HIGHLIGHTS FOR THE MONTH OF JULY 2008

By: Elizabeth Torphy-Donzella

RECENT DEVELOPMENTS

EEOC ISSUES GUIDANCE ON RELIGIOUS HARASSMENT AND DISCRIMINATION UNDER TITLE VII

On July 23, 2008, the EEOC issued updated pronouncements on the meaning of “religious discrimination” under Title VII, how to manage and address competing employee rights in the area of religion, and how to avoid engaging in religious discrimination in the workplace.

The EEOC issued three documents: an update to its Compliance Manual Section on religious discrimination; a “Question and Answer” document addressing basic issues in that area; and a “Best Practices Manual” that provides suggested strategies for legal compliance. The documents are intended to provide guidance to employers, employees, legal practitioners as well as EEOC investigators addressing religious claims under Title VII. Broadly speaking, the documents address definitions (e.g. what is religion), fundamental legal questions (e.g. what is religious harassment or discrimination and what is required to accommodate religion); and compliance guidance (e.g. how to avoid claims, how to balance demands to engage in religious expression versus demands to be free from workplace proselytizing).

What is Religion?

As the EEOC’s Q&A document explains, “For purposes of Title VII, religion includes not only traditional, organized religions such as Christianity, Judaism, Islam, Hinduism, and Buddhism, but also religious beliefs that are new, uncommon, not part of a formal church or sect, only subscribed to by a small number of people, or that seem illogical or unreasonable to others. An employee’s belief or practice can be ‘religious’ under Title VII even if the employee is affiliated with a religious group that does not espouse or recognize that individual’s belief or practice, or if few – or no – other people adhere to it. Title VII’s protections also extend to those who are discriminated against or need accommodation because they profess no religious beliefs.” Under this broad view of “religion” adopted by the EEOC, an employer virtually has no ability to question an employee’s assertion that he/she is “covered” with respect to asserted religious beliefs (or non-beliefs).

The same Q&A document identifies a “religious practice” that might trigger the accommodation duty: “Religious observances or practices include, for example, attending worship services, praying, wearing religious garb or symbols, displaying religious objects, adhering to certain dietary rules, proselytizing or other forms of religious expression, or refraining from certain activities. Whether a practice is religious depends on the employee’s motivation.”

The EEOC does note, however, that mere personal preferences are not “religious beliefs” even if they are strongly held. Thus, a person who personally espouses or adheres to vegetarianism would not in most cases be espousing a religious belief. Similarly, per an example from the Compliance Manual, an employee’s tattoos and body piercing would not be deemed religious (such as to require an exemption from a company dress code) where it was advanced as a form of self-expression through body art (as compared with rooted in a religious tradition or belief).

Religious Harassment and Discrimination.

The EEOC explains that discrimination includes treating individuals disparately because of their religion in the terms and conditions of employment (e.g. interviewing, hiring, firing, promoting, and the like). It also includes differential treatment generally. As the EEOC’s Q&A document explains, “For example, if an employer allowed one secretary to display a Bible on her desk at work while telling another secretary in the same workplace to take the Quran off his desk and out of view because co-workers ‘will think you are making a political statement, and with everything going on in the world right now we don’t need that around here,’ this would be differential treatment in violation of Title VII.” Similarly, adopting different security requirements for adherents of some religions (e.g. Muslims) as opposed to others would be religious discrimination.

The Compliance Manual sets forth the following regarding harassment: “Religious harassment in violation of Title VII occurs when employees are: (1) required or coerced to abandon, alter, or adopt a religious practice as a condition of employment (this type of ‘quid pro quo’ harassment may also give rise to a disparate treatment or denial of accommodation claim in some circumstances), or (2) subjected to unwelcome statements or conduct that is based on religion and is so severe or pervasive that the individual being harassed reasonably finds the work environment to be hostile or abusive, and there is a basis for holding the employer liable.” Permitting or tolerating harassment of employees by customers is equally illegal as is permitting such conduct by managers or employees.

Compliance Guidance.

Perhaps most useful is the EEOC’s guidance on how to avoid claims and fulfill obligations under the law. In its Best Practices Manual, the EEOC suggests that employers ensure that their policies explain the legal obligations in this area. Further, supervisors and managers should be trained to understand when an issue of religious discrimination and/or a duty of accommodation arises and how to respond. The Manual and the other EEOC documents provide examples that can help employers balance the rights of employees to express religion against the right to be free of undue religious pressure in the workplace.

MARYLAND COURT OF SPECIAL APPEALS DENIES ENFORCEMENT OF COVENANT NOT TO COMPETE

On July 7, 2008, the Maryland Court of Special Appeals affirmed a trial court’s refusal to enforce non-competition covenants against low-level employees who went to work for a competitor after their former employer lost the government contracts on which they were employed.

