are generally not subject to federal discrimination statutes such as Title VII and the Americans with Disabilities Act, Virginia small businesses may still find themselves subject to Virginia’s discrimination laws even if they have fewer than 15 employees.
The Virginia Human Rights Act, which applies to Virginia businesses with more than 5 but less than 15 employees, makes it unlawful for a Virginia employer to discharge an employee on the “basis of race, color, religion, national origin, sex, pregnancy, childbirth or related medical conditions,” or age (if the employee is over 40). An employee may file a lawsuit against an employer for an alleged violation of the Virginia Human Rights Act in either a general district court or a circuit court, provided the employee files the action within 300 days from the date of termination. (If the employee files a complaint with a human rights agency or commission within 300 days of the termination date, then the employee may bring a court action within 90 days from the date the commission or agency has rendered a final ruling on the complaint.) Employers who are found to have violated the Virginia Human Rights Act may be liable for the employee’s attorneys’ fees and up to 12 months of back pay with interest.
Under the Virginians with Disabilities Act, it is unlawful for employers of all sizes to “discriminate in employment or promotion practices against an otherwise qualified person with a disability solely because of such disability.” To comply with the Virginians with Disabilities Act, an employer must make a “reasonable accommodation to the known physical and mental impairments of an otherwise qualified person with a disability, if necessary to assist such person in performing a particular job, unless the employer can demonstrate that the accommodation would impose an undue burden on the employer.” Under Virginia disability law, whether an accommodation would impose an undue burden on an employer depends on a variety of factors such as potential hardship on the employer, the size of the facility where the employment occurs, the nature and cost of the accommodation, and safety and health considerations. (For Virginia employers with less than 50 employees, any accommodation that would exceed $500 is presumed to impose an undue burden.) Employers who are found to have violated the Virginians with Disabilities Act may be subject to an injunction (to enjoin the violation) or ordered to pay the employee compensatory damages and attorneys’ fees.
Virginia business owners should visit the Virginia Human Rights Council’s website for more information regarding the Virginia Human Rights Act and the Virginia Department of Rehabilitative Services' website for additional information pertaining to the Virginians with Disabilities Act.
Fourth Circuit Court Of Appeals Sends Sexual Harassment Suit To Trial
In EEOC v. Fairbrook Medical Clinic, a Title VII sexual harassment case in which the Equal Employment Opportunity Commission (EEOC) brought a lawsuit on behalf of a woman doctor against her former employer, the Fourth Circuit Court of Appeals (4th Circuit) reversed the district court’s grant of summary judgment and remanded the case to the district court for trial. The 4th Circuit determined that the defendant employer’s alleged conduct, if proven true, was severe enough to alter the conditions of the plaintiff employee’s employment and create an abusive work environment.
According to the summary judgment record, the plaintiff employee was subjected to nearly four years of harassment by the owner of a family medical center. Throughout the duration of her tenure with the defendant employer, the owner of the medical center (who was also the plaintiff employee’s immediate supervisor) created a hostile work environment by: routinely making vulgar and sexually graphic comments to the plaintiff employee; repeatedly showing the plaintiff employee an x-ray of his torso, which included an image of what he called “Mr. Happy;” openly discussing with the plaintiff employee his sex life and bragging that his wife was “nice” and “tight” because she had a c-section instead of vaginal delivery; and, telling the plaintiff employee’s patients, in her absence, that they could follow up with the plaintiff “when she returns from screwing.” Additionally, during the plaintiff employee’s pregnancy and continuing after her return from maternity leave, the defendant employer commented on the size of the plaintiff employee’s breasts and offered to help her pump them. After assisting the plaintiff employee with a contract dispute with a vendor, the defendant employer told the plaintiff employee that she owed him and asked, “Are you going to let me help you pump [your breasts]?”
Although the plaintiff employee frequently told the defendant employer that his comments were inappropriate as well as discussed the harassment with the office manager and personnel manager, no investigation or corrective action was taken. Accordingly, the plaintiff employee resigned from the defendant employer and took a new position.
