Sometimes Statistics Do Not Lie: Practical Considerations to Govern Hiring and Promotion Decisions

“There are three kinds of lies: lies, damned lies, and statistics.” This quip has often been used by attorneys and others to disparage those who rely on statistics to bolster weak arguments or those that do not support their positions. However, statistics gleaned from a recent survey of 118 federal appellate court employment-related decisions provide insight into what factors juries and courts consider when deciding claims of hiring and promotion discrimination. The case survey confirmed that liability for discriminatory hiring and promotion practices comes from avoidable mistakes made before and during the interview and selection process. Factors most likely to sway juries and courts in hiring or promotion discrimination cases include:

• Direct evidence of an employer's intent to discriminate, including statements or references by decision-makers about protected characteristics or activity engaged in by an individual;
• Inconsistent application of hiring and selection criteria;
• Inconsistent hiring practices;
• Inconsistent evidence pertaining to the employer's reasons for the hiring or promotion decision;
• Perceived legitimacy of the employer's reason for the hiring or promotion decision.

The data from the case survey substantiate the need for employers to implement the following recommendations as part of their interview and selection processes when making hiring and promotion decisions:

• Job descriptions that detail background qualifications and experience for all positions should be published and updated as positions evolve before consideration of any candidate for an available position;
• Clear and legitimate criteria pertaining to background, qualifications, and experience needed for selection for each job position should be established and communicated to decision-makers before consideration of any candidate for an available position;
• Decision-makers should objectively evaluate applicants for hire and employees seeking promotion based on the established criteria;
• Decision-makers should be trained to avoid making negative statements about protected characteristics or protected activity of an applicant or employee Decision-makers should articulate and document legitimate and non-discriminatory reasons for each hiring and promotion decision;
• Human resources or other authorized representatives should monitor hiring and promotion decisions for disparate impact and to ensure legitimate, non-discriminatory reasons for each hiring and promotion decision.

Implementation of these recommendations might not eliminate altogether the prospect that an applicant or employee adversely affected by a selection decision will not seek to legally challenge the decision. However, based on the statistics from the case survey, it may be possible for an employer to minimize risk by implementing the recommendations.

Hostile Work Environment Can Follow End of Consensual Relationship

Under most circumstances, having a consensual relationship with a coworker, even a supervisor, makes it difficult later for an employee to establish a claim of hostile work environment that involves the same coworker. But, in Turner v. The Saloon, LTD, the United States Court of Appeals for the Seventh Circuit Court of Appeals said it was possible to make a plausible hostile work environment claim based on events occurring after a consensual relationship had ended.

In this case, the employee was a waiter and had a nine-month relationship with one of his supervisors. After the relationship ended, the employee identified five incidents in a period of more than a year — three of which involved unwelcome touching (including the supervisor's grabbing the employee's crotch, grabbing his buttocks, and pressing her chest against him)—that constituted a hostile work environment. In allowing the claim to proceed, the court relied heavily on the fact that there were multiple incidents involving unwelcome touching of “intimate” body parts. The court also noted that the traditional gender of harasser and victim were reversed here — it was a male employee complaining about a female harasser — but commented that if a woman had been victim to similar incidents it would be clear that the incidents could form the basis of a hostile work environment claim.

The court also mentioned that the former consensual relationship did not affect the result in this case even though the former relationship was generally relevant to the question of whether such conduct was unwelcome and whether it resulted in a workplace that was subjectively offensive to the complaining employee. In this case, the appeals court thought the incidents described were sufficient to support a claim of hostile work environment but also mentioned the lower court might still decide in favor of the employer based on a defense it did not previously consider, since the supervisor's conduct stopped after the employee complained.

Written by Raymond J. (Ray) Carey and Dabney D. Ware, Foley & Lardner LLP
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Renewed Attention to Paycheck Fairness Act Puts Employers on Notice

For those who thought the proposed Paycheck Fairness Act had faded away, here is a wake-up call. After more than a year since the bill was passed by the House of Representatives and introduced in the Senate, the Senate Committee on Health, Education, Labor and Pensions is holding a new hearing on March 11 to focus on equal pay issues.

