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DOES CAMPUS RECRUITING OR LIMITS ON EXPERIENCE FOR APPLICANTS VIOLATE THE AGE DISCRIMINATION LAWS

Do employers violate the Age Discrimination In Employment Act (ADEA) in only recruiting at college campuses or turning away applicants for having too much experience?  The Seventh Circuit has a simple answer to that question, in a ruling on January 23, 2019, that the federal age discrimination law does not protect older applicants from the unintended discriminatory effects of seemingly neutral employment policies.  Kleber v. Care Fusion Corp., 2019 B.L. 21526 (C.A. 7, en banc 1/23/19).  In this particular case, there was no question of disparate treatment of the applicant (i.e., intentional discrimination), but instead the claim was whether the ADEA applied to "disparate impact" or inadvertent discrimination cases, which nevertheless have an adverse effect on older applicants.  The 8-4 decision by the full U.S. Court of Appeals for the Seventh Circuit reverses an April 27, 2018 ruling by a three-judge panel of the court.  The disparate impact ruling was consistent with the Atlanta-based Eleventh Circuit ruling in Villarreal v. R.J. Reynolds Tobacco Co. case, thus avoiding a split in circuit court rulings that might have made it more likely for the Supreme Court to review the issue. 

The Eleventh Circuit had ruled that an employer's instruction to recruiters that they should target candidates two to three years out of college and to avoid applicants with more than eight years' experience, did not violate the ADEA. 

Editor's Note: Litigation of the issues may continue at least in other circuits.  Further, employers should be aware that the ruling only deals with "disparate impact" situations, and not to cases involving intentional discrimination on the basis of age against job applicants.  Further, the adverse impact type of case still protects existing employees (as opposed to applicants) from the "disparate impact" theory of employment discrimination. 

In a related development, the U.S. Supreme Court ruled at the end of last year that the ADEA protects state and local government workers against age discrimination regardless of the size of their employer.  Mt. Lemmon Fire Dist. v. Guido No. 17-587 (11/6/18).  The ADEA was interpreted to cover all public sector workers, even though it only applies to private-sector employers with 20 or more employees. 

WATCH OUT FOR FAIR CREDIT REPORTING ACT DISCLOSURE DOCUMENTS

The Fair Credit Reporting Act (FCRA) prohibits the use of consumer reports for employment purposes unless "a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured in a document that consists solely of the disclosure that a consumer report may be obtained for employment purposes, and that the consumer authorized the procurement of the consumer report in writing."  Thus, job applicants must be given notice that the potential employer will run a background report on that individual as part of the application process, and the consumer must provide written authorization allowing the employer to request the background report.  Further, the disclosure and authorization must be set forth in a separate stand-alone document. 

This seemingly simple requirement has resulted in numerous lawsuits against employers alleging this type of FCRA violation.  Several lawsuits have been brought as class actions alleging that the job application included a waiver and release of liability on the same form that included a consumer report disclosure in violation of the FCRA.  See Syed v. M-1 LLC, No. 14-17186 (C.A. 9, 1/20/17).  In a ruling on January 29, 2019, an appellate court ruled that an employer who includes information on both state and federal credit reporting acts on the same document violates the FCRA's "stand-alone document" requirement.  Gilberg v. Cal. Check Cashing Stores, No. 17-16263 (C.A. 9, 1/29/19). 

Some of these cases have been defended on the basis that the plaintiff does not satisfy the injury requirement for standing to sue by alleging a "bare procedural violation" of the FCRA that does not result in concrete harm.  See Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016).  However, the courts seem to be searching for ways in which a consumer job applicant may have been disadvantaged in the procedural process.  The courts have differed on whether a breach of the stand-alone requirement is a bare procedural violation that does not satisfy the concrete injury requirement.

The requirement for stand-alone disclosure forms particularly gets complicated in the use of online applications.  The courts have not yet issued rulings on how language presented in an online application can be "stand-alone" and caution is suggested to include the language by itself on its own page or "screen shot."  There is potential in the cases for statutory penalties, punitive damages, and attorneys fee awards to a successful plaintiff. 

Editor's Note:  Employers need to be careful about meeting all the technical requirements of the FCRA, as plaintiffs can allege that confusing language in the background check disclosure forms, even those caused by shoddy grammar, can potentially make them invalid under the FCRA.  Some courts have even found disclosure forms inadequate because they included unnecessary information that detracted from the disclosures they were required to provide.

EMPLOYERS MAY NOT BE ABLE TO REQUIRE MANDATORY ARBITRATION OF LEGAL CLAIMS BY TRANSPORTATION WORKERS

The Federal Arbitration Act is a federal law that encourages the arbitration of legal claims.  Fifty-five percent of American workers are covered by mandatory arbitration provisions in their employment contracts with their employers, according to published reports.  Many of these mandatory arbitration provisions preclude an employee from bringing a class or collective action and require all legal claims to be brought individually in arbitration rather than in court.  The arbitration process is quicker and cheaper than court litigation, and prevents "runaway" juries.

The current case involves whether the Federal Arbitration Act (FAA) can apply to transportation workers, as there is an exclusion in the FAA for "contracts of employment" of certain transportation workers.  In a January ruling of the U.S. Supreme Court, the issue was whether this exclusion applied to workers who were independent contractors so that the exclusion for "contracts of employment" referred only to contracts that established an employer-employee relationship, and not to contracts with independent contractors.  New Prime, Inc. v. Oliveira, No. 17-340 (U.S., 1/15/19).