Shortly after resigning, the plaintiff employee filed a charge with the EEOC and the EEOC filed a lawsuit alleging that the plaintiff employee was subjected to a hostile work environment because of her sex in violation of Title VII of the Civil Rights Act of 1964. The district court granted the defendant employer’s motion for summary judgment. On appeal, the 4th Circuit reversed the district court finding that the EEOC had raised a triable issue of fact with respect to each element of its hostile work environment claim.
In reversing the district court, the 4th Circuit focused on whether the offending conduct was sufficiently severe or pervasive to alter the conditions of the plaintiff’s employment and create an abusive work environment. (To be actionable under Title VII, the sexual harassment must be objectively hostile or abusive, and the victim must subjectively perceive it as such. The severity must be judged from the perspective of a reasonable person in the plaintiff’s position and a court must consider all circumstances including the frequency of the conduct, its severity, and whether it unreasonably interferes with an employee’s work performance.)
In considering the defendant employer’s argument that the offensive comments were not made because of the plaintiff’s sex and, instead, were made to men and women alike, the 4th Circuit held that the defendant employer’s use of “sex-specific and derogatory terms” indicated that he intended to demean women and that a reasonable jury could infer that the comments “would not have been made to someone of the same sex.”
The Court also rejected the defendant employer’s argument that, the conduct at issue, when viewed in its social context, was not severe but constituted simple teasing, off-color jokes, and off-hand comments. Based on the record before it, the Court concluded that the conduct was more than general crudity and that the allegations, if proven, show that the defendant employer targeted the plaintiff with highly personalized comments designed to demean and humiliate her. Also, the Court noted that the severity of the defendant employer’s conduct was exacerbated by the fact that he was not only the plaintiff’s immediate supervisor, but also the sole owner of the medical center. As such, he had significant authority over the plaintiff on a daily basis and the ability to influence her career.
Furthermore, the 4th Circuit found unpersuasive the defendant employer’s argument that the conduct was neither frequent nor severe because it did not cause the plaintiff employee to miss work due to stress or otherwise adversely affect her job performance. With respect to the frequency, the Court held that a reasonable person could conclude that comments once or twice a week was a persistent feature of the plaintiff employee’s work environment. Regarding the severity, the Court held that the critical inquiry is not whether the plaintiff employee’s work was impaired, but whether her working conditions were discriminatorily altered. Given that the defendant employer “bombard[ed] her with graphic and highly personalized comments about intimate features of his and her anatomy,” a jury could find that the plaintiff employee’s working conditions were in fact discriminatorily altered. (The Court also noted that the plaintiff employee withstanding the harassment until a new job became available does not, “without more,” defeat the plaintiff employee’s Title VII claim.)
This case, as if further proof is needed, illustrates the advantage that employers have on sexual harassment and discrimination claims in the 4th Circuit (which includes Virginia, Maryland, and North Carolina). Although the 4th Circuit remanded the case to the district court for trial, it is important to note that the district court had initially ruled in the employer’s favor on summary judgment. While Virginia employers should take some comfort with how courts construe Title VII cases, they should also recognize that there are circumstances in which the conduct is so egregious that a court may side with an employee. As such, Virginia businesses must ensure that they have a process in place to address allegations of harassment or discrimination seriously and expeditiously.
Virginia Federal Court: Title VII Native Corporations Exception Does Not Apply to Indirect Subsidiary in Racial Discrimination Case
The Eastern District of Virginia, Alexandria Division, recently decided a case of apparent first impression involving the Native Corporations exception to Title VII’s prohibition on unlawful employment practices. The Court concluded that there were too many layers of ownership between the employer defendant and the exempt Native Corporations company, and thus, the race discrimination case against it could go forward to trial.
In Tony Fox v. Portico Reality Services Office, a former foreman at Portico’s Manassas, Virginia office alleged he was treated differently from other non-African-American employees. During his employment with Portico, he claimed that he was the subject of numerous offensive racial remarks, was not given a regularly-scheduled pay raise like other employees, and was eventually discriminatorily fired from his job.