The Paycheck Fairness Act would amend the Equal Pay Act of 1963 (prohibiting wage discrimination on the basis of sex) and significantly alter the proof and enforcement provisions of that long standing federal law. The proposed amendments would provide additional remedies for claims of pay discrimination, including uncapped punitive damages, and would increase the burden on employers to prove that pay differences resulted from factors other than gender. It also would prohibit retaliation against employees who inquire about, discuss, or disclose their own wages or the wages of other employees.

Although it is difficult to predict whether the Senate will ultimately vote on and pass the Paycheck Fairness Act, the fact that a Senate committee is turning its attention to bill in today’s financial and political environment should signal to employers that the legislation is not likely to go away any time soon. Indeed, President Obama mentioned the issue in his State of the Union address in January, stating, “We are going to crack down on violations of equal pay laws -- so that women get equal pay for an equal day’s work.” True to his words, the President created the National Equal Pay Enforcement Task Force in January. In addition, the U.S. Equal Employment Opportunity Commission, which administers Title VII and Equal Pay Act claims, added more than 150 new hires by the end of 2009 and received an additional $23.9 million in funding for the current fiscal year for enforcement. It is seeking $18 million on top of that for fiscal year 2011.

In light of the growing threat of legislative action, regulatory enforcement, and civil litigation (including class actions alleging systemic discrimination), employers should take proactive steps now to position themselves optimally for a legal challenge. This may involve a privileged audit of the employer’s pay practices, including a review of policies and procedures and a statistical analysis of compensation data. Because these are steps that undoubtedly would be taken in the event of a government audit or private lawsuit, employers should not wait until a legal proceeding to identify and address any problems that might exist.

Proactive steps such as these can have substantial benefits in risk reduction. Employers need a well organized plan for identifying vulnerabilities, assessing employment policies and practices, monitoring outcomes of decisions on a statistical basis, and identifying solutions to address risk, all under the protection of attorney-client privilege. In addition, employers need systems and tools to help ensure the most informed and defensible decision making. A privileged compensation audit can help employers meet all of these needs.

Written by Hunton & Williams LLP
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Employer May Not Defeat Harassment Claim by Arguing That Employee Did Not Take Advantage of All Internal Complaint Options

Earlier this month, the Second Circuit Court of Appeals rejected an employer’s argument that the Faragher/Ellerth affirmative defense applied to shield it from liability where the employee complained to the alleged harasser but not to others identified in the company’s harassment policy. In Gorzynski v. JetBlue Airways Corporation, 07-4618, the Second Circuit held that it is not unreasonable, as a matter of law, for an employee to complain about sexual harassment to his or her harasser when that person is designated in the employer’s policy as one of several persons with whom a harassment complaint may be lodged. In each case, the court must look to the facts and circumstances of each case to determine whether the employee unreasonably failed to take advantage of other preventative measures provided in the employer’s sexual harassment policy.

The Facts

JetBlue hired Diane Gorzynski as a customer service agent for its operations at the Buffalo International Airport. According to Gorzynski, her supervisor, James Celeste, made numerous inappropriate sexual comments, grabbed her and other women around the waste on multiple occasions, tickled them, and stared at them as if he were mentally undressing them. In accordance with JetBlue’s harassment policy, which provided that any employee who believed that she was the victim of sexual harassment “should bring that conduct to the immediate attention of his or her supervisor, the [Human Resources] Department or any member of management,” Gorzynski complained to Celeste about his conduct. She did not complain to Human Resources or any other manager. Celeste did not apologize for his actions and no disciplinary action was taken against him. Subsequently, JetBlue terminated Gorzynski’s employment because she had allegedly created a hostile work environment.

The District Court

Following her termination, Gorzynski filed suit in the United States District Court for the Western District of New York, alleging, among other things, that JetBlue had subjected her to a hostile work environment sexual harassment in violation of Title VII of the Civil Rights Act of 1964 (“Title VII”). JetBlue moved for summary judgment motion on the hostile environment claim, arguing that the Faragher/Ellerth affirmative defense shielded it from liability because Gorzynski had only complained of sexual harassment to her supervisor, rather than pursuing alternative options listed in the harassment policy. The court accepted the argument and granted JetBlue’s motion for summary judgment without even determining if the alleged conduct created a hostile work environment. Gorzysnki appealed to the Second Circuit Court of Appeals.

