A new study of employment practices litigation (EPL) data by Hiscox found four states — California, Illinois, Alabama and Mississippi — along with the District of Columbia, to be the riskiest areas of the U.S. for employee lawsuits. Businesses in these five jurisdictions face a risk that is substantially higher than the national average for being sued by their employees.
According to the study, a U.S.-based business with at least 10 employees has a 12.5% chance each year of having an employment liability charge filed against it. California has the most frequent incidences of EPL charges in the country, with a 42% higher-than-average chance of being sued by an employee. Other high-risk jurisdictions include the District of Columbia (32% above the national average), Illinois (26%), Alabama (25%), Mississippi (19%), Arizona (19%) and Georgia (18%). Lower-risk states for EPL charges include West Virginia, Massachusetts, Michigan, Kentucky and Washington.
Bert Spunberg, a colleague at Hiscox who is a senior vice president and the practice leader for executive risk, says: “Federal level information on employee charges is generally available, but state specific information is more difficult to aggregate. Understanding employee litigation risk at a state level is a crucial step for an organization to establish the processes and protections to effectively manage their risk in this changing legal environment.”
State laws can have a significant impact on risk. For example, the employee-friendly nature of California law in the area of disability discrimination may contribute to the high charge frequency in the state. Discrimination cases filed at the state level in California are brought under the Fair Employment and Housing Act (FEHA). FEHA applies to a broader swath of businesses, covering any company with five employees, vs. a 15-employee minimum for cases brought under federal law as outlined in Title VII of the Civil Rights Act.
Mark Ogden, managing partner of Littler Mendelson, the largest employment and labor law firm in the world, says: “Not only are employment lawsuits more likely in those states, but the likelihood of catastrophic verdicts is also significantly higher. Unlike their federal counterparts, where compensatory and punitive damages combined are capped at $300,000, most state employment statutes impose no damages ceilings. Consequently, employers in high-risk states must ensure that their workforces are adequately trained regarding workplace discrimination, harassment and retaliation and that policies forbidding such conduct are strictly enforced.”
For more on the study, click here.
A significant emphasis in the FEHA, and the new regulations, involves defining unlawful employment practices — particularly those that result in adverse employment consequences to an applicant or employee based on a disability. The new FEHA regulations add “involuntary transfer or reassignment” to the list of potential adverse employment actions for which an employee can make a disability discrimination claim, which may have a significant impact on school districts as employers.
Administrators will soon begin making staffing decisions that involve involuntary reassignments for the coming school year. They should be aware of the impact the disability regulations may have on their decision making process. This is particularly important in situations where the district either has been on notice that the affected employee has a disability, or one of the factors in choosing the employee for the reassignment involves disability-related issues (such as erratic attendance due to the condition, prior use of medical leave, or prior requests for accommodation).
This article provides further explanation about this issue and the anticipated impact on California school districts. In addition, this article draws a distinction between involuntary reassignments and reassignments that are offered during an interactive process as a reasonable accommodation.
What Is An “Adverse Employment Action?”
An employer may not take any “adverse employment action” against an employee on the basis of a “protected characteristic” such as race, gender or sex, religion, national origin, pregnancy, physical or mental disability, or medical condition. Adverse employment actions consist of decisions that materially affect the terms and conditions of the individual’s employment. Common adverse employment actions include:
- Refusal to hire an otherwise qualified job applicant because of the protected characteristic;
- Disciplinary action that leads to suspension, loss of pay or benefits, or job status change;
- Demotion or an unfavorable transfer to a materially different position;
- Denial of promotion or advancement;
- Failure to engage in an interactive process to evaluate reasonable accommodations;
- Failure to make a reasonable accommodation; and
- Termination or discharge.
An adverse employment action is an action that materially affects the terms, conditions, or privileges of employment. Whether the action is “material” is viewed from an objective perspective. Relatively minor actions that are reasonably likely to simply anger or upset an employee do not constitute an adverse action. An adverse employment action is adverse treatment that is reasonably likely to impair a reasonable employee’s job performance or prospects for advancement or promotion.
