Friday: July 28, 2023: Seventh Circuit: ADA Requires Employers To Consider Accommodating Employee Commutes To Work

Official seal of the United States Court of Appeals for the Seventh Circuit (Chicago)Rejecting the trial court’s grant of summary judgment in favor of the employer, the United States Court of Appeals for the Seventh Circuit (Chicago) held that the Americans with Disabilities Act (“ADA”) requires employers to consider reasonable accommodations for an employee’s commute to and from work. The Court’s holding applies to commutes, it said, where attendance in the workplace is an “essential function” of the job. Please note that commuting is, however, not generally compensable “work” under the Fair Labor Standards Act.

The case is EEOC v. Charter Communications, LLC(Case No. 22-1231; July 28, 2023). The Court explained that its decision ensures that employers consider the protections the ADA extends to the ability of an employee to perform an essential job function.

In Charter Communications, an employee working in a call center requested an earlier work schedule to reduce nighttime driving. The employee had cataracts in both eyes that made driving in the dark unsafe. While the employer granted a request for a temporary change of the employee’s work schedule, it denied the employee’s request to permanently extend the change. The employee then filed a Charge with the U.S. Equal Employment Opportunity Commission (“EEOC”), which thereafter sued when conciliation failed.

The Court stopped short of adopting a “bright line” rule requiring employers to provide reasonable accommodations to the ability of disabled employees to get to work. (Note: The Seventh Circuit is on record as disliking “bright line” rules, finding federal statutes too complex to resolve to simple “do this” or “do that” rules of conduct. Employers are thus left to parse the facts of cases and then “think” about them in the unique context of the employer’s situation and then “analyze” its obligations). However, because courts and EEOC guidance had recognized “modified work schedules” as a reasonable accommodation, it was an error for the trial court to find there was no undisputed material fact warranting the dismissal of the employee’s claim.

Thus, where commuting to work is a prerequisite to an essential job function (i.e., attendance in the workplace), employers must consider potential reasonable accommodations when an employee’s disability substantially interferes with his/her ability to travel to and from work to meet the employer’s work schedule. In the case of commuting, the Court found the employer controls work schedules and the requirement for the employee to work from the office location. As such, the so-called “interactive process” requirement is implicated. While the ruling does not go as far as to impose an employer obligation to accommodate how an employee gets to and from work (as that remains the choice of the employee), because scheduling is an employer’s responsibility, an accommodation may be warranted if reasonable and not an undue hardship to the employer. 

As such, employers must not dismiss out-of-hand ancillary functions or conduct an employee must undertake to perform their essential job functions as “not relevant to employment.” Rather, in accommodating a disability, employers must consider not just barriers inside the workplace but barriers “outside the workplace” as well when the employer controls certain variables that impact the employee’s ability to overcome those barriers. 

Monday, August 21, 2023: Third-Party Businesses Now Liable for Discrimination Undertaken on Behalf of an Employer Under California’s Anti-Discrimination Law

The great seal of the State of CaliforniaThe California Supreme Court has – for the first time – interpreted California’s anti-discrimination law (the Fair Employment and Housing Act, or “FEHA”) to impose liability on business entities serving as “agents” of an employer. This interpretation will potentially impact staffing agencies, corporate consultants, employment test providers, background check companies, and even accountants and lawyers providing services relating to the “terms,” “conditions,” and/or “privileges” of employment to a company FEHA covers. The case is Raines v. U.S. Healthworks Medical Group, (Case No. S273630; August 21, 2023). 

Ruling on a question the U.S. Court of Appeals for the Ninth Circuit (San Francisco) submitted to it, the California Supreme Court rejected the U.S. District Court’s holding that FEHA did not impose liability on “business entity agents” of an employer (as opposed to individual supervisors). Rather, businesses that are agents of an employer must now ensure that they themselves do not engage in discriminatory conduct while performing services on behalf of the employer relating to the terms, conditions, and/or privileges of employment, or else become subject to liability for unlawful discrimination.

In Raines, plaintiffs sued on behalf of a putative class alleging that pre-employment medical screenings the U.S. Healthworks Medical Group conducted on behalf of its employer customers violated FEHA and California’s Unruh Civil Rights Act (among other claims) by seeking responses from job applicants to medical history questions unrelated to their prospective employment. Note: The California Supreme Court did not address the other claims in the underlying case because the Ninth Circuit only sought California’s Supreme Court’s interpretation of FEHA. 

 U.S. Healthworks’ defense rested on a narrow definition of the term “employer” it urged that the California Legislature had intended when passing FEHA and the Unruh Act into law. U.S. Healthworks argued that the California Legislature had not intended FEHA’s and the Unruh Act’s prohibitions on discrimination to reach third parties like itself, which were not the employer of the putative class members.

However, because the term “employer” under FEHA includes “any person acting as an agent of an employer, directly or indirectly,” the California Supreme Court held that an employer’s agents may also be held liable for employment discrimination FEHA makes unlawful when carrying out FEHA-regulated activities on behalf of an employer.

The Court based its decision on the following factors:

    • The plain language of the statute imposes liability on any person acting as an agent of an employer. The definition of “person” within the statute includes corporations, partnerships, associations, and other forms of business entities;
    • FEHA’s legislative history showed that the definition of employer was taken from the agent-inclusive language from the National Labor Relations Act, and thus, the inclusion of separate business entities was within the context of what the legislature considered when passing FEHA;
    • Case rulings in federal courts interpreting federal discrimination laws to extend to agents of an employer, so long as those entities exercised an administrative function the employer traditionally exercised; and
    • Finally, a public policy argument supporting the liability of agents of an employer given FEHA’s mandate that courts construe it liberally to further its remedial purpose to prevent unlawful discrimination.

