Employment and Labor Insider - Legalese Is Not Spoken Here

Last spring I had the honor of talking about equal pay legislation with Stephanie Thomas on her podcast The Proactive Employer. My counterpart and the star of the show was Lilly Ledbetter.

Yes. That Lilly Ledbetter. Lilly Ledbetter of the Lilly Ledbetter Fair Pay Act. The Lilly Ledbetter who wore a red suit and stood beside President Obama when he signed the Fair Pay Act into law. Ms. Ledbetter had recently published her book, Grace and Grit: My Fight for Fairness and Equal Pay at Goodyear and Beyond.

Yes, I am serious! The Lilly Ledbetter who is standing right behind the President!

Stephanie is always great, and Ms. Ledbetter herself was a gracious and charming lady, and our half hour flew right by. If she hadn't lived two states away from me, I would have invited her over for dinner.

Ms. Ledbetter strongly believes that pay discrimination against women is rampant. And a women's advocacy group has recently come out with a study showing that, between 2011 and 2012, women's relative pay has dropped from about 82 cents for each dollar that men earn to only about 81 cents on the male dollar.

At the same time, we have extremely well-compensated female super-executives like Sheryl Sandberg of Facebook saying that women aren't as successful, not because men are holding them back, but because women don't want success enough, or something like that, and Marissa Mayer, CEO of Yahoo, saying she's not a feminist and abolishing telecommuting for her employees while building herself a baby nursery next door to her office. (Sisterhood is powerful, baby! This is what we fought for!)

THE PRICE WAS WRONG: I had reported earlier on model Brandi Cochran's $7.7 million verdict in a pregnancy discrimination lawsuit against the long-running TV game show The Price Is Right. The trial judge has now granted the show's motion for a new trial, saying that he gave an erroneous jury instruction according to a California Supreme Court decision that was issued after the trial. I'll continue to keep you posted on this and all daytime-TV-related employment law.

So, with all apologies to Lilly Ledbetter, as we approach the sixth anniversary of the Supreme Court's decision saying that Ms. Ledbetter's case against Goodyear was untimely (a decision that Congress overruled by passing the Ledbetter Fair Pay Act), and the 50th anniversary of the Equal Pay Act, and as the Office of Federal Contract Compliance Programs says in so many words that it's going to keep on scrutinizing contractors' pay in every way possible until it finds a violation, I'm going to be contrary: here are five reasons why I think the "gender pay gap" is mostly baloney.

Res ipsa loquitur.

1. The "X cents on the dollar" argument is fallacious. This statistic measures all women in the workplace against all men in the workplace. It takes nothing into account except sex and pay. That's it. It doesn't control for anything else that might affect a person's pay, such as educational level, years in the workforce, skill or experience level, willingness to travel or do "dirty" work, or anything. Just sex and pay. So it doesn't tell you much of anything about discrimination. At most, it's the first piece in a 2,000-piece jigsaw puzzle. Here are a few of the other 1,999 pieces:

Problem solved! My work here is done!

2. Statistically speaking, men are disproportionately willing to work heavy, dirty, dangerous jobs in bad conditions with long or inconvenient hours. Because these jobs totally stink aren't very pleasant, companies are sometimes willing to pay quite a lot to anyone who is willing to do them. Companies don't have to do that with nice, clean, 9-to-5, Monday-through-Friday office jobs, or even "pink-collar" jobs, which might have inconvenient hours and be stressful in some ways but don't usually involve danger or heavy lifting.

3. Statistically speaking, women are more likely to start their work lives later and interrupt their work lives. (Remember, we are talking "statistically.") The work force is still full of women my age and older, who unlike today's young women, may not have jumped right into their chosen careers, often because we were working at dead-end jobs for a few years while our husbands went to professional school or threw themselves headlong into their own careers. And/or we were having babies. (In my own case, I didn't even start law school until I was 30 and already had one child. And I'm not that unusual.) Even if we were working, we quit* when we had babies. Our husbands never did -- male "moms" are a relatively new phenomenon.

*Quit working outside the home. Moms and dads who stay home, of course, do a ton of work.

So, if you're young, remember that the "pay equity" stats include us as well as you, and we have a big pay gap that usually was not a result of discrimination by employers but a result of family choices we made at various stages of our lives. In other words, our choices are bringing down the average for the whole group of working women. Don't you feel better now?  :-)

4. In the most recent recession, the pay gap narrowed somewhat, and do you know why? It's because women were employed while men were unemployed. (Statistically speaking, of course.) That's right -- men were disproportionately affected by the last recession. You may recall that they even called it a "mancession." Most of the jobs that went away were "men's" jobs -- construction, heavy manufacturing, etc. This narrowed the gender pay gap because women were making a little bit of money while many men were not making any money. If the pay gap really is widening again, I hope it's because some of those poor unemployed men have started to find jobs.

