In a landmark decision, the Second Circuit (which covers New York, Connecticut, and Vermont), ruled that discrimination based on an employees’ sexual orientation is actionable under Title VII.  The Second Circuit in Zarda v. Altitude Express, Inc. is only the second appellate court in the United States to expressly find that employers who discriminate on the basis of an employees’ sexual orientation violate federal law.  The Second Circuit joins the Seventh Circuit, who reached a similar decision in Hively v. Ivy Tech Cmty. Coll. of Indiana.  The decision in Zarda intensifies an existing circuit split bolstering the argument that the United States Supreme Court should rule on the issue.

On its face, Title VII prohibits discrimination “because of such individual’s race, color, religion, sex, or national origin.”  Notably missing from the text of Title VII is discrimination based upon “sexual orientation.” The absence of sexual orientation within the text has resulted in extensive disputes on the issue, with the vast majority of courts determining that discrimination on this basis is not prohibited.  The Second Circuit’s ruling, however, highlights a growing trend that sexual orientation is a subset of “sex” and should be a protected characteristic under federal law.

In Zarda, the plaintiff, an openly gay skydiving instructor, brought suit against his employer alleging he was terminated on the basis of his sexual orientation.  In short, the plaintiff asserts that he was terminated after his employer discovered his sexual orientation and believed that such termination was based on his failure to adhere to the traditional “straight male macho stereotype.”   The claim was originally dismissed under the guise that Title VII does not protect against discrimination based upon sexual orientation.

Relying heavily on the Seventh Circuit decision in Hively, which found that Indiana educator Kimberly Hively stated a claim for sexual orientation discrimination under Title VII, the Second Circuit in Zarda ruled that “[i]n the context of Title VII, the statutory prohibition extends to all discrimination ‘because of…sex’ and sexual orientation discrimination is an actionable subset of sex discrimination.”  In coming to this conclusion, the Court noted that “[a]lthough sexual orientation is assuredly not the principal evil that Congress was concerned with when it enacted Title VII, statutory prohibitions often go beyond the principal evil to cover reasonable comparable evils.”  Sexual orientation is one “comparable evil.”

To bolster its decision, the Zarda Court relied on three separate and distinct reasons for finding sexual orientation was protected, each of which the Court stated was enough on its own to bar this type of discrimination.  First, the Court found that sexual orientation is an inherent function of sex.  Put simply, the Court reasoned that “[b]ecause one cannot fully define a person’s sexual orientation without identifying his or her sex, sexual orientation is a function of sex….Logically, because sexual orientation is a function of sex and sex is a protected characteristic under Title VII, it follows that sexual orientation is also protected.”  Therefore, the Court concluded sexual orientation is a subset of sex, making discrimination on this basis impermissible.

Next, the Court determined that discriminating on the basis of sexual orientation is a form of gender stereotyping, which is further prohibited under Title VII.  In this regard, the Court explained that discrimination based on sexual orientation is “rooted” in gender stereotyping because it is based upon the idea that an individual is not conforming to the traditional forms of gender- i.e., men should be attracted to women, and women should be attracted to men.  By discriminating for failing to conform to these stereotypes, the Second Circuit reasoned that the employer was engaging in a form of sex discrimination.

Finally, the Court strengthened its holding by finding that sexual orientation discrimination is also “associational discrimination.” Relying on the Supreme Court decision in Loving v. Virginia, which found a law prohibiting interracial marriage to be unconstitutional, the Second Circuit explained that an employee should be able to have romantic associations without fear of reprisal.  By permitting an employer to discriminate on this basis, the Court reasoned that it was allowing decisions to be made solely on who the employee associated with.  Such a determination would permit employers to impermissibly force the employee to conform to what the employer deemed appropriate within the employee’s personal life.

While it is too early to know whether the Supreme Court will take up the issue raised in Zarda and other cases, it is clear that the Zarda decision bolsters an employee’s argument that Title VII protects against sexual orientation discrimination. The Second Circuit’s well-structured three-reasoned approach attacked each argument raised by the employer, setting the framework for employees who wish to bring such claims going forward.

Employers with questions about the impact of the Second Circuit’s ruling should consult with counsel to ensure compliance with Title VII.

