Take 5: Views You Can Use – July 2011

This issue of "Take 5" was written by Frank C. Morris, Jr., a Member of the Firm in Epstein Becker Green's Washington, D.C., office.

1. Employer Automated Scheduling Systems, Company Websites, and Emerging ADA Requirements

Private entities with automated scheduling or customer service systems should assure that disabled callers can navigate such systems, or risk violating the Americans with Disabilities Act ("ADA"). Title III of the ADA covers private entities providing goods and services to the public and it classifies such entities as "public accommodations." Disparate treatment of the disabled arising from a public accommodation's scheduling system runs afoul of Title III and may result in serious financial penalties and adverse public relations.

According to rules recently promulgated by the U.S. Department of Justice ("DOJ"), 28 C.F.R. ยง 36.303, when a public accommodation uses an automated-attendant system for receiving and directing incoming telephone calls, that system must provide effective real-time communication with individuals using auxiliary aids and services, including text telephones ("TTYs") and all forms of Federal Communications Commission-approved telecommunications relay systems, such as Internet-based relay systems. The Disability Rights Section of the DOJ recently stepped up enforcement of this and other pertinent regulations, reaching settlement agreements with companies whose telephonic scheduling systems allegedly led to difficulties for individuals with disabilities.

In a recent settlement agreement between the DOJ and one company, the DOJ pursued the position that the company's alleged refusal to communicate through relay services constituted discrimination against those with hearing impairments. This and other claims were resolved in a multimillion dollar lawsuit. The DOJ also reached a settlement agreement with Megabus USA, LLC, and Megabus Northeast, LLC (collectively "Megabus"). Megabus customers with mobility impairments allegedly could not view the bus schedules for wheelchair-accessible buses online; rather, they were forced to use the telephonic reservation system to obtain the schedules and consequently incurred a nominal reservation fee not imposed on online customers. The agreement required Megabus to publish on its website the schedules of wheelchair-accessible buses so that patrons using wheelchairs would not incur the fee that non-disabled patrons could avoid.

The DOJ's examination of Megabus, and both its online and telephonic appointment-scheduling systems, points to an important issue: the automated-attendant system regulations take the position that public accommodations must make all scheduling and customer service systems accessible. The DOJ's position now appears to be that, if a business offers its clientele the opportunity to schedule appointments or access customer service via the Internet and telephone, the business must ensure that both systems are accessible for customers with disabilities. Failing to comply with this requirement may prove both costly and publicly embarrassing.

Business websites raise a related issue. Today, of course, companies spanning the gamut of activities make web-based marketing a major focus of activity. In fact, many businesses advertise that first access to goods and services, or the best deals, are only available via the business's website. Businesses that do so should assess the accessibility of their websites. The DOJ has published an Advance Notice of Proposed Rule Making regarding Accessibility of Web Information and Services (75 Fed. Reg. 43460). Private litigants, including advocacy groups for individuals with sight impairments, have already challenged many businesses' website operations, relying on Title III of the ADA. There are thus likely future challenges from the DOJ and private litigants over businesses' technological systems for various kinds of customer contact. This is a rapidly evolving area and covered entities with public accommodation obligations should review their customer service and scheduling systems and websites to assess accessibility for individuals with sight or hearing impairments. We are providing guidance to health care, hospitality, and financial service clients, among others, on these emerging issues.

2. All Employer Alert — The NLRB's Assault on Employer Facebook Policies

Employers have already realized that social media have created numerous workplace issues. Quickly rising to the top of the list is the recent spate of National Labor Relations Board ("NLRB" or "Board") complaints based on employer attempts to set rules on employee social media use that may impact on employer interests.

Section 7 of the National Labor Relations Act protects employees — both union and non-union — who engage in "concerted activity" for their "mutual aid and protection." In 2004, the NLRB held in Southern Heritage Village that employer rules could restrict public statements by employees, provided that the employer rules were for the purpose of maintaining a "civil and decent work place" and did not explicitly restrict rights to engage in protected concerted activity, e.g., supporting a union drive.

In a virtual 180-degree turn, the NLRB has issued a number of complaints against employers of both unionized and unorganized employees who have sought to enforce social media policies in a variety of cases. For example, in Karl Knauz Motors, Inc., No. 13-CA-46452, the NLRB challenged the discharge of an employee who made a hostile Facebook posting about a sales event that he believed could impact the earnings of car sales employees. Similarly, in Hispanic United of Buffalo Inc., No. 3-CA-27872, the NLRB alleges that the nonprofit organization serving low income clients fired five employees for posting on one employee's Facebook page either negative comments about working conditions and staffing or various responses.