5. Even when they're in the workforce, women disproportionately treat their jobs as "secondary" to their spouses' so that they'll have time to devote to their families. (Statistically speaking again, of course.) Just look around you. Count up the women you know who take off work when their kids are sick, assume primary responsibility for taking care of elderly or sick relatives (including their in-laws), move when their spouses get transferred, and say they want a job that they can "forget about" when they go home at night. Now count up the men you know who do these things.

Some might say taking good care of them is as rewarding a career as any.

My guess is that everyone's circle of acquaintances will include a relatively large number of women, and a relatively small number of men, who do. Now -- tell me who do you think is probably going to make more money at work? Would it be the people who consider their jobs "secondary" to the jobs of their spouses, or would it be the people who consider their jobs to be the "primary" jobs in the family? Do I really have to ask? Of course not. And, if that's the way those women want it, then what's the problem?

I can tell you what the problem isn't: it isn't employment discrimination. 

Image credits: Wikimedia Commons: (1) President Obama signing Lilly Ledbetter Fair Pay Act into law (January 2009) with Lilly Ledbetter standing behind him (in black turtleneck); (2) random person starting a jigsaw puzzle; (3) Benno Adam, "Stier"; (4) William-Adolphe Bouguereau, "The Elder Sister."

All right, kiddies. My posts over the last few weeks have been juicy and entertaining. (Or as juicy and entertaining as employment law can get.) But summer is over, and it's time to buckle down.

"I h8 school!"

The Supreme Court of the United States (aka "SCOTUS") began its new term this past Monday, and it will be reviewing at least four employment cases, as well as two non-employment cases that will have an impact on employment litigation. (Hat tip to Bloomberg BNA. Paid subscription required.)

Here's a rundown on the cases that the Court has agreed to hear.

Do you have to have authority to hire fire, demote, or discipline to be a "supervisor" under Title VII?

In Vance v. Ball State University, the U.S. Court of Appeals for the Seventh Circuit* said you do, but other courts have disagreed. The plaintiff in Vance alleged that she was racially harassed by two people who really were supervisors, as well as another employee who may or may not have been. This last person was really important because there wasn't much evidence that the "true" supervisors had harassed her but a lot of evidence that this third person did.

*The Seventh Circuit hears appeals from federal courts in Illinois, Indiana, and Wisconsin.

The definition of "supervisor" is important because if the harasser is not a "supervisor," then the employer is not liable unless it knew or had reason to know about the harassment and failed to act reasonably to stop it. On the other hand, if the harasser is a "supervisor," the employer is strictly liable unless it qualifies for the  "Faragher/Ellerth" defense.*

*At the end of this post, I have a quick and dirty example of how this defense works, just in case you're not familiar with it.

The Seventh Circuit affirmed summary judgment for the university, in part on the ground that this one bad lady was not a "supervisor" because she did not have authority to hire, fire, demote, or discipline the plaintiff.

Oral argument is scheduled for October 10 (Tuesday).

Can you defeat an FLSA collective action by making an offer of judgment to the only named plaintiff before the class has been certified?

(Note to class/collective action nerds: I realize I'm being sloppy by combining "class" and "collective action" terminology here, but I don't know any other way to make myself intelligible.)

Here's the story. A plaintiff sued her employer, alleging that the employer violated the Fair Labor Standards Act by deducting for meal time in which she and her co-workers were allegedly required to work. If true, this would be a no-no. The FLSA allows plaintiffs to bring lawsuits "on behalf of themselves and others similarly situated," which is what this plaintiff sought to do. This is known as a "collective action." (Class actions are a little different and are governed by different rules. That's probably all you need to know about that for now.)

After the plaintiff filed suit but before she got court approval of a collective action, the employer made what is called an "offer of judgment." This essentially means that the employer offered her everything that she could have recovered for the employer's alleged FLSA violations against her (which was $7,500).

Then the employer argued that her lawsuit should be dismissed on the ground that it was now moot, thereby also defeating many claims of all the co-workers who would otherwise have joined her collective action.

Pretty clever, huh? This is why defense lawyers get the big bucks.

A district court in Pennsylvania agreed with the defendant and dismissed the lawsuit, but the U.S. Court of Appeals for the Third Circuit* reversed, saying that this type of tactic means that a defendant could continually "pick off" named plaintiffs one by one and prevent a collective action from ever going anywhere.

*The Third Circuit hears appeals from federal courts in Delaware, New Jersey, and Pennsylvania.