Over a span of two weeks at the end of last month, the Third Circuit Court of Appeals issued two key opinions concerning oft-scrutinized areas of employment law — rights attendant to employer-employee relationships and application of the Fair Labor Standards Act (“FLSA”).

In the first of those cases, Fausch v. Tuesday Morning, Inc., the Third Circuit adopted and utilized the Darden test to assess whether a temporary employee, who was hired, paid and assigned to work at a certain retailer through a temporary staffing agency, had an employment relationship with the defendant-retailer that could give rise to the employee asserting Title VII discrimination claims.  In a 2-1 decision, the Court vacated a lower court denial of the plaintiff-temporary employee’s Title VII discrimination claims and remanded the matter, ruling that there was sufficient evidence in the record to conclude that the defendant-retailer was the plaintiff’s “joint employer” along with the staffing agency.  In reaching this conclusion, the Court analyzed the relationship between the parties under common-law agency principles, an analysis commonly referred to as the “Darden test.” The Darden test, first set forth by the United States Supreme Court in Nationwide Mutual Insurance Co. v. Darden, demands that courts generally assess the level of control and supervision that an employer exercises over the employees in question through a multi-factor, fact-intensive inquiry. For example, as the Court of Appeals noted in Fausch, the most important factors of the Darden test include “which entity paid the [employees’] salaries, hired and fired them, and had control over their daily employment activities.”  In applying the Darden test to the facts at hand, the Court concluded that while the plaintiff was paid by the staffing agency, “he worked under the direct supervision and control” of the defendant-retailer who indirectly paid the plaintiff’s wages, had the power to “eject” the plaintiff from its store and provided the plaintiff’s “assignments, directly supervised him, provided site-specific training, furnished any equipment and materials necessary and verified the number of hours he worked on a daily basis.” Such “joint employer” status subjected the defendant-retailer to discrimination claims from the plaintiff-temporary employee in the same way as a traditional employee, thereby equipping temporary employees in the Third Circuit with an expanded set of legal rights in the workplace.

Less than one week after the Fausch ruling, in another split decision in Babcock v. Butler County, the Third Circuit adopted the “predominate benefit test” to determine whether an employer must compensate a prison guard for 15 minutes of unpaid time during his/her one hour meal break. In affirming the lower court’s dismissal of the plaintiff’s FLSA claims, the Court ruled that, notwithstanding minor restrictions on the plaintiff’s meal break, such as requirements that the employee obtain permission before leaving the premises, remain in uniform, remain “in close proximity to emergency response equipment” and otherwise remain “on call to respond to emergencies,” the employer was not obligated under the FLSA to compensate the plaintiff for the unpaid time.  In so holding, the Court applied the predominate benefit test and assessed, by weighing the benefits each party received from the meal break, whether the employee’s time during the meal break “is spent predominately for the employer’s benefit or for the employee’s.”  The Court compared the restrictions on the plaintiff’s meal break to a number of other considerations, including that the plaintiff could leave the premises with permission, could eat away from his/her post, and, most compellingly, that the existence of a collective bargaining agreement between the parties provided for “a partially-compensated mealtime and mandatory overtime pay if the mealtime is interrupted by work.” Weighing these factors, the Court concluded that, on balance, the plaintiff was the primary beneficiary of the break and the 15 minutes of unpaid time was therefore not compensable time under the law.

Employers and employees should take note of these recent developments as these decisions will certainly impact employer-employee relationships throughout the Third Circuit going forward.

For the first time in 30 years, on July 14, 2014, the Equal Employment Opportunity Commission (“EEOC”) has issued comprehensive guidelines for employers dealing with pregnant employees in the workplace (the “Guidance”).  Employers must remember that while EEOC guidance is not law, the Agency’s position on such topics will be relied upon by the courts.  The Guidance is available at: [http://www.eeoc.gov/laws/guidance/pregnancy_guidance.cfm]

The Guidance is extensive and addresses the treatment of pregnant and non-pregnant workers under the Pregnancy Discrimination Act (“PDA”) which amends Title VII of the Civil Rights Act of 1964 (“Title VII”), the Americans with Disabilities Act and the Family and Medical Leave Act.  Some of the highlights of the Guidance include the EEOC’s position on the following topics:

  • Employers may not discriminate against employees who are pregnant, or against a woman with a medical condition relating to pregnancy or childbirth, all of which is prohibited as sex discrimination;
  • The PDA requires employers to provide pregnant workers with equal access to employment benefits such as leave, light duty and health benefits; and
  • The Americans With Disabilities Act (“ADA”), with its broader definition of “disability,” applies to individuals with pregnancy-related impairments.

