In the latest of an increasing number of recent website accessibility decisions, in Gorecki v. Hobby Lobby Stores, Inc. (Case No.: 2:17-cv-01131-JFW-SK), the U.S. District Court for the Central District of California denied Hobby Lobby’s motion to dismiss a website accessibility lawsuit on due process and primary jurisdiction grounds.  In doing so, the Hobby Lobby decision further calls into question the precedential value of the Central District of California’s recent outlier holding in Robles v. Dominos Pizza LLC (Case No.: 2:16-cv-06599-SJO-FFM) which provided businesses with hope that the tide of recent decisions might turn in their favor.

The Hobby Lobby website provides a variety of services which are closely related to Hobby Lobby’s brick and mortar stores, including:  purchasing products online; searching for store locations; viewing special price offers; and purchasing gift cards.  Plaintiff alleged that Hobby lobby violated Title III of the ADA, as well as California’s Unruh Act, by not providing full and equal access to its website for individuals with disabilities (as the website was inaccessible to individuals who are blind and make use of a screen-reading program).  In the complaint, Plaintiff sought injunctive relief requiring Hobby Lobby to ensure that individuals with disabilities have as full and equal enjoyment of the website as individuals without disabilities.  However, importantly, Plaintiff did not seek the imposition of a specific technical rule or standard for Hobby Lobby to provide full and equal enjoyment.

Hobby Lobby made a motion to dismiss Plaintiff’s complaint on two grounds – due process and the primary jurisdiction doctrine.  In short, Hobby Lobby argued that because the U.S. Department of Justice had not promulgated final website accessibility regulations under Title III setting forth specific accessibility standards, it would violate due process to provide Plaintiff with injunctive relief imposing website accessibility obligations as Hobby Lobby lacked sufficient notice of its obligation.  Additionally, Hobby Lobby argued the action should be dismissed under the primary jurisdiction doctrine which, if applied, would hold that the court should not rule on website accessibility issues until DOJ – the expert regulator in this area – first speaks on the issue by promulgating and adopting regulations.  While these arguments have generally failed in the context of website accessibility, their potential viability was recently revisited following the Dominos decision which dismissed a website accessibility action based on these very grounds (noting that businesses might be able to provide access to a website’s services via alternative means than making the website itself accessible – e.g., a 24/7 toll-free, sufficiently staffed, hotline).

Here, in denying the motion to dismiss, the court rejected each of Hobby Lobby’s arguments.  First, the court took great exception with the contention that Hobby Lobby did not have sufficient notice of the need to make its website accessible.  The court stressed that DOJ had articulated its position that Title III requires website accessibility for over 20 years – including in speeches, congressional hearings, amicus briefs and statements of interest, rulemaking efforts, and enforcement actions and related settlement agreements.  Moreover, at a broader level, the court noted that from its inception, Title III has always required “full and equal enjoyment” and the provision of “auxiliary aids and services” for “effective communication” and further explained that these overarching civil rights concepts could (and should) easily apply to websites and screen-readers.  Second, following up on this reasoning and underscoring other comparable times when courts have interpreted similar issues under Title III’s civil rights provisions, the court disagreed that it would be appropriate to apply the primary jurisdiction doctrine.  The court saw no reason the issue of website accessibility could not be adjudicated in the same way countless other Title III matters had been handled in the past.  Moreover, the court expressed concern that – given that seven years has already passed since DOJ first expressed an intent to promulgate website accessibility regulations under Title III with little progress – invoking the doctrine could needlessly delay potentially meritorious claims.

The Court also rejected Hobby Lobby’s efforts to rely upon the Dominos decision – which was reached in the very same court – to support its arguments.  In Dominos – contrary to the law that had come before it in website accessibility matters decided in other jurisdictions – citing due process concerns, the court did invoke the primary jurisdiction doctrine to dismiss a website accessibility claim.  However, the court in Hobby Lobby, readily distinguished the Dominos decision in concluding it did not dictate the same ruling in this case.  Specifically, in Dominos the plaintiff sought injunctive relief that required Dominos comply with the WCAG 2.0, a specific standard that has not been officially adopted by DOJ in Title III regulations (though it has been officially adopted in other government regulations and is readily used by DOJ in its settlement agreements).  In Hobby Lobby plaintiff merely sought “full and equal” enjoyment of the website’s services without specifying how that would have to be accomplished – a pivotal distinction.