"Well, duh, Your Honors, why do you think we did it?"

Anyway, the Supremes have agreed to hear the case, and oral argument is scheduled for December 3.

"Bay-bee, bay-bee . . . where did our FLSA collective action go?"

When can a benefits plan be reimbursed from a litigation settlement?

I was really hoping my friends at Employee Benefits Unplugged would post on this, and maybe they will later, but in the meantime, I'll do my best here.

An employee was in a devastating non-work-related automobile accident and received disability benefits in the amount of $66,866. He hired a lawyer and went after the driver who was at fault, and from her and various uninsured motorist policies recovered a gross amount of $110,000.

That's why plaintiffs' lawyers get the big bucks. In this case, 40 percent of the $110,000. Without ever going to court.

"Let 'em know YOU MEAN BUSINESS."

So, really, this guy got $66,000 from his litigation settlement. But the benefits plan went after him for reimbursement of the full $66,866 that it had paid out, effectively leaving him in the hole for $866. A federal district court in Pennsylvania decided that the plan was entitled to the full amount (considering the "gross" settlement) and ordered the guy to pay up.

He appealed, and the Third Circuit reversed. According to the court, the Employee Retirement Income Security Act allows a plan to recover "appropriate equitable relief." That means there may be limits on what a plan may recover, the court said. In this case, recovering more than the employee netted would not be "appropriate." Moreover, the employee got his settlement through his own efforts -- the plan did not do anything to help him. So the Third Circuit remanded for the district court to consider what equitable relief for the plan would be "appropriate."

A joint amicus brief in support of the plan has been submitted by the U.S. Chamber of Commerce, the Society for Human Resources Management, the American Benefits Council, and the ERISA Industry Committee.

The U.S. Department of Justice has also submitted an amicus brief. It does not support either side, but according to Bloomberg BNA, argued "that courts retain power under the common-fund doctrine to equitably apportion attorneys' fees, so the Third Circuit's decision should be partially affirmed."

Oral argument is scheduled for November 27.

Well, anyway, here's a link if you care.

The fourth employment case involves which court should hear the claim of discrimination and retaliation claims brought by a federal government employee. I don't think many of my readers are federal employees, so I'll just link to the Eighth Circuit* decision that the SCOTUS will hear for anyone who may be interested. Argument on this one was held this past Tuesday (October 2).

*The Eighth Circuit hears appeals from federal district courts in Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota.

Two non-employment cases with big implications for employers

Fisher v. University of Texas. The Supreme Court will hear arguments in Fisher v. University of Texas, in which an undergraduate applicant is challenging the university's admissions standards. The student, who is white and who has since graduated from Louisiana State University, contends that the school's admissions standards violate her rights under the Equal Protection Clause of the U.S. Constitution. A three-judge panel of the U.S. Court of Appeals for the Fifth Circuit* upheld the university's use of race as a factor in selecting applicants for acceptance. The student petitioned for rehearing by the full Fifth Circuit, and nine judges voted against rehearing the case while seven voted in favor of it. Five of those seven joined in a strongly-worded written dissent from the decision not to rehear the case.

*The Fifth Circuit hears appeals from federal courts in Louisiana, Mississippi, and Texas.

The American Bar Association supports the University, as do the NAACP, the Lawyers Committee for Civil Rights Under Law, and the National Women's Law Center, and others.

The plaintiff/student has the support of three members of the U.S. Commission on Civil Rights, the Center for Individual Rights, the Mountain States Legal Foundation, the Pacific Legal Foundation, the Asian American Legal Foundation, and others.

The Equal Employment Advisory Council, an employers' group, has not supported either side but in its amicus brief, according to Bloomberg BNA, has "urged the court not to issue a decision that makes it more difficult for federal contractors to comply with government-mandated affirmative action requirements" or "maintain successful voluntary diversity initiatives."

Oral argument is scheduled for this Tuesday (October 10). The University of Texas School of Law has a great website with links to all of the briefs and decisions in this case, as well as any other related material you might care to read.

Comcast Corp. v. Behrend. This is an antitrust case in which the SCOTUS will decide what type of evidence must be considered in certifying a class action under Rule 23 of the Federal Rules of Civil Procedure. Comcast has challenged a Third Circuit decision affirming certification of a class of current and former cable subscribers.

What does this have to do with employment, you ask? Well, Wal-Mart v. Dukes was a sex discrimination class action brought under Title VII. (The linked article links to the actual decision.) In the summer of 2011, the Supreme Court found that the case could not proceed as a nationwide class action because there wasn't enough "commonality" among the members of the putative class. (The women were claiming discrimination in virtually all aspects of employment, and the class consisted of more than a million members. Meanwhile, Wal-Mart had a corporate policy prohibiting discrimination and delegated employment decisions to the store-management level, which meant that there were hundreds of thousands of decisionmakers.)

