In a move that could have broad national effects on gay rights in the workplace, the Second Circuit ruled that discrimination based on sexual orientation violates Title VII of the Civil Rights Act, deciding in favor of the estate of a deceased skydiving instructor who was allegedly fired for telling a client he was gay.

On Monday, the United States Court of Appeals for the Second Circuit became the second federal appeals court to rule that Title VII encompasses sexual orientation discrimination in Zarda v. Altitude Express, joining the Seventh Circuit in its decision last year. This issue has divided courts for years, and even caused a split between the EEOC and the Department of Justice, with the former arguing in favor of including sexual orientation under Title VII’s protections and the latter arguing against it. The Second Circuit’s decision furthers a circuit split, which occurred when the Eleventh Circuit held that sexual orientation discrimination is not actionable under Title VII.

Chief Judge Robert A. Katzmann delivered the majority opinion and concluded, “Title VII’s prohibition on sex discrimination applies to any practice in which sex is a motivating factor. Sexual orientation discrimination is a subset of sex discrimination because sexual orientation is defined by one’s sex in relation to the sex of those to whom one is attracted, making it impossible for an employer to discriminate on the basis of sexual orientation without taking sex into account.”

In so holding, the majority adopted each of the theories advanced by the EEOC. Applying the “comparative test” to determine whether an employment practice constitutes sex discrimination, the court considered the example in the Seventh Circuit’s decision Hively v. Ivy Tech Community College. The court compared a lesbian woman to a heterosexual man and rejected the framing urged by the government, which would compare a woman attracted to people of the same sex with a man attracted to people of the same sex.  Finding that sexual orientation acts as a proxy for sex, the majority concluded that a lesbian treated differently than a heterosexual man due to her sexual orientation would not have been subject to an adverse action “but for” her sex.

The majority opinion also concluded that sexual orientation discrimination constitutes actionable gender stereotyping, held to be unlawful under Price Waterhouse v. Hopkins, and associational discrimination, borrowing principles from Loving v. Virginia.

In dissent, Judge Lynch argued that Congress did not intend to cover sexual orientation discrimination when drafting Title VII. The majority court acknowledged this fact, but also recognized that the legal framework for evaluating Title VII claims has changed dramatically over time. “Because Congress could not anticipate the full spectrum of employment discrimination that would be directed at the protected categories,” Katzmann explained, “it falls to courts to give effect to the broad language that Congress used.”

Employers operating within the Second Circuit – comprising New York, Connecticut, and Vermont – already should have in place policies prohibiting sexual orientation discrimination because those state laws expressly prohibit such conduct. But this decision provides a roadmap for the potential adoption by other circuits around the country, and suggests that the Supreme Court may settle the current circuit split.  Thus, employers are encouraged to adopt nationwide policies prohibiting sexual orientation discrimination to the extent they have not done so.

Additionally, the sweeping adoption by the majority opinion of the positions pressed by the EEOC should signal to employers to take seriously the actions by and guidance from the EEOC in this and other matters. For example, the EEOC will finalize new enforcement guidance on harassment shortly, and employers should expect the EEOC to aggressively enforce that guidance, including with respect to harassment based on sexual orientation.

See also Nathaniel Glasser’s video interview on this topic, from next Monday’s Employment Law This Week: “Second Circuit Says Title VII Covers Sexual Orientation Discrimination.”

The U.S. Court of Appeals for the Second Circuit recently clarified that the “motivating factor” standard of causation applies to Family and Medical Leave Act (FMLA) retaliation claims, instead of the “but for” causation standard applied in Title VII and ADEA retaliation cases. The “but for” standard is more onerous for the plaintiff, who must demonstrate that discrimination or retaliation was the determining factor for the adverse employment action, not just one reason among others. The less burdensome “motivating factor” causation standard requires the plaintiff to show only that the action was motivated at least in part by discriminatory or retaliatory animus.  In Woods v. START Treatment & Recovery Ctrs., Inc., the Second Circuit vacated and remanded the jury verdict where the district court incorrectly instructed the jury to apply the “but for” causation standard to Plaintiff’s FMLA retaliation claims.  Specifically, the court held that the “motivating factor” standard applies to FMLA retaliation claims actionable under 29 U.S.C. § 2615(a)(1), which prohibits “any employer to interfere with, retrain, or deny the exercise of or the attempt to exercise” rights under the FMLA.