The Hobby Lobby decision underscores the likelihood that the Dominos decision remains, for now, an outlier.  Taken in tandem with last week’s post-trial verdict in Gil v. Winn-Dixie Stores, Inc., this most recent decision should be viewed as another reason why businesses should seriously consider prophylactic efforts to make their websites (at least when linked to places of public accommodation) accessible.  (For now, the most commonly accepted path to accessibility remains compliance with WCAG 2.0 at Levels A and AA).

Featured on Employment Law This Week – New York City has enacted “fair workweek” legislation.

Mayor Bill de Blasio has signed a package of bills into law limiting scheduling flexibility for fast-food and retail employers. New York City is the third major city in the United States, after San Francisco and Seattle, to enact this kind of legislation. The bills require fast-food employers to provide new hires with good-faith estimates of the number of hours that they will work per week and to pay workers a premium for scheduling changes made less than 14 days in advance.

Watch the segment below, featuring our colleague Jeffrey Landes from Epstein Becker Green. Also see our colleague John O’Connor’s recent post, “New York City Tells Fast Food Employees: ‘You Deserve a Break Today’ by Enacting New Fair Workweek Laws,” on the Hospitality Labor and Employment Law blog.

After years of ongoing and frequent developments on the website accessibility front, we now finally have – what is generally believed to be – the very first post-trial ADA verdict regarding website accessibility.  In deciding Juan Carlos Gil vs. Winn-Dixie Stores, Inc. (Civil Action No. 16-23020-Civ-Scola) – a matter in which Winn-Dixie first made an unsuccessful motion to dismiss the case (prompting the U.S. Department of Justice (“DOJ”) to file a Statement of Interest) – U.S. District Judge Robert N. Scola, Jr. of the Southern District of Florida issued a Verdict and Order ruling in favor of serial Plaintiff, Juan Carlos Gil, holding that Winn-Dixie violated Title III of the ADA (“Title III”) by not providing an accessible public website and, thus, not providing individuals with disabilities with “full and equal enjoyment.”

Judge Scola based his decision on the fact that Winn-Dixie’s website, “is heavily integrated with Winn-Dixie’s physical store locations” that are clearly places of public accommodation covered by Title III and, “operates as a gateway to the physical store locations” (e.g., by providing coupons and a store locator and allowing customers to refill prescriptions).  This line of reasoning follows the “nexus theory” body of law that has been developing over the past several years.  Based upon this conclusion, Winn-Dixie was ordered to: (i) bring its website into conformance with the WCAG 2.0 Guidelines; (ii) develop and adopt a website accessibility policy (publishing aspects of it upon the website); (iii) provide website accessibility training; (iv) conduct regular ongoing compliance audits; and (v) pay Plaintiff’s reasonable attorney’s fees and costs.  The parties were left to negotiate the exact timeframe for each requirement.

While this post-trial verdict does not have precedential value in other matters, it does raise a variety of points that businesses should consider as they continue to confront the still-increasing number of website accessibility demand letters and lawsuits:

  • The Court applied the nexus theory to the Winn-Dixie website even though customers could not make purchases directly through the website.  The Court deemed the ability to obtain coupons and link them to customer discount cards (for use in stores), refill prescriptions (for in-store pick up), and the presence of the store locator sufficient services for a nexus to exist between the brick and mortar locations and the website;
  • By applying the nexus theory, the Court was able to avoid having to rule on whether a website is a public accommodation in and of itself (a point of law courts remain split on);
  • The Court adopted the WCAG 2.0 Guidelines as the standard of website accessibility, thus following DOJ, the recently refreshed standards for Section 508 of the Rehabilitation Act, the Air Carrier Access Act, and countless private settlements between businesses and advocacy groups or private plaintiffs reached over the past 5 years;
  • The Court gave heavy weight to the testimony of an “accessibility consultant” who had conducted an audit of the Winn-Dixie site and testified very favorably for the Plaintiff that he did not believe that remediation process would be terribly difficult;
  • Relying upon the accessibility consultant’s representations, the Court went far beyond the scope of most existing website accessibility agreements by holding Winn-Dixie must require that any third-parties – including tech-giants such as Google – who are responsible for aspects of the website to also conform to the WCAG 2.0 while operating as part of the Winn-Dixie website;
  • The Court was unmoved by Winn-Dixie’s estimates that the remediation work to bring the website into conformance with WCAG 2.0 could cost upwards of two hundred and fifty thousand dollars ($250,000), and did not believe that such an amount would constitute an undue burden, noting that in the preceding 2 years the company had spent a total of approximately nine million dollars ($9,000,000) to launch a new website and then modify that new website to roll out a new customer rewards system; and, finally, in the one somewhat helpful piece for businesses;
  • The Court noted that in making a website accessible, a business need not ensure that it is accessible on all browsers and when read by all screen reader programs, provided that it is accessible on “main browsers” (e.g., Google Chrome, Internet Explorer, and Apple Safari) when read by “main screen reader programs” (e.g., JAWS and NVDA).

Given the Trump Administration’s edict against the promulgation of new regulations (without first eliminating multiple existing similar regulations) it is increasingly unlikely that DOJ will issue private sector website accessibility regulations in the near future.  Therefore, businesses can expect advocacy groups and private (often serial) plaintiffs to continue to threaten and/or bring website accessibility actions under both the ADA and corresponding state laws.  With that in mind, this verdict serves as a strong reminder of the risks of litigating a website accessibility matter, at least in situations where there is a reasonably clear nexus between a brick and mortar place of public accommodation and the website.

On May 24, 2017, the New York City Council signed a bill banning retail employers in New York City from utilizing “on-call scheduling.” Given the unpredictable fluctuations in customer flow associated with retail business operations, retail employers have historically utilized “on-call” schedules in an effort to manage labor costs associated with running their businesses. Rather than provide employees with fixed work schedules, many retail employers place employees “on-call,” requiring them to call in shortly before their work shift is to start to ascertain if they need to actually report to work.  The conflicting interests between retail employers and their employees posed by “on call” scheduling is obvious.  Retail employers favor the use of “on-call’ scheduling because it enables them to tailor their workforce to customer needs and avoid excessive labor costs.  Employees disfavor “on-call” scheduling for a variety of reasons.  First, they are not able to accurately predict their income because they are uncertain as to the number of hours they will actually work each week.  Second, the lack of rigid work schedule impacts their ability to plan their day-to-day life. Because they are not certain when they will be required to work, their ability to schedule appointments, attend regular school obligations, or hold a second employment position are impaired.

In January 2015, San Francisco became the first city to pass predictive scheduling legislation, requiring retail employers in that City to pay employees for cancelled on-call shifts and provide notice to their employees of their biweekly schedules. In September 2016, Seattle followed suit, enacting legislation mirroring that in San Francisco.  Similar predictive scheduling legislation is presently pending at the federal level as well as in no less than twelve states (California, Connecticut, Illinois, Indiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, Oregon and Rhode Island).  By adopting this new law banning on-call scheduling, New York City becomes the most recent jurisdiction to seek to protect retail employees’ interests despite the increased operating costs such predictive scheduling legislation may impose on retail employers

Pursuant to the new law, retail employers in New York City now have to post employees’ work schedules at least 72 hours before the beginning of the scheduled hours of work. The law also precludes retail employers from cancelling, changing or adding work shifts within 72 hours of the start of the shift (except in limited cases).  Moreover, each retail employee must be scheduled for no less than 20 hours of work during each 14-day period.  In a press release in which he praised the New York City Council for passing the bill and in which he expressed his intent to immediately sign the law, Mayor de Blasio claimed that the law “will ensure that workers will be able to budget for the week ahead, schedule childcare, and plan evening classes.” While the law is clearly intended to help retail employees better balance their professional and personal lives, the strict scheduling requirements will challenge New York City’s retail employers to develop new means of managing their businesses impacted by the unpredictability posed by seasonal demand, customer fluctuation, weather, holidays, employee turnover issues, and other variations in day-to-day retail operations.