In retaliation cases, both federal and state courts have broadened the range of what constitutes an adverse action, concluding that an action is also material if it is reasonably likely to deter an employee from engaging in protected activity. In Yanowitz v. L’Oreal USA, Inc., the California Supreme Court reviewed an employee’s unlawful retaliation claim under the FEHA. In Yanowitz, the alleged retaliatory conduct included unwarranted negative performance evaluations, unwarranted criticism voiced by a supervisor in front of other employees, and a supervisor’s solicitation of negative feedback from the plaintiff’s staff. Thus, depending on the circumstances, lateral transfers, unfavorable job references, and changes in work schedules may constitute adverse employment actions.
Involuntary Transfer Or Reassignment Is An Adverse Employment Action
Prior to the recent adoption of new regulations, the list of potential “adverse actions” did not specifically include involuntary transfers or involuntary reassignments. The Fair Employment & Housing Commission added this as a specified unlawful employment action based largely on the case law that has emerged over the last few years. The Department of Fair Employment & Housing observed that many times employees claimed that they were transferred or reassigned against their will to less desirable positions because of their protected characteristic (e.g. gender, race, religion, age, disability, etc.) or in retaliation for engaging in protected activity.
A retaliation lawsuit in San Diego specifically focused on an involuntary transfer as an “adverse employment action.” In Coyne v. County of San Diego, the employee sued for discrimination and retaliation in violation of Title VII and the California FEHA. The plaintiff claimed that she was transferred to a lateral position in a different division because of her gender and because she actively supported the gender discrimination claims of other employees. The County conceded that the plaintiff had engaged in protected activity, and the issues were whether the transfer constituted a materially adverse employment action and whether the transfer was justified by legitimate non-discriminatory reasons.
In analyzing the facts, the district court concluded that that a jury should decide whether the transfer was an adverse employment action. First, assignment to the new division was perceived by the County’s employees as less prestigious, unfavorable and, at times, punitive. Second, the transfer interfered with the plaintiff’s ability to care for her disabled son because it lengthened her commute. The judge found that the County knew that the plaintiff needed to care for her disabled son and that her current assignment was more conducive to that need. Because the plaintiff met her initial burden of proving the elements of retaliation, the burden shifted to the County to offer a legitimate non-discriminatory reason. The County offered more than one legitimate non-discriminatory reason for the transfer. The plaintiff, however, offered evidence that the County’s reason for the transfer shifted over time from one reason to another. The court concluded that the shift from one reason to another was sufficient to create an issue of fact for a jury about whether the non-discriminatory reasons offered by the County were pretexts for unlawful discrimination and retaliation.
It is clear that any “involuntary” transfer or reassignment will now be subject to an employee claiming that the decision was made, in whole or in part, for discriminatory motives and not for legitimate non-discriminatory business reasons. With the very broad definition of disability, it is likely that many certificated and classified employees fall within the protections FEHA offers for disability and medical conditions. Given the fluctuating needs of California school districts to make staffing decisions based on budgetary, enrollment and other key criteria, we can also anticipate that more reassignments and transfers will be necessary. Accordingly, this will have an immediate impact on districts as they staff for the next school year.
Impact On School Districts With Involuntary Transfer/Reassignments
Most school district collective bargaining agreements have provisions addressing criteria for transfers or reassignments. Bargaining unit members are eligible for any position for which they are appropriately credentialed or qualified using the process outlined in the collective bargaining agreement. And, most provide that any reassignment or transfer is subject to the District finding an appropriately credentialed teacher or qualified individual to fill his/her position.
The agreements also typically address the circumstances under which an involuntary transfer (to another site) or reassignment (to a different position at the same site) may be made. A reassignment or transfer may be necessary due to a shift in student population resulting in a decline or increase of enrollment at grade levels or departments, reduction of programs, initiation or expansion of programs, opening of a new school, or for the legitimate needs of a specific program. The criteria set forth in the contract are very important because they will form the criteria for defending an involuntary reassignment as a legitimate, non-discriminatory decision.
