There have been a number of significant developments on labor and employment issues that affect all employers. We provide a summary below and will discuss some of these and other developments at our Annual Labor & Employment Seminar on October 15.
Supreme Court Holds that a Request for Religious Accommodation is Not Necessary to Trigger Discrimination Liability
The U.S. Supreme court recently decided a highly publicized case filed by the Equal Employment Opportunity Commission (EEOC) against Abercrombie & Fitch (Abercrombie). See EEOC v. Abercrombie & Fitch, Case No. 14-86 (June 1, 2015). In this case, Abercrombie refused to hire a practicing Muslim because the headscarf that she wore violated the company’s dress code policy. The EEOC filed suit on behalf of the applicant claiming that Abercrombie failed to accommodate her religious beliefs. Abercrombie argued that it did not know why the applicant wore a headscarf and without such actual knowledge, the company could not be liable for discrimination. The Supreme Court disagreed with Abercrombie holding that to prevail in a disparate-treatment claim, an individual must only show that his/her need for an accommodation was a motivating factor in the employer’s decision, not that the employer had knowledge of the need.
In this case, Abercrombie suspected, but did not actually know, that the applicant wore a headscarf because of her religious beliefs. In its analysis, the Court stated that Title VII does not impose a knowledge requirement unlike other states, such as the Americans with Disabilities Act (ADA). The ADA prohibits an employer from making “reasonable accommodations to the known physical or mental limitations” of an applicant. Title VII does not contain this limitation and prohibits certain motives regardless of the employer’s knowledge. The Court stated, “Motive and knowledge are separate concepts. An employer who has actual knowledge of the need for an accommodation does not violate Title VII by refusing to hire an applicant if avoiding that accommodation is not his motive. Conversely, an employer who acts with the motive of avoiding accommodation may violate Title VII even if he has no more than an unsubstantiated suspicion that accommodation would be needed.”
This decision underscores that employers must not only accommodate specific requests for religious accommodations, but also accommodations that an employer suspects are based on religion. As such, Abercrombie should have asked the applicant whether she could comply with the company’s dress policy and, if necessary, engaged in an interactive process regarding a possible accommodation.
Supreme Court Expands and Clarifies Fiduciary Duties
In Tibble v. Edison International, Case No. 13-550 (May 18, 2015), the U.S. Supreme Court expanded and clarified the fiduciary duties of those who select funds for a 401(k) plan. The case involved ERISA’s six year statute of limitations within which a fiduciary action must be brought. In short, by unanimous decision, the Supreme Court held that an ERISA fiduciary responsible for the selection of investment choices has an ongoing duty to monitor such choices.
In this particular case, participants in the Edison 401(k) Savings Plan (the Plan) sued the Plan fiduciaries to recover damages for losses suffered by the Plan. Participants claimed the fiduciaries had selected six higher priced mutual funds when lower priced institutional class mutual funds were available.
The case was brought in 2007 and involved six mutual funds. Three were added to the Plan in 1999 and three were added in 2002. The lower courts, including the Ninth Circuit Court of Appeals, concluded, with respect to the three funds added in 2002 that the fiduciary had failed to exercise the care, skill, prudence, and diligence that ERISA demands of fiduciaries, in that there was no credible explanation for offering retail class higher priced mutual funds that cost the Participants wholly unnecessary fees. Nevertheless, the lower courts had held that the complaint was untimely because the three funds added in 1999 were included in the Plan more than six years before the complaint was filed, and circumstances had not changed enough during the 6 year period to create an obligation to review the funds.
The Supreme Court said the Ninth Circuit did not recognize that under trust law a fiduciary is required to conduct a regular review of its investment with the nature and timing of the review contingent on the circumstances. “Under trust law, a trustee has a continuing duty to monitor trust investments and remove imprudent ones. This continuing duty exists separate and apart from the trustee’s duty to exercise prudence in selecting investments at the outset.” As a result, the Court vacated and remanded the Ninth Circuit’s decision.
This decision makes it clear that ERISA plan fiduciaries must regularly review funds for compliance with ERISA fiduciary standards.
New Connecticut Laws Affecting Employers
The Connecticut General Assembly recently passed several employment law bills including the following:
Federal Department of Labor Publishes New FMLA Forms
The federal Department of Labor recently published new model FMLA notices and Medical Certification forms. The new notices and forms include GINA disclaimers, advising employees and health care providers to not provide certain genetic information. The updated notices and forms can be found here.
OSHA Issues Guidance on Transgendered Workers
On June 1, 2015, OSHA issued its "Best Practices: A Guide to Restroom Access for Transgender Workers." According to OSHA, employers should allow employees to use whichever restroom corresponds to an employee's internal gender identity. The OSHA Best Practices document can be found here.
Watch Out! Department of Labor Expected to Propose Major Changes to Federal Overtime Rules
The federal Department of Labor’s Wage and Hour Division is expected to release soon proposed regulations on the FLSA overtime exemptions. Many speculate that the proposed regulations will be released this month. We will issue an updated alert addressing the proposed changes.
Details of the proposed regulations are not available. However, they are expected to significantly increase the minimum salary level for the “white collar” exemptions, which currently is $23,660. A number of commentators have speculated that the minimum salary level could be doubled.
The proposed regulations also are expected to include a quantitative test (similar to California’s test) establishing the percentage of time that workers must spend performing exempt work to qualify for one of the exemptions. Currently, the test used for determining exempt states is the “primary duty” test. Under this test, an employee can be exempt if their primary duty involves exempt work, even if total amount of the exempt work they perform is less than 50% of their job duties.