Facts of the Case: In Ecology Serv., Inc. v. Clym Environmental Serv., LLC, Ecology, a specialized waste management provider, lost two separate government contracts because it grew beyond its “small company” status (required to qualify for the contracts). Both contracts were awarded to Clym. Thereafter, three fairly low level employees on the two contracts were either terminated from or quit Ecology’s employ. All three had signed non-competition and confidentiality agreements that barred them from working for a competitor for one year and from disclosing, at any time, company confidential information. All three went to work for Clym on the government contracts in the same capacities for which they had worked for Ecology. Ecology sought to enforce the non-competition agreements and lost in the circuit court. Ecology appealed.

The Court’s Holding: The Court of Special Appeals (CSA), in agreeing with the circuit court and Clym, noted first that covenants in Maryland (and elsewhere) are not enforceable where the employee has not developed personal contacts with company clients or inside-knowledge that can be exploited after his departure to the detriment of the former employer. In this case, the employees had no client contacts. Moreover, there was no evidence that the contracts (which were awarded strictly based on bid) were influenced by personal contacts. Second, Ecology was seeking to prevent its former employees from working for a competitor because it claimed it had trained them in its methods. In rejecting this contention, the CSA explained that the training that Ecology performed, which merely permitted its employees to do their job (and thus potentially become a more efficient competitor) is not a legally protected interest. Finally, the CSA explained that while an employer might be able to constrain the future competition of employees with unique or specialized education, training and skill (because their skills are difficult to replace), the employees at issue were not particularly skilled nor was their education in a special area. As such, the non-competition covenants were void.

Lessons Learned: Agreements against future competition are not enforceable simply because an employee signs the agreement. Instead, as restraints on trade, they must be justified by legitimate and recognized business necessities. An employer has an enforceable interest in limiting post-employment competition by individuals who develop personal contacts or inside-knowledge that can be exploited to an employer’s detriment for a period, but not someone who has no particular influence. In addition, mere investment in training is not a basis for “side-lining” an employee after termination, unless that training imparted a unique and difficult-to-replace skill or exposes him to trade secrets (and then, a confidentiality agreement may be the better course). Finally, although not at issue in this case, a covenant may not enforceable if it is longer or broader in scope (i.e. time and mileage) than is necessary to protect the company’s legitimate interest. While Maryland courts sometimes “blue pencil” these terms to a shorter duration or more limited scope, there remain questions as to whether Maryland’s highest court actually endorses this practice. Thus, wise employers will seek through contract no more than what they legitimately need to protect their interests.

TAKE NOTE

ADA Amendments. By a vote of 402-17, the House of Representatives quickly passed the ADA Amendments Act of 2008. If enacted, the ADA Amendments Act of 2008, which is the replacement for its predecessor, the ADA Restoration Act, would effectively overrule several significant Supreme Court decisions in an attempt to “restore the balance” between the rights of disabled workers and the obligations of employers under the ADA. Key provisions of the proposed Act include:

o Clarifying the definition of disability to consist of an impairment that materially restricts (as opposed to substantially limits) a major life activity. The “materially restricts” qualifier is not yet defined precisely in the proposed legislation. The House bill also includes in the definition of disability an impairment that is episodic or in remission but would substantially limit a major life activity when active;

o Prohibiting consideration of the ameliorative effects of mitigating measures in determining whether an individual has a disability, although it will remain permissible to consider a vision impairment in its corrected state with contacts or eyeglasses;

o Expanding the definition of “regarded as” having a disability to include when an employee establishes that he or she has been discriminated against because of an actual or perceived physical or mental impairment. The legislation would confirm that employers are not required to provide accommodation to individuals who are regarded as disabled (which point is currently disputed in the federal circuits); and

o Confirming that an employee would continue to bear the burden of proving that he or she is a qualified individual with a disability.


The bill specifically excludes from coverage impairments that are minor and transitory, with an actual or expected duration of six months or less. The Senate is currently wrestling with its companion bill to make any changes necessary to bring it to the floor for a vote.

Pregnancy Discrimination Includes Abortions. In a case of first impression, the Third Circuit Court of Appeals held that Title VII’s prohibition against sex discrimination prevents an employer from terminating an employee for having an abortion. In Doe v. C.A.R.S. Protection Plus, Inc., the plaintiff was fired three days after having an abortion. She sued, claiming sex discrimination in violation of Title VII. The employer argued she was terminated for failing to provide proper notice regarding her need to take leave. The trial court found for the employer but on appeal, the Third Circuit reversed. The appellate court ruled that the Pregnancy Discrimination Act (PDA), which amends Title VII, protects not only pregnant women, but women who elect to terminate their pregnancies. The Sixth Circuit has also interpreted the PDA to prevent discrimination against a woman who has an abortion. Further, the court considered the EEOC guidelines stating that a woman should not be fired because she has had an abortion. In finding Title VII protection, the Third Circuit relied upon the language in the PDA that requires women affected by pregnancy, childbirth, or related medical conditions to be treated the same for all employment-related purposes.