Most agreements also have a provision that first seeks voluntary requests for a transfer or reassignment to a posted vacant position. If there is no interest, then the district has the right to invoke the involuntary transfer or reassignment process. The very nature of “involuntary” suggests that the person who is reassigned (who expressed no interest in the position when posted) will be unhappy. In the past, employees and their union representatives generally invoked whatever remedies the collective bargaining agreement provided to contest an involuntary transfer. Now, districts can expect that when an unhappy employee is involuntary transferred or reassigned, even within the boundaries of a governing collective bargaining agreement, s/he may also claim that the decision was made in whole or in part, on a disability, medical condition or perceived disability and not non-discriminatory business reasons.
The Employee’s Initial Burden Of Proof
If an employee sues for disability discrimination alleging that an involuntary reassignment was based on disability, s/he must provide evidence that the disability played some role in the decision. Once that initial burden is met, the burden of proof shifts to the district to prove that the business decision was based on objective job-related criteria and that it was a legitimate non-discriminatory decision. It will, therefore, be very important for districts to establish, with clear and objective evidence, the business-related basis for involuntary reassignments.
To establish a disability discrimination claim in California, the employee must have a covered disability and must still be able to perform the essential functions of the job with or without accommodation. Treating an employee adversely in hiring, advancement, performance appraisal, termination, compensation, job training, and other terms, conditions, and privileges of employment because of a disability violates the California FEHA. Also, taking adverse employment actions against an employee because of a perceived disability or limitation violates FEHA, whether or not the impairment actually limits a major life activity.
To prove disability discrimination, the employee must prove the following elements:
- S/he has a physical or mental disability or medical condition, as those terms are defined in the law (and the new regulations);
- S/he is qualified for the position she seeks or holds, meaning that s/he is able to perform the essential job functions with or without reasonable accommodation;
- The district denied an equal employment opportunity by taking an adverse action against him/her; and,
- A “causal connection” between the individual’s disability or perceived disability and the denial of an employment opportunity. In other words, the decision was based, at least in part, on the disability, medical condition or perceived disability.
An adverse employment action can be proven through direct evidence or by inference. For example, when an employee alleges she was involuntarily reassigned because of her disability, the employer’s discriminatory motive can be shown by establishing that the employee was reassigned due to factors related to his/her disability (such as irregular attendance due to the condition or other factors involving physical capacity, etc.). The evidence need not show that the disability or medical condition was the sole, or even the dominant motivation for the adverse action. Rather, discrimination is established if the preponderance of the evidence indicates that the claimant’s disability or medical condition was at least one of the factors that motivated the decision that led to an adverse employment action.
The District’s Burden Of Proof To Defend An Involuntary Reassignment
As noted above, FEHA provides a “mixed motive” basis for establishing discrimination claims. Once the plaintiff provides “some evidence” that one or more of the reasons for an adverse employment decision was based on a protected characteristic, the burden shifts to the defendant to prove that it had a legitimate non-discriminatory reason. These reasons can vary with the individual circumstances. The criteria for making involuntary transfers or reassignments set forth in a collective bargaining agreement will certainly be a starting point — particularly since they apply to all similarly situated members of the bargaining unit.
Districts should be prepared to produce concrete, objective reasons for making an involuntary transfer and why the particular employee with a disability was the appropriate person to select. Often, this can be based on factors such as appropriate credentials, seniority, or other objective factors.
Also, if the decision makers on the reassignment were unaware of the individual’s disability, then the district can defend by establishing that the decision could not have been based on the disability or aspects of the disability. However, districts should also be prepared for the potential that an involuntarily reassigned individual with a previously undisclosed disability requests a reasonable accommodation that would: (a) invalidate the reassignment or transfer so the employee can remain in the current assignment; (b) seek to identify modifications or adjustments needed to perform in the new position or at the new site; (c) seek to identify a different reassignment (to a different vacant position) be considered as a reasonable accommodation; or, (d) request leave as a reasonable accommodation rather than to complete the involuntary reassignment or transfer.