U.S. Healthworks attempted to rely on prior case law precedent, which had found that individual supervisors were not “agents” subject to individual liability under FEHA for otherwise unlawful discriminatory conduct. However, the California Supreme Court rejected this argument because FEHA’s exemption of employers with fewer than five employees does not extend to business entities. Furthermore, the concern about damaging the ability of supervisors to exercise supervisory judgment due to a fear of personal financial ruin also did not arise when dealing with a corporate business entity.

The California Supreme Court’s ruling in Raines expands who qualifies as an “employer” for purposes of liability under FEHA. Before, temporary staffing companies, payroll service companies, background check providers, and other similar vendors avoided liability by arguing that they were not the “employer” for jurisdictional purposes and thus could not be subject to FEHA anti-discrimination protections (though they could be sued on other legal grounds). With this ruling, this defense no longer exists for these entities. 

The Big Picture: The ruling is a further example of efforts by courts and regulatory agencies to address the ever-changing 21st-century labor economy. As more companies outsource HR and recruiting functions or enter into “non-traditional” employment arrangements with other entities, courts, and agencies are attempting to ensure that protections for “worker” rights do not slip between the cracks. This includes recent decisions we have reported on regarding joint employer liabilityfranchisor liability for acts of its franchisee, and independent contractor classification, as well as the U.S. Equal Employment Opportunity Commission’s enforcement efforts in 2022 against staffing agencies engaged in alleged hiring discrimination on behalf of employers.

Going forward after the Raines decision, it is even more important for businesses subject to FEHA and providing administrative services to employers pertaining to the “terms”, “benefits” and/or “privileges” of employment to ensure they remain compliant with both federal and state anti-discrimination laws not just within their workplace, but in the services they provide to their customers. Finally, a “best practice” for these vendors would include an audit and review of the assignments and requirements their employer clients request of them to ensure that their customer is not imposing unlawfully discriminatory requirements.

Tuesday, August 22, 2023: House Bill Would Mandate Federal Contractors Adopt Cyber Vulnerability Disclosure Policy

Consistency with NIST Guidelines Would Be Required

U.S. House of Representatives SealRepresentative Nancy Macy (R-SC) introduced a bill that, if enacted, would require covered contractors to implement a vulnerability disclosure policy (“VDP”) consistent with National Institute of Standards and Technology (“NIST”) guidelines. Specifically, the measure – at Section 2(a) – would require the White House Office of Management and Budget to recommend updates to the FAR Council to amend the Federal Acquisition Regulation to mandate that covered federal contractors implement a VPD consistent with NIST guidelines for contractors as required under Section 5 of the “Internet of Things Cyber Security Act of 2020” (15 U.S.C. 278g-3c; Public Law 116-207). In May 2023, the NIST published its “Recommendations for Federal Vulnerability Disclosure Guidelines” (NIST SP 800-216). The text of the bill – H.R.5255 – is available here.

Already, contractors providing information systems to the federal government are required to have VDPs pursuant to Section 5 of the Internet of Things Cyber Security Act of 2020. The Congresswoman’s bill – entitled the “Federal Cybersecurity Vulnerability Reduction Act of 2023” – would extend those VDP requirements to all government contracts above the simplified acquisition threshold (“SAT”)(which is $250,000 or more) (Section 2 (c)(3) of the bill does not alter the value of the SAT).

Representative Mace chairs the Subcommittee on Cybersecurity, Information Technology, and Government Innovation of the House Committee on Oversight and Accountability.

“By mandating [VDPs] for federal contractors, we can ensure a proactive approach to cybersecurity, enabling contractors to identify and address software vulnerabilities promptly,” Mace said in a statement provided to the Federal News Network “This legislation, aligned with internationally recognized standards, empowers contractors to stay ahead of malicious actors, preventing potential exploits and protecting sensitive information,” she added.

(See also, our story on the NIST AI Risk Management Framework).

Tuesday, August 22, 2023: Major Law Firms & Prominent Employers Targeted in Flood of Anti-DEI Lawsuits/EEOC Charges Energized by SCOTUS’ University Admissions Decision

Emboldened by the U.S. Supreme Court’s decision in Students for Fair Admissions, Inc. v. President and Fellows of Harvard College, (Case No. 20–1199; June 29, 2023; abbreviated hereafter as “SFFA“) some conservative community activist groups and employees have sued numerous prominent employers. The suits, now being reported almost daily, allege the targeted companies violated a broad range of federal statutes to promote diversity, equity, and inclusion (“DEI”) through unlawful race, national origin, and/or gender-based employment preferential decisions.

Also, another organization has filed multiple Charges with the U.S. Equal Employment Opportunity Commission (“EEOC”), both before and after the U.S. Supreme Court’s June decision. In SFFA, the Court held that the consideration of race in the admissions practices of the University of North Carolina and Harvard College violated the Equal Protection Clause of the Fourteenth Amendment and Title VI of the Civil Rights Act of 1964 (a law that prohibits discrimination based on race, color, or national origin in programs or activities receiving federal financial assistance (i.e. “grants”). These trending lawsuits and claims serve as reminders to federal contractors and other employers to review their DEI policies and practices to ensure that they are lawful.

The EEOC charges claim the employers’ diversity programs have discriminated and are continuing to discriminate on the basis of race in violation of Title VII of the Civil Rights Act of 1964 (“Title VII”). The majority of the lawsuits assert that the defendant employers’ diversity efforts violated 42 U.S.C. Section 1981 (“Section 1981”). Section 1981, a federal statute that is part of Section 1 of the 1866 Civil Rights Act, prohibits racial discrimination in the making and enforcing of contracts. In some cases, lawsuits were brought on behalf of employees, while others were brought on behalf of shareholders. The shareholder lawsuits alleged violations of certain disclosure and anti-fraud provisions of the Securities Exchange Act of 1934.

It is important to keep in mind that these actions are based on allegations that have not, to date, been proven in court.