Since the early 1980s, the NLRB has vacillated back and forth on whether non-union employees are entitled to have a co-worker present during an investigatory interview that could result in discipline — a right that has long been afforded union employees pursuant to the United States Supreme Court’s holding in NLRB v. Weingarten, 420 U.S. 251 (1975). In the 42 years since the Supreme Court first extended this right to union employees in Weingarten, the NLRB has changed its position four times as to whether “Weingarten rights” extend to non-union employees.  In what can only be viewed as a victory for retail employers with non-unionized workers, the NLRB, on May 3, 2017, rejected a request that it again reverse course and extend Weingarten rights to non-union employees.  With this Order, the NLRB confirms that retail employers need not acquiesce to a request by a non-union employee to have a co-worker sit in while that non-union employee is questioned in an investigatory interview.

In Weingarten, the Supreme Court concluded that an employer violated Section 8(a)(1) of the National Labor Relations Act (“NLRA”) by denying a unionized employee’s request to have a union representative present at an investigatory interview which the employee reasonably believed might result in disciplinary action. The Court held that the presence of a union representative “safeguard[s] not only the particular employee’s interest, but also the interests of the entire bargaining unit. . . .” Weingarten, 420 U.S. at 260.  Several years later, the NLRB extended Weingarten rights to non-union employees.  See Materials Research Corp., 262 NLRB 1010 (1982).  However, non-union workers did not savor this right for too long.  In two successive decisions, Sears, Roebuck, & Co., 274 NLRB 230 (1985) and in E.I. DuPont & Co., 289 NLRB 627 (1988), the NLRB reversed course and ruled that Weingarten rights do not extend to non-union employees.  But by 2000, union employees regained this right when, in Epilepsy Foundation of Northeast Ohio, 331 NLRB 676 (2000), the NLRB ruled that Weingarten rights do extend to non-union employees.  In Epilepsy Foundation, the NLRB reasoned that: “Section 7 [of the NLRA] rights are enjoyed by all employees and are in no way dependent on union representation for their supplementation.” Id. at 678.  Just four years later, in IBM Corp., 341 NLRB 1288 (2004), the NLRB changed direction again, ruling that non-union employees do not have the right to have a co-worker present during an investigatory interview that might lead to discipline. In this opinion, the NLRB noted that changes in employment laws and recent security concerns require that investigations into matters like substance abuse, improper internet use, dishonesty, threats, harassment and discrimination be conducted “in a thorough, sensitive, and confidential manner” and that failure to conduct investigations in this manner could expose an employer to claims that it did not conduct a fair investigation or that unfair discipline was imposed based on incomplete information. The NLRB reasoned that the presence of a co-worker increases the possibility that information will not be kept confidential, reduces the chance that the employer will get the whole truth, and increases the likelihood that employees with information about sensitive subjects will not come forward. Accordingly, the NLRB concluded that the right of a non-union employee to a coworker’s presence is “outweighed by an employer’s right to conduct prompt, efficient, thorough, and confidential workplace investigations.” Id.

By application dated November 15, 2016, petitioner Charles Strickler asked the NLRB to reconsider its position and, again, extend Weingarten rights to non-union employees.  By Order dated May 3, 2017, the NLRB rejected this application with virtually no explanation.  Retail employers remain within their rights to deny a non-union employee’s request to have a co-worker present when that employee is being interviewed by the employer, even if the interview may result in discipline.

As a follow-up to our blog post from April 24, 2017, the New York Court of Appeals has issued its decision in Griffin v. Sirva, addressing the questions certified by the U.S. Court of Appeals for the Second Circuit regarding the scope of liability for employment discrimination based on an individual’s criminal history under the New York State Human Rights Law (“NYSHRL”). In its May 4, 2017 opinion, the Court of Appeals held that only a worker’s employer may be liable for direct discrimination under NYSHRL § 296(15), while other entities who do not qualify as employers may be liable for aiding and abetting an employer’s discriminatory acts under NYSHRL § 296(6).

