LINDNER & MARSACK, S.C. NAMES SALLY PIEFER AS EQUITY PARTNER

Lindner & Marsack, S.C., one of the region’s most respected and long-standing management-side labor and employment law firms, announced today the advancement of Sally Piefer to Equity Partner.

Piefer, who joined Lindner & Marsack in 2016, specializes broadly in all areas of employment law matters with special emphasis in employment litigation, employment counseling and compliance issues, and employee/supervisor training. Sally’s litigation practice has involved representing and defending employers in employment discrimination, wage & hour, FMLA, ADA, OSHA and unemployment compensation claims. In addition, she frequently drafts, advises clients and litigates claims involving non-competition, non-solicitation, confidentiality and duty of loyalty issues.

“In the short time Sally has been with Lindner & Marsack, she has become both a leader among our dedicated team of attorneys as well as an invaluable asset to our clients in providing counsel to help them address their toughest legal challenges,” said Thomas Mackenzie, Firm President.

Piefer received her JD from Marquette Law School in 1994. Before joining Lindner & Marsack, she led the employment law team at a small Waukesha area law firm for more than 17 years. Piefer has an AV rating from Martindale Hubbell, the highest possible. She has also received “Women in the Law” accolades from the Wisconsin Law Journal and special recognition from the Waukesha County Community Foundation’s Women of Distinction.

“No matter the issue or challenge facing a client, my main goal is to help employers operate in the most efficient, productive and cost-effective environment possible, says Piefer. “I take immense pride in working with clients to mitigate and manage risk, and helping them implement solutions that are proactive, practical and legally sound. Doing this work with the support of my colleagues at Lindner & Marsack just makes it that much more rewarding.”

 

THE NLRB BRIGHTENS THE SEASON WITH MULTIPLE EMPLOYER-FRIENDLY DECISIONS BEFORE THE NEW YEAR

By: Kristofor Hanson

As has been anticipated since the change in presidential administrations earlier this year, the National Labor Relations Board, with a Republican majority, issued a slew of impactful and employer-friendly decisions in recent days.  (The Republican majority on the Board was in place until December 16, 2017, when Chairman Philip Miscimarra’s term ended.  The Board now has two Republican appointees and two Democrat appointees until President Trump appoints a new member who must receive the approval of the United States Senate.)  These decisions, altering standards for workplace policies, joint employers, the duty to bargain, and bargaining unit makeup will come as a pleasant Christmas present to employers this year.

Interpreting Neutral Workplace Policies

On December 14, 2017, in The Boeing Company, 365 NLRB No. 154, the Board discarded its test for determining whether an otherwise facially neutral workplace policy violates the National Labor Relations Act because an employee “would reasonably construe” the policy to prohibit some form of protected Section 7 activity presently or at some point in the future.  Section 7 rights give employees protection for engaging in concerted activity, such as joining a union and discussing or complaining about the terms and conditions of their employment, among others.  At issue in the case was Boeing’s no-camera rule, which prohibited the use of “camera-enabled devices” such as cell phones on its property.  Boeing stated that it instituted this rule because of its security concerns, as Boeing is a “target for espionage by competitors, foreign governments, and supporters of international terrorism, and [it] faces a realistic threat of terrorist attack.”

In finding this rule lawful, the Board sharply criticized the “reasonably construed” test stating that it has been difficult to apply, failed to consider any legitimate reasons for the work rule, failed to allow for considerations of the type of industry and work settings involved, and provided no clear guidance for employers to determine what rules and policies were lawful.

Therefore, the Board decided a new test was appropriate and held that to determine whether a facially neutral work rule interferes or potentially interferes with Section 7 rights the Board will look at “(i) the nature and extent of the potential impact on NLRA rights, and (ii) legitimate justifications associated with the rule.”

