January 2007

HAPPY NEW YEAR TO ALL OF OUR CLIENTS! Welcome to the January 2007 edition of Cup, Bashen Corporation’s Client Update Newsletter. In this month’s edition, we highlight the final noteworthy events of 2006 and examine issues that will impact the industry in 2007.

RECORD RECOVERY FOR OFCCP IN 2006

The OFCCP recently announced a record recovery for a record number of workers in Fiscal Year 2006, during which the OFCCP recovered approximately $51.5 million for 15,273 workers. According to the OFCCP, the total recovery represents a 15 percent increase over the total for FY 2005. OFCCP reports that 88 percent of its recovery was collected from cases involving systemic discrimination.

SUPREME COURT TO WEIGH IN ON WAGE DISCRIMINATION IN 2007

On November 27, 2006, the Supreme Court heard oral arguments in Ledbetter v. Goodyear Tire & Rubber Co., which presents the important question of whether and under what circumstances an employee may bring a Title VII action alleging illegal pay discrimination when the disparate pay is received during the statutory limitations period but is the result of an intentionally discriminatory pay decision that occurred outside the statutory limitations period.

Lilly Ledbetter was almost 60 years old and near retirement before filing a wage discrimination suit in 1999. Ms. Ledbetter alleged that for years she had been paid substantially less than her male counterparts as the result of a discriminatory pay decision made when she was hired approximately 20 years earlier. To prevail, Ms. Ledbetter was required to show that the discrimination had occurred within 180 days prior to her filing a charge with the EEOC. Although the allegedly discriminatory decision that led to Ms. Ledbetter’s lower pay occurred years before she filed her charge, counsel for Ms. Ledbetter argued that according to the “paycheck accrual rule,” each new paycheck Ms. Ledbetter received continued the discrimination that commenced when she was hired and constituted a new violation of her civil rights. A federal jury agreed and awarded Ms. Ledbetter a judgment of more than $3.8 million, which was later reduced to $360,000 based on damage caps. On appeal, the 11th Circuit Court of Appeals reversed the trial court’s finding, holding that the limitations period for Ms. Ledbetter’s claim had long expired. Ms. Ledbetter then appealed to the Supreme Court.

Employers should note that Ms. Ledbetter’s claim originated under Title VII rather than the Equal Pay Act, under which the validity of Ms. Ledbetter’s claim would not be disputed. Courts have long observed a “paycheck accrual rule” with regard to the Equal Pay Act, and plaintiffs such as Ms. Ledbetter will continue to have an actionable claim under the Equal Pay Act regardless of the Supreme Court’s ruling. However, the Equal Pay Act only protects individuals who claim wage discrimination based on gender. If the Supreme Court rules in favor of Ms. Ledbetter and determines that the paycheck accrual rule should apply to Title VII plaintiffs as well, the ramifications for employers will be significant. A finding for Ledbetter could breathe life into numerous Title VII wage discrimination claims that would otherwise be barred by the statute of limitations. Employees of any protected category who have allegedly been subjected to a discriminatory pay decision in the distant past could become potential plaintiffs. Thus, employers may face potential liability based on employment decisions made long ago by decision-makers who have long since left the company, or by the company’s previous ownership if the business has changed hands since the alleged discriminatory act.

The Supreme Court’s ruling is expected this summer. Regardless of the outcome, employer best practices should not be altered. The current interpretation of the Equal Pay Act indicates that employers should already be examining past decisions affecting employee pay. A finding for Ledbetter will not expand an employer’s duties to its employees. Rather, it may create an additional avenue through which employees complaining of wage discrimination may seek redress.

EEOC LITIGATION BLOTTER

On November 7, 2006, the EEOC entered into a settlement with Tyson Foods (Tyson) for $871,000 on behalf of African American workers at the company’s Ashland, Alabama facility. Employees charged Tyson with maintaining a racially hostile work environment that included a racially segregated bathroom facility, the use of racial slurs, and intimidation. Employees who complained were allegedly retaliated against. The settlement includes significant injunctive relief, which will require the facility to make operational changes.

As required by the settlement, Tyson must appoint a senior-level employee as “consent decree coordinator” to oversee the implementation of the settlement. The coordinator will be responsible for reviewing Tyson’s policies and procedures for addressing discriminatory workplace conduct and supplementing those policies as necessary. The coordinator will also be responsible for preparing and submitting semi-annual reports to the EEOC over the three-year term of the decree. Additionally, Tyson will be required to provide employee training and modify the criteria used for performance appraisals of supervisors.

The details of the employees’ allegations and the resulting settlement suggest a failure by the facility’s first-line supervisors to ensure the existence of a harassment-free workplace.