Background

Plaintiff Woods worked as a substance abuse counselor for Defendant START from 2007 until her termination in 2012. Beginning in 2011, Woods received several warning memos and was placed on probation due to poor performance.  During this period, Woods suffered from severe anemia and other conditions for which she requested medical leave under the FMLA.  Woods was hospitalized as a result of her condition in April 2012 and, shortly after returning to work, was terminated from her position as a counselor.  START proffered that Woods’s termination was the result of her demonstrated poor performance for over a year, whereas Woods claimed that she was discharged due to her request for and use of FMLA leave.  During discovery, START pursued questions about Woods’s prior alleged wrongdoing, but Woods refused to answer and invoked the Fifth Amendment.  At trial, the district court instructed the jury that Woods had to show that she would not have been discharged “but for” her use of FMLA leave, and that the jury could presume, based on her invocation of the Fifth Amendment, that Woods would have answered questions about her alleged wrongdoing in the affirmative.  The jury returned a verdict in favor of START on all counts.

The Second Circuit reversed and remanded, finding the district court erred by improperly instructing the jury on the causation standard and by issuing the adverse inference ruling with regard to the Fifth Amendment claim. While other circuits find a basis for FMLA retaliation claims in 29 U.S.C. § 2615(a)(2), the court determined that FMLA retaliation claims are sourced from § 2615(a)(1).  This is a key distinction because the language in § 2615(a)(2) is similar to the Title VII retaliation language discussed in Univ. of Tex. Sw. Med. Ctr. v. Nassar, 133 S. Ct. 2517 (2013) and Gross v. FBL Fin. Servs., Inc., 557 U.S. 167 (2009), where the Supreme Court determined that the default “but for” causation standard applied.  Relying instead on § 2615(a)(1) as the basis of Woods’s claims, the court adopted the Department of Labor’s regulations requiring the “motivating” or “negative” factor causation standard for FMLA retaliation claims after concluding that Chevron deference required that outcome.  In Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), of course, the Supreme Court held that deference should be given to administrative interpretation of statutes, so long as the statute is unclear and the interpretation is reasonable.

On remand, Woods likely will receive a new trial, where she will have to prove only that FMLA retaliation is one “motivating factor,” among others. Therefore, even if START successfully demonstrates that Woods performed poorly throughout the last twelve months of her tenure, or proves that she committed misconduct constituting a terminable offense, START must also show that the Plaintiff’s use of FMLA leave was not considered at all in the decision to terminate.

Implications

Although some district courts, like the District of Massachusetts, have recently held that the “but for” standard applies to FMLA retaliation claims, the recent trend in the Circuit Courts has been the opposite.  With the holding in Woods, the Second Circuit joins the Third Circuit in finding that the “motivating factor” causation standard applies to FMLA retaliation claims.  Thus, in litigation, employers should be prepared, particularly in these jurisdictions, to respond to this lower causation standard by proving that the same decision would have been made regardless of whether FMLA leave was taken.

This decision also should serve as a reminder to employers that, as discipline, discharge, and similar decisions are made, precautions must be taken to ensure that FMLA and other protected characteristics are not being considered in reaching those decisions. Human Resources and/or the legal department should review such decisions for discriminatory and retaliatory animus, and the non-discriminatory and non-retaliatory reasons for the decision should be contemporaneously documented.  Therefore, if the matter reaches litigation, these precautions will help rebut any claim that discrimination or retaliation motivated the adverse action.

In an important new decision, the Massachusetts Supreme Judicial Court recently held that a qualifying patient who has been terminated from employment for testing positive for marijuana as a result of her lawful medical marijuana use may state a claim of disability discrimination under that state’s anti-discrimination statute. As we blogged with respect to a after a similar decision in Rhode Island, this holding has significant implications for employers that drug test for marijuana use because 29 states plus the District of Columbia have enacted legislation legalizing medical and/or recreational marijuana use.