This test provides employers with the ability to defend work rules that may limit employees’ abilities to exercise their Section 7 rights by establishing legitimate business justifications for their rules.  In addition to enunciating the new standard, the Board also created three categories of rules designed to aid in the evaluation of the legality of the policies.  Those categories are:

Category 1: Rules that are lawful either because (a) when reasonably interpreted, they do not prohibit or interfere with the exercise of NLRA rights; or (b) the potential adverse impact on protected rights is outweighed by justifications associated with the rules.  The Board found the Boeing no-camera rule to be such a justified rule and also determined that rules requiring employees to abide by basic standards of civility are similarly justified.  In doing this, the Board overruled past decisions in which employers were found to have violated the Act by maintaining rules requiring employees to foster “harmonious interactions and relationships” or to maintain basic standards of civility in the workplace.

Category 2:  Rules that warrant individualized scrutiny in each case as to whether the rule would prohibit or interfere with NLRA rights, and if so, whether any adverse impact on NLRA-protected conduct is outweighed by legitimate justifications.

Category 3:  Rules that the Board will designate as unlawful to maintain because they would prohibit or limit NLRA-protected conduct, and the adverse impact on NLRA rights is not outweighed by justifications associated with the rule.  An example would be a rule that prohibits employees from discussing wages or benefits with one another.

The Board stated that going forward, its decisions concerning work rules will place work rules into one of these three categories.  Doing this will offer employers a fair amount of guidance, but employers must continue to carefully assess each proposed rule and policy to determine whether the business justifications for the rule are legitimate and outweigh any limitations the rule might place on employees’ rights under the Act.

Return to Previous Joint Employer Standard

In August 2015, in its Browning-Ferris decision, the Board altered long-standing precedent concerning joint employer status, holding that employers are joint employers if: (1) they are both employers within the meaning of the common law;  and (2) they share or codetermine matters governing the essential terms and conditions of employment. The central question under this standard was whether an employer exercised control over terms and conditions of employment directly or indirectly, or had reserved the right to do so.

On December 14, 2017, the Board reversed course on this standard and returned to the standard that had been in place prior to Browning-Ferris.  In Hy-Brand Industrial Contractors, 365 NLRB No. 156, the Board stated that it was reverting to the “direct and immediate control” standard, which had been in place for decades prior to the Browning-Ferris decision.

Under the direct and immediate control standard employers are considered joint when there is “proof that putative joint employer entities have exercised joint control over essential employment terms (rather than merely having ‘reserved’ the right to exercise control), the control must be ‘direct and immediate’ (rather than indirect), and joint-employer status will not result from control that is ‘limited and routine.’”

This standard limits joint employer status to only those employers who have significant and direct control over the terms and conditions of employment and actually exercise that control.  It removes from consideration control that is reserved, but not applied, by the employer.

Unilateral Implementation of Work Rule Changes without Bargaining

On December 15, 2017, in Raytheon Network Centric Systems, 365 NLRB No. 161, the Board restored 50-year old precedent that allows an employer to implement changes to work rules without bargaining with a union if the employer has a past practice of taking similar actions.

This decision overturns a 2016 Board ruling that required employers to bargain with unions over changes workplace rules, even where employers had made similar changes in the past.  In Raytheon, the Board criticized the previous ruling as distorting common sense understanding of what constitutes and change in employment conditions and ignoring long-standing precedent concerning the impact of past practice on the labor-management relationship.

The case involved Raytheon’s unilateral adjustment of employees’ healthcare benefits.  The lower judge found that the adjustment was unlawful as it needed to be bargained.  However, the Board, overturning the decision, held that Raytheon was well within its rights to modify the employees’ healthcare benefits because it had done so annually each of the previous eleven years.

The Board stated that employer actions do not constitute a change if they are similar in kind and degree with an established past practice consisting of comparable unilateral actions.  The Board held this applies regardless of whether (1) a collective bargaining agreement was in effect when the past practice was created, or (2) no CBA existed when the disputed actions were taken.

Accordingly, the Board found that Raytheon’s change to the healthcare benefits of its employees was consistent with its past practice and did not require Raytheon to notify the employees of the proposed change and provide them with an opportunity to bargain before making the change.

Micro Bargaining Units are a Thing of the Past

In another December 15, 2017 decision, the Board overturned a 2011 ruling that allowed what were termed “micro units” to petition for a union election.  The case, PCC Structurals, Inc., 365 NLRB No. 160, overturned what is known as the Specialty Healthcare standard that required employers to establish that other employees who the employer believed should be included in a bargaining unit had an “overwhelming community of interest” with the petitioning unit.