The following is a non-comprehensive list of organizations targeted in these recent suits and EEOC charges (the embedded links go to the various plaintiffs’ announcements of the lawsuits, where applicable):

  • International law firms Morrison and Foerster LLP and Perkins Coie LLP (August 22, 2023);
  • Gannett Co. Inc., the largest U.S. newspaper publisher (August 18, 2023);
  • Progressive Insurance (August 17, 2023);
  • Activision (August 15, 2023); and
  • other companies in the food manufacturing, general merchandise retailing, and accounting industries.

Example: Employee Suit Against Gannett

Five current and former employers of Gannett Co. Inc. filed a proposed class action lawsuit on August 18 with the U.S. federal court for the Eastern District of Virginia (Case No. 23-cv-1100). The plaintiff employees claimed that the publisher’s actions to implement its diversity policy discriminated against white workers in violation of Section 1981. The plaintiffs alleged that Gannett fired them or passed them over for promotions as a result of the policy.

American Alliance for Equal Rights’ Suits Against Law Firms

The American Alliance for Equal Rights (“AAER”), filed suit on August 22 against two international law firms over fellowships they offer to promote diversity. The AAER asserts that the firms – Morrison and Foerster LLP and Perkins Coie LLP – violated 42 U.S.C. Section 1981 by expressly refusing to contract with certain applicants based on their race and/or national origin.

The organization filed its lawsuit against Morrison and Foerster in the U.S. District Court for the Southern District of Florida, Miami Division (Case No. 1:23-cv-23189). It alleges that one of the firm’s lucrative fellowships “bans certain applicants based on their race.” Specifically, the firm limits applicants to those who are “African American/Black, Latinx [sic], Native Americans/Native Alaskans, and/or members of the LGBTQ+ community,” according to the AAER.

The AAER filed its case against Perkins Coie in the U.S. District Court for the Northern District of Texas, Dallas Division (Case No. 3:23-cv-01877-L), alleging that the firm’s diversity fellowships for first and second-year law students exclude certain applicants based on their race. The suit alleges that applicants do not qualify unless they are “students of color,” “students who identify as LGBTQ+,” or “students with disabilities.”

EDITOR’S NOTE: Perkins Coie will likely file a Motion to Dismiss at least the disability preference claim as a matter of law. Non-disabled persons are not regarded as a group protected by law, so courts generally uphold disability preferences, not just in employment but also in public transit settings (bus and train seating and fares).

Conservative activist Edward Blum, who founded Students for Fair Admissions (the lead plaintiff in SFFA), is also the founder and president of AAER. In addition to the two suits against law firms, the AAER earlier this month sued The Fearless Fund, a venture capital fund that invests in women-of-color-led businesses seeking early-stage investment. AAER alleges that the fund’s grant program discriminates based on race in violation of Section 1981.

Other Lawsuits & EEOC Charges

Stephen Miller, a former advisor to President Trump, is the president of America First Legal (“AFL”) who brought the other lawsuits/EEOC charges in the bullet points listed above. The organization’s Vice-President and General Counsel is Gene Hamilton, who also served in the Trump Administration as Counselor to the U.S. Attorney General at the U.S. Department of Justice from 2017-2021. AFL had been pursuing similar claims against multiple other companies for at least a year prior to the Supreme Court’s decision in SFFA. Following that decision, AFL issued a press release cataloging some of its previous actions.

Similar Suit Against Starbucks Dismissed Earlier This Month

On August 11, a federal judge in the U.S. District Court for the Eastern District of Washington granted Starbucks’ motion to dismiss the National Center for Public Policy Research’s (“NCPPR”) suit challenging Starbucks’ DEI policies, announced in October 2020. (National Center for Public Policy Research v. Schultz, Case No. 2:22-CV-267-SAB). The NCPPR purported to bring the suit on behalf of shareholders and others impacted by Starbucks policies, claiming that the policies violated Section 1981, Title VII, numerous state civil rights statutes, and other laws. Reuters reported that “Chief U.S. District Judge Stanley Bastian in Spokane, Washington, rejected the allegations at a hearing in the case on Friday, saying the lawsuit centered on public policy questions that are for lawmakers and corporations, not courts, to decide.” Judge Bastian also remarked: “If the plaintiff doesn’t want to be invested in ‘woke’ corporate America, perhaps it should seek other investment opportunities rather than wasting this court’s time,” according to Reuters.

Another Reminder of Employer Resources

For more information on how the SFFA decision impacts employers, see our stories here and here. We reported last month that OFCCP updated its Affirmative Action FAQ Section to address the SFFA ruling. Moreover, do not miss John Fox’s Four-Part Series discussing the implications for employers of the SFFA decision. PART I discusses the Pipeline Problem” and suggests “Life Preserver” Solutions. PART II covers how” Goals Are Not Unlawful Quotas.” PART III discusses “Doing Right the Right Way: The Renewed Commitment to Hiring African Americans Is Not A ‘Greenlight’ to Unlawfully Discriminate Against Other Protected Groups.” PART IV covers “How to Lawfully Engage in Race-Based Employment Decisions If You Choose to Do So.”

Tuesday, August 22, 2023: EEOC’s FY 2022-2026 Strategic Plan Blurs The Lines Between It and The OFCCP As The EEOC Now Focuses On Systemic Discrimination

Other Aims Include Better Conciliation Agreement Monitoring, Improved Charge Intake Process, Seeking Non-Monetary Remedies

Official Seal of the EEOC featuring Bald Eagle and bannerFollowing a notice and comment period, the U.S. Equal Employment Opportunity Commission (“EEOC”) announced its approval and immediate implementation of the agency’s finalized Strategic Plan for Fiscal Years 2022-2026. The Strategic Plan provides a framework for the EEOC’s strategic application of its enforcement activities. These plans direct the agency’s work and lay the foundation for the development of more detailed annual plans, budgets, and related program performance information in the future.

What’s In the Plan?