Portico requested summary dismissal of the discrimination claim on the basis that it was a wholly-owned, indirect subsidiary of NANA Regional Corporation, an Alaskan Native Corporation. Certain groups and entities, such as Indian tribes, private membership clubs and Alaska Native Corporations are not considered to be “employers’ under Title VII’s statutory definition, and thus, are not subject to its prohibitions. Alaska Native Corporations play special roles in controlling lands and funds for Alaskan Natives, and the underlying purpose of its exception was to permit hiring favoritism toward Alaska Natives without violating Title VII.
Here, Portico is an Alaska limited liability company, but with its principal place of business in Virginia. Portico’s sole member, Qivliq LLC is a wholly-owned subsidiary of NANA Development Corporation. NANA Development is a wholly-owned subsidiary of NANA Regional Corporation - the Native Corporation. In interpreting the statute narrowly, the Court ruled that the Native Corporation exception applies to subsidiaries only where the Native Corporation directly owns the subsidiary.
It is important to note that Section 1981 of the Civil Rights Act of 1866, which provides a separate and independent basis for relief for race discrimination in private employment, contains no similar exception for Alaska Native Corporations. Thus, even Native Corporations and their direct subsidiaries may be held liable under this statute.
EEO Guidelines for Small Businesses with Federal Contracts
Small businesses with Federal contracts have to be especially mindful of ensuring compliance with equal employment opportunity (EEO) requirements. The failure to comply with the EEO guidelines set forth in Executive Order 11246 (which prohibits employment discrimination by Federal contractors and subcontractors as well as federally-assisted construction contractors and subcontractors) may very well result in the cancellation of a contract, termination, suspension (in whole or in part), or the debarment of the contractor. As the Office of Federal Contract Compliance Programs (OFCCP) requires contractors to engage in their own internal EEO compliance analysis, small businesses often run afoul of satisfying their obligations under Executive Order 11246.
To ensure compliance with the basic EEO requirements imposed by Executive Order 11246 -- and to avoid the wrath of the OFCCP – contractors should adhere to the following OFCCP guidelines:
Don’t Discriminate! Contractors must refrain from engaging in workplace employment discrimination on the basis of race, color, religion, sex, or national origin. Although most people think of intentional discriminatory acts, employment discrimination can also arise when a neutral policy or practice has an adverse impact on the members of any race, sex, or ethnic group.
Post an EEO Poster. Federal contractors must post OFCCP’s EEO poster in a location that is easily seen (e.g., a lunchroom, break room, or locker room).
Include an EEO Tag Line in Employment Advertising. Contractors should include a sentence in all solicitations and advertisements for employment stating that “all qualified applicants will receive consideration for employment without regard to race, color, religion, sex or national origin.”
Keep Records. Contractors must maintain their personnel records and employment records including job descriptions, job postings, job offers, applications and resumes, interview notes, tests and test results, written employment policies and procedures, personnel files, and time-keeping records.
Develop and Maintain an Affirmative Action Program. Contractors with 50 or more employees and a contract of $50,000 or more must develop and maintain a compliant affirmative action program (AAP).
Small businesses with Federal contracts should regularly review their EEO policies and procedures to ensure that they are compliant with Executive Order 11246. Certainly, given the potential penalties, it is better to be safe than sorry!
Proposed EEOC Rule on ADEA Defenses
A proposed rule introduced by the Equal Employment Opportunity Commission (EEOC) on February 18, 2010, if adopted, will provide guidance and meaning to the “reasonable factors other than age” defense in the federal Age Discrimination in Employment Act (ADEA).
The ADEA, unlike Title VII, states that it is not unlawful for an employer to take an action “otherwise prohibited” by the statute against an employee where “the differentiation is based on reasonable factors other than age” (RFOA). The Supreme Court interpreted this provision in Smith v. City of Jackson and Meacham v. Knolls Atomic Power Laboratory, which involved disparate impact discrimination claims.