Of particular note, the Guidance “discourages” employers from even asking employees about pregnancy and other gender-related issues.  In addition, the Guidance establishes that employers must offer light duty to pregnant employees if they offer such positions to non-pregnant employees.  The Guidance also addresses the requirement that employers provide health insurance benefits that treat pregnancy-related costs in the same manner as non-pregnancy related costs.  The Guidance is extensive and addresses other issues not discussed in this post.

Practically, the Guidance provides “Best Practices” for employers to consult to avoid claims related to pregnancy.  Employers are well advised to become familiar with such practices.

The PDA, Title VII and the ADA apply to private employers with 15 or more employees, as well as government employers, labor organizations, employment agencies, and apprenticeship and training programs.

Employers are also reminded of the Patient Protection and Affordable Care Act’s amendment to the Fair Labor Standards Act, which establishes the requirement that employers provide a reasonable break time and private place for breastfeeding employees to express milk.

A federal judge in the Southern District of New York ruled earlier this month that a former intern was not entitled to pursue her claim for sexual harassment under the New York City Human Rights Law (the “NYCHRL”) because she was not an “employee” under the NYCHRL.

In the case of Lehuan Wang v. Phoenix Satellite Television US, Inc., Case No. 13 Civ. 218, plaintiff, Lehuan Wang (“Wang”) was an unpaid intern at Phoenix Satellite Television US, Inc. (“Phoenix”).  Wang alleged that during her internship she was subject to a hostile work environment, sexual harassment and retaliation by her supervisor, Zhengzu Liu (“Liu”).  Liu was the bureau chief of Phoenix’s New York office where Wang worked, as well as the Washington, D.C. office, and he had discretion over the hiring and firing of employees and interns for both offices.  Wang asserted in her complaint that at the beginning of her internship she had asked Liu about permanent employment with Phoenix after her graduation, and was told she could obtain permanent employment at Phoenix if she was able to obtain a visa.  Thereafter, Wang alleged that when Liu was visiting from out-of-town he lured her to his hotel and subjected Wang to unwanted sexual advances which were rejected.  Wang claimed that after the sexual advances were rebuffed, Liu no longer expressed any interest in hiring her after she completed her master’s degree.

The Court determined that since Wang was an unpaid intern, she was not an employee protected by the NYCHRL, and thus could not pursue an actionable claim for sexual harassment.  The Court indicated that its decision was supported by the plain meaning of the NYCHRL, and the fact that compensation is a threshold issue in determining the existence of an employment relationship.  Since Wang received no compensation for her internship, she was not entitled to the NYCHRL protection.  The Court also noted that its decision that an unpaid intern was not an employee under the NYCHRL was bolstered by interpretations of similar provisions of both Title VII and the New York State Human Rights Law.

The Court, however, declined to dismiss Wang’s claim for failure to hire under both the NYCHRL and the State Law.  Instead, it found Wang had sufficiently alleged facts to show that a permanent position was available at Phoenix and that she had applied informally for the position.  The Court noted that hiring for Phoenix’s New York Office rested solely with Liu, and that when Wang contacted Liu about a permanent position after she rejected his first advance, his response was to invite her to Atlantic City for the weekend to discuss a permanent position rather than have her solicit a formal application.

The Court’s decision in Lehuan Wang v. Phoenix Satellite Television US, Inc. is certain to spark debate about what protections should be available to unpaid interns and/or volunteers against unwanted sexual harassment.  Any business that offers unpaid internships should be careful to treat interns and employees alike with professionalism and respect.

On June 24, 2013, the United States Supreme Court issued two employer-friendly opinions that substantially narrow potential liability for claims of supervisor misconduct and retaliation under Title VII of the Civil Rights Act of 1964 (“Title VII”).