Background

The plaintiff received an offer of employment conditioned on her passing a mandatory drug test. Before taking the test, the plaintiff told her would-be supervisor that she would test positive for marijuana because she was a qualifying medical marijuana patient under Massachusetts law and used marijuana to treat her Crohn’s disease and irritable bowel syndrome. The supervisor assured her that her medicinal use of marijuana would not be an issue with the company. After submitting a urine sample for the mandatory drug test, the plaintiff completed her first day of work without incident. At the conclusion of that day, however, she was terminated for testing positive for marijuana. She was told that the company did not consider whether the positive test was due to the lawful medicinal use of marijuana because it followed federal, not state, law.

Court’s Holding and Rationale

The Court rejected plaintiff’s claims under the Massachusetts medical marijuana act, finding there to be no private right of action under the statute, which merely decriminalizes medical marijuana use and does not provide express employment protections. Nonetheless, the Court allowed to the plaintiff’s disability discrimination claim to proceed. In so holding, the Court rejected the employer’s arguments that the plaintiff could not be a qualified handicapped person under the statute because the only accommodation she sought (possession and use of marijuana) is a federal crime, and that the plaintiff was discharged because she tested positive for an illegal substance, not because of her disability.

Rather, the Court concluded that, at least in some circumstances, an employer may have an obligation to accommodate the off-duty use of marijuana for medicinal purposes. Like the Rhode Island trial court in Callaghan v. Darlington Fabrics Corporation, the Massachusetts Court determined that the medical marijuana act implicitly recognizes that off-site medical marijuana might be a permissible accommodation of an individual’s disability, and further concluded that the fact that marijuana may be illegal under federal law does not make it per se unreasonable as an accommodation.

The court rejected arguments that the federal classification of marijuana as a controlled, and thus illegal, substance should preempt the state law classification. First, the court noted that only the plaintiff, and not the employer, risked federal prosecution for using marijuana, and therefore the legality of its use should not impact a determination of its reasonableness as an accommodation. Second, the court concluded that to adopt the federal classification would be to improperly reject the determination of Massachusetts voters to legalize the drug for medical use.

Notably, just because the plaintiff may proceed on her disability discrimination claim does not mean she ultimately will succeed. This decision comes at the motion to dismiss stage, and the employer still has the opportunity to demonstrate on summary judgment or at trial that accommodating the plaintiff’s marijuana use would constitute an undue hardship.

Key Takeaways

This decision is the first in any state in which the applicable medical marijuana act merely decriminalizes to permit a disability discrimination claim to proceed on such facts. The decision calls into question whether, even in these states, employers may maintain zero tolerance marijuana testing policies. Prior to this year, decisions in other jurisdictions have held that employers operating in such jurisdictions may enforce such policies and take adverse action against medical marijuana users simply for testing positive. With claims in Rhode Island and now Massachusetts surviving motions to dismiss, these decisions may indicate a trend by courts to provide greater protections for lawful medical marijuana users.

Wherever employers operate, it is clear that they must take added precautions in administering their drug testing policies. While employers may continue to prohibit the on-duty use of or impairment by marijuana, employers must consider the following when testing for marijuana:

  • Employers should review their drug-testing policies to ensure that they (a) set clear expectations of employees; (b) provide justifications for the need for drug-testing; and (c) expressly allow for adverse action (including termination or refusal to hire) as a consequence of a positive drug test.
  • Employers may consider or be required to adjust or relax certain hiring policies to accommodate lawful medical marijuana users.
  • When an individual tests positive ostensibly because marijuana is used to treat a disability, employers, particularly those in Massachusetts, may be required to engage in the interactive process. First, however, employers should evaluate whether the individual has a qualified disability that warrants an accommodation and whether allowing the individual to use medicinal marijuana would allow rather than hinder the individual’s ability to perform the essential functions of the job.
  • Employers concerned with the application of federal law may, during the interactive process, explore whether another equally effective medical alternatives to marijuana use may enable the individual to perform the essential functions of the job. Note, however, employers in states requiring accommodation of medical marijuana use may be prohibited from exploring these alternatives.
  • Where no such alternative exists or can be agreed upon, employers who cannot accommodate even lawful, off-duty medicinal marijuana use must be prepared to demonstrate that such accommodation would constitute an undue hardship.
  • Any such decision should be well-documented and well-coordinated by the relevant stakeholders.
  • In any case, hiring managers should be trained not to provide assurances as to whether and how marijuana use may be accommodated. If an applicant or employee discloses marijuana use, that disclosure should immediately be referred to Human Resources and addressed by a Human Resources professional in coordination with counsel.