In this decision, the Board returns to the traditional community of interest standard that it has applied “throughout nearly all of its history.”  This standard allows for the Board to evaluate the interests of all employees – both those within and those outside the petitioned-for unit – without having to determine whether their community of interest is “overwhelming.”  Rather, the traditional test requires the Board to assess multiple factors to determine the appropriate unit, such as:

whether the employees are organized into a separate department,; have distinct skills and training; have distinct job functions and perform distinct work, including inquiry into the amount and type of job overlap between classifications; are functionally integrated with the Employer’s other employees; have frequent contact with other employees; interchange with other employees; have distinct terms and conditions of employment; and are separately supervised.

The Board found that the “overwhelming community of interest” standard was akin to gerrymandering and resulted in arbitrary and fractured units.  It stated the traditional community of interest standard takes into consideration those groups of employees who have “substantial” shared interests to be taken into consideration when determining appropriate unit size.

PCC Structurals involved an employer’s challenge of a Regional Director’s decision and direction for election of a petitioned-for unit of 100 welders.  The employer contended that the smallest appropriate unit actually consisted of more than 2500 employees.  The Board did not decide whether the unit sought by the employer was appropriate, but directed the Regional Director to reevaluate the unit based upon the standard enunciated in the case.

This decision eliminates the burden that had been placed on employers to establish an “overwhelming” community of interest among employees in order to enlarge a bargaining unit.  As the Board stated, that burden was nearly impossible for employers to achieve.  Employers now will be better able to expand bargaining units, which should allow employers to better combat union organizing efforts.

The decisions cited here can be found at https://www.nlrb.gov/cases-decisions/board-decisions

Should you have any questions about the cases and issues discussed above, please contact our offices.

 

LINDNER & MARSACK, S.C., ANNOUNCES 2017 SUPER LAWYER AND BEST LAWYER DESIGNATIONS

Lindner & Marsack, S.C., one of the region’s most respected and long-standing management, labor, and employment firms, today announced seven attorneys acknowledged by Super Lawyer magazine. Honorees include Douglas M. Feldman, Daniel J. Finerty, Thomas W. Mackenzie, Gary A. Marsack, Chelsie D. Springstead, Jonathan T. Swain and Oyvind Wistrom.

Finerty, Mackenzie, Marsack and Swain were also recognized as Best Lawyers by U.S. News & World Report, as was Feldman who received the additional honor of being named as a Lawyer of the Year by the publication.

“The Super Lawyers and Best Lawyers designations highlight the accomplishment not only of the individual lawyers receiving the acknowledgement but also the quality of the work provided by the entire firm,” said Mackenzie, President of the firm. He added, “Peer recognition is always appreciated but these accolades do not occur in a vacuum. We have a dedicated team providing excellent labor and employment representation and work injury defense to employers in Wisconsin and around the country.”

Super Lawyers is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high-degree of peer recognition and professional achievement. Attorneys are selected using a rigorous, multi-phase rating process in which peer nominations and evaluations are combined with third party research. The objective of the program is to create a credible, comprehensive, and diverse listing of outstanding attorneys that can be used as a resource for attorneys and consumers searching for legal counsel.

Wisconsin’s Right to Work Law Upheld

By: Thomas W. Mackenzie and Kristofor L. Hanson

In a decision issued September 19, 2017, the Wisconsin Court of Appeals upheld as constitutional Wisconsin’s so-called “Right to Work” law (Act 1), which outlawed mandatory union membership as a condition of employment.

Prior to the law becoming effective on March 11, 2015, the International Association of Machinists District 10, the United Steelworkers District 2, and the Wisconsin AFL-CIO filed an action in Dane County challenging the constitutionality of Act 1.  The Unions’ theory was that because unions are required to fairly represent all employees covered by a collective bargaining agreement, a law prohibiting unions from receiving just compensation for those services constitutes an unlawful “taking” under the Wisconsin constitution.  Dane County Circuit Court Judge C. William Foust agreed with the Unions, concluding that requiring Unions to represent non-members without compensation constituted a “taking” and threatened the Unions’ “very economic viability.”