Highlights of the newly finalized Strategic Plan include the Commission’s focus on:

  • Combatting systemic discrimination by training field staff and having at least 90 percent of investigators and trial attorneys participate in systemic discrimination training each year. Moreover, the agency set a goal of every District having at least two dedicated Enforcement Unit systemic staff members by Fiscal Year (“FY”) 2026;

Editor’s Note: This “systemic discrimination mission” EEOC focus is a substantial departure from President Carter’s vision of the best and highest use of the federal government’s three pre-eminent civil rights enforcement agencies and their missions. President Carter’s division of labor has served until now as the defining foundation architecture separating the roles, duties, and missions of the three primary civil rights agencies within the federal government. President Carter cut the pie like this:

  • the Equal Employment Opportunity Commission (“EEOC”) was to focus on individual Charge processing (to keep up with the ever-increasing number of Charges of unlawful discrimination serving the critical mission to help keep intact the fabric of society by giving every person in the United States both the knowledge and the guarantee that the federal government was available to hear and adjudicate for him or her, without cost, all meritorious Charges alleging unlawful discrimination). You may see this evidenced in the EEOC and OFCCP “Memorandums of Understanding” (“MOU”s) over the decades;
  • converted, in 1978, the Office of Federal Contract Compliance (“OFCC”) within the USDOL—then only a headquarters-type organization that policed and supervised the compliance activities of what was once 17 government contractor compliance sub-agencies shot gunned since 1965 throughout the federal agencies and each uniquely responsible for their agency’s federal contracts—and centralized all federal government contract compliance activities going forward into the newly established Office of Federal Contract Compliance Programs (“OFCCP”). Once established, President Carter then assigned OFCCP the almost exclusive role of finding, attacking, and rooting out “systemic” or “class-based” unlawful discrimination, acting like calvary on the frontier hunting for large-scale targets of opportunity to stamp out discrimination at its root source being accomplished through corporate “systems” (of hires, promotions, involuntary terminations, and compensation) predicated on unlawfully discriminatory corporate “policies” and/or “practices”. So, the EEOC owned the individual Charges, including the hundreds every year of individual “Complaints” filed with OFCCP pursuant to Executive Order 11246, which OFCCP deflected at intake to the EEOC. By contrast, OFCCP created the notion of Compliance Reviews (aka “audits”) (i.e., an explorative, diagnostic, and attacking investigative tool, not just responding to inbound claims of unlawful discrimination), and thus owned almost all “systemic investigations” and all “class-type” “Complaints” (meaning affecting two or more applicants and employees) filed with OFCCP pursuant to Executive Order 11246; and
  • the United States Department of Justice, Civil Rights Division to address itself to unlawful discrimination in which state governments engaged and to serve as the primary policymaker to interpret all discrimination laws the federal government enforced, including Title VII and Executive 11246, to ensure homogeneity in application among the federal non-discrimination agencies.

So, this most recent EEOC Strategic Plan encroaches terribly on OFCCP’s assigned mission at a time when the OFCCP has no political appointee to champion its position and fight to protect its mission responsibilities within the inner sanctums of the federal government triad of federal government civil rights agencies.

This new EEOC Strategic Plan now follows on the November 2020 Trump Administration’s revision of the 2011 EEOC-OFCCP MOU the EEOC and OFCCP have periodically updated over the decades, defining and separating their roles. We sounded a warning in a November 9, 2020 Week In Review Blog titled OFCCP’s New MOU with the EEOC Could Dramatically Change OFCCP’s Enforcement Program.” We noted that the revised MOU blurred the boundaries separating the missions of the EEOC and OFCCP by allowing OFCCP to undertake individual Complaint investigations arising under Title VII of the 1964 Civil Rights Act, previously the primary assignment of the EEOC and off-limits to OFCCP.

The 2020 EEOC-OFCCP MOU was the first step in knocking down the walls separating the two agencies as OFCCP expanded its mission by enabling it to take on a large portion of the EEOC’s primary mission. Now, the second wall of separation is falling, with the EEOC expanding its mission to take on large portions of the OFCCP’s primary mission: systemic discrimination enforcement.

Future OFCCP Directors and policymakers in Congress and on the Budget Committees will soon wonder what the distinction is between the two agencies as the lines between them blur toward common tasks and missions. This is obviously not a Democrat or Republican political policy since Democrats are changing Democrat policy, and Republicans changed Republican policy to get us where we are today. Nonetheless, these changes are a developing political policy…but leading where…to what conclusion? 

  • Improving the monitoring of its conciliation agreements and seeking discrimination remedies that go beyond individual monetary compensation. The Commission’s goal is to have 90% of its settlements and litigation resolutions contain “targeted, equitable relief” by Fiscal Year (“FY”) 2025 and maintain that level through FY 2026;
  • Improving and expanding access to its charge intake services, increasing the availability of intake interview appointments, and improving overall service to the public;
  • Leveraging technology and innovative outreach, including media, strategies to expand the agency’s reach to diverse populations; vulnerable communities; and small, new, and disadvantaged or underserved employers; and
  • Promoting “promising practices that employers can adopt to prevent discrimination in the workplace.”

How We Got Here

In November 2022, we reported that the EEOC published a notice in the Federal Register, to formally request public comments on the agency’s 33-page draft of its Strategic Plan for FYs 2022-2026. The comment period on the draft version closed on December 5, 2022. The Commission received 44 comments in response to the Federal Register notice. In a January 10 press release, the agency reported that it had reviewed those comments and was finalizing the Plan.

Strategic Plan Not to Be Confused with Separate Strategic Enforcement Plan

The EEOC also publishes a Strategic Enforcement Plan (“SEP”), which is a separate document different from its Strategic Plan. In January, the EEOC published, and requested public comment on, its Draft SEP for FY 2023-2027. (See our story here.) The Commission issues a SEP every five years to establish the agency’s substantive area enforcement priorities. This public comment period on the draft SEP closed on February 9, 2023, with the public submitting 48 comments. The Commission has yet to approve a finalized version of the SEP, which requires a formal vote.