In March 2011, the NLRB also ruled in Wyndham Resort Development Corp. that the employer violated the NLRA when it issued a warning to an employee who said he "might not want to tuck in my shirt" and that "I did not sign up for this crap" in response to a possible dress code change. Overruling an Administrative Law Judge, a split NLRB reached the remarkable conclusion that the employee was engaged in protected concerted activity merely because he made his statement in front of other employees. The NLRB did so despite the fact that the employee did not purport to speak for anyone else and had not sought any co-worker input.

It appears that the NLRB, with an Acting General Counsel and union-sympathetic Board majority appointed by President Obama, will seek to treat as protected activity any social media postings that are possibly made on behalf of other employees or to induce or even prepare for group action. The cases being pursued by the NLRB also strongly suggest that the Board will attempt to drape a mantle of Section 7 protection even on harsh or profane insults posted to social media outside the workplace during non-working time if such posts arguably may be connected to concerted activity or the terms and conditions of employment. Whether the courts will agree with the NLRB's troubling new position remains to be seen.

Given this extremely aggressive NLRB approach to employer workplace policies and rules, employers should promptly work with experienced employment counsel to review their social media, blogging, email, and Internet policies to assess whether the NLRB could find that they improperly interfere with employee Section 7 rights. Any policy changes should be made before an employer needs to invoke the policy, whether because of improper employee activity or union organizing. Employers will need to walk the proverbial tightrope in seeking to control disruptive or otherwise inappropriate postings while not stepping on the NLRB's ballooning interpretation of concerted activity—especially given the vast array of sophisticated technology and social media now commonly used by employees.

3. Cell Phones, Texting, and OSHA — A Risky Mix for Employers

It is no secret that employers face potential liabilities from employee use of cell phones, PDAs or other devices while engaged in business-related driving. Many employers have issued policies barring employees from texting or using cell phones while on company business or for business communications while driving. They have done so to protect employees and others from accidents and to avoid additional liability should an employee have an accident.

Now the Occupational Safety and Health Administration ("OSHA") is upping the ante. According to David Michaels, the Assistant Secretary of Labor for Occupational Safety and Health, companies will be fined (or penalized) under the Occupational Safety and Health Act ("OSH Act") for cell phone-related accidents caused by employees if OSHA determines that employer policies contributed to an accident. Describing OSHA's "Distracted Driving Initiative," Michaels stated that OSHA's new enforcement position is that it will pursue cases if it receives a credible employee complaint or otherwise can find that "an employer has set up a situation where an employee has a strong incentive or is required to use their phone, and that had resulted in an accident that has any sort of personal damage?..." OSHA will pursue these cases without issuing a new rule and will rely on the OSH Act's General Duty Clause requiring employers to provide a safe workplace, free of recognized hazards.

OSHA's enforcement initiative will apply to many employers who otherwise do not regularly have OSHA concerns because of the nature of their business. The OSHA initiative is a good reminder to all employers to review their existing policies on cell phone use and texting by employees while driving on the job or in company vehicles or to issue a new, comprehensive policy. Employers should assure that employees indicate their agreement to the policy either electronically or in hard copy. These policies, and the record that an employee signed off on the policy, could be the key fact in the successful defense of an OSHA citation or a lawsuit resulting from an accident.

4. New Employer Obligations under the Fair Credit Reporting Act, Effective July 21, 2011

A lesser-noticed provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") affecting employers is an amendment to Section 615 of the Fair Credit Reporting Act ("FCRA"). It applies to employers that take adverse action against either a prospective or current employee based, in whole or in part, on the individual's consumer credit report. The amendment requires an employer in such cases to make additional disclosures to the individual. There are five new required disclosures as of July 21, 2011:

  • That the individual's credit score was used by the employer;
  • The range of credit scores under the credit scoring system used;
  • The key factors that adversely affect the individual's credit score under the system, but not to exceed four (if however, the number of credit inquiries made is a factor, it is not counted in the four);
  • The date the credit score was created; and
  • The name of the entity or person that supplied the credit score to the employer or that supplied the credit file that was the basis for the score.

Despite the FCRA's focus on consumer credit matters, it controls employer use of consumer reports from consumer reporting agencies to employers that relate to a prospective or current employee's "creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living" when the report is actually used or expected to be used as a factor in determining an individual's employment eligibility.