The Second Circuit

Unlike the District Court, the Second Circuit initially addressed whether Gorzynski had presented sufficient evidence to create a genuine issue of material fact as to whether she had experienced a hostile work environment. The Second Circuit concluded that she had, and then moved on to the application of the Faragher/Ellerth affirmative defense.

An employer can avoid liability on a Title VII hostile environment claim in certain circumstances by raising the Faragher/Ellerth affirmative defense, which consists of two elements: (1) “the employer exercised reasonable care to prevent and correct promptly any [discriminatory] harassing behavior,” and (2) “the plaintiff unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.”
No issue existed as to JetBlue’s satisfying the first prong, as it maintained a formal, written sexual harassment policy. Gorzynski acknowledged receiving the policy when she was hired, and she did not argue that JetBlue’s policy was insufficient with respect to the first element of the Faragher/Ellerth defense.

The Second Circuit’s decision turned on the second prong – which required JetBlue to demonstrate that Gorzynski had unreasonably failed to take advantage of the harassment policy. While conceding that Gorzynski had complained to Celeste, JetBlue argued that Gorzynski did not reasonably avail herself of its sexual harassment policy because she only complained to Celeste. According to JetBlue, it was unreasonable for Gorzynski not to take advantage of the alternate avenues that it had provided for employees to make internal complaints of sexual harassment, such as complaining to other members of management or the Human Resources Department.

The Second Circuit rejected “such a brittle reading of the Faragher/Ellerth defense” and stated that the Supreme Court did not intend “victims of sexual harassment, in order to preserve their rights, [to] go from manager to manager until they find someone who will address their complaints.” According to the Second Circuit, “[t]here is no requirement that a plaintiff exhaust all possible avenues made available where circumstances warrant the belief that some or all of those avenues would be ineffective or antagonistic.” As a result, the Second Circuit held “that an employer is not, as a mater of law, entitled to the Faragher/Ellerth affirmative defense simply because an employer’s sexual harassment policy provides that the plaintiff could have complained to other persons as well as the alleged harasser.”

Rather, the facts and circumstances of each case must be examined to determine whether, by not pursuing other avenues provided in the sexual harassment policy, the plaintiff unreasonably failed to take advantage of the employer’s preventative measures. In this case, the Court held that genuine issues of fact existed, as evidence had been presented that another manager was not receptive to receiving complaints from employees and that the other manager’s behavior led employees to believe that they could be subjected to retaliation if they complained. Additionally, evidence had been presented that another employee who had complained to the Human Resources Department had been suspended within days of making her complaint.

Conclusion

The Second Circuit’s decision in Gorzynski makes clear that for an employer to prevail on the Faragher/Ellerth affirmative defense at the summary judgment stage, there can be no genuine issue of material fact. Perhaps more importantly, the case underscores the importance of not only having a well-drafted harassment policy, but also ensuring that it is followed in practice. If an employee can present evidence that the policy is ineffective or that it would be futile to complain to those identified in the policy, then the Faragher/Ellerth affirmative defense will not succeed.

Written by David W. Garland and Jill Barbarino, Sills Cummis & Gross PC
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Is it Working Time or Not? Employer Compulsion is the Key Element

The electronic giant, Best Buy, has requested that a judge approve a $900,000 settlement in a New York State wage-hour class action in which the plaintiffs sought payment for time worked “off-the-clock.” That working time was the minutes spent going through security clearings at the end of the work day, assumedly to ensure that employees did not steal anything during their shifts. The case is entitled Turner v. Best Buy Company, Inc.

Although the case was filed in state court, the employer had removed the case to federal court under the Class Action Fairness Act of 2005. After going through a great deal of discovery, the parties decided to settle the action, although they maintained their respective positions. The company maintained that it properly paid all employees for all time worked, while plaintiffs took the view that going through the security check was an employer instigated “activity” that required compensation.

Interestingly, and significantly, the employer has agreed to modify its operating procedures to allow all employees to remain on the clock until their manager allows them to leave the store. Thus, although the employer denied any culpability, the remedial action it took suggests that it knew that there was an issue here.

The key to determining whether preliminary or postliminary activities are compensable is the element of employer compulsion or the lack thereof. I equate this activity to the employer ordering a retail cashier to report ten minutes early to balance out the cash drawer or to stay ten minutes after the shift ends to do the same. It is a safe bet that where employer ordering, or direction or compulsion of an activity related to the main job is involved, the activity is working time and compensable. The other benchmark is how integrally related to the main job is the side activity.