Thursday, August 24, 2023: On Schedule, NLRB Announced Direct Final Rule on Quickie Election Procedures

Official Seal for the National Labor Relations Board (NLRB)On track with the Spring 2023 Regulatory Agenda, the U.S. National Labor Relations Board (“NLRB”) announced its Direct Final Rule revising its procedures governing representation elections located at 29 CFR §102. The NLRB published the Rule in the Federal Register the day after its announcement. This Rule largely reverses the amendments made by the Board’s 2019 Election Rule. For details on those amendments and related litigation, see our story here. The NLRB also included this background information in the preamble to the Rule. The Rule is scheduled to take effect on December 26, 2023.

The Board provided a ten-item list of the ways in which the new Rule changes or codifies current practice in the preamble here and also in a corresponding “Fact Sheet.”

Board Chairman Lauren McFerran and Members Gwynne A. Wilcox and David M. Prouty approved the new Rule. Board Member Marvin E. Kaplan dissented.

[Note that Member Wilcox’s (Democrat and former union lawyer) term expired on August 27, 2023. President Biden nominated her on May 27, 2021, for a portion of an unexpired term on the Board. The Senate confirmed her quickly on July 28, 2021. President Biden nominated her for a second term on June 6, 2023, and the Senate Committee on Health, Education, Labor, and Pensions advanced the nomination on July 12. However, the full Senate has not yet voted on her nomination to her second term.]

Friday, August 25, 2023: New U.S. NLRB Framework for Union Representation Proceedings Goes Beyond Already Union-Friendly Joy Silk Doctrine

Official Seal for the National Labor Relations Board (NLRB)In yet another 3-1 decision, the U.S. National Labor Relations Board (“NLRB”) announced a new framework to determine when employers must bargain with unions without a representation election. The Board majority’s ruling in Cemex Construction Materials Pacific, LLC not only revived the Joy Silk doctrine, which had allowed unions to bypass an official NLRB election with only a card-check count serving instead as a “vote”, but now goes beyond Joy Silk by further removing one option for an employer to seek an election that Joy Silk had allowed.

Under the new NLRB election framework, when a union requests recognition on the basis that a majority of employees in an appropriate bargaining unit have designated the union as their representative through signed union “authorization cards”, an employer must either recognize and bargain with the union or promptly file an RM petition seeking an election. However, if an employer which seeks an election commits any unfair labor practice that would require setting aside the election, the petition will be dismissed, and – rather than re-running the election – the Board will simply order the employer to recognize and bargain with the union. This is, in effect, a new remedy for employers which commit an unfair labor practice that would also spoil the hoped-for “laboratory clean conditions” in which to hold an employee election. 

The NLRB press release announcing the decision states that the new Cemex standard differs from the Joy Silk standard (which applied from 1949 to 1969) because Joy Silk required an employer to bargain with a union unless it had a good-faith doubt of the union’s majority status.

According to the Board, “the revised framework represents an effort to better effectuate employees’ right to bargain through their chosen representative while acknowledging that employers have the option to invoke the statutory provision allowing them to pursue a Board election. When employers pursue this option, the new standard will promote a fair election environment by more effectively disincentivizing employers from committing unfair labor practices.” 

Addressing the facts of the case at hand, all four Board Members found that the employer engaged in more than 20 instances of objectionable or unlawful misconduct during the critical period between the filing of the election petition and the election. As such, the Board found that the employer was subject to a bargaining order under both the Supreme Court’s 1969 decision in NLRB v. Gissel Packing Co. and under the newly announced standard, applied retroactively in this case.

Members Gwynne A. Wilcox and David M. Prouty joined Chair Lauren McFerran in issuing the decision. Member Kaplan joined the majority as to the ruling in the case at hand, but he dissented from the decision to establish the new framework. His point was simply that the Board did not have to fashion a new election framework but rather could have simply relied on its Gissel Order to certify the union and order the employer to then bargain with the new union.

Friday, August 25, 2023: Here is What is New in OFCCP’s Latest Audit Scheduling Letter for Supply & Service Contractors

logo for the Office of Federal Contract Compliance Programs (OFCCP)We have divided our coverage of OFCCP’s new Audit Scheduling Letter for Supply and Service Contractors into two WIR stories:

WIR story #1: This story catalogs the changes from OFCCP’s prior audit Scheduling Letter for Supply and Service covered federal Government contractors that the Office of Management and Budget (“OMB”) had approved for OFCCP’s use as of April 7, 2020. (This new OFCCP audit Scheduling Letter (that OMB has approved for OFCCP’s use as of August 24, 2023) does NOT apply to “Construction Contractors,” which now have their own audit Scheduling Letter).

You may stop after you read this story if all you want to know is what you must do in a coming OFCCP Supply and Service audit….unless your company wishes to resist OFCCP’s new changes, or some of them. (See the first eight paragraphs of our WIR story dated November 21, 2022, referenced and linked below to understand the legal mechanics of that opposition. Awkwardly, that opposition causes the federal contractor to “throw the first blow” by refusing to comply during an OFCCP audit, forcing OFCCP to then file an Administrative Complaint to enforce its (non-existent) “Rule” with which the contractor has refused to comply, as Firestone Tire & Rubber Co famously did in 1979.)

WIR story #2: Our second story, which follows immediately below this one, is titled: “OFCCP Published Its Expected Controversial Changes to its Greatly Expanded Supply and Service Scheduling Letter and Itemized Listing.” This second story provides links to all the underlying OFCCP documents. Our second story also includes links to the very important and explanatory “Supporting Statements” OFCCP supplied to OMB in past months discussing its proposals at great length. Our second story also explains the history that has led up to this new audit Scheduling Letter for Supply and Service Contractors.

So, What’s New?

Background Note: OFCCP published its proposals in two parts leading up to last week’s Final audit Scheduling Letter for Supply and Service contractors.