Clearly, employers enforcing zero-tolerance policies should be prepared for future challenges to such policies. In Massachusetts as well as in those states prohibiting discrimination against and/or requiring accommodation of medical marijuana users, such challenges are now more likely to survive a motion to dismiss.

What obligations does an employer have to an employee returning from leave under the Family and Medical Leave Act (FMLA)?

What must the employer do if it was forced to fill that employee’s position during the employee’s absence?

How long after the employee returns must the employer wait before taking an adverse action against that employee?

The U.S. Court of Appeals for the Fourth Circuit recently provided guidance to employers who frequently face these questions in the context of FMLA administration. In Waag v. Sotera Defense Solutions, Inc., the employer, Sotera, filled the position of an employee, Gary Waag, while he was out on FMLA leave, and assigned Waag to a different position when he returned.  Less than six weeks later, Sotera laid off Waag in a workforce reduction.  Waag filed suit claiming FMLA interference and retaliation.  The Fourth Circuit affirmed the lower court’s dismissal of the case, holding that Sotera was not required to return Waag to his original position and that Sotera reassigned him to a bona fide equivalent position, not a “sham position” meant to mask a discriminatory or retaliatory reason for his termination.  Most importantly, the court held that the “temporal proximity” of six weeks’ time between Waag’s return from medical leave and his termination was insufficient by itself for him to succeed on his FMLA interference claim.

Plaintiff Waag took a two-month medical leave to recuperate from a severe head injury. During Waag’s absence, Sotera filled his position.  Upon his return, Waag was assigned to a new position in a different division, albeit with the same salary, benefits, and terms and conditions of employment.  Six weeks after Waag returned to work, a drastic drop in work and revenue caused Sotera to begin a series of reductions in force, and Waag was included in the first round of layoffs.  Waag filed suit, alleging that Sotera violated his FMLA rights by putting him in a “sham position” that Sotera planned to eliminate shortly after his return from leave.

The Fourth Circuit rejected Waag’s claims. Addressing Waag’s claim of FMLA interference for failure to restore him to the same or an equivalent position, the court emphasized that Waag did not have an absolute right to reinstatement to his original position.  Rather, an employee “has the right to be restored either to his original position or to an equivalent position,” and an employer is not required to restore the employee to his original position if that position is no longer vacant.  Sotera fulfilled its obligations under the FMLA by reassigning Waag to a bona fide equivalent position with “substantially similar duties and responsibilities.”

Regarding Waag’s claim of FMLA interference based on his termination, the court held that although the close, six-week temporal proximity between his protected activity (medical leave) and the adverse action (termination) could demonstrate causation for purposes of establishing a prima facie case, it was insufficient standing alone to satisfy Waag’s burden of showing that his reassignment and the budgetary reduction-in-force were pretext for his termination.  Finally, the court rejected Waag’s claim of FMLA retaliation for failing to prove retaliatory intent.

This decision provides important guidance for employers reintegrating employees returning from FMLA leave. It makes clear that employers are not required to restore an employee to the exact same position held before taking leave, particularly where the original position had to be filled during the employee’s leave.  Indeed, employers are not required to hold open the employee’s original position while that person remains on leave.  Employers instead may place the employee in an equivalent position with the same status, pay, benefits, and “substantially similar duties and responsibilities.”  If intervening factors arise causing the employer to terminate the employee, either while on leave or shortly after returning from leave, the temporal proximity between the leave and the termination decision alone will not substantiate an FMLA claim – at least in the Fourth Circuit.  (Employers should be aware that courts in other jurisdictions may more closely scrutinize the temporal proximity and rely upon it in assessing pretext.)  In these instances, however, it is particularly important that an employer can point to documentary evidence of the legitimate, non-discriminatory reasons supporting the termination decision.  As a best practice, employers should contemporaneously document and clearly communicate their reasons for taking such adverse actions.

Finally, while the subject was not raised in this case, employers should always be cognizant of their obligations under the Americans with Disabilities Act (ADA), especially after an employee has exhausted FMLA leave. Depending on the employee’s reason for leave, the ADA may impose additional obligations – beyond those of the FMLA –to extend the employee’s leave, transfer or reassign the employee, or otherwise accommodate the employee.  In matters involving the interplay of the FMLA and ADA, employers are advised to consult with counsel to determine the proper course of action.