The new Dodd-Frank FCRA-required disclosures are in addition to current employer notice and authorization obligations to applicants and employees when credit or background checks are being sought or relied upon. Because many employers conduct background checks on at least some applicants and current employees, both the new and existing FCRA required disclosures are important to employers. Taken together with the Equal Employment Opportunity Commission's interest in whether credit checks have a discriminatory impact on protected groups under Title VII of the Civil Rights Act of 1964, employers should review their practices regarding credit and background checks and when and why they are being used. Employers should also assure that they are timely making all of the newly-expanded FCRA required disclosures.

5. Wal-Mart v. Dukes — The Supreme Court Gives Employers Guidance on Resisting Class Certification

The Supreme Court of the United States' recent decision in Wal-Mart v. Dukes provides the framework for determining when employment class actions may proceed and guidance on how employers can defend against putative class claims. In Dukes, the plaintiffs alleged gender discrimination because of a supposed "core company culture" facilitating discriminatory promotions and wage increases in violation of Title VII against approximately 1.5 million current and former female Wal-Mart employees from over 3,400 stores across the country. The three named plaintiffs worked in California Wal-Marts, where the U.S. District Court for the Northern District of California and U.S. Court of Appeals for the Ninth Circuit Court initially certified the class. A five-member majority of the Supreme Court refused to certify such a large class because it lacked several key elements of "commonality." Equally important, the Court clarified key class action principles.

Justice Scalia's majority opinion emphasized that certification depends upon a common contention, capable of class-wide resolution, with common answers apt to drive the resolution of the litigation.

Generating a common answer required the plaintiffs to demonstrate that "discrimination was the company's standard operating procedure." The Court, however, found a wide gap between any specific denial of a promotion and unsupported allegations that the company had a policy of discrimination, and required that the ultimate outcome of the case must answer the crucial question of "why was I disfavored?" to proceed as a class action.

The issue as framed by the Court was whether the plaintiffs had provided sufficient evidence of any uniform employment practice that met the test of plausibility. The Court distinguished between the possibility that a discriminatory culture can exist when local management has discretion to promote and increase wages, and the fact that one does exist which ultimately results in discrimination, holding that the former "does not lead to the conclusion that every employee in a company using a system of discretion has such a claim in common." The Court's plausibility analysis is similar to that first established in non-class cases in Ashcroft v. lqbal, and Bell Atlantic Corp. v. Twombly. The Dukes plaintiffs simply lacked commonality because they held numerous jobs varying in responsibility for different lengths of time, working under different supervisors in multiple regions across the country.

The plaintiffs relied primarily on the testimony of a sociologist, Dr. William Bielby, who conducted a highly questionable so-called "social framework analysis" of Wal-Mart's "culture" and personnel practices. Dr. Bielby concluded that the company was supposedly vulnerable to gender discrimination by permitting unconscious bias. The District Court concluded that the Daubert test for admission of expert testimony did not apply at the certification stage of class action proceedings, but the Supreme Court strongly suggested to the contrary. The Court effectively performed a Daubert test of its own, citing scholarly works refuting Bielby's pseudo-scientific conclusions. The Court found Bielby's "testimony [did] nothing to advance [the plaintiffs'] case," because he could not determine what percentage of the employment decisions at Wal-Mart were allegedly the result of stereotyped thinking.

The plaintiffs' statistical evidence was no more helpful. It did not address employment decisions at the store level despite their claims of excess discretion producing disparities at the store level.

The Court also unanimously denied the plaintiffs' request for individual backpay awards, reaffirming that class claims for monetary relief may not be certified under FRCP 23(b)(2), where the monetary relief is not incidental to the injunctive or declaratory relief requested. The plaintiffs' claims were for just such individualized claims for money payments. The critical element of a "(b)(2) class is the indivisible nature of the injunctive or declaratory remedy warranted." Employers should note that Rule 23(b)(3) may nevertheless permit class certification when each individual class member would receive an individualized award.

Dukes is certainly helpful to employers, but it does not by any stretch of the imagination provide complete immunity from employment discrimination or wage and hour class actions when plaintiffs can show commonality and that a class action decision would produce a common answer for all class members. After Dukes, employers should assure that local management discretion is clearly subject to strong Equal Employment Opportunity ("EEO") policies that ban discriminatory exercise of discretion and provide employees with a complaint mechanism for any perceived EEO issues.