On the Legal Front: You Say You Want a Revolution
The opinions expressed in this article are those of the author and not necessarily those of any government agency. The article should not be construed as legal advice.
But is the revolution, if you got one, the one you wanted or expected?
The hottest news is the #MeToo revolution. It is especially remarkable because it was not based in any new legal promulgation but by the rise of consensus that sexual harassment in the workplace really is unacceptable. EEOC can claim it was on the leading edge with its report on harassment, although, as the report acknowledges, there has been previous scholarship on the problem. In particular, that scholarship has highlighted ineffectual efforts to prevent the problem from occurring, not just responding when it happens. Getting control of a dysfunctional organizational culture, well within the I-O bailiwick, has been picked up by attorneys in the advice they give corporate clients. Some commentators have called for “big picture” strategy that seeks to deal with cultures that may support forms of discrimination other than harassment, such as pay inequity.
The “big picture” approach is in contrast to criticism that has appeared in the legal and sociological literature, and was taken up by the EEOC report. The “small picture” approach1 is seen as ascribing discrimination solely to “rogue” actors who act against the organization’s interests in their harassment. The organization’s response is limited to policy defining harassment as wrong and training on the policy, with procedures to report violations of that policy and thus limit the organization’s liability. Some advocates of cultural solutions would go so far as to make the organizations strictly liable for all harassment, whether management knew about it or not.
As mentioned in previous Legal Front articles, there seems to be fertile ground for both research and practice regarding harassment and lesser forms of negative treatment, termed microaggressions and microinequities. Dealing with these is not easy. What constitutes legally recognized harassment can be fuzzy, involving considerations of severity and persistence.2 The microinequity concept further complicates the matter, because the perpetrator may be acting without malice or even awareness that the action is offensive.
The potential of psychology and allied sciences has percolated into business strategy discussions. A recent podcast (Güntner, Smith, & Sperling, 2018) mentions efforts at debiasing decision making; EEO bias is one area, but the broader context is dealing with biases in all organizational decision making. I-Os will readily notice here some of the biases that come up with conducting interviews and other assessments requiring human judgment. The approach advocated here is “nudging” people along the path to better decisions rather than heavy-handed policing of the workplace. That the bias issue might be framed in a wider context beyond EEO just might help to get it taken more seriously.
It has been noted that women have been deterred from filing discrimination complaints for fear of retaliation. Still, it is curious that sexual harassment charges received by EEOC have been in decline, as has the percentage of “cause” findings. It remains to be seen if women now are more inclined to confront their harassers.3
Bad behavior outside Title VII time limits for filing a discrimination charge likely are not subject to other individual victim action. But an interesting side effect is suits filed by investors who take a loss because the stock of the implicated corporations falls; the allegation is that the boards of those corporations knew about the problem and did not discharge their duties to protect the corporation (Prial, 2018).
Then there was the Trump Administration’s expected revolution, with much anticipation—both fear and hope—as to what was in store for EEO legal enforcement. The fear was that there would be a full-scale assault on disparate impact theory. The hope was that there would be less regulation seen as mindlessly burdensome, and the enforcement agencies would be less adventuresome in formulating new theories for hounding employers. The past year has little to show, either way. We had two federal agencies with opposing arguments as to whether discrimination based on sexual orientation constitutes sex discrimination under current law. There is more on this below. Meanwhile, EEOC awaits confirmation of two of the five commissioners, Janet Dhillon (Chair-designate) and Daniel Gade. Current Commissioner Chai Feldblum (Democrat) has been nominated for a second term. Democrats have a current 2-to-1 majority. There has been no nomination for General Counsel, the official who heads litigation against employers. One unsurprising development was suspension of plans to require salary information on the annual EEO-1 workforce demographics report. The Office of Management and Budget (OMB) called a halt because, as some employers have maintained since the proposal was announced, the reporting requirements may be unduly burdensome. Advocacy groups have sued, pointing out that OMB under the previous administration had approved the proposal. The Department of Justice (DOJ), defending the suspension, is arguing that no final action has been taken warranting judicial attention, and the groups do not have a claim to requiring the government to collect the data for them.
