If you’re found liable for age discrimination, it’s going to cost you

By: Jonathan R. Mook and Colete Fontenot
DiMuroGinsberg, PC

The Equal Employment Opportunity Commission (EEOC) recently scored a win for older workers when the U.S. Supreme Court declined to review the U.S. 4th Circuit Court of Appeals’ decision in EEOC v. Baltimore County. As a result, employers can look forward to paying back wages without exception as a remedy for age discrimination.

Origins of the case
The EEOC’s case began when two older Baltimore County employees filed an age discrimination charge in which they claimed they were paying a higher percentage of their salary to the county’s retirement plan than their younger coworkers paid. The plan was structured so that the amount contributed by employees rose with their age. Thus, employees who enrolled when they were 20 paid 4.42 percent of their wages, those who joined at 40 paid 5.57 percent, and those who enrolled at 50 paid 7.23 percent.

After an investigation, the EEOC determined the county’s retirement contribution structure violated the federal Age Discrimination in Employment Act (ADEA) because employees’ age was the “but-for” cause of differential treatment in their contribution amounts. The county disputed that determination, however, so the EEOC filed suit.

County found liable for discrimination
The Maryland federal district court sided with the EEOC and concluded that the county’s contribution formula discriminated against employees on the basis of their age. Unhappy with that result, the county appealed to the 4th Circuit, which is based in Richmond, Virginia, and whose decisions apply to employers in Maryland, North and South Carolina, Virginia, and West Virginia.

The 4th Circuit upheld the lower court’s finding that the county’s retirement contribution structure violated the ADEA. The court of appeals then sent the case back to the district court to calculate damages. In the renewed district court proceedings, the EEOC sought retroactive back pay based on the older employees’ higher contributions to the retirement plan.

What does this decision mean for you?
Mandatory back pay as a remedy for age discrimination can be quite substantial, which is a compelling reason to make sure all your managers are clearly aware of the liability that age discrimination presents. Here are a few steps you can take to avoid a large back-pay award being rendered against your organization:

  • Encourage employees to report anything they consider to be age discrimination at the time it happens, and move quickly to resolve any complaints that have merit.
  • Review your personnel policies to ensure there’s no “systemic” age discrimination written into your guidelines, benefits, or compensation.
  • Finally, be sure to talk with your older employees and let them know they are valued members of your organization and should tell you if they feel they aren’t being treated fairly.

The best way to avoid age discrimination claims or any other type of workplace discrimination is to work with your employees to resolve any problems they identify. That way, there’s no need for anyone to file an EEOC charge or pursue a discrimination claim against you in court.

Is back pay mandatory?
The district court refused to award back pay to the county employees. Because the language of the ADEA itself doesn’t require an award of back pay, the district court believed it had the discretion to determine whether to grant such an award, and it exercised its discretion to deny the request for back pay. The EEOC appealed the denial of back pay to the 4th Circuit, and this time, the court of appeals reversed the district court.

The appeals court reasoned that even though the ADEA doesn’t require back pay, it still had to be awarded because the Act’s remedies incorporate the terms of the Fair Labor Standards Act (FLSA). The FLSA provides that employers “shall be liable” for the payment of lost wages. Accordingly, the 4th Circuit said that upon a finding of age
discrimination, lost wages in the form of back pay are mandatory remedies under the ADEA. Because the U.S. Supreme Court declined to review the 4th Circuit’s decision, back-pay awards for violations of the ADEA are now mandatory, at least for employers within the 4th Circuit.

Virginia to ratify Equal Rights Amendment

By: Jonathan R. Mook and Colete Fontenot
DiMuroGinsberg, PC

When the Virginia General Assembly convened in January, ratification of the Equal Rights Amendment (ERA) to the U.S. Constitution was at the top of the agenda. As stated in Section 1, the ERA guarantees: “Equality of rights under the law shall not be denied or abridged by the United States or by any state on account of sex.” Section 2 provides the enforcement mechanism by which “Congress shall have the power to enforce, by appropriate legislation, the provisions of this article.”

Since both the Virginia Senate and the House of Delegates now have a Democrat majority, there is little doubt the ERA will be ratified before the legislative session closes in March. At that point, Virginia will become not only the 38th state to ratify the ERA but also the final state to satisfy the required two-thirds majority needed to amend the U.S. Constitution.

Additional hurdles
Importantly, the General Assembly’s anticipated ratification of the ERA doesn’t necessarily mean we’ll have a new constitutional amendment this year. There are at least two key hurdles to overcome:

Deadline. When a super majority of Congress passed the ERA in 1972, the legislation included a seven-year deadline for two-thirds of the states to ratify the amendment. By 1977, however, only 35 of the necessary 38 states had endorsed ratification.

At that point, many observers thought the ERA was dead as a doornail. Yet, in 2017, 42 years after the last state ratified, Nevada became the 36th state to sign on to the amendment. In 2018, Illinois became teachers, nurses, support staff, and other jobs often held by women are just as valuable to an organization’s bottom line and should be paid in a comparable fashion to disproportionately male-held positions such as doctors, administrators, and other highly compensated professionals.

Bottom line
Section 3 of the ERA states: “This amendment shall take effect two years after the date of ratification.” The lead time will give you some breathing room to review your company’s policies and procedures to ensure all employees are treated equally. Your review should include not only employee pay but also nonmonetary benefits, perks, insurance, profit sharing, time off, disciplinary policies, and even peripheral issues like office size, dress code, and flexibility of hours worked.

As always, the best way to know how a new law affects your business is to consult with an experienced employment law attorney. It’s always a good idea to designate one person in your HR office to stay up to date on all changes affecting employment law, including the ERA. The individual also can be the point person to hear employee complaints if there is an incident of alleged discrimination. Have a workable procedure in place so you aren’t caught off guard and can handle all employee concerns or complaints in a prompt and thorough fashion.

