Another Federal Appeals Court Finds Title VII Prohibits Sexual Orientation Discrimination

Following the Seventh Circuit’s landmark decision last April in Hively v. Ivy Tech Community College, the Second Circuit Court of Appeals has joined in finding that Title VII prohibits discrimination on the basis of sexual orientation. In Zarda v. Altitude Express, decided on February 26, 2018, the Second Circuit concluded that Title VII’s ban on sex discrimination “applies to any practice in which sex is a motivating factor.” Because sex is necessarily a factor in sexual orientation, discrimination based on sexual orientation amounts to banned sex discrimination, reasoned the Second Circuit.

The outcome in Zarda is significant because, unlike many state laws that explicitly prohibit sexual orientation discrimination, Title VII has long been interpreted by federal courts as not reaching such discrimination. The Second Circuit’s decision therefore signals a seismic shift in this long-standing consensus and will likely cause other circuits to reexamine their precedent in light of Title VII’s “evolving” legal framework. Although the Eleventh Circuit hewed close to its precedent in a decision issued shortly before Hively and declined to extend the reach of Title VII to sexual orientation discrimination, the Second Circuit’s decision suggests that the Equal Employment Opportunity Commission’s (EEOC) position on sexual orientation discrimination, which the agency has advanced for several years now, may be gathering steam. For example, in a recent decision from the First Circuit, Franchina v. City of Providence, the court noted that the continuing validity of its “nearly twenty-year-old” precedent on Title VII and sexual orientation discrimination was not at issue in the case, but it also observed (citing Hively) that “the tide may be turning when it comes to Title VII’s protections.” How high the tide goes, and whether it will reach the doors of the Supreme Court, remains to be seen.

Decision on medical marijuana and preemption holds lessons for Maine employers

A U.S. district court recently held that federal law does not preempt the anti-discrimination provision in Connecticut’s medical marijuana law prohibiting employers from terminating or refusing to hire individuals based on their status as qualifying medical marijuana patients.  The ruling is important for Maine employers because of the similarities between Maine’s and Connecticut’s medical marijuana statutes.

The plaintiff in the case, Noffsinger v. SSC Niantic Operating Co., LLC, had received a verbal offer of employment from a nursing facility, but was not hired after she disclosed that she was a qualifying medical marijuana patient and tested positive for marijuana on a pre-employment drug screen.   Noffsinger sued in state court claiming that the facility’s refusal to hire her violated the anti-discrimination provision in Connecticut’s medical marijuana law.  The facility removed the case to federal court, where it argued that Noffsinger’s complaint should be dismissed because federal law preempted Connecticut’s medical marijuana statute. 

In denying the facility’s motion to dismiss, the district court found no actual conflict between Connecticut’s medical marijuana law and the federal laws identified by the facility.  For example, the court found that the Controlled Substances Act (CSA) did not preempt Connecticut’s law because the CSA regulates drugs, not employment, and therefore did not conflict with the employment-related provisions in Connecticut’s law.  The court also found no conflict with the ADA; although the ADA does not protect current users of illegal drugs, the court observed that Connecticut’s law did not authorize the use of drugs in the workplace, and nothing in the ADA suggested that it was intended to regulate the use of drugs outside the workplace or limit the abilities of states to do so.  Finally, although the facility argued that Connecticut’s anti-discrimination provision was preempted by the Federal Food, Drug, and Cosmetic Act, which prohibits the sale or distribution of unapproved medications, the court found that it, like the CSA, did not govern the employment relationship and therefore did not preempt Connecticut’s anti-discrimination provision.

This decision is important for Maine employers because, like Connecticut’s statute, Maine’s medical marijuana statute contains an anti-discrimination provision that prohibits employers from making employment decisions based on an individual’s status as a medical marijuana patient.  The decision therefore provides a potential roadmap on how an employer’s preemption arguments might play out with respect to Maine’s medical marijuana law.

When is an employee a qualified individual with a disability under the MHRA?

Maine’s highest court recently weighed in on what it means to be a qualified individual with a disability under the Maine Human Rights Act.  Affirming a summary judgment in favor of the employer in Carnicella v. Mercy Hospital, the Law Court found that an employee who remained absent from work after exhausting her leave failed to demonstrate that she was a qualified individual with a disability where there was no dispute that she was unable to perform the essential functions of her job with or without an accommodation at the time of her termination.

