Tag Archives: title vii

Sexual Harassment in Restaurant Industry

Sexual harassment lawsuits against another employee are not uncommon, but oftentimes employers overlook harassment of their own employees by customers. A 2014 Restaurant Opportunities Center United report about sexual harassment found that 78% of restaurant workers had been harassed at one time by a customer. Title VII of the Civil Rights Act requires employers to provide a workplace free of harassment. If the employer “knew, or should have known about the harassment and failed to take prompt and appropriate corrective action,” they can be held liable. Many guests don’t expect that their behavior will be questioned; many restaurants don’t want to make customers uncomfortable by correcting their behavior. So what is a restaurant to do when a customer harasses the staff?

The first step for restaurants to fix this problem is to have a strong HR department that is serious about preventing and dealing with sexual harassment. It’s clear when employers are using training as a pre-emptive legal defense and when they actually take it seriously. Employees will respond with equal seriousness. If workers don’t feel like policies against harassment will be enforced, they won’t report.

Another step that restaurants can take to prevent lawsuits is proper sexual harassment training. All restaurants need sexual harassment training, not just big ones with HR departments. There needs to be something written down somewhere that’s clearly visible — if this happens, this is how we will respond. In other words, employers can’t just say that all their employees deserve respect; they have to go out of their way to show that they won’t tolerate sexual harassment if there is to be any meaningful change.

See also: Sexual Harassment: Just the Start  

The final way to mitigate sexual harassment lawsuits is through employment practices liability Insurance. Some restaurants consider going without EPLI coverage. Others mistakenly assume they are covered under their general liability policies, which most often have a standard exclusion for employment practices liability exposures. Going without EPLI can be a costly decision. Even if a restaurant only has a few employees, it needs EPLI coverage.

You can find the full report here.

An Underestimated Source of Risk

When directors or CEOs or senior managers think about risk, they generally envision risks associated with the company’s finances, manufacturing, data, supply chain and customers. Human resource risk is often underappreciated, and that can be a serious misjudgment. Recent events, lawsuits and settlements prove this point.

It is true that the risk associated with talent and a lack thereof has risen in the risk hierarchy of most organizations. However, the many other serious risks associated with managing existing talent are often relegated to the bottom of the risk register.

The reasons for this underestimation are varied. Many executives tend to think that: 1) human resource matters are supplemental to the business rather than integral, 2) being an “employer at will” protects the company and enables it to make human resource decisions however it sees fit, 3) a single employee, applicant or retiree is no risk to the organization as a whole (even though a single employee can potentially cause a “class” to be formed under the law). The danger inherent in underestimating HR risk is that it does not get adequately addressed with mitigation plans.

Not all organizations will have the same exposure to risks. Even if they did have the same exposure, some will have more safeguards already in place and warrant a lower risk ranking than some other organization. The discussion that follows is not meant to imply that all HR risks must be prioritized at the top right hand corner of a heat map. It is meant to highlight the potential impact that some HR risks can have on an organization.

Rogue Employee Risk

The rogue employee is one of the most amazing phenomena among human resource risk categories. In financial services, rogue employees have wreaked havoc on otherwise solid and long-standing businesses. Two noteworthy examples are Barings Bank, London’s oldest merchant banks, and UBS, one of Switzerland’s financial giants. Roughly 20 years ago, Nick Leeson, a Barings Bank derivatives trader, gambled away the equivalent of $1. 4 billion of bank money from a secret “error” account. The bank went bust and was bought by ING for a nominal sum. In 2011, UBS announced it had lost $2 billion due to unauthorized trades by a director at its global synthetic equities desk.

And financial institutions are not the only organizations exposed to rogue employee actions that create huge risks and large losses. For instance, GNP, parent of Just BARE and Gold’n Plump, just recalled 55,608 pounds of chicken because of what it called a “product tampering incident” at one of its processing plants.

Here are some of the ways in which such an employee can create risk in just about any industry sector and for which organizations need to develop safeguards as part of their mitigation plans:

  • Abetting a data breach affecting customer/employee personal data
  • Sabotaging mechanical or technological equipment
  • Sabotaging products intended for sale
  • Stealing company property, including intellectual property
  • Mishandling customers/patients on purpose

See also: Risk Management, in Plain English

A fundamental safeguard is thorough vetting during the employment process. Others include: 1) active supervision, 2) automatic, system alerts when authorities are exceeded or other rogue actions are attempted, 3) robust internal audits.

Regulatory Violations Risk

Organizations must deal with employee-related regulation at the local, state and federal level. The number of major federal regulations has grown significantly in the past few decades and now includes such well-known acts as: the Fair Labor Standards Act, Title VII, Age Discrimination Act, the Americans with Disabilities Act, Employee Retirement Income Security Act, Family and Medical Leave Act and WARN Act. Each of these has numerous elements that must be understood and complied with, including gray areas that need to be thought through before any action regarding an employee can be decided on.

The Fair Labor Standards Act has been the high-risk area of late. There have been numerous types of suits under this act related to: 1) misclassification of employees into exempt and non-exempt categories, which has implications for overtime pay, 2) incorrect calculation of overtime pay for those due it, 3) mismanagement of paid break time.