Rescissions. The second obstacle arises because five states (Idaho, Kentucky, Nebraska, South Dakota, and Tennessee) that initially ratified the ERA have voted to rescind ratification. The issue of whether the rescissions have legal effect has yet to be determined.

Consequently, Virginia’s ratification of the ERA will not be the end of the story. Instead, ratification will likely spawn a host of lawsuits addressing those knotty constitutional issues, so stay tuned for further developments on the legal front.

What ERA means for you
What the ERA’s ratification means for employers not only in Virginia, but nationwide cannot be predicted with certainty. But, without question, an amendment to the U.S. Constitution guaranteeing women’s equal rights will be a watershed event with repercussions for years to come.

As a practical matter, regardless of whether the ERA actually makes it into the U.S. Constitution, the very vocal political movement supporting the amendment will certainly have an impact on a variety of efforts to ensure women’s equality, especially in the workplace. Proponents are focusing on the influence the amendment will have on pay equity legislation. That isn’t just about “equal pay for equal work” but also about pay differences between lower-paid jobs traditionally held by women versus jobs usually held by males, which have a higher pay level.

Consequently, we’re likely to hear more about ensuring the comparable worth of jobs traditionally performed by women versus male-dominated jobs. Thus, expect to see a public debate on whether the 37th. Even with Virginia bringing the number to 38, the question remains, “Is it too late?”

DGRead 20.11.15

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Trump’s Executive Order Creates New Uncertainty for Employers

By: Jarrad Wright

At the end of September, President Trump issued Executive Order 13950 innocuously titled “Combating Race and Sex Stereotyping,” which has ignited a storm of controversy among employers that do contracting with the federal government. Among other things, the Executive Order bars federal contractors and subcontractors from conducting certain types of racial sensitivity trainings.

EO Specifics

More specifically, the Executive Order states that federal contractors “shall not use any workplace training that inculcates in its employees any form of race or sex stereotyping or any form of race or sex scapegoating.”  This prohibition includes any training that “an individual, by virtue of his or her race or sex, is inherently racist, sexist, or oppressive, whether consciously or unconsciously.”  In addition, the Executive Order places similar restrictions on entities receiving federal funding and grants.

While the Executive Order took effect immediately, its requirements, with certain exceptions, apply only to contracts entered into after November 21, 2020.

OMB Guidance

Shortly after the Executive Order was issued, the Office of Management and Budget (“OMB”) issued a memorandum to provide guidance to federal agencies in implementing the order.  OMB’s memorandum directs federal agencies to identify all training programs related to diversity and inclusion conducted by the agency or by outside vendors and the costs of such programs.  The memorandum further requires agencies to review all government contractor workplace training programs to determine whether they comply with the Executive Order.  All statements of work and future government contracts also must comply with the Executive Order’s requirements.

Although the implementation of the Executive Order is ongoing and the situation is fluid, it has had an immediate impact.  The U.S. Office of Personnel Management reportedly has directed all federal agencies to submit to the OPM for review all training programs related to diversity and inclusion, even if such materials previously had been approved.  Likewise, the Department of Justice has postponed diversity and inclusion training programs, pending further review.

OFCCP Info Request

The Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) also has published in the Federal Register a notice seeking “comments, information, and materials from the public relating to workplace trainings that involve race or sex stereotyping or scapegoating.”  Significantly, OFCCP defines “race and sex scapegoating” broadly as “assigning fault, blame, or bias to a race or sex, or to members of a race or sex because of their race or sex.”  “Scapegoating” encompasses the view “that, consciously or unconsciously, and by virtue of his or her race or sex, members or any race are inherently racist or are inherently inclined to oppress others, or that members of a sex are inherently sexist or inclined to oppress others.”

The OFCCP’s information request specifically seeks materials from federal contractors, federal subcontractors, and their employees, and encourages federal contractors and subcontractors to voluntarily submit materials for review.  In that instance, if a contractor corrects non-compliant materials, the OFCCP states it will “not take enforcement actions.”  The OFCCP, however, reserves the right to institute enforcement proceedings should non-compliant materials not be corrected.  Finally, the notice includes a public hotline and email address for the public to “confidentiality report to the Federal government the unlawful use of racist or sexist training materials.”

Political Implications

Needless to say, President Trump’s issuance of Executive Order 13950 is a politically charged issue, and its continued enforcement, effectiveness, and existence in all likelihood will depend on the outcome of the presidential election.  If former Vice President Joseph Biden is elected, the Executive Order is likely to be rescinded early in his administration.  If President Trump is re-elected, on the other hand, the Executive Order will remain in place and federal agencies will continue the process of providing clarifications and instructions on its requirements.  In any event, legal challenges to the effectiveness of the order and its implementation by federal agencies are likely to occur, as interested entities ranging from civil rights organizations to the U.S. Chamber of Commerce have raised questions and concerns about the Executive Order.

Bottom Line

At least for the time being, the Executive Order remains in place, and all government contractors and subcontractors need to consider its immediate impact upon their operations.  This may include temporarily postponing diversity training and programs until after the election or until further clarification is forthcoming from the federal government on the order.  What is clear is that before taking any action, it always is best to consult with counsel knowledgeable about the employment aspects of federal contracting law.

At this point, the longer-term impact of the President’s Executive Order is simply unknown.  That said, going forward, the order has the potential to significantly impact all companies that do business with the federal government.  Accordingly, we shall continue to keep you informed of further developments on the impact of the President’s race and sex stereotyping order.

Jarrad Wright is a partner at DiMuroGinsberg, P.C. and can be reached at mjwright@dimuro.com.