The employee in the case, Carnicella, was a registered nurse who developed a serious medical condition requiring an absence from work.  In August 2013, Carnicella’s employer, Mercy Hospital, granter her full leave under Maine’s medical leave law and then extended it after Carnicella developed post-surgery complications.  In December 2013, shortly before Carnicella was due to return to work, her surgeon informed Mercy that Carnicella was not able to resume work and that her anticipated return date would be on March 15, 2014.  In January 2014, however, Carnicella’s primary care physician notified Mercy that a March return date was premature and estimated that Carnicella would be able to return to work without restrictions on June 1, 2014.  At a subsequent meeting with Carnicella, Mercy told her that it would extend her leave until March 15 and that if she was unable to work at that time then she could transition to per diem status.  When March 15 came, however, Carnicella left a voicemail with Mercy stating that she was still not able to return to work.  Carnicella did not propose any accommodations that would have allowed her to return to work.  Believing from her voicemail that Carnicella did not want to remain a per diem employee, Mercy terminated Carnicella’s employment.  Although Mercy reversed the termination within weeks and reinstated Carnicella after she made it clear that she wanted to remain a per diem employee, Carnicella sued Mercy claiming that she had been terminated because of her disability.  Mercy moved for summary judgment, which the court granted.

On appeal, Carnicella argued that the court incorrectly found that she was not a qualified individual with a disability.  The Law Court did not agree.  According to the Law Court, two questions are relevant to the determination of an employee’s qualified status: 1) whether the employee can perform the essential functions of his or her job; and 2) if not, whether any reasonable accommodation would enable the employee to perform those functions.  As to the first question, the Law Court found that because Carnicella had never received a medical clearance to return to work, there was no dispute that she was unable to perform the essential functions of her job when she was terminated.  With respect to whether a reasonable accommodation would have allowed Carnicella to do so, the Law Court noted that additional leave was the only accommodation Carnicella arguably sought.  However, the Law Court found this accommodation was unreasonable because of a statutory defense under the MHRA, which absolves an employer of liability for discrimination if, at the time of an employee’s termination, the employee is unable to perform their job duties.  Because Carnicella was unable to perform her job duties at the time she was terminated, and because additional leave “would necessarily continue to prevent” her from doing so, the Court reasoned that the statutory defense applied and made additional leave unreasonable as a matter of law.

The Law Court’s decision is noteworthy given other cases exploring the interplay between disability and medical leave laws and the sometimes thorny issue of extended leaves.  One such case is Hwang v. Kansas State University, which the Law Court cited with approval in Carnicella, but which is arguably at odds with the EEOC’s views on what disability laws like the ADA require after an employee has exhausted a medical leave.  Employers should therefore take the Carnicella decision in context, just as they should do when dealing with any disabled employee.

Employer Grabs the Driver’s Seat on Electronic Privacy Claims

Most employment laws are like a one-way street, where the only party with the ability to drive a claim is the employee.  When it comes to electronic privacy, however, some federal statutes allow for two-way traffic.  Although the Stored Communications Act (SCA) and the Computer Fraud and Abuse Act (CFAA) are often used by employees to assert claims (like this and this) against employers over unauthorized access to electronic communications, these laws also provide avenues for employers to pursue claims against employees for similar transgressions.

For example, earlier this year the Eleventh Circuit Court of Appeals affirmed a judgment against an employee for violations of the CFAA and SCA in a case called Brown Jordan International v. Carmicle.  The employee in the case, Carmicle, was an executive who became suspicious that a subordinate employee with whom he was having difficulty was communicating directly with the company’s CEO.  Acting on that suspicion, Carmicle took advantage of a generic email password to search the accounts of other employees.  From his search, Carmicle inadvertently learned about a planned buyout of the company by a select group of executives, and he also discovered that the company was scrutinizing his entertainment expenses.  Concerned that his job was in jeopardy after a poor financial year, Carmicle informed the company’s board of directors about the planned buyout and accused the group of executives of fraudulent activity.  This prompted the board to hire an independent investigator.  The resulting investigation failed to substantiate Carmicle’s accusations, but did disclose the extent of his email activities and the fact that he had spent over $100,000 in unauthorized business expenses.  After receiving these findings, the company terminated Carmicle and then sued him for violations of the CFAA and SCA.  The company prevailed at trial.

On appeal, Carmicle argued that the judgment on the CFAA claim was in error because the company had not experienced a “loss” recognized by the statute.  However, the Eleventh Circuit found that the CFAA’s definition of a “loss” encompassed payments that the company had paid to outside consultants to determine the extent of Carmicle’s hacking activity and so affirmed the judgment on that claim.  As for the SCA claim, Carmicle argued, among other things, that his access of employee email accounts was authorized because the company’s policy made clear that emails were subject to monitoring and were not private, and also because, as a member of senior management, he was not required to request access.   However, agreeing with the trial court, the Eleventh Circuit found that it was unreasonable to interpret the policy as authorizing Carmicle to “exploit a generic password” and to access email accounts without going through the proper channels, particularly where he did so without any reason to suspect wrongful or illegal conduct by the employees whose accounts he accessed.

