OFCCP Week In Review: May 20, 2024

The DE OFCCP Week in Review (WIR) is a simple, fast and direct summary of relevant happenings in the OFCCP regulatory environment, authored by experts John C. Fox, Candee J. Chambers and Cynthia L. Hackerott. In today’s edition, they discuss:

• Coalition of 18 Republican States’ Attorney Generals Filed Suit to Challenge EEOC’s Harassment Guidance
• Bill to Amend How Illinois Biometric Information Privacy Act Damages Accrue Headed to Governor Pritzker’s Desk
• Budget Battles Update: Setting Aside Previous Side Deals, House Republicans Proposed Fiscal Year 2025 Budget Cuts
• In Brief
• New Publications
• Looking Ahead: Upcoming Date Reminders

Monday, May 13, 2024: Coalition of 18 Republican States’ Attorney Generals Filed Suit to Challenge EEOC’s Harassment Guidance

A coalition of 18 Republican state attorney generals (“AGs”), led by Tennessee Attorney General Jonathan Skrmetti, filed a federal court complaint challenging the U.S. Equal Employment Opportunity Commission’s (“EEOC”) finalized updates to the agency’s sub-regulatory “Enforcement Guidance on Harassment in the Workplace.” The updated guidance reflects notable changes in law, including the U.S. Supreme Court’s 2020 decision in Bostock v. Clayton County [140 S. Ct. 1731] (see our story discussing the guidance here). In Bostock, the High Court held that an employer which fires an individual merely for being gay or transgender violates Title VII (our story on the Bostock decision is here).

In the meantime, the EEOC’s challenged Enforcement Guidance (effective upon its issuance) remains in effect as the agency’s interpretation of Title VII’s prohibitions on covered employers.

Regarding sexual orientation and gender identity, the EEOC’s workplace harassment guidance provides that:

“… sex-based harassment includes harassment based on sexual orientation or gender identity, including how that identity is expressed. Harassing conduct based on sexual orientation or gender identity includes epithets regarding sexual orientation or gender identity; physical assault due to sexual orientation or gender identity; outing (disclosure of an individual’s sexual orientation or gender identity without permission); harassing conduct because an individual does not present in a manner that would stereotypically be associated with that person’s sex; repeated and intentional use of a name or pronoun inconsistent with the individual’s known gender identity (misgendering); or the denial of access to a bathroom or other sex-segregated facility consistent with the individual’s gender identity.” [citations omitted]

The 18 state AGs assert that the harassment guidance violates the Administrative Procedure Act (“APA”) because it is contrary to Tite VII and exceeds the EEOC’s statutory authority. They claim that the guidance goes beyond the scope of Bostock because the U.S. Supreme Court explicitly disclaimed any intent “to address bathrooms, locker rooms, or anything else of the kind.”

The complaint also mentions the October 1, 2022, federal district court in Texas’ nationwide injunction that vacated and set aside an earlier, separate EEOC guidance on Bostock (published on June 15, 2021) and the similar injunction a Tennessee Court had issued on July 15, 2022, covering 20 states at issue in that litigation and addressing the same guidance documents. (Our stories on those injunctions are here and here.)

Last month, we reported that a coalition of 17 GOP states’ AGs sued to stop EEOC’s Pregnant Workers Fairness Act (“PWFA”) regulations. Thirteen of the 18 state AGs challenging the harassment guidance were also part of the coalition that brought last month’s suit challenging the PWFA regulations. The 18-state coalition filed their complaint to stop the harassment guidance in the U.S. District Court for the Eastern District of Arkansas, Knoxville Division. (The 17-state coalition challenging the PWFA regulations filed its complaint in the same district court, but in the Delta Division.)

Similar to the 17-state coalition challenging the PWFA regulations, the 18-state coalition also brought Constitutional claims in its suit to kill the harassment guidance. The 18-state coalition asserts that the guidance runs afoul of Federalism, State Sovereignty, and the First Amendment. Moreover, the coalition claims that the EEOC’s independent commission structure violates the Separation of Powers provision in Article II of the U.S. Constitution.

EDITORIAL NOTE: If the constitutional claims the 18-state coalition urges fail, this lawsuit could then potentially backfire on the 18-state coalition should the Court then interpret Title VII to include harassment protections for gay, lesbian, and transgender Applicants and employees.

