Discrimination Complaints & Form I-9 Audits

In a landmark decision, the U.S. Court of Appeals for the Seventh Circuit, sitting en banc, held that discrimination on the basis of sexual orientation is covered under Title VII of the Civil Rights Act’s protections against discrimination on the basis of sex.

In Hively v. Ivy Tech Community College of Indiana, Kimberly Hively, a lesbian part-time professor at Ivy Tech, applied for but was denied several full-time positions with the college. After her employment was later terminated, she filed a lawsuit alleging that she was denied promotion and then terminated because of her sexual orientation. The lower courts held that they were bound by Seventh Circuit precedent to rule that sexual orientation was not a protected category under Title VII. On July 28, 2016, a three-judge panel of the Seventh Circuit held that sexual orientation discrimination is not sex discrimination. The Seventh Circuit agreed to hear the case en banc with all 11 judges.

Deviating from almost every other circuit court, the Seventh Circuit voted 8-3 that discrimination on the basis of sexual orientation is a form of sex discrimination. In March, the Eleventh Circuit held in Evans v. Georgia Regional Hospital, et al. that it was bound by precedent that concluded that Title VII does not extend protections on the basis of sexual orientation. Later in the month, the Second Circuit reached a similar conclusion in Christiansen v. Omnicom Group, et al. While that court found that the plaintiff had no viable claim for sexual orientation discrimination, it remanded the case to the Southern District of New York to address whether the plaintiff’s claims could be considered sex stereotyping discrimination.

The court acknowledged that the three-member panel in 2016 “described the line between gender nonconformity claim and one based on sexual orientation as gossamer-thin;” the majority now concludes that such a line “does not exist at all.”

Citing to the Supreme Court’s decisions in Meritor Sav. Bank, FSB v. Vinson (sexual harassment is discrimination on the basis of sex), Price Waterhouse v. Hopkins (sex stereotyping is discrimination on the basis of sex), and Onacle v. Sundowner Offshore Servs., Inc. (same sex harassment is discrimination on the basis of sex), the court held that sex discrimination has been understood to “cover far more than the simple decision of an employer not to hire a woman for Job A or a man for Job B.”

The majority addressed Hively’s two legal theories – (1) the comparative method, whether a woman and a man would be treated differently under the same facts, and (2) the associational theory, whether discrimination occurs against an individual because of the protected characteristic of one with whom the individual associates. Under each theory, the court reduced each inquiry to a simple question – if the employee in question were male instead of female, would it matter that the employee was in a relationship with a woman? Answering that if the sex of a plaintiff such as Hively in a lesbian relationship was changed, then the outcome would be different, the Court held that discrimination on the basis of sexual orientation necessarily is discrimination on the basis of sex.

The court acknowledged the long-standing critique of the judiciary with respect to civil rights issues – that the court was attempting to “legislate from the bench.” Writing for the majority, Chief Judge Diane P. Wood wrote that the decision to “amend” Title VII to add sexual orientation as a new protected category “lies beyond our power.” She further wrote: “We must decide instead what it means to discriminate on the basis of sex, and in particular, whether actions taken on the basis of sexual orientation are a subset of actions taken on the basis of sex. This is a pure question of statutory interpretation and thus well within the judiciary’s competence.” In response to the dissent’s reliance upon legislative intent, the Court noted that the definition of sex discrimination has expanded in numerous ways since the passage of Title VII, and that the Congress that enacted Title VII likely would be surprised as to the extent of expansion.

In an expectedly colorful concurrence, Judge Posner acknowledged that the Court is, in fact, re-writing Title VII because society’s definition of “sex” has changed over the past 50 years. Instead of relying solely upon stereotyping claims, as the majority writes, Judge Posner instead recognized that the judiciary has long been interpreting statutory language in the context of society’s new and changing understanding of terms. And here, Posner writes, that we should not rely upon the 88th Congress’ “failure” to divine how society’s interpretation of the term would change. Rather, he writes: “We understand the words of Title VII differently not because we’re smarter than the statute’s framers and ratifiers but because we live in a different era, a different culture.”

With a Circuit split, the question of whether sexual orientation is a protected characteristic under Title VII is ripe for review by the Supreme Court, although this case likely will not be the vehicle. Ivy Tech has released a statement that it does not intend to appeal. The decision in this case, however, may affect the Eleventh Circuit’s decision to rehear the Evans case en banc. When this issue does reach the Supreme Court, the soon-to-be-confirmed Supreme Court justice Neil Gorsuch could render an impactful vote should this reach the highest court.