Below are three “lifeline” documents designed to alert you to OFCCP’s changes. Please do not shoot the messenger just because there are numerous significant changes. You just have to slog through the new (lengthy) OFCCP Supply and Service Scheduling Letter and Itemized Listing, one OFCCP request at a time. We suggest you print out now all six pages of the new audit Scheduling Letter for Supply and Service contractors. We then suggest you consult the new audit Scheduling Letter while you read what the changes are in the following three documents to which we link:

Document 1: OFCCP published on November 21, 2022, its Initial Proposals including, by our count, 28 significant changes to the prior OFCCP audit Scheduling Letter for Supply and Service Contractors.

We identified and published each proposed change and then discussed each one in this November 21, 2022, WIR story titled “OFCCP Proposed Numerous Changes to Its Supply & Service Contractor ICRs…” Scroll down eight paragraphs into this story to find the subhead: “Proposed Revisions to the Scheduling Letter.” This is the document you want to read.

Document 2: OFCCP published on April 18, 2023, a slight modification of its Initial proposal to accept only two of the dozens of vigorous, thoughtful, and earnest comments contractors made to the OMB. These two changes were to pull back:

  • one component part of the newly proposed Itemized Listing document demand 20(c) that would have required contractors to identify which “promotions” were “competitive” or “noncompetitive”; and
  • newly proposed Itemized Listing document demand 20(d) that would have required contractors to break down all terminations by the reason for termination.

We identified and  published the proposed change and then discussed each change in this April 18, 2023, WIR story titled “OFCCP’s Modified Proposal to Revise Scheduling Letter & Itemized Listing Revealed Via Newly Posted Documents.”

So, after reading these two WIR stories referenced above, you have the list of changed items in OFCCP’s audit Scheduling Letter for Supply and Service Contractors and our quick-hit discussion of each.

Document 3: For those contractors familiar with the old audit Scheduling letter and who wish to see exactly what changed, where, and how, you may want to review this “red line” comparison of the old audit Scheduling Letter (OMB approved as of April 7, 2020) as compared to the new audit Scheduling Letter (OMB approved as of August 24, 2023).

Happy Hunting…and be safe out there.

Friday, August 25, 2023: OFCCP Published Its Expected Controversial Changes to its Greatly Expanded Supply and Service Scheduling Letter and Itemized Listing

Expect a New Supply & Service Corporate Scheduling Announcement List Soon

logo for the Office of Federal Contract Compliance Programs (OFCCP)Via an email to subscribing stakeholders, OFCCP announced it finalized updates to its Supply and Service Scheduling Letter and Itemized Listing. The updated “audit Scheduling Letter” applies to Supply and Service “Compliance Evaluations,” including “Compliance Reviews” the agency schedules by audit Scheduling Letter dated on or after Thursday, August 24, 2023 (the day before the announcement).

The White House Office of Management and Budget (“OMB”) approved the changes on August 24. The changes greatly expand the agency’s audit Scheduling Letter and demand for documents (i.e., Itemized Listing) to Supply and Service federal contractors and subcontractors. The Itemized Listing now contains 26 items, compared to 22 items in the previous version.

We discuss the almost 30 significant changes to the new OFCCP audit Scheduling Letter for Supply and Service Contractors in our companion WIR story today titled: “Here What Is New In OFCCP’s Latest Audit Scheduling Letter for Supply & Service Contractors.”

Moreover, OFCCP modified several of the previously existing items to require more, and more detailed information and documents, including now purporting to require submission for audit of all AAPs within a “campus-like setting” involving multiple AAPs:

“If you are a post-secondary institution or Federal contractor with a campus-like setting that maintains multiple AAPs, you must submit the information requested in this scheduling letter for all AAPs developed for campuses, schools, programs, buildings, departments, or other parts of your institution, or company located in [city and state only].”

Contractors may wish to record all hours spent and all out-of-pocket expenses incurred by corporate personnel and consultants to respond to the new audit Scheduling Letter. This would be powerful evidence to offer to OMB in future OFCCP renewals of this Letter that OFCCP’s calculations of the “hours burden” and costs are understated (as most observers predict…by a very large margin: we set out OFCCP’s “burden hours” cost predictions below).

After considering public comments on its initial proposal (published on November 21, 2022) and modified proposal (published on April 17, 2023), OFCCP decided to forge ahead, making only a few minor changes to the modified April 2023 proposal, according to a new, 34-page Supporting Statement that OFCCP submitted to the OMB on August 22, 2023 (page 12 of the August 22 Supporting Statement). “Specifically, OFCCP has removed only the reference to the Contractor Portal and has modified Item 19 [of the Itemized Listing] to remove the reference to staffing agencies. OFCCP has also made nonsubstantive, language changes for clarity,” the agency stated. 

OFCCP further discusses the finalized modifications to Item 19, which requests employee-level compensation data, on pages 21-22 of the Supporting Statement. “… OFCCP acknowledges that there may be situations where a referred employee may not have an employer-employee relationship with the contractor. Therefore, OFCCP is amenable to removing the reference to staffing agencies from Item 19 and clarifying this issue through other means, such as compliance assistance,” the agency explained (Supporting Statement, page 22).

The agency discusses the Contractor Portal, including the “Data Input & Security” and “Implementation” aspects, on pages 11-13 of the Supporting Statement. 

OFCCP also updated its corresponding Frequently Asked Questions section. In addition, the agency stated it intends to post a course in its Contractor Compliance Institute, which will provide more guidance. 

Burden Hours

The finalized Scheduling Letter states:

“The estimated public reporting burden for this information collection is 37.5 hours, including the time for evaluating instructions, searching existing data sources, gathering and maintaining the data needed, and completing and evaluating the collection of information. If you have comments regarding the estimated reporting burden or suggestions for reducing the burden, please send them to the Office of Federal Contract Compliance Programs (OFCCP), Division of Policy and Program Development, 200 Constitution Avenue, N.W., Room C-3325, Washington, D.C. 20210, and reference OMB Control Number 1250-0003.”