Nonetheless, there have been changes in EEOC activity, albeit not dramatic. For fiscal year (FY) 2017,4 compared to the previous FY, charge receipts were down to 84,259 from 91,503; “cause” findings were slightly down (2.9%), and “no cause” findings were slightly up (70.2%). “Merit” (substantive rather than procedural) suits filed by the agency were notably up (184 vs. 86); monetary benefits were up slightly, $348.0M versus $355.6M, excluding litigation benefits. Those were down, $42.4M versus $52.2M. As has been the trend in recent years, monetary relief is coming mostly from agreements, not litigation. The charge inventory was decreased by 99,109, to 61,621. Congressional critics had faulted the agency for too much focus on high-profile cases while the inventory was growing.
The Office of Federal Contract Compliance Programs (OFCCP) has a new director, announced without much fanfare. Ondray Harris had joined the administration last summer; he had been with DOJ during the previous Bush Administration. Notably, some changes from the Obama Administration are still sticking regarding contractor employment rules: paid sick leave, affirmative action goals for military veterans and people with disabilities, nondiscrimination for LGBT people, and pay transparency. So far, there has not been much on addressing regulatory concerns from employers. Talk about combining OFCCP with EEOC has quieted, at least for now.
Probably the biggest changes have been with the National Labor Relations Board (NLRB), which likely has less impact on I-O practice than the activities of the EEO enforcement agencies. NLRB broke with precedent on several issues during the Obama Administration (Pedrow & Gordon, 2018); there is now restoration of the status quo ante on acceptance of “reasonable” settlements even if a party objects, a balancing test of the reasonableness of an employer’s rules and worker’s rights, allowing the employer to change workplace rules without agreement by the union if the change is consistent with past practice, overturning the establishment of “micro units” for unionization and overturning joint employer status based on potential joint control. Critics had seen this as a way to attach the parent company in disputes involving a franchise, even if the parent did not control the practices in question. But overturning this matter did not stick. Conflict of interest concerns were raised regarding former board member who participated in the overturning decision. The board then voted to return, at least temporarily, to the Obama-era policy. More change is likely. The board’s General Counsel, Peter Robb, has issued a list of matters in which NLRB field offices should consult with headquarters rather than follow Obama-era precedents.
Another revolution, which some have started to suspect had stalled out, got some invigoration. The much-anticipated decision from the federal Second Circuit Court of Appeals (based in New York), whether Title VII covers employment discrimination based on sexual orientation as sex discrimination, was delivered on February 27. Previously, the Eleventh Circuit (based in Atlanta) said no; the Seventh Circuit (based in Chicago) initially said no, following court precedent on the matter. However, after this decision by a three-judge panel, the entire set of active and non-recused judges reheard the case en banc (legal French, the judges “on the bench”) and overturned the precedent to yes. A similar scenario played out in New York, with the added drama of EEOC and DOJ being on opposite side of the question. In the end, the result also was similar to Chicago’s: sexual orientation discrimination is sex discrimination.
The case (Zarda v. Altitude Express, Inc., 2018) involves a skydiving instructor allegedly fired for being gay. He filed a discrimination suit but did not live to taste victory in this decision. His estate has been carrying on the litigation.
The vote was 10–3 for the decision, but the margin of the decision conceals marked disagreement on underlying legal theory. All of the judges, including the dissent, agreed that sexual orientation5 discrimination was wrong; the legal question was whether it was covered by law and by what rationale was it covered, because Title VII itself makes no reference to LGBT discrimination. The majority agreed on the proposition that sexual orientation discrimination by its nature had to involve sex discrimination, to some degree. But only five of the judges signed off on the opinion of the court, written by Chief Judge Katzmann. The others who concurred in the decision filed their own opinions regarding which portions of the court’s opinion they endorsed. The endorsement count seems to be as follows:
- Textual analysis over legislative history: Congress intended to put an end to sex discrimination, even though it did not foresee the specifics of sexual harassment, hostile work environment, and same-sex harassment. Sexual orientation discrimination fits as well. This argument was endorsed in the 5-judge plurality opinion of the court, 2 concurrences, and 1 who agreed with the general principle that sexual orientation discrimination was sex discrimination (and not with the other arguments), for a total of 8.
- Comparative test: If the person charging discrimination were of a different sex in the same situation, would there have been discrimination? If so, then sex must be a factor. This was endorsed by five judges. The court’s opinion indicated that this endorsement did not invalidate sex-based grooming standards or sex-segregated rest rooms.
- Gender stereotype: Sexual discrimination can involve enforcement of what the employer thinks is appropriate behavior for the sexes; sexual orientation can go against this expectation and so becomes the occasion for discrimination. This was endorsed by six judges.