Each year between October and May, millions of people contract the flu. Recent estimates suggest that up to 111 million workdays are lost during the flu season each year — at an estimated $7 billion per year in sick days and lost productivity.[1]  In light of the significant impact the flu can have on human capital and workplace productivity, many employers – especially those with employees who frequently interact with members of the public through the course and scope of their employment, such as health care providers, retailers, and educators – are beginning to implement policies mandating flu shots for all employees. The administration of an annual flu vaccine can substantially reduce the risk of contracting the flu and spreading it to others. During the 2015-2016 flu season, the Center for Disease Control estimates that flu vaccinations prevented approximately 5.1 million illnesses and 2.5 million flu-associated medical visits. However, as discussed in our HEAL Take 5 December 2016 newsletter and last month’s blog post, a recent influx of Equal Employment Opportunity Commission (EEOC) lawsuits alleging religious discrimination and failure to accommodate under Title VII highlight the challenges employers face when implementing mandatory flu vaccination policies.

On September 22, 2016, the EEOC filed a lawsuit against Saint Vincent Health Center in Erie, Pennsylvania alleging religious discrimination on behalf of six Saint Vincent former employees, asserting that the hospital refused to grant them religious-based exemptions from a mandatory flu vaccine policy and then discharged the employees when they refused the vaccination. EEOC v. St. Vincent Health Ctr., No. 16-224 (W.D. Pa. Sept. 22, 2016).  In December 2016, Saint Vincent settled the suit for $300,000 and offered reinstatement to the terminated employees. Further, Saint Vincent agreed on a going forward basis to grant exemptions to its mandatory flu vaccine policy to all employees who request one due to sincerely held religious beliefs unless the hospital can demonstrate an undue hardship to its operations. The hospital agreed that it would not deny any accommodation requests solely because it disagrees with an employee’s stated beliefs, thinks the belief are unfounded, or that the beliefs are not based on an official religion or denomination. Additionally, Saint Vincent agreed to notify its employees of their right to request a religious exemption to any mandatory vaccination policy, implement appropriate procedures for considering such accommodation requests, and provide training regarding Title VII reasonable accommodation to certain personnel.

Saint Vincent is not the only employer to recently be targeted by the EEOC as a result of its mandatory flu vaccine policy. Two similar suits are pending in North Carolina and Massachusetts. See EEOC v. Mission Hosp., Inc., No. 1:16-CV-00118 (W.D.N.C. Apr. 28, 2016); EEOC v. Baystate Med. Ctr., Inc., No. 3:16-cv-30086 (D. Mass. June 6, 2016).  In both of those suits, the EEOC has alleged similar violations of Title VII due to a failure to accommodate the religious practices of employees.

While it is uncertain how ardently the EEOC will pursue these cases under the new administration, individual employees remain able to pursue claims for religious discrimination on their own behalf. Moreover, in addition to Title VII compliance, employers risk running afoul of the Americans With Disabilities Act (ADA) and similar state laws if they do not consider accommodations for employees who choose not to be vaccinated as a result of existing medical conditions.  The recent uptick in cases on this issue makes clear that employers should be cautious when developing mandatory flu vaccine policies and should consult legal counsel before implementing any such policy (or refusing to grant an exception to the policy) to insure its compliance with Title VII, the ADA, and comparable state or local law.  Employers should also work with employees to think outside the box regarding possible accommodations when an employee expresses an objection to the policy due to a sincerely held religious belief or for medical reasons.  Among the available accommodations a hospital may consider are the use of a surgical mask or transfer to a non-patient-facing position.

[1] Statistics referenced herein are taken from the CDC website.

In a notable recent court decision highlighting transgender issues and employer sponsored benefit plans, on January 13, 2017, in Baker v. Aetna Life Ins. Co., 2017 U.S. Dist. LEXIS 5665, 2017 WL 131658 (N.D. Tex.), Aetna Life Insurance Co. (“Aetna”) defeated a claim by a transgender employee of L-3 Communications Integrated Systems LP (“L-3”) who alleged that Aetna’s denial of her disability benefits constituted discrimination based on her gender identity. The plaintiff, Charlize Marie Baker (“Baker”), is a participant in L-3’s Employee Retirement Income Security Act (“ERISA”) covered group health plan and short term disability benefits plan (“STD Plan”). Aetna is the third party administrator (“TPA”) of the group health plan and the claim fiduciary and administrator of the STD Plan.