How We Got Here

As we previously reported in detail the day OFCCP published the November 2022 notice, OFCCP’s initial proposal included significant changes to the agency’s Scheduling Letter and Itemized Listing (see the November 2022 version of the proposed revised Scheduling Letter and Itemized Listing here). However, the Federal Register notice itself provided no substantive details on OFCCP’s proposed changes.

Rather, OFCCP only revealed the substantive details of its new proposal in its 31-page November 2022 Supporting Statement. The public comment period for the November 21, 2022, notice closed on Tuesday, January 20, 2023DirectEmployers Association filed extensive and detailed comments on behalf of its member companies. Forty-seven other entities also filed comments. We discussed those comments in our story here.

We also reported that OFCCP published a new notice on Monday, April 17, 2023, in the Federal Register referencing its earlier November 2022 notice of its initial proposal. Once again, the Federal Register notice itself provided no substantive details on OFCCP’s modified, proposed changes or why the agency was now changing its November 2022 proposal. It was not until the following day (Tuesday) that a new Supporting Statement and the modified proposed Scheduling Letter and Itemized Listing – both submitted on April 10, 2023 – popped up on the OMB’s RegInfo.gov website. OFCCP reported that it received nine public comments in response to the modified proposal of April 17 (August 22, 2023, Supporting Statement, page 12). OFCCP addresses those comments in detail on pages 12-25 of the August 2023 Supporting Statement.

Finalized Version Not Published in Federal Register

Unlike the initial November 2022 proposal and the modified April 2023 proposal, our review of the OMB and Federal Register websites indicates that OFCCP does not plan to publish the finalized version of the Scheduling Letter and Itemized Listing in the Federal Register

Notably, when OFCCP finalized the previous version of the Scheduling Letter and Itemized Listing in April 2020 (See our stories here and here), the agency also did not publish that finalized version in the Federal Register.

And, at no time has OFCCP published its proposed changes for Notice and Comment pursuant to the Administrative Procedure Act (“APA”). Rather, OFCCP has published its proposed changes only for comment to comply with the Paperwork Reduction Act, which OMB administers. The APA requires formal Notice and Comment when federal agency changes propose substantial burdens on the regulated community. OFCCP is thus hoping that federal contractors will nonetheless comply with the agency’s new audit Scheduling Letter and not resist by refusing to comply during audits and thus bringing on a lawsuit in which the legitimacy of OFCCP changes would be at issue.

In Brief

Tuesday, August 22, 2023: OFCCP Published Minor Corrections to Its “Pre-Enforcement Notice & Conciliation Procedures” Final Rule

logo for the Office of Federal Contract Compliance Programs (OFCCP)Posting a one-page notice in the Federal Register, OFCCP made only minor corrections to its Final Rule on “Pre-Enforcement Notice & Conciliation Procedures” – a/k/a  the “PDN Rule.” “PDN” stands for “Pre-Determination Notice.” The agency published the PDN Final Rule on Friday, August 4. It substantially modified the reform procedures and standards OFCCP had been using since 2020 when issuing pre-enforcement notices and engaging in the conciliation process regarding agency claims in OFCCP audits that a federal contractor had engaged in alleged unlawful discrimination. (See our story here.)

The Final Rule is scheduled to take effect on September 5, 2023. We reported last week that OFCCP will hold a webinar that same day to discuss the new Rule.

Wednesday, August 23, 2023: Relying on Illinois Supreme Court Ruling, U.S. Appellate Court Concluded Biometric Information Privacy Act Claims Timely

Ruling Confirmed That Claims Under State’s Biometric Information Privacy Act Accrue with Each Scan or Transmission

Official seal of the United States Court of Appeals for the Seventh Circuit (Chicago)In a straightforward, three-page decision, the U.S. Court of Appeals for the Seventh Circuit (Chicago) ruled that a proposed class action lawsuit brought under the Illinois Biometric Information Privacy Act (“IBIPA”) was timely. The federal appellate court’s ruling adopted the Illinois Supreme Court’s February 17 ruling (Cothron v. White Castle System Inc., Dkt. No. 128004) that a claim accrues under the IBIPA “with every scan or transmission of biometric identifiers or biometric information without prior informed consent.” This means that the named plaintiff in the case can proceed with her claims that may potentially cover 9,500 current and former White Castle employees. Lawyers in that case on both sides estimated that, if successful, damages for the plaintiff’s proposed class-wide relief claims could exceed $17 billion.

As we explained in February, the U.S. District Court for the Northern District of Illinois rejected White Castle’s claims that the plaintiff’s lawsuit was untimely based on its assessment that a new IBIPA claim accrued each time she scanned her fingerprints and White Castle sent her biometric data to its third-party authenticator. Nevertheless, the federal court later certified its order for immediate interlocutory appeal to the Seventh Circuit because it involved a controlling question of law on which there is substantial ground for disagreement. In turn, the Seventh Circuit found that “the novelty and uncertainty of the claim-accrual question” warranted certification of the question to the Illinois Supreme Court.

Wednesday’s unanimous decision by a three-judge panel of the Seventh Circuit (Cothron v. White Castle System Inc., Case No. 20-3202) quickly disposed of White Castle’s appeal of the lower court’s timeliness ruling. “The Illinois Supreme Court’s answer to the certified question makes it clear that the suit is timely with respect to some of the allegedly unlawful fingerprint scans,” the Circuit’s Chief Judge Diane S. Sykes wrote on behalf of the panel. “That resolves this appeal,” she added.

Wednesday, August 23, 2023: USDOL Officially Published Its Controversial Final Rule Updating Davis-Bacon Act Regulations Expected To Dramatically Increase Labor Costs

Rule Effective October 23rd

Official seal for the United States Department of Labor (DOL) and the Wage and Hour Division (WHD)As anticipated, the U.S. Department of Labor’s Wage and Hour Division (“WHD”) published the Final Rule to update its Davis-Bacon and Related Acts (“DBRA”) regulations in the Federal Register. The DBRA requires the payment of prevailing wages and fringe benefits to laborers and mechanics who work on federal or District of Columbia contracts in excess of $2,000 for the construction, alteration, or repair of public buildings and public works. Among other changes, the Final Rule amends the methodology to determine the “prevailing wage.” It is scheduled to take effect on Monday, October 23, 2023.