A $188 million judgment against Walmart, which is being appealed, had to do with paid versus unpaid break time. Interestingly, this case revolves around the company not living up to the policies in its own handbooks, not around a failure to fulfill specific requirements spelled out in the law. This case is, therefore, illustrative of two important points. First, settlements can be financially significant even for the largest of companies. Second, when dealing with human resource matters, formal programs or policies, which constitute a contractual obligation, have to be considered.

See also: Building a Strong Insurance Risk Culture

Wage and hour suits are likely to keep increasing in 2016 due to the success of recent plaintiffs, new regulations regarding overtime pay and an overall concern among employees that wages are not sufficient or not fair. In an article titled “Why Wage and Hour Litigation Is Skyrocketing,” Lydia DePillis writes, “The number of wage and hour cases filed in federal court rose to 8,871 for the year [ended] Sept. 30, up from 1,935 in 2000.”

Title VII and age discrimination cases have been associated with large dollar losses over the years. Given the many federal, state and local statutes, coupled with a more informed and litigious employee population, organizations can inadvertently step into non-compliance pitfalls rather easily.

Organizations should always follow the laws that apply to them. Risk enters into the equation because there is always the potential that someone in management is unaware or careless or, worse yet, disrespectful of the laws. Thus, the organization is continuously exposed to the risk of violations. Every effort should be made to be compliant, including: 1) having a clear set of core values that guide lawful behavior, 2) educating management and all employees about the laws and how to comply with them, 3) investing in strong compliance processes and 4) making sure violators are dealt with quickly and appropriately.

HR Program Risk

Human resources professionals create and administer many expensive programs such as retirement, benefits, compensation and incentive programs. A large error in terms of budgeting or managing such programs could lead to a sizable financial risk for the organization.

Imagine an actuarial error that creates severe pension underfunding or a poorly managed self-insured medical benefit plan that costs double what benchmarks would suggest. Or, consider a new incentive program that produces the antithesis of the behavior it was intended to promote. The risk can be major, not unlike the size and seriousness of a natural catastrophe or product recall or supply chain debacle.

CEOs need to ensure that HR programs and policies are being handled by expert professionals, whether staff or consultants. At the same time, senior management needs to invest the attention and support necessary to ensure these are well-designed and implemented according to specification.

The comments in this article are neither meant to be all-inclusive nor to be construed as advice.

How Strict Can a Dress Code Be?

Does your company have a “look” or standard of dress it requires in the workplace? No hats, or maybe no beards? Can you deviate from the dress code?

Increasingly, employees and applicants for employment are making “failure to accommodate” claims on the grounds that they were discriminated against based on their need for a change or exception to a workplace grooming or dress policy. Examples of religious discrimination or failure to accommodate can include: not hiring the applicant because she doesn’t fit the company’s “look” or placing an employee in a non-customer-facing position because of religious attire or grooming (e.g., long beard, piercings, head scarf ).

The law

Title VII of the Civil Rights Act of 1964 (“Title VII”), 42 U.S.C. § 2000e, et. seq., as amended, prohibits employers with at least 15 employees from discriminating in employment hiring, recruitment, promotion, benefits, training, job duties, termination or any other aspect of employment on the basis of religion. It also prohibits retaliation for complaining of religious discrimination or for participating in the investigation of such claims, and for denying reasonable accommodations, including accommodations for religious attire or grooming standards. It is the EEOC’s position that an employer is required to reasonably accommodate an employee’s religious beliefs or practices, unless doing so would cause more than a minimal burden on the operations of the employer’s business.

Title VII only provides protection to sincerely held religious beliefs and practices about dress code. These protections are broadly interpreted and cover not only traditional religious beliefs but also those that are new and uncommon. If an employee merely makes such a request for accommodation based on personal preference rather than religious belief, there are no Title VII protections or implications. However, the requirement that employers and their management learn to distinguish between these two types of requests can be daunting and dangerous in light of the litigious society we live in.

Recent case

In February 2015, the United States Supreme Court heard arguments in a case filed against Abercrombie & Fitch, where a Muslim applicant was rejected after wearing a head scarf (known as a hijab) to an interview, based on the hiring manager’s belief that such covering violated the company’s rigid “look” policy, which forbids caps and hats. The applicant never asked for an accommodation, and the employer never opened a dialog as to whether a reasonable accommodation to the dress code would be necessary. Once a ruling is issued, we hope the Supreme Court will provide guidance as to when an employer has any obligation to open dialog about religious accommodation without the employee or applicant making such a request.

Takeaway

To ensure compliance with the law, employers must be informed and vigilant when applying workplace uniform, “look” or grooming policies, particularly as they apply to employees or applicants in need of a religious accommodation. Management or hiring decision makers should be trained on how to implement religious accommodation requests, specifically, learning to identify and understand religious clothing accommodation requests and how to properly engage in such discussion. When in doubt as to the proper handling of a religious clothing accommodation, we suggest that you contact a labor and employment lawyer before making employment decisions. Your attorney can also help identify potential pitfalls in uniform, look or other clothing policies. Further, a well-designed employment practices liability (EPL) insurance policy should be purchased to mitigate potentially costly financial damage, should you be faced with a discrimination suit based on religious dress or grooming.