On June 5, 2017, in Advocate Health Care Network et al. v. Stapleton et. al, the Supreme Court unanimously held that employee benefit plans maintained by church-affiliated hospitals were exempt from the Employee Retirement Income Security Act (the “ERISA”), regardless of whether the plan was actually established by a church. The plaintiffs consisted of current and former employees of three church-affiliated non-profits who ran hospitals and healthcare facilities that offered their employees defined benefit pension plans established by the hospitals and managed by internal hospital employee benefits committees.  The plaintiffs filed class actions in three different federal districts alleging that the hospital defined benefit pension plans were not entitled to an exemption under ERISA because they were not established by a church and therefore should be required, among other things, to meet the minimum-funding obligations of ERISA. The pension plans at issue were severely underfunded and ERISA would have required the hospitals to potentially contribute billions of dollars to satisfy the ERISA minimum-funding standards.

Under ERISA, private employers that offer pension plans must abide by a set of rules created to protect plan participants and ensure plan solvency. Section 4(b)(2) of ERISA, however, specifically exempts the employee benefits plans of churches. Section 3(33) of ERISA originally defined a church plan to mean a plan “established and maintained” for its employees by a church or by a convention or association of churches. In 1980, Congress expanded the church-plan definition to state that an “employee of a church” would include an employee of a church-affiliated organization and to add that a church plan includes a plan “maintained” by a “principal-purpose” organization. A “principal-purpose” organization is an organization controlled by or associated with a church or a convention or association of churches the principal purpose or function of which is the administration or funding of a plan or program providing retirement or welfare benefits to employees of such organizations. The Supreme Court found that, under the best reading of the statute, Congress intended that the church plan exemption under ERISA include plans adopted by principal-purpose organizations, even if not established by the church to which the principal-purpose organization is affiliated. In a concurring opinion, Justice Sotomayor agreed with the interpretation of ERISA but cautioned that Congress, when enacting the 1980 amendment, probably did not envision that this exemption would apply to large organizations that employ thousands of employees, operate for-profit subsidies, earn billions of dollars in revenue, and compete in the secular market with companies that must bear the cost of compliance under ERISA. Although she agreed with the majority’s conclusion, she wondered whether the current reality may prompt Congress to make changes.

Takeaway

The Supreme Court’s decision provides assurances to church-affiliated organizations that have treated their employee benefit plans as exempt church plans under ERISA. The organizations should be mindful, however, that as the Court specifically noted, the issue of whether  the hospitals qualified as “principal-purpose” organizations was not brought before it.  Therefore, it remains to be seen how the lower courts address the level and quality of a relationship that must be maintained between a church and a health care provider to qualify it as a “principal-purpose” organization.

An employee on an extended medical leave to recuperate from shoulder surgery posts pictures of his active Caribbean vacation. His employer is justified in terminating him, right?  Maybe not.

On April 19, 2017, the Eleventh Circuit reversed a trial court ruling and held that a former employee had raised a genuine issue of material fact regarding whether he was terminated in retaliation for using FMLA despite the former employee posting pictures from various vacations on Facebook during his time off of work to recuperate from surgery. This case, Jones v. Gulf Coast Health Care of Delaware, LLC, 2017 U.S. App. LEXIS 6766 (11th Circ. 2017), serves as a cautionary tale of why employers need to be careful and consistent while following proper steps when terminating employees—even in situations where the evidence of employee wrongdoing might appear obvious.

The plaintiff, Rodney Jones, was formerly employed as the activity director for the defendant, Accentia Health. His job included desk work as well as regular physical activity.  During his employment, Accentia Health approved Jones’s request for FMLA leave for shoulder surgery.  When Jones was unable to resume his full-time job duties at the end of the 12-week FMLA period, Jones requested a modified duty assignment, which was rejected by Accentia Health. Jones then requested additional time off from work, and Accentia Health granted another 30 days of “non-FMLA medical leave” in order to complete his physical therapy.