All of these requests will trigger an interactive process that must be completed and well documented. It will not be sufficient to assert that the collective bargaining agreement provisions on involuntary transfer or reassignment is controlling. Remember that modifying or bypassing a provision of a collective bargaining agreement to make a reasonable accommodation must at least be considered as part of an interactive process. And, when the collective bargaining agreement states that seniority is “one factor” to consider in making an involuntary reassignment, it does not constitute a “bona fide seniority system” because it leaves some discretion and flexibility to balance a number of legitimate business factors in making staffing decisions.
Distinction: Involuntary Reassignments Versus Reassignments As A Reasonable Accommodation
This article addresses involuntary reassignments or transfers which are made outside of an interactive process. This is very different from making a reassignment to a vacant position as part of a reasonable accommodation, to better suit the employee’s needs for modified schedule or adjustments to physical tasks such as standing, walking, etc. Such decisions are made properly in the context of an interactive process. Although an employee may not “welcome” a reassignment, that isn’t the same as an involuntary reassignment prior to (or in the absence of) a timely good faith interactive process.
In the context of an interactive process, after considering potential alternatives to effectively accommodate an employee with modifications or adjustments to his regular job or other environmental changes, a school district may conclude that a reassignment to a “comparable” vacant position for which he is qualified offers the best opportunity to reasonably accommodate his work restrictions. As long as the interactive process explores in good faith all options for reasonable accommodation, the reassignment can be defended even if this is not the employee’s preferred accommodation. It is important, however, to be sure the reassignment is to a comparable position that the employee can perform and to have a constructive dialogue with the employee to obtain his/her agreement on the reassignment as a reasonable accommodation.
In fact, reassignment to a vacant position as part of a reasonable accommodation is required when the employee cannot perform his own job even with an accommodation. Reassignment as a reasonable accommodation received specific attention in the new regulations. The regulations provide: “As a reasonable accommodation, employer shall ascertain through an interactive process suitable alternate, vacant positions and offer an employee such a position for which the employee is qualified under the following circumstances:
- Employee can no longer perform essential job functions, even with accommodation;
- Accommodation of the essential functions of own job creates an undue hardship; and
- Agreement with employee that reassignment is preferable to accommodation in U&C.
If no funded, vacant comparable positions for which the employee is qualified with or without reasonable accommodation exists, the employer may assign to a lower graded or lower paid position. Although reassignment to a temporary position is not considered a reasonable accommodation under these regulations, an employer may offer and an employee may choose to accept or reject a temporary assignment during the interactive process (Interactive process is continuous — so the intent is to make this a “stop gap”).
Most significantly, the new regulations make it clear that reassignment as a reasonable accommodation is a very high level responsibility for employers. The regulations specify: “The employee with a disability is entitled to preferential consideration of reassignment to a vacant position over other applicants and existing employees. However, ordinarily an employer is not required to accommodate an employee by ignoring a bona fide seniority system absent a showing that special circumstances warrant a finding that the requested accommodation is reasonable on the particular facts, such as where the employer reserves the right to modify its seniority system or the established practice is to allow variations to its seniority system.”
On July 26, 2012, a federal judge in Las Vegas ordered Prospect Airport Services, Inc., a provider of wheelchair assistance services to airline passengers, to implement extensive measures to prevent future sexual harassment.
After agreeing to a monetary settlement of $75,000 in a lawsuit brought by the the Equal Employment Opportunity Commission, Prospect refused to agree to any prospective relief to prevent future harassment. The Equal Employment Opportunity Commission petitioned the court for an injunction and order directing compliance.
The judge issued an order prohibiting Prospect from further violating Title VII as it relates to sexual harassment for a period of five years. Prospect must develop a policy and procedures for handling reports of sexual harassment and an effective investigation process for all harassment complaints. It must also “appropriately discipline management and human resources staff for failure to comply with such procedures and provide annual sexual harassment training to all supervisory employees.”
The Equal Employment Opportunity Commission will monitor compliance and can haul Prospect into court again for any failure to comply with these orders or for damages based on new harassment incidents.