The State Attorney General’s Office appealed Judge Foust’s decision to the Wisconsin Court of Appeals. The Court of Appeals reversed Judge Foust’s decision, concluding that Unions have no constitutional entitlement to the fees of non-members.  The Court found that Act 1 did not preclude Unions from receiving just compensation for the services provided to non-members; it merely precluded the Union from collecting those fees from the non-members themselves.  In other words, Unions will have to look to other sources (e.g. union members) to fund the duty of fair representation owed to members and non-members alike.

The Court’s decision is not surprising.  Wisconsin became the 25th state with a “Right to Work” statute.  That number has climbed to 28 states since Wisconsin’s enactment of the law.  These provisions have withstood similar constitutional challenges in other forums.  The Unions have the right to appeal to the Wisconsin Supreme Court but, given the current composition of that Court, success will be hard to find.

To view the Court of Appeals decision clicks here.

 

UPDATE ON STATUS OF CHANGES TO OVERTIME SALARY THRESHOLDS

By Laurie A. Petersen

On August 31, a U.S. District Judge for the Eastern District of Texas struck down the controversial high salary threshold hikes that the Department of Labor under President Obama set for overtime exemptions putting to rest employer concerns about their obligations when or if the Rule was ever implemented.  The Rule was to have gone into effect on December 1, 2016, but Judge Amos L. Mazzant III entered a nationwide injunction about a week prior to the effective date of the rule.  The Final Rule more than doubled the minimum salary necessary for an employer to consider a particular job (executive, administrative, professional, outside sales) exempt from overtime and significantly increased the salary threshold exemption for highly compensated employees.

While the Obama Administration appealed Judge Mazzant’s injunction to the Fifth Circuit, the Department of Justice under President Trump decided not to pursue the appeal.  Instead, the Trump Administration’s Department of Labor is seeking information from the public regarding the exemptions and salary levels and published a Request for Information in late July 2017.  Submissions are due on or before September 25, 2017 and request information regarding salary thresholds and the duties test.  Details of the request for information and links to submit comments can be found at www.federalregister.gov.

It appears likely that the Trump Administration will still modify the overtime rule, potentially increasing the salary threshold, but the result is not expected to be as generous for workers or as costly to employers.

Lindner & Marsack, S.C. will continue to keep you posted on further developments with changes to the overtime exemptions. For more information about the DOL’s overtime exemption rules or your general employment law needs, please contact Attorney Laurie Petersen at (414) 226-4804 or by email at lpetersen@lindner-marsack.com or any of the other attorneys you work with at Lindner & Marsack, S.C.

DOL WITHDRAWS JOINT EMPLOYER AND INDEPENDENT CONTRACTOR GUIDANCE

By:  Samantha J. Wood

On Wednesday, June 7, 2017 the U.S. Department of Labor (“DOL”) withdrew its 2015 and 2016 informal guidance letters regarding independent contractors and joint employment, which had been issued by the prior administration.

The DOL’s first guidance letter, which was issued in July 2015 and reiterated the DOL’s focus on misclassification of employees as independent contractors, was borne out of a concern that too many employers were misclassifying workers to avoid certain labor costs. In this guidance, the DOL narrowly interpreted the definition of independent contractor, focusing on the economic dependence of the worker, and downplaying the traditionally-used control test. The DOL stated that employers should consider and weigh the following factors: (1) the extent to which the work performed is an integral part of the employer’s business; (2) the worker’s opportunity for profit or loss depending on his/her managerial skill; (3) the extent of the relative investments of the employer and the worker; (4) whether the work performed requires special skills and initiative; (5) the permanency of the relationship; and (6) the degree of control exercised or retained by the employer. Minimizing the control factor, the DOL stated that all of the factors should be considered and weighed together in each case, and that no one factor, such as the control factor, should be given undue weight. The DOL advised employers that under this analysis most workers should be classified as employees rather than independent contractors.