The Brown decision serves as an important reminder of the leverage that statutes like the SCA and CFAA can provide to employers when it comes to protecting their proprietary electronic communications and systems.  Although employers are unlikely to find themselves very often in the position of needing that leverage in pursuit of a claim against an employee, these statutes nonetheless provide employers with a license to go down that road if needed.

Second Circuit Weighs in on Social Media, Profanity, and the NLRA

One of the fundamental protections of the National Labor Relations Act is that employers may not discipline employees for engaging in concerted activities relating to the terms and conditions of their employment.  Whether an employee has engaged in statutorily protected activity, however, is not always clear – especially when the activity involves profane or obscene conduct that would seem to cross the line in any other context.

For example, the Second Circuit Court of Appeals just considered whether an employee lost the protection of the NLRA when he took to social media in an expletive-laden rant on the eve of a union election.  The employee in the case, Perez, had worked for thirteen years as a server for a catering company, Pier Sixty, which was undergoing a tense union-organizing campaign.  Two days before the election, Perez received some directions from his supervisor that he felt were delivered in a “harsh tone” and that he viewed as further evidence of the company’s continuing disrespect for employees. So, during a break, Perez commented about the incident on his Facebook page, saying: “Bob is such a NASTY MOTHER FUCKER don’t know how to talk to people!!!! Fuck his mother and his entire fucking family!!!! What a LOSER!!!! Vote YES for the UNION!!!!!!!”  After learning of the post, the company terminated Perez.

Perez filed a charge with the NLRB claiming that he was terminated for engaging in protected concerted activities and the NLRB ultimately agreed.   On a petition for review by Pier Sixty, the Second Circuit acknowledged that an employee may act in such an abusive manner that he or she loses the protection of the NLRA.  However, under a “totality of circumstances” test as applied by the NLRB in recent social media cases, the court found that the evidence supported the NLRB’s decision that Perez’s obscenity-laced post was not “so egregious as to exceed the Act’s protection.” Recognizing that social media has become a “key medium” for communication among coworkers, the court found that even though the Facebook post may have been visible to the whole world, the comments were not made in the immediate presence of customers or at a company event and were therefore distinguishable from other cases involving opprobrious “public outbursts.”  And, although Perez’s post was dominated by “vulgar attacks,” the subject matter of the post nonetheless referenced workplace concerns and was made in the context of a tense organizing campaign.  Also tilting the balance in favor of affirming the NLRB’s decision was the fact that the evidence demonstrated that profanity was common in the workplace and that Perez’s termination was the first time the company had disciplined an employee for profanity.

For employers, the lesson from this case is that context matters.  Even the Second Circuit noted that this case sat “at the outer-bounds of protected, union-related comments.”  Determining where those outer-bounds end, however, requires employers to consider an employee’s activity in light of the circumstances in which it occurs.

Federal Appeals Court Finds That Title VII Prohibits Sexual Orientation Discrimination

In a groundbreaking decision, the Seventh Circuit Court of Appeals ruled earlier this month that Title VII of the Civil Rights Act prohibits discrimination on the basis of sexual orientation. The Seventh Circuit’s decision in Hively v. Ivy Tech Community College of Indiana is significant because it is the first decision by a federal appeals court to hold that sexual orientation discrimination is prohibited under Title VII.

Hively v. Ivy Tech Community College of Indiana

 

The fundamental question at issue in Hively was whether Title VII’s prohibition against discrimination “because of sex” encompasses discrimination on the basis of sexual orientation.  As noted in our previous posts on this topic (here and here), federal courts have historically answered “no” to that question and excluded sexual orientation discrimination from the protections of Title VII.   Indeed, last summer, a three-member panel of the Seventh Circuit concluded that its prior precedent precluded Hively’s claim for sexual orientation discrimination under Title VII and affirmed a lower court ruling dismissing her case.  In reaching that conclusion, however, the three-member panel questioned the continuing vitality of its previous decisions, particularly given the evolution of the law since Title VII was first passed in 1964, including the Supreme Court’s 2015 decision in Obergefell v. Hodges, which extended constitutional protections to the right of same-sex couples to marry.  As the three-member panel observed, its prior precedent created a “paradoxical legal landscape in which a person can be married on Saturday and then fired on Monday for just that act.” 

Given this landscape, the full panel of the Seventh Circuit voted to rehear argument in Hively and, in its 8-3 decision this month, reversed its position.  The court gave two reasons for its decision.  First, applying a “comparative” method, the court explained that Hively’s primary allegation was that she would not have been terminated if, instead of being a woman, she were a man married to a woman,.  According to the court, this allegation described “paradigmatic sex discrimination” because it alleged differing treatment “because she is a woman.”  The court went on to explain that the line between gender stereotyping claims (which the Supreme Court recognized in Price Waterhouse v. Hopkins) and claims based on sexual orientation is not only “gossamer-thin,” it “does not exist at all.”  Second, the court explained that its decision was guided by a line of cases beginning with the Supreme Court’s 1967 decision in Loving v. Virginia, which prohibited discrimination against a person because of the protected characteristic of the one with whom he or she associates.  According to the Seventh Circuit, because a change in the sex of one partner would change the alleged outcome in this case, that change revealed that the alleged discrimination rested on impermissible “distinctions drawn according to sex.”