The Equal Employment Opportunity Commission had charged the company with failing to address complaints of unrelenting sexual advances toward a male passenger services assistant by a female co-worker. The employee, whose wife had passed away, received sexually suggestive notes and unwelcome advances. He rebuffed the advances and brought the notes to the attention of a general manager who made light of the situation and failed to stop the harassment. There was no effective company policy at the time to address the issue.
Over the course of a year, the harassment escalated to a near-daily basis, including offensive remarks by co-workers about his sexuality due to his rigorous rejection of the sexual advances. Despite his repeated complaints to management, the hostile work environment ended only when he resigned.
The Equal Employment Opportunity Commission’s press release states: “Today the court has spoken to affirm the importance for all employers to have effective policies and procedures in place to prevent discrimination in the workplace … A strong policy, meaningful training and a swift response to complaints help to contain an existing hostile work environment or to prevent one from arising.”
Under California’s Fair Employment & Housing Act (FEHA), failure to “take all reasonable steps to prevent discrimination or harassment from occurring” is a separate unlawful employment practice.
In a precedent-setting decision against a small law firm, the Fair Employment & Housing Commission (FEHC) determined that the Department of Fair Employment & Housing (DFEH) can prosecute an action for such failure, even when the underlying claims of harassment and retaliation aren’t proven.
In DFEH vs. Law Offices of Jeffrey Lyddan, the Fair Employment & Housing Commission determined that Lyddan’s statements, gestures and cartoons directed toward a paralegal, while often in bad taste, did not rise to the level of objectively severe and pervasive harassment that interfered with her ability to perform her job duties. Nevertheless, it supported a “stand alone” action by the California enforcement agency for failing to take all reasonable steps to prevent harassment from occurring. Without actionable harassment or retaliation, such a claim may not be actionable by a private litigant in a civil action.
The Commission found that Lyddan failed to maintain an anti-harassment policy, did not attend harassment training, and failed to order a fair and impartial investigation into the paralegal’s charges of harassment presented in her email when she resigned. Therefore, Lyddan was liable for failure to take all reasonable steps to prevent harassment from occurring.
California’s Fair Employment & Housing Act requires “effective remedies” that will both “prevent and deter” discrimination. This is why the Equal Employment Opportunity Commission and the Department of Fair Employment & Housing require employers to adopt significant future anti-discrimination practices and conduct widespread training as part of their settlement agreements.
The affirmative duty to prevent future harassment goes beyond sexual harassment to other hostile environment claims, including disability, as is seen in Espinoza v. Orange County, in which an employee was awarded more than $850,000 after harassment by his co-workers and indifference by the County to his complaints.
Failure to prevent future discrimination is also a separate unlawful employment practice in disability discrimination lawsuits. The Department of Fair Employment & Housing has obtained settlements and Commission decisions with affirmative requirements for expanding reasonable accommodation procedures, adopting preventative practices and training in several pregnancy and disability discrimination actions in the last 18 months.
In DFEH v. Acme Electric, the Fair Employment & Housing Commission handed down the largest award in its history to a sales manager with cancer when his employer violated California’s Fair Employment & Housing Act by ignoring the duty to engage in a good faith interactive process, refusing to reasonably accommodate his disability and “failing to take all reasonable steps necessary to prevent discrimination from occurring.”
- Update your discrimination prevention policies and periodically audit their enforcement — even before someone complains.
- Make sure your complaint procedures have accessible avenues for employees to report harassing work environments.
- Conduct an immediate neutral fact-finding investigation with every internal discrimination complaint, even when it is raised by a departing employee, because the alleged behavior may still occur with others.
- Update your disability processes to comply with the broad interactive process and reasonable accommodation requirements imposed by California’s Fair Employment & Housing Act. California law mandates that leaders receive harassment prevention training every two years.
- Provide training for front-line supervisors on the standards for preventing discrimination or retaliation against employees who seek reasonable accommodations or take leaves of absence for medical conditions and/or disabilities.