The Supreme Court in Smith held that employees bringing claims under the ADEA can rely on the disparate impact theory, and thus, proof of age-motivation is not required. The Smith decision also stated that employers can defend such a case based on a reasonable factor other than age; however, the Court did not provide which party had the burden of persuasion on this issue. Subsequently, in Meacham, the Supreme Court held that the employer - not the employee - has the burden of proving the RFOA defense.
The EEOC’s proposed rule seeks to provide guidance on what constitutes “reasonable factors other than age” consistent with the decisions in Smith and Meacham. It’s non-exhaustive list of relevant factors to be considered in determining whether an employment practice is reasonable are as follows:
-- Whether the employment practice and the manner of its implementation are common business practices;
-- The extent to which the factor is related to the employer’s stated business goal;
-- The extent to which the employer took steps to define the factor accurately and to apply the factor fairly and accurately (e.g., training, guidance, instruction of managers);
-- The extent to which the employer took steps to assess the adverse impact of its employment practice on older workers;
-- The severity of the harm to individuals within the protected age group, in terms of both the degree of injury and the numbers of persons adversely affected, and the extent to which the employer took preventive or corrective steps to minimize the severity of the harm, in light of the burden of undertaking such steps; and
-- Whether other options were available and the reasons the employer selected the option it did.
It is important to note that this standard is lower than Title VII’s business-necessity test but higher than the Equal Pay Act’s “any other factor” test.
The EEOC is accepting public comment on the proposed rule until April 19, 2010.
Fourth Circuit: Testimony of Other Women in Sexual Harassment Case is Admissible
In a recent decision, the Fourth Circuit Court of Appeals affirmed the trial court’s admission of testimony by female employees, other than the plaintiff, regarding their own experiences of sexual harassment by the defendant. The Court stated that such testimony is often relevant to a plaintiff’s hostile work environment claim and the employer was not unfairly prejudiced – even though the testimony did not in any way involve the actions of the defendant against the plaintiff.
In King v. McMillan, a former deputy in the Sheriff’s Office for the City of Roanoke, VA alleged that the Sheriff sexually harassed her. Other women testified at trial that the defendant made inappropriate sexual remarks to them as well, asked for kisses and hugs, and touched them in ways that made them feel uncomfortable. The Court determined that the testimony of the other women was relevant to two elements in a hostile work environment claim: (1) whether the defendant’s unwelcome conduct toward the plaintiff was because of the plaintiff’s sex, and (2) whether the unwelcome conduct toward the plaintiff was sufficiently severe or pervasive to create a hostile work environment.
The important aspect of this decision is the determination by the Fourth Circuit that the evidence was relevant and its admission was not a violation of Rule 403 of the Federal Rules of Evidence, which excludes relevant evidence if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury. The appeals court noted that proper jury instructions were provided on this issue and unfair prejudice was further avoided by only admitting testimony of harassment that occurred during the same timeframe of the plaintiff’s employment. Thus, the Sheriff’s Office was not able to limit the evidence to matters involving the plaintiff. The trial court specifically acknowledged that disaggregating the experience of its employees was not the law.
What can you do to prevent a sexual harassment claim against your company? In addition to establishing and implementing a comprehensive sexual harassment policy, you and your human resources department should learn to recognize the patterns of sexual harassment. As was apparent from this case, some harassers are adroit at protecting themselves from disclosure and rely on threats or rewards to prevent complaints. Regular training of all employees and establishing clear communication lines for employees to report behavior anonymously will certainly assist in preventing such legal entanglements.
Does your Company Have an Inclement Weather Policy?
With forecasts for the Northern Virginia region calling for nearly two feet of snow, many Virginia business owners will have to decide whether to take a “snow day.” For small businesses in particular, this decision is confounded by operational and logistical factors, including the absence of a means to timely communicate with employees (to advise them of a closing) and the potential disruption to critical business processes. Instead of playing the “should I close” decision by ear, businesses should take the proactive step of adopting an inclement weather policy.