The Supreme Court ruled that when Congress enacted the FAA in 1925, the term "contracts of employment" referred to agreements to perform work, whether to be performed by employees or independent contractors.  Thus, under the exclusion from the FAA of certain transportation workers, the Court lacked authority under the FAA to order arbitration. 

Editor's Note: The New Prime Supreme Court ruling does not affect employers of employees or independent contractors other than certain transportation workers in interstate commerce.  However, trucking companies and related transportation employers will have to find other ways besides the FAA to enforce mandatory arbitration agreements.  Most states have state arbitration laws that may be applicable, although a few states exempt arbitration agreements in employment contracts.  Thus, employers of transportation workers have to rely on state arbitration laws to enforce their mandatory arbitration agreements.  Some have expressed the view that other theories might be used to counter mandatory arbitration agreements of transportation workers in interstate commerce.

NLRB REVERSES OBAMA-ERA INDEPENDENT CONTRACTOR TEST

During the Obama administration, the NLRB overturned 92 traditional NLRB doctrines.  The current Trump administration's NLRB is in the process of attempting to reverse the Obama-era rulings, thus going back to the prior doctrines.  The latest example occurred in the January 25 ruling of the NLRB in Super Shuttle DFW, 16-RC-010963 (1/25/19).  The latest ruling involves shuttle-van-driver franchisees in the Dallas-Fort Worth airport.  Only employees are covered by the Labor Act, which provides them the right to unionize and engage in concerted activities.  The Board during the Obama administration had particularly limited the use of independent contractors in its ruling that Federal Express Home Delivery drivers were not independent contractors, a ruling that was overturned by the District of Columbia Court of Appeals.  In the recent ruling, the NLRB used the common-law test drawn from the Restatement of Agency, a legal treatise that names 10 factors to consider to determine whether a worker is an independent contractor or employee.  Those factors include, among other things, the level of control the business exerts over a worker, the method of payment, and the amount of supervision involved in the job.  The current ruling emphasizes that the Board should "evaluate the common-law factors through the prism of entrepreneurial opportunity when the specific factual circumstances of the case make such an evaluation appropriate."  The current Board ruling was 3-1, broken down between Trump administration appointees and the sole remaining Obama administration appointee.

NLRB Chairman John Ring recently stated that the NLRB may propose a new regulation to resolve the resolution of the issue as between independent contractors and employees.  The Board has already proposed a related rule dealing with the joint employment issue.

DANCERS SUE EMPLOYER CLAIMING RECLASSIFICATION AS EMPLOYEES WAS RETALIATION

Employers are well aware of classification issues as to whether workers are employees or independent contractors.  Use of independent contractors offers great advantages to employers, including saving of payroll taxes and the avoidance of union and employment claims.  On the other hand, there is widespread litigation over misclassification issues. 

One employer recently received the worst of both worlds.  A class of exotic dancers in California sued their employer alleging their reclassification as employees and related reduction of pay was in retaliation for their previous lawsuit.  Although the employer contended it was required to reclassify the dancers as a result of a California Supreme Court ruling, the dancers contended that the employer was not required to reduce their pay in the process.  The case is Jane Loes 1-3 v. SFBSC Management LLC, Cal. Super. Ct., complaint filed 1/29/19.

Editor's Note:  This lawsuit, if valid, puts employers in a "damned if you do, damned if you don't" situation.  The lesson to be learned from the case is that hard facts may make bad law, and that employers should seek competent employment counsel in carrying out such reclassifications.

CAUTION NECESSARY FOR WELLNESS PROGRAMS DUE TO RECENT DEVELOPMENTS

Many employers are successfully using wellness programs and finding that good programs can be a"win-win."  That is, employee wellness improves attendance and reduces healthcare plan costs, while showing the employer's desire to help workers.  Unfortunately, there are many legal issues in setting up and operating a wellness plan.  While the Affordable Care Act (ACA) encourages wellness programs, such plans must be "voluntary" to be legal under both the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). 

The Equal Employment Opportunity Commission (EEOC) had issued regulations supporting the use of company-sponsored wellness programs, including provisions allowing employers to offer a 30% reduction in individual health premiums for employees participating in voluntary wellness programs.  The American Association of Retired Persons (AARP) filed a lawsuit against the EEOC regulations, contending that incentives up to 30% of the cost of an employee's health insurance premiums show that employee participation would not really be "voluntary."  A federal judge last year ordered the EEOC to make some corrections to the regulations or the rules would have to be vacated by January 1 of this year.  The EEOC did not make revisions, and instead removed the contested sections from its regulations in December.

Thus, at this time there is no "safe harbor" as to the incentives employers can offer to encourage voluntary participation in wellness programs.  At the same time, a number of lawsuits have been brought by the Department of Labor (DOL) against employers' welfare programs.  Suits have been brought by the DOL against Macy's and subsidiaries of Cigna and Anthem over Macy's tobacco cessation program, and against Dorel Juvenile Group over its surcharge for participants who use tobacco products.    Most recently, ChemStation was sued over its requirement to pay higher healthplan premiums for those who do not participate in its wellness program or fail to maintain certain health outcomes.  Among other things, the lawsuit against ChemStation contends that the wellness plan did not offer any alternative standard by which participants could obtain the discounted premiums.

The bottom line is that wellness programs are subject to strict legal requirements.  Although the EEOC says it plans to issue a new set of wellness regulations by mid-2019, this entire area is legally controversial and needs clarification.


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