I have often commented on these preliminary and postliminary issues. They are a real danger to the employer because oftentimes, the employer may not even appreciate that this “little” activity or routine or inconvenience to employees is actually “work,” which can then lead to a single employee filing an action (as was done here) and everybody else coming on board. The proactive approach is to analyze every non-exempt job and ascertain if there are preliminary or postliminary activities involved or related to it and then apply the above-referenced analysis and make the call on whether it is or is not working time.

Written by Mark Tabakman, Fox Rothschild LLP
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Lessons Learned for Performance Appraisals and RIFs from the Sixth Circuit in Cutcher v. Kmart

Even in the face of an undisputed national workforce reduction, in a recent decision (Cutcher v. Kmart), the Sixth Circuit found an issue of disputed fact existed as to whether Kmart’s termination of an hourly associate as part of a reduction in force interfered with and was in retaliation for that associate’s recent exercise of her FMLA rights.

Cutcher had been employed by Kmart for about 20 years. In the four years she had been evaluated by her then current supervisor, Cutcher had received either the highest or second-highest rating in Kmart’s appraisal system. While her supervisor did comment in certain appraisals that Cutcher had some challenges in the area of teamwork, the supervisor never documented Cutcher for any such episode and still rated her as a high performer.

Within weeks after her last appraisal, Cutcher began a six-week FMLA-approved leave for which she was paid under Kmart’s short-term disability leave policy. Then, just weeks later, Kmart announced a nationwide RIF which included the termination of six associates at the store where Cutcher worked. As part of the nationwide RIF process, the store was instructed to evaluate each associate’s performance based on the same core areas that were evaluated in the annual performance appraisals. The store then averaged the employee’s RIF appraisal score with their most recent performance appraisal score to arrive at the overall score that determined those associates to be terminated. One caveat in the scoring form was that the store had to comment on a significant change in the RIF appraisal score from that in the associate’s most recent performance appraisal.

Cutcher’s RIF appraisal score was much lower than her most recent performance appraisal, made just one month earlier. As required, the store explained the difference by stating only poor customer and associate relations and “LOA.” Kmart denied that the leave notation formed the basis for Cutcher’s decreased RIF appraisal, but that LOA signified only that her termination had to be delayed until her return from leave, as mandated by Kmart’s national guidelines. Had Cutcher’s rating during the RIF been identical to her appraisal just weeks earlier, she would not have been selected for termination.

In reversing the district court’s summary judgment ruling in favor of Kmart, The Sixth Circuit held that a disputed issue of material fact remained as to whether Kmart interfered with Cutcher’s FMLA rights and retaliated against her because she took the leave. That is, the Court explained that a reasonable fact finder could conclude that the termination was based on her leave because of the brief time between her annual appraisal and the lower RIF appraisal. Also significant was that Kmart had not documented any of the performance issues that it claimed supported the lower RIF appraisal. In fact, Cutcher had never been disciplined and her evaluators admitted they knew of no change in her performance during the minimal period between the annual and RIF appraisals. Moreover, the Court found that a jury could reject Kmart’s explanation that the change between appraisal resulted from the fact that Cutcher’s supervisor tended to rate associates higher than deserved to avoid confrontation. Lastly, the Court pointed to Kmart’s LOA notation on the RIF form as evidence that could support a finding in Cutcher’s favor.

So, what lessons can we take from Cutcher v. Kmart? Whether in times of a RIF or simply standard business operations, attention must be paid to how managers evaluate their employees. It will always be the case that certain managers rate high or low as a practice, so if you can’t train the manager to rate in a more realistic manner, then at least document that particular manager’s practice. This will avoid the post-hoc allegation Kmart confronted and also lay the groundwork for later explaining potential differences in appraisals made by others. Furthermore, a termination analysis must be meticulously conducted and documented. Standing alone, a LOA notation on the section of a RIF form identifying the reason for a termination decision begs a court to deny summary judgment.

Thus, as with any termination decision, attention to important details and careful documentation can protect the employer from an adverse decision like that in Cutcher v. Kmart.

Written by Nicole J. Quathamer, Porter Wright Morris & Arthur LLP
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