The DOL’s second guidance letter, issued in January 2016, took an expansive view in determining joint employment under the Fair Labor Standards Act (FLSA). The DOL differentiated between “horizontal” and “vertical” joint employment, and provided guidance on analyzing each type. The DOL stated that in determining whether horizontal joint employment exists (which analyzes whether two employers are sufficiently related and benefit from an employee’s work), employers should consider factors such as: (1) ownership of the employers; (2) overlapping officers, directors and managers; (3) shared control over operations; and (4) shared supervisory authority of employees. In determining whether vertical joint employment exists (which analyzes the employee’s relationship with the indirect employer and the intermediary employer), employers should consider the “economic dependence” between the employee and the two employers.

The DOL’s withdrawal of its July 2015 and January 2016 guidance letters signifies that, under the new administration, the DOL intends to take a more business-friendly approach in analyzing employer-employee relationships. However, the DOL has stated that the withdrawal of the two guidance letters “does not change the legal responsibilities of employers under the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act.” While the DOL may return to the traditional control tests under both the independent contractor and joint employment analyses, the full implication of the DOL’s withdrawals is unclear. Accordingly, until the DOL issues further guidance, employers should continue to consider all relevant factors in determining whether a worker is an employee or an independent contractor and in determining whether a joint employment relationship exists.

If you have questions about this material, please contact Samantha J. Wood by email at swood@lindner-marsack.com, or any other attorney you have been working with here at Lindner & Marsack, S.C.

Laurie Petersen Recognized by the Wisconsin Law Journal as a 2017 Women in the Law Honoree

Lindner & Marsack, S.C. is pleased to offer enthusiastic congratulations to Laurie Petersen, who is being recognized by the Wisconsin Law Journal as a 2017 Women in the Law honoree. Petersen, who has been with the firm since 1990, is a shareholder and member of its Board of Directors. Her extensive labor and employment law experience covers a broad spectrum of matters for diverse business organizations in a range of industries. She frequently lectures on critical employment law topics for a variety of human resource and training organizations, and holds an adjunct faculty position at Marquette University Law School where she teaches employment discrimination law.

“For 27 years, Laurie Petersen has been an integral member of our dedicated team of attorneys,” said Firm President Thomas Mackenzie. “Our clients are fortunate to have her at their side during litigation but, perhaps more importantly, she has dedicated her career to helping clients create proactive, cost-effective legal strategies to achieve their business goals while minimizing the risk of litigation.”

The 14th annual Women in the Law recognition event will take place Wednesday, June 7, at Milwaukee’s Discovery World. For more information about the event and a full list of this year’s honorees, visit http://wislawjournal.com/women-in-the-law/.

WISCONSIN SUPREME COURT DEFINES “SUBSTANTIAL FAULT” STANDARD FOR UNEMPLOYMENT INSURANCE AND WORKER’S COMPENSATION MATTERS

By:  Daniel Finerty

On May 4, 2017, the Wisconsin Supreme Court released a long–awaited decision in Lela Operton vs. LIRC, 2017 WI 46, the first Supreme Court interpretation of Wisconsin’s “substantial fault” standard. Operton held that, as a matter of law, the employee’s eight accidental or careless cash-handling errors over the course of 80,000 cash-handling transactions during 21 months of employment were inadvertent and, therefore, met an exemption to the “substantial fault” standard. The substantial fault standard is used in unemployment insurance and worker’s compensation disputes.

Background

Operton worked for Walgreens in Madison until March 24, 2014, when she was terminated for the last of 8 separate errors when she failed to check identification during a customer’s $399.27 credit card purchase in violation of Walgreen’s policy. Because the credit card was later determined to have been stolen, Walgreens was out the $399.27. This error Operton made was not unlike the others she made during her 21 months of employment:

  • In October 2012, Operton received a verbal warning after she accepted a Women, Infants, and Children (WIC) check for $8.67 when the check should have been for $5.78, a mistake which costs Walgreens $2.89.
  • In February 2013, Operton received a written warning for two errors. First, she accepted a WIC check for $14.46, but did not get the customer’s signature on the check. In March 2013, she gave a $16.73 check back to a customer. Walgreens suffered losses of $14.46 and $16.73 as a result of these errors because it was unable to process these two checks.
  • A few months later, Operton took a WIC check for $27.63 before the date on which it was valid. Walgreens was unable to process the check, and Operton received a final written warning.
  • On January 1, 2014, Operton returned a WIC check for $84.95 back to a customer that the customer had tried to use to make a purchase, resulting in a loss of $84.95. Walgreens gave Operton the first of two final written warnings.
  • On January 29, 2014, Operton received the second final written warning (any additional cash-handling errors would lead to her termination) and served a two-day suspension after she accepted a check for $6.17 even though it was written for $6.00, thereby causing another loss. In addition, a customer attempted to pay for $9.26 worth of items but left the store without completing the debit transaction, which caused a second monetary loss that day of $9.26.