The Seventh Circuit’s decision provides new critical context for actions at the Eleventh and Second Circuits, both of which recently held that their prior decisions barred claims for sexual orientation discrimination under Title VII.  Should one or both of those circuits rehear argument and affirm their positions, it will create a circuit split that will certainly find its way to the Supreme Court.

Following Maine's Minimum Wage & Tip Credit: An Update for Employers

The evolution of Maine wage payment laws continues apace, and a raft of legislative bills are currently undergoing scrutiny in Augusta.   Back in November, Maine voters increased the state minimum wage to $9 per hour and approved phasing-out the “tip credit” by increasing the minimum direct service wage for tipped employees to $5 per hour in 2017 and increasing it by an additional $1 per hour each year until it reaches the state minimum wage.   On Wednesday, April 5th, the Joint Standing Committee on Labor, Commerce, Research and Economic Development held public hearings on a list of bills seeking to modify -- or reverse recent changes to -- Maine’s minimum wage law.

Even though voters ultimately cast their ballots and approved changes to the minimum wage by referendum, fierce debate continues in Augusta as to how Maine businesses ought to be impacted and what modifications, if any, should be made.  High attendance at the April 5 hearing served to demonstrate the contentiousness of the topic.   Representatives from Maine People’s Alliance and Maine Small Business Coalition lined the halls in support of upholding the referendum, while the Maine Restaurant Association, Maine Chamber of Commerce and others business groups rallied members in opposition.   State House metal detectors got a workout – the Legislature saw its busiest public hearing of the year, with testimony extending into the morning hours on Thursday.

During the hearing, the committee heard testimony on the following bills:

• LD 774, "An Act To Create a Training Wage." This bill provides a minimum hourly training wage of $1 above the federal minimum wage for a person who is 20 years of age or under and is a student at a secondary or postsecondary school.
• LD 775, "An Act To Prohibit the Minimum Wage from Exceeding the New England Average." This bill provides that the minimum wage may not exceed the average minimum wage paid in the New England states, as determined by the Maine commissioner of labor.
• LD 778, "An Act To Eliminate the Indexing of the Minimum Wage to Inflation." This bill eliminates the indexing of the minimum wage to inflation, which under current law is scheduled to begin on January 1, 2021.
•  LD 831, "An Act To Base the Minimum Wage on a New England State Average and To Restore the Tip Credit." This bill provides that starting Jan. 1, 2018, the minimum hourly wage is the average minimum hourly wage in the New England states of New Hampshire, Vermont, Massachusetts, Connecticut and Rhode Island on July 1 of the previous year, as determined annually by the Maine commissioner of labor. It also restores the tip credit.
• LD 971, "An Act To Exempt Certain Employees from the Minimum Wage Laws." This bill exempts from the minimum wage laws an employee who has not attained 18 years of age, is claimed as a dependent on the income tax return of another person or is employed by a seasonal employer.
• LD 991, "An Act To Establish a Minimum Wage for Minors." This bill establishes a minimum hourly wage for minors that is 75% of the minimum hourly wage established for persons who are 18 years of age and older.
• LD 1005, "An Act Regarding Minimum Wage Increases." This bill eliminates the $1 per hour increases in the minimum wage scheduled for each of the next three years and eliminates increases in the minimum wage based on the increase in the cost of living starting in 2021. It also restores the tip credit to the minimum wage laws.

In addition, testimony was heard on the following bills all seeking to restore the "tip credit" used by Maine’s restaurateurs:

• LD 673, "An Act To Restore the Tip Credit to Maine's Minimum Wage Law." This bill restores the tip credit to the minimum wage laws
• LD 702, "An Act To Restore the Tip Credit to Maine Employees." This bill also restores the tip credit in the minimum wage laws.
• A third bill, LD 1117, "Resolve, To establish the commission to study the phase-out of sub-minimum wage," seeks to study the phase-out of the tip credit and have the commission report back to the full Legislature with recommendations in 2019.

Any business operating in the state with at least one employee, including all public and private employers, is automatically covered by Maine labor laws and needs to comply with the updates. The new minimum wage laws went into effect on January 1, 2017, although employers were given a one month grace period to comply with changes in the tip credit or the minimum salary requirement for overtime-exempt workers.

Ultimately, the committee did not vote on the issue on Wednesday, April 5. Still, with further changes inevitably on the horizon, employers should remain attentive to the fate of all bills pending in Augusta. We will offer updates as things progress between now and the end of the legislative session.