During the additional 30 days of leave, Jones twice visited the Busch Gardens theme park and went on a trip to St. Martin. Jones took pictures while on the vacations—including pictures of himself on the beach, posing by a boat wreck, and in the ocean—and then posted those pictures on Facebook.  An anonymous co-worker provided the pictures to management.  When Jones returned to work at the end of the additional time off, Jones was suspended by his supervisor and was later terminated. Accentia claimed that Jones was fired because he “(1) posted photos from his outings in violation of the company’s social-media policies, and (2) displayed poor judgment as a supervisor in posting these photos, even if this activity did not violate the company’s social-media policies.”

The appellate court found that Jones presented sufficient evidence that a fact-finder could conclude that Accentia Health’s stated reasons for the termination were pretexual. In arriving at this decision, the court focused on inconsistencies and contradictions in the reasons presented to Jones.  These inconsistencies included a formal termination letter that didn’t mention the Facebook photos, and failing to let Jones know at any time that he violated the company’s social media policy.

Employers need to be consistent when taking adverse action against an employee when FMLA is involved. This includes making sure that both written and oral communications to the affected employee are consistent and clear. Employers should take the time necessary to gather the proper facts and have better communication with the potentially affected employee before deciding upon a course of action and before letting the employee know what action might be taken. This will help ensure that any eventual adverse action is communicated clearly and consistently to the affected employee and will help limit the potential for allegations of a pretexual termination.

On April 20, 2017, in Marshall v. The Rawlings Company LLC, No. 16-5614, slip op., (6th Cir. April 20, 2017) the Sixth Circuit Court of Appeals, which covers federal courts in Kentucky, Michigan, Ohio and Tennessee, for the first time adopted the cat’s paw theory of liability in the context of a retaliation claim brought under the Family Medical Leave Act (FMLA), 29 U.S.C. § 2601 et seq.  The term “cat’s paw” was coined by Judge Richard Posner of the Seventh Circuit and introduced in Shager v. Upjohn Co., 913 F.2d 398 (7th Cir. 1990) as a standard by which liability may be imputed to an employer for the discriminatory animus of a biased low-level supervisor.

In Marshall, the company demoted and ultimately terminated the plaintiff-employee after she used FMLA leave to address acute mental health problems.  The employee sued the employer for FMLA retaliation and other employment discrimination claims, alleging two lower-level supervisors exhibited bias against her because she had taken approved medical leave.  The two supervisors allegedly influenced the decision to demote the employee after she returned from leave and the ultimate decision to terminate her employment.  The district court granted summary judgment to the employer and dismissed all claims.

On appeal, a split panel of the Sixth Circuit reversed.  After holding the cat’s paw theory applicable to the employee’s FMLA retaliation claims, the majority determined:

  1. the cat’s paw theory of liability applies even in cases involving multiple layers of supervision between the employee and the ultimate decision-maker;
  2. an employee pursuing a claim of FMLA retaliation under a cat’s paw theory must satisfy the McDonnel Douglas framework and prove that the decision-maker was the cat’s paw of the biased low-level supervisor; and
  3. the honest-belief rule is not applicable in cat’s paw cases because the honesty of the decision-maker’s belief is not relevant to the issue of whether a biased low-level supervisor intentionally manipulated the decision-maker.  Nonetheless, an employer may still protect itself from liability under the cat’s paw theory by showing that the decision-maker conducted an independent investigation and determined that the adverse employment action was justified.

The decision in Marshall emphasizes the importance for employers of conducting reasonable, independent investigations to confirm disciplinary action is justified by objective evidence and clearly documented, particularly where a protected category or activity is implicated.  The ultimate decision-makers should not rely solely upon the recommendation of a subordinate supervisor when making employment related decisions, but rather should probe the subordinate supervisor’s rationale and reach an independent determination of the basis for the adverse action.

In a decision with significant implications for private hospitals, on March 7, 2017, the Third Circuit held in Doe v. Mercy Catholic Medical Center that medical residents may bring private causes of action for sex discrimination under Title IX against private teaching hospitals operating residency programs, and are not limited to claims under Title VII.