- Associational discrimination: Discrimination can occur by association with someone on the basis of protected class. It would be racial discrimination against, say, a White person for association with a Black person; the employer has no problem with Whites but does not like Blacks or anybody who likes Blacks. The Seventh Circuit held that associational discrimination theory was applicable to all Title VII protected classes in its sexual orientation decision and eight judges agreed that it applied to sexual orientation here.
- Legislative developments: The five-judge plurality dealt with some objections by the dissent and found them unconvincing: Congress was aware that there were judicial decisions excluding Title VII coverage for sexual orientation when writing the Civil Rights Act of 1991 but did not include sexual orientation in the law; Congress has failed to pass a law specifically extending Title VII to sexual orientation although bills to the effect have been introduced many times; other laws differentiate issues of sexual orientation from sex.
Three judges joined in dissent, but here also there was disagreement. The main argument, put forth by Judge Lynch, was, “Discrimination against gay men and lesbians is wrong because it denies the dignity and equality of gay men and lesbians, and not because, in a purely formal sense, it can be said to treat men different from women.” He and two other dissenters argued that neither textual analysis nor legislative history supported inclusion of sexual orientation, that traditional associational bias had an element of bigotry not found in sexual orientation cases, and sex stereotyping is a separate issue from sexual orientation. He concluded with a differentiation between constitutional and statutory issues, which seems to be a response to a comment in EEOC’s brief that it was strange that two same-sex individuals could legally marry (established by the Supreme Court as a constitutional matter) but be fired from their jobs the next day for sexual orientation. Judge Lynch pointed out that the Constitution is concerned with broad, permanent principles of what the government can and cannot do to citizens; statutes deal with specifics that apply to how citizens interact with each other and can change with the times. The issue here was that the statute did not change. The two other dissenting judges found this argument unnecessary and did not endorse it.
What next? One reaction was that, in the short, practical term, not much would change. Sexual orientation is protected in a majority of states and by many private employers, so discrimination is already banned there. For those that are discriminating, this ruling applies only to New York, Connecticut, and Rhode Island (which protect sexual orientation), and so it may be business as usual. There is clearly a circuit split on the issue, which is an invitation for the U.S. Supreme Court to intervene. But the Court likes to have the legal theories worked out in the lower courts before it issues the final word. The majority in this case seems to rally around the notion that sexual orientation discrimination logically involves sex discrimination, but after that one judge’s rationale does not necessarily carry much weight with another judge. The dissent can point to the fact that various courts historically have given assurance that sexual orientation is not covered. Because Congress has shown no indication that it will provide a legislative resolution, the dispute falls back on the court, with the question being when will the time be ripe for a decision. There is also the matter of religious objection to employing gays and lesbians; this highlights that the issue is not a simple variation on sex discrimination.
Finally, the long-running revolt of the State of Texas (2018) against EEOC’s 2012 guidance on criminal background history as a selection procedure got judicial resolution. Texas filed suit to prevent the agency from telling the state how to set qualifications for its jobs. EEOC, represented by DOJ, argued that its guidance was just guidance; there was no legal action pending against the state on the matter; and DOJ, not EEOC, had authority to sue the state for a Title VII violation. Texas responded by adding DOJ to the complaint and arguing that the “guidance” was an invitation for meritless private lawsuits. The court declined to grant the state’s requests for restraints on EEOC enforcement, with one exception: EEOC and DOJ were enjoined from "enforcing the EEOC's interpretation of the Guidance against the State of Texas until the EEOC has complied with the notice and comment requirements under the APA [Administrative Procedures Act] for promulgating an enforceable substantive rule." As Shea (2018) noted, the injunction applies only to Texas and, although other defendants might want to cite to this decision, another court may rule that guidance really is just guidance and thus not subject to the APA. The bigger issue is the deference to be given to agency pronouncements on matters to which the law has not given specific regulatory authority. This has been a matter of controversy in recent years, with federal agencies issuing guidance and amicus curiae briefs (Latin, “friend of the court;” these are third-party opinions on how the law should be interpreted) that some have argued went beyond the law and sometimes contradicted the agencies’ previous positions. Associate Attorney General Rachel Brand recently issued policy that DOJ litigators are not to use guidance material as presumptive indication of a legal violation (Tenpas, Etzel, Barker, & Nelson, 2018). On the other hand, presumably employers would want to know what an agency’s position is regarding enforcement issues, such as EEOC’s guidance on sexual harassment, awaiting OMB approval as of this writing (Gurrieri, 2018). Meanwhile, EEOC has to decide if it will mess with Texas on appeal.