In 2011, Baker began transitioning from male to female, legally changing her name and gender designation on all government issued documents. In 2015, after a consultation with a health care professional who determined that breast implants were medically necessary to treat gender dysphoria, Baker scheduled surgery and sought benefits under the STD Plan to cover her post-surgery recovery. Coverage under the group health plan and benefit claims under the STD Plan were denied. Filing suit against Aetna and L-3, Baker alleged that Aetna and L-3 discriminated against her based on her gender identity in violation of Section 1557 of the Affordable Care Act (the “ACA”), that Aetna denied her benefits under the STD Plan in violation of ERISA, and that Aetna and L-3 violated Title VII by discriminating against her based on her sex.

The court held that there is no controlling precedent that recognizes a cause of action under Section 1557 for discrimination based on gender identity with Baker failing to cite any precedent that recognizes such a cause of action. The court also held that ERISA does not recognize such a claim. Specifically, the court concluded that it is up to Congress to decide whether it wants to create in ERISA a protection that the statute does not expressly provide. Lastly, regarding Baker’s Title VII claims, the court found that Aetna was not an employer of Baker under the “single employer” test or the “hybrid economic realities/common law control” test. However, the court declined to dismiss Baker’s Title VII claims against L-3, finding Baker did sufficiently argue that she was denied employee benefits due to her sex.

Takeaways

While the Northern District of Texas declined to find a cause of action for gender identity discrimination under Section 1557 of the ACA, there are several cases of gender identity or transgender discrimination pending that may further impact the law for these benefit claims under Section 1557. There is little likelihood, however, that a claim of gender identity discrimination will be successful under ERISA. If the ACA is repealed under the Trump administration, Section 1557 will no longer be available and transgendered employees would be limited to claims under Title VII, to the extent that employees are successful in arguing that discrimination on the basis of gender identity constitutes sex discrimination.

In May 2016, the U.S. Department of Health and Human Services (“HHS”) published a final rule implementing Section 1557 of the ACA. Section 1557 prohibits discrimination in the health programs and activities of “Covered Entities” on the basis of race, color, national origin, sex, age, or disability. Section 1557 also imposes detailed and specific notice and disclosure requirements on Covered Entities, including, among other things, the requirement to provide information about the use of auxiliary aids and services, the adoption of grievance procedures, and access for individuals with limited English proficiency. Covered Entities are also required to include specific nondiscrimination protections in the design of group health plans.

A “Covered Entity” is one that receives “federal financial assistance” for a health program or activity from HHS. If any part of a health program or activity receives federal financial assistance from HHS, then all of that entity’s programs and activities are subject to the nondiscrimination provisions of the final rule.

While the nondiscrimination provisions of the final rule went into effect on July 18, 2016, and “Covered Entities” subject to the final rule were required to comply with the notification and grievance procedures by October 16, 2016, entities are still struggling to determine if they qualify as “Covered Entities” subject to the final rule.

Is it only federal financial assistance from HHS that matters for this determination?

In general, Section 1557 of the ACA applies to all health programs and activities, any part of which receives federal financial assistance from any federal agency. However, the requirements in the final rule specifically apply only to recipients of federal financial assistance from HHS.

What does federal financial assistance include?

“Federal financial assistance” includes Medicare Parts A, C, and D and Medicaid payments, grants, loans, subsidies, contracts of insurance, and other types of assistance. Such assistance also includes premium tax credits and advance payments of premium tax credits and cost-sharing reductions for health insurance coverage purchased through the federal and state Health Insurance Marketplaces.

Importantly, HHS does not consider Medicare Part B payments to be federal financial assistance.

What are some examples of “Covered Entities”?

HHS defines “Covered Entities” that are subject to the final rule to include:

  • every health program or activity that receives HHS funding;
  • every health program or activity administered by HHS, such as the Medicare Part D program; and
  • the Health Insurance Marketplaces and all plans offered by issuers that participate in those marketplaces.

“Covered Entities” may include entities that receive federal financial assistance through their participation in Medicare or Medicaid (e.g., hospitals, nursing facilities, and home health agencies) or through grants or subsidies from HHS agencies (e.g., health clinics, community health centers, and health-related schools), state Medicaid agencies, state public health agencies, health insurance issuers that participate in the Health Insurance Marketplaces, Medicare Advantage plans and Prescription Drug Plan sponsors, and physician practices receiving Medicaid payments or other payments from HHS (e.g., meaningful use incentive payments).

What about entities that do not receive funding directly from HHS?

A wide array of entities that provide health-related services do not receive funding directly from HHS but do receive payment for their services through other HHS-funded organizations. The “Covered Entity” status for these entities is more complex and must be examined closely.

By definition, a “recipient of federal financial assistance” is an entity to which such funding is extended directly or through another recipient. However, it is important to look to the entity that Congress intended to assist or subsidize with certain funds when determining whether a downstream entity is a recipient of federal financial assistance.