Thursday, May 16, 2024: Bill to Amend How Illinois Biometric Information Privacy Act Damages Accrue Headed to Governor Pritzker’s Desk

Measure would remove IBIPA’s per-scan penalty & switch to a per-person penalty
Governor Pritzker Has Not Yet Signaled Whether He Will Sign

To avert the threat to businesses of potentially catastrophic damages awards, the Illinois House passed a bill, S.B. 2979, to amend how damages accrue under the state’s Biometric Information Privacy Act (“IBIPA”). NOTE: Illinois courts have in the first two years of the Illinois biometric law already issued damages awards potentially amounting to billions of dollars under the statute.

The new bill would change how IBIPA violations would accrue going forward. Each initial collection of an individual’s biometric data (such as a fingerprint) would amount to one violation under the new bill, rather than a violation occurring for each scanning instance as occurs under current law. The Illinois Senate passed the new bill on April 11. The new measure thus now heads to Governor J.B. Pritzker’s desk. As of our WIR deadline, the governor has not indicated whether he will sign the revision into law.

How IBIPA Violations Accrue

Currently, IBIPA requires private entities to obtain permission before collecting fingerprints, retinal scans, voice prints, scans of face geometry, and other biometric information. As we have previously reported, a prevailing party may recover against a private entity for each violation:

1. liquidated damages of $1,000 or actual damages, whichever is greater, for negligent violations;
2. liquidated damages of $5,000 or actual damages, whichever is greater, for intentional or reckless violations;
3. reasonable attorneys’ fees and costs, including expert witness fees and other litigation expenses; and
4. other relief, including an injunction, as the court may deem appropriate.

If Governor Pritzker signs the bill, it would limit damages to one recovery per plaintiff no matter how many violations occurred and cap the damages. In other words, the bill would remove IBIPA’s per-scan penalty and switch to a per-person penalty.

The measure provides that it will take effect “upon becoming law.”

Other Notable Changes in the Bill

There are two other notable provisions in the bill:

1. it is NOT retroactive, and
2. the measure would allow companies to obtain the required “written release” via “electronic signature.” The bill defines “electronic signature” as “an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.” Currently, a “written release” under IBIPA includes only “informed written consent or, in the context of employment, a release executed by an employee as a condition of employment.”

How We Got Here

In February 2023, we reported (see here and here) that the Illinois Supreme Court held, in Cothron v. White Castle System Inc. (Dkt. No. 128004), that a claim accrues under (IBIPA) “with every scan or transmission of biometric identifiers or biometric information without prior informed consent.” We pointed out then that the damage claims in that class action case alone could exceed $17 billion. (See also our related story here.) In that decision, Illinois’ top court stated that “. . . policy-based concerns about potentially excessive damage awards under the Act are best addressed by the legislature.” According to published reports, late last month, a federal judge in the U.S. District Court for the Northern District of Illinois, Eastern Division (Chicago), preliminarily approved a $9.4 million settlement in the White Castle case (see here, here, and here).

Thursday, May 16, 2024: Budget Battles Update: Setting Aside Previous Side Deals, House Republicans Proposed Fiscal Year 2025 Budget Cuts

Oh my gosh: The 2023 budget packages the Congress and the President agreed to in 2023 as to “Topline spending” (meaning the maximum amount the federal Executive Branch agencies could spend) during FY 2023 (the so-called “discretionary spending bills the Congress passes each year) but also previously passed for FY 2024 (the current Fiscal Year) and for FY 2025 (the upcoming federal Fiscal Year) is already blowing apart. Rather than to have previously settled the FY 2025 federal “Topline” spending levels for the federal Executive Branch agencies, Republicans and Democrats last week “ripped the band-aids off” the still open wounds from their recent budget battles and agreements for FY 2023, FY 2024, and FY 2025 by now signaling their intent to ignore their previous agreements for FY 2025.

Rather, Republicans and Democrats are now signaling their intent to “start over” on budget discussions for FY 2025. So, buckle your seatbelts for continued budget turbulence the Congress had previously announced would not occur until after the FY 2026 budget. UGH!