Corey Riley, the facility administrator of DaVita Dialysis in Arlington, recommends that small businesses identify in advance which employees are critical to sustain business operations. “Given the nature of our business and that, for our customers, our services are literally a matter of life or death, we cannot afford to make decisions at the last minute. It is important that each of our employees knows precisely what to do well in advance of a winter storm,” said Riley. “On occasions like this weekend, we will rent an SUV and then have a team member pick up the employees who are essential to the operation of the center.”
“The safety of each employee should be a primary consideration in a company’s inclement weather policy,” said Talulla Newsome, a recent retiree and the former head of Colgate Palmolive’s Global Technology Center in Piscataway, New Jersey. “The policy should be flexible enough to allow employees to make a decision that is best for their own personal circumstance. Most importantly, regardless of the policy, there must be open communication between each employee and the employee’s direct supervisor.”
So what should your inclement weather policy consist of? In reality, there isn’t a “one size fits all” answer to this question. However, every inclement weather policy should:
- State that it is the company’s policy to remain open during inclement weather and that employees should make every reasonable effort to get to work (or telecommute if the company has a telecommuting policy in place).
- Detail how and when the company will communicate closings or delayed openings to employees.
- Address potential issues relating to hourly employees, such as whether they will be paid (or disciplined) for not reporting to work when the business is open.
For business continuity and employee safety, every business should have an inclement weather policy in place. Once a policy is in place, make sure that it is kept up-to-date and that it is regularly communicated to employees.
IRS Announces Standard Business Mileage Reimbursement Rate for 2010
Employers should take notice that the Internal Revenue Service (IRS) has announced a standard business mileage reimbursement rate of 50 cents per mile for 2010. The business mileage reimbursement rate is used by many employers for computing the appropriate employee reimbursement amount in instances where an employee uses a personal vehicle for a work-related purpose. The new mileage reimbursement rate, which takes effect on January 1, 2010, represents a significant decrease from the rate set by the IRS in 2009 of 55 cents per mile.
Employers with an established personnel policy should update their employee handbooks by year-end to reflect this change. Those employers who do not have an established policy for reimbursing employees for business miles traveled in personal vehicles should consider instituting a mileage reimbursement policy for 2010 and adopting a good mileage log reimbursement form for employees.
Employers should consult the IRS website for more information on the mileage reimbursement guidelines.
FLSA Compliance of Employer Intern Programs
In today’s tough economic environment, employers are looking for creative ways to reduce their overhead. And, what could be more appealing than an unpaid intern who can assist with getting the work done? With this year’s financial crisis, there is no shortage of such labor for employers. Many people are willing to work for little or no compensation in order to prevent a big gap of employment or build a resume. However, unpaid interns can create legal troubles for the unwary business owner. Federal labor laws governing internships provide that the relationship has to benefit the intern more than the company. If it doesn’t, then the employer must comply with the Fair Labor Standards Act (“FLSA”) by paying minimum wages and possibly overtime.
As many employers already know, there are many advantages to using an intern. If you are faced with a tight budget for personnel, interns may help fuel growth for your company. But, you need to be sure that your main purpose for hiring an intern isn’t to avoid paying wages. The U.S. Department of Labor’s Wage and Hour Division outlined a list of criteria to determine whether a trainee or intern is an “employee” under the FLSA, and thus, must comply with Federal wage laws.
The following criteria provide guidance in evaluating internship programs for for-profit organizations, but it is important to note that each program is unique and must be carefully examined:
- the training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school;
- the training is for the benefit of the trainee;
- the trainees do not displace regular employees, but work under close observation;
- that the employer that provides the training derives no immediate advantage from the activities of the trainees and on occasion the employer’s operations may actually be impeded;
- the trainees are not necessarily entitled to a job at the completion of the training period; and
- the employer and the trainee understand that the trainees are not entitled to wages for the time spent in training.
If your company’s internship program does not satisfy all of the above criteria, your interns may be considered “employees” under the FLSA. Hiring an intern, which qualifies as an “employee” may cost your company thousands in unpaid wages and legal fines. So, how do you ensure compliance? Establish a written internship program outlining the terms and structure of the relationship in a way that the intern is receiving the full benefit of the learning experience, and ensure that your managers and other employees properly implement it.