The EEOC’s focus on systemic discrimination is reflected in the Commission’s case against Dial Corporation. On November 20, 2006, a federal appeals court upheld a lower court’s decision that a pre-employment “strength test” discriminated against female applicants for jobs at the Dial Corporation’s Armour Star sausage-making plant in Fort Madison, Iowa. The seven-minute test required applicants to carry 35-pound weights back and forth, lifting them to heights of 35 and 65 inches. More than 95 percent of male applicants passed the test, but fewer than 40 percent of female applicants passed. Prior to January 2000, when the test was implemented, approximately half of newly hired workers in the plant were women.

The appeals court agreed that the test had a disparate impact against women. The court also upheld the jury’s finding that continued use of the test after two years amounted to intentional discrimination against women.

Significantly, the appeals court found that although the test resembled the job in some respects, it was in fact more difficult. Furthermore, Dial could not show that the test achieved its stated purpose of reducing injuries. The court affirmed the award of approximately $3.3 million to 52 rejected female job applicants. As previously emphasized by Bashen, pre-employment tests that screen out women or minorities will be closely examined by the agency.

On November 22, 2006, the EEOC and JPMorgan Chase & Co. (Chase) announced the $2.2 million settlement of a claim brought under the Americans with Disabilities Act (ADA) against Bank One Corporation, which merged with Chase in 2004. On March 11, 2004, the EEOC found reasonable cause to believe that Bank One violated the ADA by failing to properly accommodate a group of employees who were medically released to return to work after leaves of absence exceeding six months.

During its investigation, the EEOC found that Bank One’s policy permitted employees who returned from short-term disability within six months to return to their jobs. Employees who required more than six months of disability leave, however, were not guaranteed to return to their previous positions. If their positions had been filled, employees who were released to return to work after more than six months of disability leave had thirty days to find other positions within Bank One or were terminated. The ADA, however, requires that employers individually assess whether or not additional leave will assist employees with disabilities in returning to work without placing an undue hardship on the company.

As a result of the settlement, Chase will distribute $2.2 million among 222 individuals who went on a long-term disability leave of absence from Bank One and whose employment was ultimately terminated. Chase will also reinforce its policies to individually assess whether a disabled employee on a disability leave of absence should receive additional job protection or other accommodations.

REVISED EEO-1 REPORT DUE SEPTEMBER 2007

On November 16, 2005, the Commission met and approved a revised EEO-1 report. Employers must begin using the revised survey for the reporting period beginning September 30, 2007. The revised EEO-1 report adds a new category titled "Two or more races" and divides "Asian or Pacific Islander" into two separate categories: "Asian" and "Native Hawaiian or other Pacific Islander." The revised report renames "Black" as "Black or African American" and "Hispanic" as "Hispanic or Latino." The revised report also strongly endorses self-identification of race and ethnic categories, as opposed to visual identification by employers. While employers are required to use the new EEO-1 report for the period beginning September 30, 2007, employers will not be required to resurvey their employees using the new categories until 2008.

With respect to job categories, the current category of "Officials and Managers" will be divided into two levels based on responsibility and influence within the organization. These two levels will be: (1) Executive/Senior Level Officials and Managers (plan, direct and formulate policy, set strategy and provide overall direction; in larger organizations, within two reporting levels of CEO); (2) First/Mid-Level Officials and Managers (direct implementation or operations within specific parameters set by Executive/Senior Level Officials and Managers; oversee day-to-day operations).

The revised EEO-1 report also will move business and financial occupations from the Officials and Managers category to the Professionals category (to improve data for analyzing trends in mobility of minorities and women within Officials and Managers).

OFCCP SCHEDULING COMPLIANCE INTERVIEWS

Beginning November 27, 2006, OFCCP regional offices began scheduling compliance evaluations of non-construction Federal contractors from a new scheduling list generated by OFCCP’s Federal Contractor Selection System (FCSS). This system uses multiple information sources and analytical procedures to select contractors for review, including a mathematical model that predicts the likelihood of a finding of systemic discrimination and ranks Federal contractor establishments accordingly.

The new scheduling list is comprised of approximately 2000 facilities that have either self-identified as being an establishment of a Federal contractor, or have been identified as such by OFCCP. According to the OFCCP, contractors should note that while the mathematical model that is part of the selection system does assign a higher likelihood of discrimination to some establishments than others, and that this measure was used to make selections, a test of the model is underway. OFCCP assures contractors that while the model develops an individual establishment measure, OFCCP does not rely upon those measures to conclude that discrimination exists in a particular establishment.

OFCCP has mailed a Corporate Schedule Announcement Letter (CSAL) to the Chief Executive Officer or designated point of contact of each parent company with more than one establishment on this initial scheduling list.

QUESTIONS?

David Johnston is an EEO Consultant at Bashen Corporation. If you have a question or topic that you would like to see addressed in a future edition of Cup, please e-mail David at djohnston@bashen.net.

Previous editions of Cup are available online at www.bashen.net.

A transcript of the oral arguments made in Ledbetter v. Goodyear Tire & Rubber Co. is available at: http://www.supremecourtus.gov/oral_arguments/argument_transcripts/05-1074.pdf.

Additional EEOC news and enforcement guidance is available at http://www.eeoc.gov.