Specifically, the warring parties took up their cudgels and again precipitated budget battles. First, REPUBLICANS: House Appropriations Committee Chair Tom Cole (R-OK) previewed proposed budget allocations for Fiscal Year [(“FY”)] 2025, which had been developed using the caps previously outlined in the Fiscal Responsibility Act of 2023 [(“FRA”)].” (See our stories on the FRA here and here). In a statement, Congressman Cole said, ‘[t]he bills written by this Committee will adhere to [the] law set by the Fiscal Responsibility Act—with no side deals . . .” This means that House Republicans want to set aside parts of the two-year budget deal President Biden struck with them last year in exchange for raising the debt ceiling.

Cole outlined the following key takeaways:

• Defense will receive an increase of nearly $9 billion (in FY 2025) in his view.
• Homeland Security will be funded above the President’s Budget Request.
• Veterans Affairs – including veterans’ medical care and benefits – will be fully funded.
• Non-defense programs will be cut effectively by 6%, and those cuts would not be evenly distributed.

• • Some subcommittees, such as Labor-Health and Human Services-Education, Financial Services-General Government, and State-Foreign Operations, will receive significant cuts of 10-11%.
  • Other subcommittees will have smaller non-defense cuts, reflecting Republican priorities across the bills.

That same day, House Appropriations Committee Ranking Member Congresswoman Rosa DeLauro (D-CT) then issued a statement decrying the proposed Republican cuts. She called upon Republicans to rethink their proposal and “[i]ncrease nondefense and defense funding levels by at least one percent as agreed to almost a year ago today.” The next day (Friday), taking a cue from Taylor Swift’s latest album, “The Tortured Poets Department,” Representative DeLauro followed up with a “Fact Sheet” referring to herself as the “Chair of The Tortured Topline Department.”

What Did Last Year’s Debt Ceiling Deal Entail?

The nonpartisan Center on Budget and Policy Priorities (“CBPP”) explained last year’s debt ceiling deal in part as follows:

“Appropriations for 2024 and 2025 are governed by agreements reached in May 2023 in negotiations among congressional leaders and the Biden Administration to raise the debt ceiling. Many, but not all, of those agreements were codified in the Fiscal Responsibility Act of 2023. Among other things, the FRA set legally binding caps on both defense and non-defense appropriations, similar to the caps in effect from 2012 through 2021 under the Budget Control Act of 2011.

The negotiators announced that they had agreed to allow defense funding to increase by 3.3 percent in 2024 and then by 1 percent in 2025, but to hold non-defense funding in 2024 roughly level with 2023 and follow that with a 1 percent increase in 2025.

For defense, implementation of the agreement is straightforward, as the FRA caps were set to allow the intended increases. For non-defense, however, the agreement is more complex because the FRA non-defense caps for 2024 and 2025 were set substantially below the announced agreed-on funding levels. For example, the 2024 cap is about 9 percent below the enacted 2023 level (not adjusting for inflation).

To raise funding back up to the agreed-on levels for 2024 and 2025, the parties to the FRA negotiations relied on what became known as “side-deal” adjustments. These were agreements to include provisions in the appropriations bills that would create additional room under the cap, thus allowing the cap to remain at the lower level set by the law while providing higher funding. Some of these agreed-on adjustments had also been included in the 2023 appropriations bills (prior to the FRA), but the side agreements for 2024 and 2025 increased the funding that is freed up under the caps.” [citations omitted]

Senate Battle: Defense and Nondefense Parity

Second, DEMOCRATS: Meanwhile, in the Senate, Democrats are insisting that nondefense spending programs receive spending parity with defense programs. Predictably, Republicans have pushed back, asserting that defense programs take priority. (See here and here for more details.)

Additional Background

Currently, the federal budget is funded through the end of September 2024. See our story here on the final FY 2024 budget. Our story on President Biden’s FY budget request is here.

Note: Going forward, the WIR does not intend to report on what we expect will be frequent ongoing partisan back-and-forth budget proposals and counter-proposals in the next (perhaps) 12-months. Rather, we will report when Congress passes the 12 final discretionary budgets for the federal Executive Branch agencies for FY 2025. Depending on the November 4, 2024 Congressional and Presidential elections, the federal FY 2025 budget (which commences October 1, 2024) might not be passed until mid-2025…half-way or so through the coming Fiscal Year FY 2025.

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.