Nonetheless, whether a downstream entity is covered under the final rule remains far from clear, as HHS offers only limited guidance. HHS makes some distinctions in the final rule. For example, an issuer participating in a Health Insurance Marketplace receives federal financial assistance, but a health care provider that contracts with such an issuer does not become a recipient of federal financial assistance by virtue of that contract. Similarly, physicians who contract to provide health services to hospitals or clinics that receive federal financial assistance do not become recipients of federal financial assistance by virtue of those contracts. However, HHS has confirmed that providers that receive reimbursement from a Medicare Advantage plan are subject to the final rule, regardless of whether payments from the plan go directly to the provider or to the patient.

An entity acting as a third-party administrator for an employer’s employee health benefit plan may not be a “Covered Entity” if the entity is legally separate from an issuer that receives federal financial assistance for its insurance plans. Nonetheless, if an issuer that receives federal financial assistance also provides third-party administrator services, the final rule would apply to those third-party administrator services.

As a general rule of thumb, downstream entities contracting with a recipient of federal financial assistance may not qualify as a “Covered Entity” by virtue of the contract alone. Entities unsure of their status should consider whether they are the intended recipient of the federal financial assistance when making this determination. Entities also should be aware that a “Covered Entity” may include provisions regarding compliance with Section 1557’s nondiscrimination requirements in its contracts with downstream entities. Finally, HHS has reserved the right to engage in a case-by-case inquiry to evaluate whether an entity is appropriately subject to Section 1557. A highly fact-specific inquiry should be undertaken to determine if an entity that does not directly receive funding from HHS might still be a “Covered Entity” in the eyes of HHS.

Takeaways

Entities operating a health program or activity should determine the source of funding for any such program or activity. Those programs or activities receiving federal financial assistance are subject to the nondiscrimination requirements of Section 1557, which include providing a notice of nondiscrimination to the public, implementing a grievance procedure, designating a civil rights coordinator, and providing language assistance to limited English proficiency speakers and appropriate accommodations to individuals with disabilities.

Employers sponsoring group health plans should read the following article by our colleagues to determine the extent to which the Section 1557 nondiscrimination rules apply to them.

A version of this article originally appeared in the Take 5 newsletter Five Key Issues Impacting Health Care Employers.”

Employers Under the Microscope: Is Change on the Horizon?

When: Tuesday, October 18, 2016 8:00 a.m. – 4:00 p.m.

Where: New York Hilton Midtown, 1335 Avenue of the Americas, New York, NY 10019

Epstein Becker Green’s Annual Workforce Management Briefing will focus on the latest developments in labor and employment law, including:

  • Latest Developments from the NLRB
  • Attracting and Retaining a Diverse Workforce
  • ADA Website Compliance
  • Trade Secrets and Non-Competes
  • Managing and Administering Leave Policies
  • New Overtime Rules
  • Workplace Violence and Active-Shooter Situations
  • Recordings in the Workplace
  • Instilling Corporate Ethics

This year, we welcome Marc Freedman and Jim Plunkett from the U.S. Chamber of Commerce. Marc and Jim will speak at the first plenary session on the latest developments in Washington, D.C., that impact employers nationwide.

We are also excited to have Dr. David Weil, Administrator of the U.S. Department of Labor’s Wage and Hour Division, serve as the guest speaker at the second plenary session. David will discuss the areas on which the Wage and Hour Division is focusing, including the new overtime rules.

In addition to workshop sessions led by attorneys at Epstein Becker Green – including some contributors to this blog! – we are also looking forward to hearing from our keynote speaker, Former New York City Police Commissioner William J. Bratton.

View the full briefing agenda here.

Visit the briefing website for more information and to register, and contact Sylwia Faszczewska or Elizabeth Gannon with questions. Seating is limited.

By:   Amy B. Messigian

In University of Texas Southwestern Medical Center v. Nassar, one of two employment-related opinions issued on Monday by the Supreme Court, a narrow majority held that a retaliation claim brought under Title VII of the Civil Rights Act of 1964 must be proved according to a strict but for causation standard.  Under such a standard, a plaintiff must present proof that “the unlawful retaliation would not have occurred in the absence of the alleged wrongful action or actions of the employer.”

The underlying facts of the Nassar case are somewhat complicated.  The plaintiff, a medical doctor employed as a faculty member of the defendant medical center and staff physician for its affiliated hospital entity, resigned from the faculty claiming that the chief of infectious disease medicine at the medical center was biased against individuals of Middle Eastern heritage such as plaintiff.  The hospital entity offered the plaintiff a full time position as staff physician, but later rescinded the offer after plaintiff’s former supervisor protested the job offer.  The plaintiff sued, alleging that the medical center retaliated against him for his discrimination complaints by encouraging the hospital to rescind its job offer.  A jury returned a verdict in the plaintiff’s favor and awarded more than $3 million in damages.