In Griffin v. Sirva, defendant Allied Van Lines (“Allied”) and its corporate parent Sirva, Inc., had contracted with Astro Moving and Storage Co. (“Astro”) to have Astro’s employees provide packing and moving services on an independent contractor basis at the homes of Allied’s customers. Plaintiffs argued that defendants should be held liable for violating the NYSHRL even though they were not plaintiffs’ direct employer, because Allied had required plaintiffs to pass a background check before being assigned to its jobs. When plaintiffs’ background checks revealed prior convictions for sexual offenses against young children, Astro terminated their employment because those convictions disqualified plaintiffs from performing work for Allied, which constituted 70 to 80 percent of Astro’s business.

The Second Circuit had certified three questions regarding the scope of liability for discrimination based on a worker’s criminal history under the NYSHRL: (1) does NYSHRL § 296(15), prohibiting discrimination based on criminal convictions, limit liability to an aggrieved party’s “employer”; (2) if so, does the term “employer” include entities that are not an aggrieved party’s “direct employer,” but who exercise a significant level of control over the direct employer’s discrimination policies and practices; and (3) does NYSHRL § 296(6), providing for “aiding and abetting” liability, apply to an out-of-state entity that requires its New York State agent to discriminate based on a worker’s criminal history. In addressing these questions, the Court of Appeals reformulated the second and third queries as discussed below, to make them more broadly applicable beyond the parameters of this particular case. Five judges supported the majority opinion, while one judge dissented.

Question 1: Only an Employer May Be Liable for Direct Discrimination

The NYSHRL states that it “shall be an unlawful discriminatory practice for any person, agency, bureau, corporation or association” to deny employment based on an individual’s prior criminal conviction “when such denial is in violation of the provisions of article twenty-three-A of the correction law.” While this statutory language would appear to extend liability to “any” person or entity, not just an individual’s employer, the court found it significant that “liability under section 296(15) arises only upon a violation of [New York Correction Law Article 23-A (“Article 23-A”)].” Article 23-A prohibits a “public or private employer” from denying employment based on a criminal conviction unless, after analyzing eight specified factors, the employer can demonstrate that there is either a direct relationship between the criminal offense and the position sought or that granting employment would pose an unreasonable risk to the property or safety of others. Given this language, the court held that, “[b]ecause it incorporates Article 23-A by reference, section 296(15) of the Human Rights Law likewise limits liability to a public or private employer.”

Question 2: Common Law Principles, Especially Control, Determine Employer Status

The Court of Appeals questioned the assumption inherent in the Second Circuit’s second certified question, that “a significant level of control” over an employer’s “discrimination policies and practices” might be sufficient to confer employment status on a third party. Because “other factors are relevant to that determination,” the court reformulated the second question to read: “[i]f [liability under] Section 296(15) is limited [to an employer], how should courts determine whether an entity is the aggrieved party’s ‘employer’ for the purposes of a claim under Section 296(15)?”

Noting that neither the NYSHRL nor Article 23-A contains a substantive definition of “employer,” the court referred to both federal and New York case law holding that, in the absence of statutory guidance, common law principles should be used to determine employer status. Under applicable New York precedent, employer status is based on four relevant factors: (1) the selection and engagement of the worker; (2) the payment of salary or wages; (3) the power of dismissal; and (4) the power of control over the worker’s conduct. The Court of Appeals accordingly held that these four factors should be used to “determine who may be liable as an employer” under the NYSHRL, “with greatest emphasis placed on the alleged employer’s power ‘to order and control’ the employee in his or her performance of work.”

Question 3: Out-of-state Non-Employers May Be Liable for Aiding and Abetting Discrimination

The Court of Appeals indicated that the third certified question, regarding whether “an out-of-state principal corporation that requires its New York State agent to discriminate in employment on the basis of a criminal conviction may be held liable for the employer’s violation of § 296(15),” was too focused on “whether there was discrimination in this particular case.” Because the court interpreted the Second Circuit’s question as seeking “clarification as to who may be liable” under the NYSHRL’s “aiding and abetting” provision, it reformulated the third question to ask “whether section 296(6) extends liability to an out-of-state nonemployer who aids or abets employment discrimination against individuals with a prior criminal conviction.”