Since Dukes, the federal courts have been struggling the parties' burdens of proof in determining whether a putative class has sufficient "commonality" to proceed, what evidence should be considered, and what weight the evidence should be given. The Supreme Court's Comcast decision, scheduled for oral argument on November 5, is expected to provide some welcome clarification.

Photo credits: Clipart.com (girl texting at school), Wikimedia Commons.

DON'T FORGET! If you want my quick explanation of Faragher/Ellerth (not that you need it), read on!

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Don't eat that pretty red apple, Snow White!!! It has poison in it!!!!

You know the old saying, "If it seems too good to be true, it probably is"? Well, it appears that this may be the case with the new "sweet deal" the Internal Revenue Service is offering to employers who agree to reclassify their "independent contractors" [sic] as "employees" in exchange for some admittedly generous breaks.

The IRS announced this week that it is offering a REALLY, REALLY NICE THING to employers. :-)  If an employer promises that it will treat its independent contractors as employees going forward and enters into an agreement with the IRS, the IRS will assess employment taxes for only the tax year before the agreement was entered and at a reduced rate, with no penalties or interest, and no audits. The program is aimed at small employers, but all employers are welcome. Jewell Lim Esposito at our sister blog, Employee Benefits Unplugged, has more details about the IRS deal and thinks it's great from a pure tax standpoint.

I agree. But, as Jewell also notes, the news release says nothing about amnesty on all liability resulting from a misclassification.

I must admit that I wondered why this Administration, which is usually aggressive toward employers, is all of a sudden being so sweet and lovable?

(I am such a cynic.)

It then occurred to me: But, of course! This is to allow that other agency, the U.S. Department of Labor, which presumably will not be a party to the IRS/employer agreement, to come in and sue the pants off the employer for back benefits and wage-hour violations. Because, you see, misclassified "independent contractors" don't get benefits or overtime, and they may not even be getting the minimum wage once their "fee" is divided by hours worked.

My paranoia was really raging now, and I remembered another news item that came out at the beginning of this week: Secretary of Labor Hilda L. Solis announced a "cooperative" initiative in which the IRS, the DOL, and 11 state governments* are going to start working together to fight misclassification of employees as independent contractors. In addition, the Office of Federal Contract Compliance Programs (the affirmative action guys) and the Occupational Safety and Health Administration are among the agencies who will be receiving and sharing information.

*The 11 states who entered into the memorandum of understanding or have agreed to do so are Connecticut, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Missouri, Montana, New York, Utah and Washington.

(Hat tip to Bureau of National Affairs for both of these news items.)

So! Aha! Putting it all together, here's what the deal really appears to be: A naive (probably small but could be large) employer who has some misclassified folks will read about the IRS deal and think, "What have I got to lose? I'd be a fool to turn this down!" So he signs the agreement with the IRS.

Bam! Six months later, the DOL -- who has received from the IRS the list of unsuspecting employers who entered into this agreement admitting that they were doing it wrong -- comes out for an investigation and hits the employer for overtime and possibly minimum wage violations. Then, the employer's state government -- armed with the same information -- comes out and clobbers the employer for workers' compensation premiums and benefits, and possibly other benefits that the state requires employers to offer to employees. Bam! Bam!

But, wait! There's more! The newly classified employees might have claims for other employment benefits as well, as Microsoft learned the hard way. Bam! Bam! Bam! Then, OSHA and the OFCCP and who knows who else can come in and kick the employer a few more times while he's down. Bam! Bam! Bam! Bam! Bam! (etc.)

THE MORAL: If you have "independent contractors" who are misclassified, by all means get that fixed as quickly as you can. As long as the workers are misclassified, you are potentially liable for back taxes, including FICA, and penalties, back benefits, and back wages. In fact, you can even be liable for severance pay in the event that the faux independent contractor was let go under circumstances that would have entitled her to severance if she'd been an employee. (I actually had this happen to a client once.)

To repeat, if you're doing it wrong, stop it now. But don't be too eager to enter into this deal with the IRS, and definitely do not enter it without consulting with your attorney. Situations vary, and the IRS deal may be good for some, but you also may be much better off taking your chances with an IRS audit (which may or may not ever happen). Meanwhile, you will not be erecting a large neon sign with flashing lights saying, "Here I am, Hilda Solis and everybody else -- I'm guilty -- come and get me!"

Just call me Jim Garrison.