Title IX of the Education Amendments of 1972, 20 U.S.C. §1681, et seq., prohibits sex discrimination in any “education program or activity receiving federal financial assistance.” 20 U.S.C. § 1681(a). A former resident alleged the director of her program repeatedly sexually harassed her and then retaliated against her for resisting his advances and complaining about them, culminating in her termination from the program. In deciding a question of first impression, the Third Circuit held that Mercy could be sued under Title IX because, under the allegations of the complaint, its medical residency program constituted an “education program or activity” provided by a private organization principally engaged in the business of providing health care, 20 U.S.C. §1687(3)(A)(ii), that received Federal financial assistance. In so holding, Court established a test to determine whether a program is educational, asking whether it is structured as an educational program, allows participants to obtain a degree or certification or qualify for an examination, has instruction, tests, or grades, accepts tuition, and is promoted as educational.  The Court had little trouble finding that the allegations demonstrated plaintiff was enrolled in a multi-year regulated program of study and training that led to qualification to take a certification examination, and that this program was run by Mercy in affiliation with Drexel University’s College of Medicine, a university program also plausibly covered by Title IX.

Notably, the Court did not reach the question of whether Mercy’s receipt of Medicare payments constituted “Federal financial assistance” under Title IX because Mercy had not raised this issue in the District Court, although it expressed some skepticism towards Mercy’s argument that such payments merely flowed from “contracts of insurance.” In this regard we note that a number of courts have found Medicare payments can constitute Federal financial assistance for the purpose of coverage under Title VI and the Rehabilitation Act.

Importantly, the Court rejected Mercy’s argument that the plaintiff’s remedy should be limited to an action under Title VII (which would have been time-barred) because she was also an employee, finding that there is concurrent liability under Title IX. In this regard it followed decisions from the First and Fourth Circuits, rejecting conflicting decisions from the Fifth and Seventh Circuits that predated the Supreme Court’s decision in Jackson v. Birmingham Board of Education, 544 U.S. 167 (2005), where the Supreme Court found a high school coach who alleged a retaliatory termination could sue under Title IX. Thus, it found that causes of action exist under Title IX for claims of both retaliation and quid pro quo sexual harassment and that, where an individual is covered by both Title IX and Title VII, that plaintiff can file complaints through either means. However, the Court did not reach the question of whether Title VII’s potential applicability barred a Title IX claim for hostile environment because that claim was time-barred under Title IX’s two-year statute of limitations.

This case stands as a warning to hospitals and other health care institutions providing accredited teaching and training programs to ensure that they have in place and follow policies that not only bar sexual discrimination, harassment and retaliation, both in general and with respect to medical residency and other educational programs, but also provide an effective complaint procedure for addressing claims that these policies have been violated.  These institutions also should be aware that employees covered under both Title VII and Title IX may pursue their discrimination claims under Title IX in federal court without first exhausting their administrative remedies, as required under Title VII.

Two stories on the new episode of Employment Law This Week will be of particular interest to our readers in the health care industry:

California Health Care Workers Can Waive Breaks

California health care workers can still waive some breaks. In February 2015, a California appeals court invalidated an order from the Industrial Welfare Commission (IWC) that allowed health care workers to waive certain meal breaks. The court found the order, which allowed the workers to miss one of their two meal periods when working over eight hours, was in direct conflict with the California Labor Code. The state legislature then passed a new law giving the IWC authority to craft exceptions going forward for health care workers. This month, the appeals court concluded that its 2015 decision was based on a misreading of the statute and that even waivers occurring before the new law are valid.

Transgender Guidance Withdrawal Impacts the Courts

A multistate lawsuit against the Obama administration’s transgender guidance is coming to an end. The states, led by Texas, have dropped their suit in light of the Trump administration’s decision to withdraw that guidance. The Obama-era guidance allowed students to use the bathrooms of the gender they identify with. The withdrawal has also prompted the U.S. Supreme Court to return a case that it was scheduled to hear on transgender rights in public schools. The appeals court, which based its original decision on the guidance, will now consider the case solely based on the statutory requirements of Title IX.

These stories are featured in the first and third segments of the show – see below:

Featured on Employment Law This Week:  The Equal Employment Opportunity Commission (EEOC) has issued new guidance on workplace retaliation.

The EEOC’s final guidance on retaliation includes concrete examples of retaliation issues that the courts have largely agreed upon, as well as expanded definitions of “adverse action” and “causal connection.” The guidance also describes “promising practices” for reducing the possibility of retaliation, including anti-retaliation training and proactive follow-up with potential targets. Retaliation has become the most frequent form of employment claim across business sectors. The percentage of EEOC charges in this area has almost doubled since the last guidance was issued. Our colleague David Marden is interviewed.

See below for the episode and read our blog post about the guidance.