In granting summary judgment for defendants, the district court had held that a third party who was not the plaintiff’s direct employer could only be liable for “aiding and abetting” discrimination if the third party and the direct employer were “joint employers.” The Court of Appeals rejected that decision, holding that the “aiding and abetting” provision “applies to any ‘person,’” and “nothing in the statutory language or legislative history limits the reach of this provision to employers” or joint employers. Instead, the broad language of the NYSHRL’s “aiding and abetting” provision applies to any person or entity, including out-of-state defendants who are not employers of an aggrieved party, as long as “the alleged discriminatory conduct had an impact in New York.”

Impact of Court of Appeals Decision

The Court of Appeals did not address how its answers to the Second Circuit’s certified questions should apply to the underlying facts of Griffin v. Sirva. In her dissent, however, Judge Jenny Rivera indicated that, under the majority’s decision, “it is unlikely that either [Allied or Sirva] could be found to be an employer,” because “[n]either contributed to the selection and engagement of Astro employees, paid salary or wages, possessed the power of dismissal, or controlled Astro’s employees’ conduct.” Judge Rivera appeared to take the position that requiring a criminal background check, standing alone, should not be sufficient to establish “employer” status under the NYSHRL.

As we previously discussed, however, that does not end the inquiry. Under the Court of Appeals’ decision, an entity that is not a “direct employer” may face liability under the NYSHRL in one of two ways. First, depending on the facts of a particular case, a third party engaging another company’s workers on an independent contractor basis may be liable as an “employer” under New York’s four-part common law test, especially if any indicia of the third party’s control over the contract workers are present. Second, even in the absence of an employment relationship, a third party that requires an independent contractor’s employees to pass a criminal background check may be found liable under the NYSHRL’s “aiding and abetting” provision. Because the Court of Appeals held that this provision should be “construed broadly,” and applied to both non-employers and out-of-state defendants, the court’s interpretation of the “aiding and abetting” provision may sweep more third parties within the NYSHRL’s ambit going forward.

The Court of Appeals raised, but left unanswered, the question of whether a third party may be found liable for “aiding and abetting” discrimination in the absence of any finding of direct discrimination by a worker’s employer. The court previously held that “a newspaper company that had no employment relationship with the plaintiff” was liable for “aiding and abetting” discrimination by publishing its employment ads in separate categories by gender. The Griffin court found it “[n]otabl[e]” that this previous opinion imposed “aiding and abetting” liability without “consider[ing] the issue of whether, separate from the newspaper company, any employer or prospective employer was liable for primary discrimination under the Human Rights Law.” This discussion may have significance for the Griffin appeal, because Allied and Sirva now face potential “aiding and abetting” liability, even though a jury previously found that plaintiffs’ direct employer did not discriminate against them in violation of the NYSHRL. Whether a court will impose liability against a third party for “aiding and abetting” discrimination, after a fact-finder has expressly determined that the primary employer did not discriminate against plaintiffs, however, remains to be seen.

In summary, the Court of Appeals’ decision provides some good news for companies that engage independent contractors, by holding that only “employers” are subject to direct liability for employment discrimination under the NYSHRL. The court’s decision also poses some challenges, however, as it may extend liability to a third party either by finding employer status under New York’s four-part common law test, or by determining that imposition of a background check requirement constitutes “aiding and abetting” discrimination. Accordingly, companies who conduct background checks on their independent contractors should remain cognizant of both the four factors that determine employer status under New York common law, and the various statutes, including the NYSHRL, the New York City Human Rights Law, and the New Jersey Law Against Discrimination, that may impose liability for “aiding and abetting” acts of employment discrimination under such circumstances.