Are Your Separation Agreements Unlawful?

Employers entering into separation agreements (also called “settlement” or “severance” agreements) has become commonplace. By way of these agreements, employers generally provide a monetary benefit to outgoing employees, or employees who have asserted claims. In exchange, the employees waive certain legal rights to which they otherwise may have been entitled.

Some of the most common provisions that bind employees are:

  • confidentiality (prohibiting the employee from disclosing the amount of severance money received, and other terms)
  • non-disparagement (prohibiting the employee from making unfavorable comments about the employer)
  • releases (the employee forever agrees not to file claims against the employer)
  • cooperation (the employee agrees to notify the employer if she receives information about an investigation or claim against the employer).

In light of a recent complaint filed by the U.S. Equal Employment Opportunity Commission (EEOC), the legality and enforceability of existing signed separation agreements could be subject to challenge.

The EEOC recently filed a lawsuit against CVS, a national provider of prescriptions and health-related services, in a federal district court. The EEOC alleges that CVS entered into more than 650 unlawful separation agreements with employees. Specifically, the EEOC alleges that the separation agreements, which contained the common provisions described above, unlawfully made severance pay depend on:

  • prohibiting the employees from filing charges at the EEOC
  • interfering with the employees’ ability to cooperate with investigations by the EEOC and other federal agencies.

According to the EEOC’s complaint, the separation agreements violate Title VII of the Civil Rights Act of 1964.

The lawsuit is pending, and the federal district court has not issued any ruling on the merits. Nevertheless, in light of the EEOC’s complaint, employers should be mindful of existing and future separation agreements and should review such agreements with their employment counsel to ensure that they comply with the law.

EEOC Suit Against CVS Raises Concerns

The Equal Employment Opportunity Commission has challenged the legality of provisions commonly included in severance, separation or other settlements with employees being terminated. These provisions state that settlement benefits are to be paid only if the employee doesn’t file charges or otherwise communicate with the EEOC.

Employers planning to use such provisions should note a lawsuit filed by the EEOC against the nation’s largest integrated provider of prescriptions and health-related services, CVS Pharmacy.

In Equal Employment Opportunity Commission v. CVS Pharmacy, Inc., CA no. 14-cv-863 (N.D. Ill., 2014), the EEOC charges that CVS unlawfully violated employees’ right to communicate with the EEOC and file discrimination charges. The EEOC says CVS committed the violation through an overly broad severance agreement that included five pages of small print.

The lawsuit claims CVS violated Section 707 of Title VII of the Civil Rights Act of 1964, which prohibits employer conduct that constitutes resistance to the rights protected by Title VII.

The lawsuit also is notable because it is not filed in response to an investigation of a discrimination charge. According to the EEOC, Section 707 permits the agency to seek immediate relief without the same pre-suit administrative process that is required under Section 706 of Title VII, and does not require that the agency’s suit arise from a discrimination charge.

“Charges and communication with employees play a critical role in the EEOC’s enforcement process because they inform the agency of employer practices that might violate the law,” according to the EEOC attorney leading the litigation, John C. Hendrickson. “For this reason, the right to communicate with the EEOC is a right that is protected by federal law. When an employer attempts to limit that communication, the employer effectively is attempting to buy employee silence about potential violations of the law. Put simply, that is a deal that employers cannot lawfully make.”

EEOC District Director Jack Rowe added, “The agency’s most recent strategic enforcement plan identified ‘preserving access to the legal system’ as one of the EEOC’s six strategic enforcement priorities. That was no accident. The importance of employees’ ability to participate in the agency’s process, free from fear of adverse consequences, cannot be overstated. It is always difficult for an employee to report employer discrimination to federal law enforcement officials. Anything that makes that communication harder increases the risk that discrimination will go unremedied.”

The litigation showcases the need for employers to use caution when attempting to prevent employees from reporting to or cooperating with regulators investigating suspected discrimination or other legal violations. The EEOC’s challenge in the CVS litigation is not unique. Challenges have arisen under a wide range of federal and state laws.

The Labor Department Wage and Hour Division has rules that say employers will receive no shield from investigations by the agency or from enforcement of wage and hour laws on settlements with terminated employees that didn’t involve the division. The Justice Department and other government enforcement agencies often view confidentiality provisions as prohibited obstruction or retaliation. In addition, government investigators often view the existence of gag rules as evidence that an organization does not maintain the required culture of compliance.

The CVS litigation also cautions businesses against taking for granted the appropriateness of their current agreements with employees. The EEOC challenge is just one of several developments that can affect the design and use of severance, separation and other settlement agreements with employees intended to resolve employment discrimination claims. While many employers may assume they can safely use agreements used in connection with previous terminations, the CVS litigation highlights the potential advisability of seeking the advice of qualified legal counsel, even if the employer benefited from the advice of legal counsel in drafting the previous agreement.