1 This is a simplistic description of a complex situation. For more extensive treatment, see, for example, Green (2017). Green also discusses a “cognitive bias revolution” heralded by the Implicit Associations Test. Some may question this revolution.
2 Sperino and Thomas (2017) indicated that courts were ignoring blatant sexual harassment, relying on judicial doctrine on “severe” and “pervasive” not found in Title VII. Shea (2017) noted that sexual harassment itself is not found in Title VII and criticized Sperino and Thomas’s views.
3 EEOC statistics in this article come from www.eeoc.gov/statistics. Besides what EEOC provides, see Maatman, DeGroff, Gagnon, & Miller (2017) for narrative and employer-side commentary on the statistics.
4 This covers October 1, 2016 to September 30, 2017.
5 The case was about sexual orientation, and so may be not fully apply to transgender matters. But the ink was hardly dry on the decision before the Sixth Circuit cited it in its ruling that gender identification was also covered by Title VII (EEOC & Stephens, 2018). The court held that “discrimination on the basis of transgender and transitioning status violates Title VII,” because “it is analytically impossible to fire an employee based on that employee’s status as a transgender person without being motivated, at least in part, by the employee’s sex.” In addition, “discrimination against transgender persons necessarily implicates Title VII’s proscriptions against sex stereotyping.” The three-judge panel also was unanimously unimpressed by the Religious Freedom Restoration Act (RFRA) defense that had worked with the district court, finding that “compliance with Title VII—without actually assisting or facilitating Stephens’s transition efforts—does not amount to an endorsement of Stephens’s views.” Also, “as a matter of law . . . a religious claimant cannot rely on customers’ presumed biases to establish a substantial burden under RFRA.” EEOC’s enforcement of Title VII was not an undue burden on religious expression. The court also disagreed with the district court’s finding that the actual substance of the complaint was a dispute over compliance with the employer’s dress code, noting that merely altering the dress code would not address the discrimination Stephens faced because she wanted to represent herself as a woman. Finally, the appellate court remanded back to district court the matter of whether there was discrimination regarding payment of a clothing allowance benefit available only to male employees.
EEOC & Stephens v. R.G. & G.R. Harris Funeral Homes, Inc, No. 16-2424 (6th Cir. 3/7/2018).
Green, T.K. (2017). Discrimination laundering: The rise of organizational innocence and the crisis of equal opportunity law. New York, NY: Cambridge University Press.
Güntner, A., Smith, M., & Sperling, J. (2018, February). Behavioral science in business: Nudging, debiasing, and managing the irrational mind. McKinsey Podcast, McKinsey & Co. Retrieved from htt
Gurrieri, V. (2018, February 9). Employers eagerly await EEOC sexual harassment guidance. Law360. Retrieved from https://www.law360.com/articles/1010729/employers-eagerly-await-eeoc-sexual-harassment-guidance.
Maatman, Jr., G. L., DeGroff, C. J., Gagnon, M. J., & Miller, K. (2017, November 15). https://www.workplaceclassaction.com/2017/11/bulldozing-the-backlog-doubling-filings-eeocs-2017-performance-and-accountability-report-shows-decreased-inventory-and-a-surge-in-filings/
Prial, D. (2018, February 14). Attorneys predict wave of #MeToo investor suits. Law360. Retrieved from https://www.law360.com/articles/1012534.
Shea, R. (2017, December 1). Don’t believe everything you read. Constangy Employment & Labor Insider. Retrieved from https://www.constangy.com/employment-labor-insider/dont-believe-everything-you-read-in-the.
Shea, R. (2018, February 7). Criminal background guidance enjoined—could that affect you? Constangy Employment & Labor Insider. Retrieved from https://www.constangy.com/employment-labor-insider/court-blocks-criminal-background-check-guidance-does.
Sperino, S. F & Thomas, S. A. (2017, November 29). Boss grab your breasts? That’s not (legally) harassment. New York Times. Retrieved from https://www.nytimes.com/2017/11/29/opinion/harassment-employees-laws-.html
State of Texas v. EEOC, No. 5:13-cv-255 (N.D. Tex. 02/01/2018).
Tenpas, R., Etzel, G., Barker, H., & Nelson, J. (2018, February 2). DOJ limitation on agency guidance levels playing field. Law360. Retrieved from https://www.law360.com/articles/1007407/print?section=employment.
Zarda v. Altitude Express, Inc., No. 15-3375 (2nd Cir. February 26, 2018).