The medical center appealed, arguing that the judge had instructed the jury to apply a lesser standard of causation than required for a retaliation verdict under Title VII.  Specifically, the judge told the jury it only had to find that retaliation was a motivating factor in the supervisor’s actions, called mixed-motive. The medical center argued that the judge should have told the jury it had to find that the discriminatory action would not have happened but for the supervisor’s desire to retaliate in order to hold the medical center liable for retaliation.

Though the Fifth Circuit affirmed the retaliation finding, the Supreme Court disagreed.  Without deciding whether the facts of the case warranted a finding of retaliation, the Supreme Court determined that the wrong standard had been applied, warranting reconsideration by the lower court under the strict but for causation standard.

Although the opinion raises the burden of proof required of employees who bring retaliation claims and should be uniformly applauded by employers, the holding may create some confusion for juries in cases where both discrimination and retaliation claims are raised.  By this ruling, the Supreme Court has adopted a different standard for retaliation claims and discrimination claims, the latter of which is tested under the more lenient motivating factor standard.  Justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan, dissenting in an opinion written by Justice Ruth Bader Ginsburg, criticized the use of a different standard for retaliation and discrimination claims: “The court shows little regard for the trial judges who will be obliged to charge discrete causation standards when a claim of discrimination ‘because of,’ e.g., race is coupled with a claim of discrimination ‘because’ the individual has complained of race discrimination. And jurors will puzzle over the rhyme or reason for the dual standards.”

The April 2013 issue of Take 5 was written by David W. Garland, Chair of Epstein Becker Green’s Labor and Employment Steering Committee and a Member of the Firm in the New York and Newark offices.

In it, he summarizes five recent labor and employment actions that employers should consider:

  1. EEOC Releases Letter Addressing Wellness Programs and Reasonable Accommodation Obligations
  2. Paying Interns May Not Be Enough to Stave Off Wage and Hour Claims
  3. House Committee Votes Out Bill Prohibiting NLRB from Acting Without a Quorum
  4. New York City Human Rights Law Expanded to Prohibit “Unemployment” Discrimination
  5. New Jersey May Become the Latest State Law Banning Employers from Requesting Social Media Passwords

 Click here to read the full version on ebglaw.com

David W. Garland“Take 5: Views You Can Use – April 2012,” written by David W. Garland, a Member of the Firm in Epstein Becker Green’s New York and Newark  Offices, discusses a number of topics relevant to employment in the health care industry.    
 
 The April 2012 issue covers employer’s requests for Facebook access, a new EEOC publication on the rights of disabled veterans returning to the  civilian workforce,  EEOC’s amended rules governing the defense of disparate impact claims based on age, challenges to the use of unpaid interns, and a recent case regarding the application of  Title VII to the provision of severance benefits.
 
Click here  to read the April issue of  “Take 5.”

 

A monthly breakfast law briefing and networking series specifically  designed for health care and wellness company executives and human resources professionals.  This informative series will address labor and employment issues during these challenging times and offer solutions.

For additional information and to register,  contact Carla Llarena or by tel: (404) 869-5363.

February 8, 2012 
Today’s OSHA: What Healthcare Companies and Practices Need to Know

March 14, 2012
It Can Hurt to Ask: TMI in the Digital Age
(Focusing on Social Media & Background Checks)

April 11, 2012
Best Practices to Avoid Wage and Hour Liability

May 9, 2012
What You Need to Know About the Americans with Disabilities Act,
and How Your Managers are Likely Getting it Wrong

June 13, 2012
E-Verify and Complying with Federal and State Immigration Law

July 11, 2012
Selling a Physician’s Practice

August 8, 2012
Employee Handbooks: How to Draft Them to best Protect Your Company and Communicate to Your Employees

September 12, 2012
Alternate Dispute Resolution: Is Mediation and/or Arbitration Preferable to Litigation for Healthcare Employers?

October 10, 2012
The 2012 Presidential Election and How it Will Impact You as an Employer

November 14, 2012
Doctor and Executive Compensation and Benefits

December 12, 2012
The Top 10 Biggest Mistakes that Health Care Employers Make
and How to Avoid Them

Epstein Becker Green
Resurgens Plaza
945 East Paces Ferry Road, Suite 2700
Atlanta, GA 30326-1380

8:30 a.m. – 9:00 a.m. Registration, Breakfast, and Networking
9:00 a.m. – 10:00 a.m. Program, Including Q&A Session