After hearing, an Appeal Tribunal found that Operton was disqualified from receiving unemployment insurance benefits because she was terminated for substantial fault, a finding the Labor and Industry Review Commission (Commission) affirmed, the Court of Appeals reversed the Commission’s finding. The Supreme Court accepted review.

Supreme Court Decision

The Supreme Court agreed with the Court of Appeals that the Commission had not provided a reasonable construction to support its conclusion that Operton was disqualified for “substantial fault,” defined by Wis. Stat. §108.04(5g) as:

For purposes of this paragraph, “substantial fault” includes those acts or omissions of an employee over which the employee exercised reasonable control and which violate reasonable requirements of the employee’s employer but does not include any of the following:

  1. One or more minor infractions of rules unless an infraction is repeated after the employer warns the employee about the infraction.
  2. One or more inadvertent errors made by the employee.
  3. Any failure of the employee to perform work because of insufficient skill, ability, or equipment.

While the Court conceded substantial fault existed because Operton exercised reasonable control over the cash handling transactions at issue and that Walgreens reasonably required her to handle such transactions, it ultimately found that the case turned on the Commission’s failure to examine the question of whether Operton’s errors constituted “one or more inadvertent errors,” which were exempt from the definition of substantial fault under (2.) above.

Examining that question, the Court found that Operton’s errors were not so egregious to warrant a conclusion that she behaved recklessly or intentionally but, instead, that her errors were inadvertent. While there was no testimony by Operton cited in support of its conclusion, the Court cited the length of her employment, the 80,000 transactions she processed, the period of time between errors and the fact that Operton was not making the same errors (even though they were similar in nature) in concluding the errors were inadvertent and, thus, outside of the definition of substantial fault. As further support for its conclusion, the Court cited the Commission’s finding that Operton had not been terminated for misconduct i.e., that there was no evidence Operton willfully disregarded her employer’s interests nor was she so careless or negligent as to be guilty of misconduct. Ultimately, the Court held that Operton’s 8 accidental or careless errors were, as a matter of law, “inadvertent errors” because the employee made these errors during a 21-month period during which she processed 80,000 cash-handling transactions and, therefore, substantial fault did not exists to deny benefits.

Analysis

The Court’s analysis to reach this result is rather interesting, especially considering its impact going forward. First, as a result of the Court’s numerical analysis, one must wonder at what level do employee errors cease being inadvertent and whether the answer to this question will have to remain for the next substantial fault dispute on which the Supreme Court grants review.

Second, the Court indication that an employer has the burden to establish substantial fault, while perhaps accurate, failed to allocate the burden of proof as to the substantial fault exceptions. In doing so, the Court’s opinion suggests that employers are responsible for proving a negative i.e., that the employee’s errors were not inadvertent. While proving this negative may be challenging, employers would be wise to gather statements and other evidence to show that an employee’s errors were not an accidental oversight or the result of carelessness will be critical going forward.

Third, with regard to the specific exception at Wis. Stat. §108.04(5g)(a)2, the Court held that, while discipline following errors may be dispositive in the application of Wis. Stat. §108.04(5g)(a)1 (“one or more minor infractions of rules [are not substantial fault] unless an infraction is repeated after the employer warns the employee about the infraction), an employer’s warning is not dispositive of whether the error was inadvertent. As such, while a prior warning may be relevant to this question, an employee who is warned about an inadvertent error is not necessarily terminated for substantial fault even if the employee subsequently makes another error, even the exact same error, for which s/he is terminated. As such, prior discipline will not carry the day on the “inadvertence” exception and employers must be prepared to address suggestions that an employee acted inadvertently by, again, showing any errors were not an accident or as a result of carelessness.