In Vance v. Ball State University, 570 U.S. ____ (June 24, 2013), the Supreme Court, by a 5-4 decision, greatly restricted the definition of a “supervisor” in the context of establishing employer vicarious liability under Title VII.  The case involved a claim by Maetta Vance, an African-American catering assistant at Ball State University, who alleged racially hostile conduct and retaliation by a co-worker, Saundra Davis.  While Davis’ specific duties were disputed, it was clear that she lacked the power to “hire, fire, demote, promote transfer or discipline” Vance.  Defining whether Davis was Vance’s “supervisor” was the critical question before the Court because an employer is strictly liable for a “supervisor’s” harassment of an employee if the harassment “culminates in a tangible employment action” (i.e., significant changes in employment status, such as firing, failing to promote or reassigning).  Without a tangible employment action, the employer can assert an affirmative defense to liability by demonstrating that: (1) the employer exercised reasonable care to prevent and correct the harassment, and (2) the victim unreasonably failed to take advantage of the employer’s preventative or corrective opportunities (see Burlington Indus., Inc. v. Ellerth, 524 U.S. 742 (1998); Faragher v. Boca Raton, 524 U.S. 775 (1998)).  On the other hand, if the harassing employee is merely the victim’s co-worker and not a supervisor, the employer will only be directly liable if it is found negligent in its efforts to control working conditions.

With this framework in mind, the Court rejected the “nebulous definition of ‘supervisor’” advocated by the dissenting justices and guidelines issued by the EEOC, which tie “supervisor” status to the ability of the individual to exercise significant control or direction over another’s daily work.  Instead, the Court ruled in favor of the more definitive test based upon a finding of some “tangible employment action”.  The Court made abundantly clear that its decision was grounded in concerns for efficiency and to delineate a more readily discernible definition of “supervisor” that could be determined as a matter of law at the summary judgment stage of a case or at trial.  This was in contrast to the highly fact-specific, ill-defined definition endorsed by the EEOC.  Though other factors may contribute to whether someone is viewed by co-workers as a “supervisor”, the Court found “tangible employment action” authority to be the “defining characteristic”, and one which could easily be applied by a judge or jury.  In applying this standard, the Court concluded that, because there was no evidence Davis directed Vance’s day-to-day activities or set her work schedule, Davis was not Vance’s “supervisor” for purposes of determining employer vicarious liability under Title VII.

In conjunction with Vance, the Supreme Court’s decision in University of Texas Southwestern Medical Center v. Nassar, 570 U.S. ____ (June 24, 2013), provides employers with additional ammunition for defeating retaliation claims under Title VII, resulting in potential cost savings for employers faced with such lawsuits.  The Nassar Court determined that, to successfully prosecute a retaliation claim under Title VII, a plaintiff must satisfy the higher “but-for” causation standard, rather than the lesser “motivating factor” test applied in status-based discrimination cases.  As recognized by the Court, the heightened standard may assist employers in dismissing such claims before trial and may discourage frivolous claims at the outset. 

Specifically in Nassar, the plaintiff, a medical doctor of Middle Eastern descent, filed a Title VII retaliation claim against his employer, an academic institution within the University of Texas.  In that suit, the plaintiff claimed his supervisor had attempted to prevent an employer from hiring him because of the plaintiff’s complaints against that superior of alleged status-based discriminatory harassment.  During trial, the jury ruled in favor of the plaintiff.  On appeal, the Fifth Circuit Court of Appeals affirmed, in part, determining the plaintiff, in order to prevail, only needed to prove that retaliation was a “motivating factor” for the adverse action taken against him.  The Supreme Court disagreed, however, determining the statutory language required the plaintiff to demonstrate the retaliation was the “but-for cause” of the employment action at issue.  In other words, as the Court explained, this heightened standard “requires proof that the unlawful retaliation would not have occurred in the absence of the alleged wrongful action or actions of the employer.”

The Supreme Court in Nassar recognized the influential nature of the decision for employers, noting that retaliation based claims have nearly doubled from 1997 to 2012.  By making clear that retaliation claimants must fulfill the higher “but-for” causation standard utilized in most tort cases, the Supreme Court’s decision provides employers with additional grounds to seek early dismissal of retaliation claims.

Both the Vance and Nassar decisions will likely have a far-reaching impact on employer discrimination and retaliation claims.  While neither case appears to have been decided with the specific goal of discouraging plaintiffs from filing harassment and retaliation claims, the Supreme Court clearly sought to promote efficiency and reduce the burden on employers from defending tenuous claims brought by employees.