Business Law News Bites
Here is a quick summary of some interesting blogs I have read this week on a variety of business law topics that may be of interest to Virginia businesses:
Brian Hill, of the Employer Lawyer Report, analyzes how Facebook’s new privacy controls will impact the employer-employee relationship. According to Hill, these new privacy control measures could make it more difficult for employers who use Facebook to monitor their employees.
Robin Roberts, of the Startup Lawyer Blog, provides some guidance on how equity should be divided amongst co-founders of a startup company. The primary method described by Roberts is to base the equity split on an assessment of the past, current, and future contributions of each co-founder. Regardless of the method used, Roberts advises that co-founders make the equity-split determination quickly and that they consider vesting founders’ stock over a period of time.
Joshua Heslinga, of the Virginia IP Law Blog, writes that it makes good business sense to enforce your patents before they are reexamined by the United States Patent and Trademark Office (USPTO). As Heslinga notes, the timing of a reexamination decision (where a patent is reexamined by a patent examiner to verify a patent’s validity) can be a crucial determining factor in the outcome of a patent litigation case. If a reexamined patent is determined to be invalid, then that will almost certainly result in the dismissal of a pending patent infringement litigation action.
Joel Greenwald, of the Overtime Advisor Blog, details potential issues an employer may face for having employees work through lunch. According to Greenwald, employers that require "non-exempt" staff (e.g., receptionists, data entry clerks, administrative assistants, secretaries, billing clerks, customer service representatives, etc.) to work during their unpaid break time could face substantial liability under the Fair Labor Standards Act (FLSA). Under the FLSA, non-exempt employees must: (1) be paid for every hour they work; and (2) have all hours worked count towards their potential overtime pay. The website for the Virginia Department of Labor and Industry has a good FAQ section on wage payment issues in Virginia.
Michael Stocker, of the Eyes On Wall Street Blog, discusses a proposed bill by Senator Christopher J. Dodd (D-Conn.), Chairman of the Senate Banking Committee, that would overhaul the U.S. financial system. Senator Dodd’s financial reform plan bill would, among other things, consolidate bank regulators, create a consumer financial protection agency, and impose new restraints on exotic financial instruments and credit rating agencies.
The Genetic Information Nondiscrimination Act Requires New Employment Posters for Businesses
As of No
vember 21, 2009, businesses are required to display a new federal poster in the workplace which reflects the requirements of the Genetic Information Nondiscrimination Act (“GINA”). GINA was signed into law in May 2008 to address concerns over the use of genetic information in the health insurance industry and the acquisition and use of such information by employers. Proponents of the law urged that this legislation will allow Americans to freely undergo genetic testing for diseases, such as cancer, heart disease, and mental health conditions without fear of losing their job.
GINA regulations apply to all private, state, and local government employers with 15 or more employees. Some states already have genetic information nondiscrimination laws, but the terms and application of those laws vary greatly. Pursuant to GINA, businesses may not intentionally acquire genetic information from applicants, employees or even former employers (with very limited exceptions). In addition, the law prohibits employers from using this type of information for any decision regarding the terms of employment, including hiring, firing, and promotion decisions.
The new “Equal Opportunity is the Law” poster is available on the EEOC website in English, Spanish, Arabic and Chinese. This poster also reflects the 2008 amendments to the Americans with Disabilities Act. To obtain free copies of other federal required posters, you should contact the U.S. Department of Labor at (202) 693-0200 or visit DOL’s website.
While GINA seeks to encourage increased genetic testing, which will make it more likely for researchers to come up with lifesaving therapy for disease, its application may catch businesses by surprise. Most companies assume that the law doesn’t apply to it because they don’t actively collect genetic information on their employees or applicants. However, the law defines genetic information broadly and includes information on illnesses obtained through family histories. Thus, it could be problematic to the company that has such information and inadvertently uses it.
Stay Connected with H. Scott Johnson Jr.
Stay Connected with Angela H. France