We reported on this Final Rule in detail when the WHD announced it earlier this month. 

Thursday, August 24, 2023: US EEOC Published Its Final Rule To Revise Federal Employee Complaint Processes To Allow Document Transmittal Via Its Electronic Public Portal

Official Seal of the EEOC featuring Bald Eagle and bannerThe U.S. Equal Employment Opportunity Commission (EEOC) published a Final Rule amending its federal sector complaint processing regulations to explicitly authorize the Commission to transmit – as a standard practice – its hearing and appellate decisions and other documents to registered complainants through the EEOC Electronic Public Portal. The three-page Final Rule also addresses various uses of the Commission’s Electronic Public Portal. It took effect on the same date it was published.

In September 2022, we discussed the proposed version of the rule here. The comment period on the proposal closed on November 28, 2023, with the public submitting five comments. The EEOC addressed those comments here.

Note: In contrast, OFCCP has not proposed Rules to require contractors to submit documents to OFCCP via electronic means or in digital format.

Friday, August 25, 2023: USDOL ODEP Unveiled 2023 Disability Awareness Month Poster

Via its weekly newsletter, the U.S. Department of Labor’s Office of Disability Employment Policy (“ODEP”) announced the availability of the official poster for National Disability Employment Awareness Month (“NDEAM”) coming up in October 2023.

In May, we reported that the theme for this year’s NDEAM is “Advancing Access and Equity.”

Looking Ahead - Upcoming Reminders

Looking Ahead:
Upcoming Date Reminders

There are two new items flagged in red, below.

Also, with many regulatory items now moving forward within USDOL that had been slow walked during Acting Secretary of Labor Julie Su’s Confirmation Hearings to be the next Secretary of Labor, many pending regulatory items have fallen off the calendar in the last 30 days.

June 2023: U.S. DOL WHD’s current target date (now overdue) to publish its Final Rule on Nondisplacement of Qualified Workers Under Service Contracts (RIN: 1235-AA42)

June 2023: U.S. OSHA’s current target date (now overdue) to publish its Final Rule on Occupational Exposure to COVID-19 in Healthcare Settings (RIN: 1218-AD36)

August 23, 2023 (2:00 pm ET): DirectEmployers/USCIS Webinar on 2023 Revised Form I-9

August 28, 2023: Employers required to file Form LM-10 (union “persuader reports”) must begin using revised version of the form

August 2023: U.S. DOL WHD’s current target date for its Final Rule on Employee or Independent Contractor Classification Under the Fair Labor Standards Act (RIN: 1235-AA43)

August 2023: U.S. DOL WHD’s current target date for its Notice of Proposed Rulemaking on Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees (RIN: 1235-AA39) (The WHD submitted this proposal to the OMB on July 12, 2023)

August 2023: U.S. NLRB’s current target date for its Final Rule on Standard for Determining Joint-Employer Status (under the NLRA) (RIN: 3142-AA21)

August 2023: U.S. NLRB’s current target date for its Final Election Protection Rule (RIN: 3142-AA22)

August 2023: U.S. DOL’s OASAM’s current target date to publish Proposed Rule on “Revision of the Regulations Implementing Section 188 of the Workforce Innovation and Opportunity Act (WIOA) to Clarify Nondiscrimination and Equal Opportunity Requirements and Obligations Related to Sex” (RIN: 1291-AA44)

September 5, 2023: OFCCP’s Final Rule on “Pre-Enforcement Notice & Conciliation Procedures” takes effect

September 5, 2023 (2:00 – 3:30 pm ET): OFCCP webinar covering Its Final Rule on “Pre-Enforcement Notice & Conciliation Procedures

September 19, 2023: Comments due on the Office of Personnel Management’s Proposed Rule – “Recruitment and Selection Through Competitive Examination, and Employment in the Excepted Service (Rule of Many)

September 30, 2023: 2023 VETS-4212 filing deadline – the reporting cycle began on Tuesday, August 1, 2022

October 2, 2023: Deadline for comments on DHS/ICE’s proposed pilot procedure program & information collection for non-E-Verify participants as to remote I-9 Form document inspections

October 10, 2023: Comments due on EEOC’s Proposed Regulations to Implement the Pregnant Workers Fairness Act

 NEW  October 23, 2023: US DOL’s WHD Final Rule updating Davis-Bacon & Related Acts regulations takes effect

 NEW  December 26, 2023: NLRB’s Direct Final Rule revising its procedures governing representation elections takes effect

December 29, 2023: Statutory deadline for EEOC regulations to enforce the Pregnant Workers Fairness Act

December 2023: OFCCP’s current target date for its Notice of Proposed Rulemaking to “Modernize” Supply & Service Contractor Regulations (RIN: 1250-AA13)

December 2023: OFCCP’s current target date for its Final Rule on “Technical Amendments” to Update Jurisdictional Thresholds & Remove Gender Assumptive Pronouns (RIN: 1250-AA16)

January 1, 2024: U.S. DOL OSHA’s Final Rule Requiring Covered High-Hazard Industry Employers to Electronically Submit Injury & Illness Records Takes Effect

April 3 – April 5, 2024: DEAMcon24 New Orleans 

Register for DEAMcon24

June 2024: OFCCP’s current target date for its Notice of Proposed Rulemaking to Require Reporting of Subcontractors (RIN: 1250-AA15)

THIS COLUMN IS MEANT TO ASSIST IN A GENERAL UNDERSTANDING OF THE CURRENT LAW AND PRACTICE RELATING TO OFCCP. IT IS NOT TO BE REGARDED AS LEGAL ADVICE. COMPANIES OR INDIVIDUALS WITH PARTICULAR QUESTIONS SHOULD SEEK ADVICE OF COUNSEL.

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John C. Fox
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