Conclusion

Operton shows that greater care may be required prior to hearing in order to determine whether any of the substantial fault exceptions may apply and what evidence can be presented to counter their application. It is likely that, going forward, Administrative Law Judges will question all parties about inadvertence, intent and related issues and employee-side counsel will be prepared to show inadvertence and highlight any facts which show a lack of any intent. Employers must be prepared to meet this evidence during an Appeal Tribunal hearing with preparation, testimony and documentary evidence.

If you have questions about Operton or unemployment insurance disputes or hearings, please contact Daniel Finerty or your Lindner & Marsack attorney at 414-273-3910.

Title VII Now Covers Discrimination Based on Sexual Orientation

By:  Kristofor L. Hanson

The Seventh Circuit Court of Appeals has determined that Title VII of the Civil Rights Act bars discrimination on the basis of sexual orientation.  On April 4, 2017, the Chicago-based court, which presides over federal matters in the states of Wisconsin, Illinois and Indiana, became the first federal court of appeals to determine that the protections of Title VII extend to sexual orientation.

The case, Hively v. Ivy Tech Community College of Indiana, No. 15-1720 (7th Cir. Apr. 4, 2017), was brought by Kimberly Hively, a lesbian and a part-time adjunct instructor at Ivy Tech, a public institution in Indiana with thirty campuses statewide. She alleged that the college refused to hire her for six full-time positions she sought over five years and then refused to renew her part-time contract because of her sexual orientation.

In its decision, the court held that consideration of sexual orientation centers on the issue of gender and sexual stereotypes, meaning that an employer who takes an adverse action against a homosexual employee is taking an action based upon that employee’s gender or sex, which are covered by Title VII, and the employee’s failure to conform to a particular gender stereotype.  Hively argued, and the court agreed, that had Hively been a man married to, dating, or cohabitating with a woman, Ivy Tech would not have taken the actions it did.  The court stated that while this decision may appear to write into the law the term sexual orientation, it actually does no such thing as the law already protects an individual from discrimination on the basis of sex, which cannot be separated from sexual orientation.

This decision, issued following oral argument before the full panel of Seventh Circuit judges, overruled the Circuit’s previous decision in the same case and the lower court’s decision which granted Ivy Tech’s motion to dismiss, both of which held that Title VII did not cover sexual orientation.  This decision means that Hively now has the opportunity to litigate her claims in the district court.  Whether she ultimately will prevail is to be determined, but now, in the Seventh Circuit at least, it is clear that she has a viable claim to litigate under federal law.

Twenty-two states have laws that bar discrimination based on sexual orientation, including Wisconsin, Illinois and Minnesota.  Employers in these states, therefore, have already been prohibited from discriminating against employees on the basis of sexual orientation.  The Seventh Circuit’s extension of federal protection to sexual orientation creates additional means for employees claiming such discrimination to seek remedies before the Equal Employment Opportunity Commission and in federal court.  In federal court, compensatory (i.e. emotional distress) and punitive damages may be available to plaintiffs where before state agencies such damages are generally unavailable.  Therefore, if this decision changes anything for those in states already prohibiting discrimination, it potentially increases the risk for employers who run afoul of the law.

Even though many employers have known that sexual orientation is a protected class in their states, this decision serves as a reminder that employers should make sure their handbooks, policies, and employee and supervisor training include reference to this protected class.

Register Now! Annual Compliance/Best Practices Seminar

WHEN: May 11, 2017

8:00 a.m. – 12:00 p.m.

WHERE: Sheraton Milwaukee Brookfield Hotel

375 South Moorland Road

Brookfield, WI

Registration and a continental breakfast will be served beginning at 7:30 a.m.  Click here to register.

This COMPLIMENTARY half-day event will address the latest labor and employment topics impacting employers including:

  • Annual Employment Law Update (including recent developments in immigration, the Affordable Care Act and white collar overtime regulations)
  • Social Media Pitfalls and Best Practices
  • FMLA Update – A Best Practices Review
  • Drafting, Enforcing and Litigating Confidentiality, Non-Solicitation and Non-Competition Agreements
  • Navigating the ADA, FMLA and Worker’s Compensation