Pennsylvania Ban On Smoking. Effective September 11, 2008, all Pennsylvania employers will be required to comply with the State’s Clean Indoor Air Act, which prohibits smoking in the workplace and most enclosed public places. Once the law takes effect, smoking (or permitting others to smoke) in a public place that is subject to the ban will be punishable by civil and criminal penalties, ranging from $250 to $1,000. A public place is an enclosed area which “serves as a workplace, commercial establishment or an area where the public is invited or permitted” and includes restaurants, schools, hospitals, train stations, and vehicles used for mass transportation. A “workplace” is defined as an indoor place of employment, so outside worksites are not covered by law. Employers are required to post appropriate signs indicating a non-smoking (or smoking permitted) environment. Of special note to employers, the law contains an anti-retaliation provision, banning employers from refusing to hire, terminating, or otherwise discriminating against a worker for exercising his or her “right to a smoke-free environment.” The law does except from its coverage certain locations, including full service truck stops, cigar bars, tobacco shops, designated rooms in residential adult care facilities, bars with at least 80% of revenue owing to alcohol, and bars in restaurants which have a separate entrance and ventilation. Finally, the law provides that a good faith effort to prohibit smoking is an affirmative defense to liability. Employers should therefore, review and update their policies, as well as document all efforts made to comply with the new smoking ban.

ADA Reasonable Accommodations. The Second Circuit Court of Appeals recently issued a decision in Brady v. Wal-Mart Stores, Inc., holding that employers must seek to accommodate employees with obvious disabilities, even if the employee never requests an accommodation. To learn more, click here. The employee, a man with cerebral palsy, was hired to work in the pharmacy department in a New York store and did not indicate he needed any reasonable accommodations to perform his job. He was transferred to two different positions because of performance problems and ultimately quit. The employee sued under the ADA claiming, among other things, an unreasonable failure to accommodate. The employer argued that the plaintiff’s failure to accommodate claim should be rejected because he never requested an accommodation (and even testified at deposition that he did not think he needed one). The Second Circuit held otherwise, and ruled that an exception exists when the employee has an obvious disability. The Court focused on the employee’s protections under the ADA, stating it is more important for an employer to provide reasonable accommodations even where the employee does not think he or she is disabled because, in these situations, the employee is no position to ask for an accommodation. This decision now charges employers in the Second Circuit (New York, Connecticut and Vermont) with the difficult task of proactively engaging in an interactive dialogue with employees with obvious disabilities to determine whether any accommodations are needed, while at the same time, remaining careful not to “regard” such individuals as disabled.

TOP TIP

Neutral References: Employers Beware – The Obligation Is Breached In More Ways Than One

Employers regularly, as a matter of policy or in the course of a settlement agreement, agree to provide former employees with neutral references. Typically, the neutral reference is merely confirming dates of employment, last position held, and most recent wage rate. Normal practice for ensuring that neutral references are honored is to require that the former employee forward any reference requests to a designated company official (normally a Human Resources Official) who is aware of the neutral reference obligation and will see that it is honored.

Earlier this month, the Seventh Circuit Court of Appeals, issued a decision which reaffirms why employers must ensure that only one person is responsible for answering questions about a former employee’s employment, especially when that neutral reference requirements is negotiated in a lawsuit settlement. In the Seventh Circuit case, the court ruled that a jury needed to decide whether the employer violated its promise, negotiated in a lawsuit settlement, to provide a former employee with a neutral reference merely confirming employment, unless the former employee signed a release permitting more detailed information be given.

Specifically, the former employee was receiving Social Security disability benefits and an SSA employee had placed a call to the former employer seeking information in connection with SSA’s attempt to place the employee in a job while she received disability benefits. In-house counsel responded to the SSA call (rather than Human Resources) and did not simply confirm employment. Instead, he stated that the employee had brought one, if not more, legal actions against the company and also asked the SSA employee a number of questions about the former employee’s disability claim. The in-house attorney made no disparaging remarks about the employee’s actual job performance. Nevertheless, the SSA employee interpreted the in-house counsel’s response and follow-up questions to suggest that the attorney believed the former employee was taking advantage of the Social Security system. The SSA employee removed information about her employment with the company from information that would be used to provide placement. The former employee sued the employer for breach of contract (namely the neutral reference obligation) and the court held that a jury needed to decide the issue.

Employers must ensure that all reference communications are controlled, no matter what information is solicited. Human resource professionals are the most logical choice for ensuring that only neutral job information is provided. Restrict job reference agreement assurances solely to specifically designated human resource managers. Further, make sure all interested parties within the company understand that any requests for information on former employees, which relate in any manner to an employee’s work for the company, need to be funneled accordingly.

For greater clarification of any of these issues, you may contact any Shawe Rosenthal attorney.

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