On April 27, 2017, the Ninth Circuit[1] issued an opinion in Aileen Rizo v. Jim Yovino that provides employers with guidance on how to lawfully implement facially-neutral business policies using prior salary information to set a new employee’s salary, without running afoul of the federal Equal Pay Act (“EPA”). While there has been some backlash regarding this recent decision, the Court’s ruling was consistent with its prior holding in Kouba v. Allstate Insurance Co.[2] when it vacated the lower court’s decision that denied Defendant Jim Yovino’s (“County”[3]) motion for summary judgment, and directed that the lower court consider the County’s hiring procedures in light of certain factors set forth in the Kouba case (as detailed below).

In 2009, Plaintiff Aileen Rizo (“Plaintiff”) began working for the Fresno County School District. Her starting salary was determined using the school district’s standard salary schedule, “Standard Operating Procedure 1440[4],” which was routinely and uniformly applied to all management-level employees, including Plaintiff. Based on the County’s application of this facially neutral policy, which is based on an employee’s prior salary, Plaintiff’s pay was lower than those of her colleagues with higher past salaries, including her male coworkers.

The pay disparity between Plaintiff and her male coworkers was undisputed by the County in this case. But, the County argued that its use of prior salary falls squarely under one of the affirmative defenses to the EPA – i.e., that prior salary amounts to an “other factor other than sex.”[5]

Plaintiff responded by arguing that if an employer’s pay structure is based “exclusively on prior wages,” then any resulting pay differential between men and women cannot be interpreted to be based on “any other factor other than sex.” Her position was consistent with Tenth and Eleventh Circuit decisions and the EEOC’s stance on this topic. Plaintiff further claimed that the use of prior salary alone can’t be considered a “factor other than sex” because it perpetuates existing pay disparities and further undermines the purpose of the Equal Pay Act. The lower court agreed with Plaintiff and found that women’s earlier salaries are likely to be lower than men’s because of historical gender bias; but, the District Court also acknowledged that its decision potentially conflicted with the 1982 decision in Kouba.

On appeal, the Ninth Circuit vacated the District Courts decision and held that its earlier decision in Kouba was controlling in the present case.  In its opinion, the Ninth Circuit held that the Kouba decision “allow[s] an employer to base a pay differential on prior salary so long as it showed that its use of prior salary effectuated some business policy and that the employer used the factor reasonably in light of its stated purpose and its other practices.”  Here, the County offered four business reasons for it policy: (1) the policy is objective, in the sense that no subjective opinions as to the new employee’s value enters into the starting-salary calculus; (2) the policy encourages candidates to leave their current jobs for jobs at the County, because they will always receive a 5% pay increase over their current salary; (3) the policy prevents favoritism and ensures consistency in application; and (4) the policy is a judicious use of taxpayer dollars.

The matter was remanded to the District Court for (1) an evaluation of the four business justifications offered by the County regarding its gender-neutral preset pay scale, and (2) a determination of whether the County’s use of employees’ prior salary is “reasonable in light of [its] stated purpose” under the standard set forth in Kouba.

Many states, including California, recently revised their state law equal pay protections to address the use of prior pay in hiring decisions, and whether it perpetuates prior pay discrimination. In particular, California’s equal pay law now includes a provision that expressly prohibits the use of prior salary “by itself [to] justify any disparity in compensation.” Interestingly, California’s amendment, which was passed prior to the Ninth Circuit’s decision, was not addressed at all in the decision. But, arguably here, all allegedly discriminatory decisions were made prior to the amendment’s passage.

In light of these new state and local laws’ prohibitions and/or restrictions on the use of prior pay as a determinant in setting an applicant’s salary, even if the Ninth Circuit finds that the federal Equal Pay Act permits the use of pay history for this purpose (under certain circumstances), in many jurisdictions, state and local laws will prohibit it. Employers should be aware both of the split in the circuits on this issue, and also of any applicable amendments to state and local equal pay laws that may impact their ability to rely on prior pay in setting an applicant’s rate of pay.

[1] The panel included Circuit Judges A. Wallace Tashima and Andrew D. Hurwitz and the Honorable Lynn S. Adelman, U.S. District Judge for the Eastern District of Wisconsin, sitting by designation.

[2]Kouba v. Allstate Insurance Co. ( 9th Cir. 1982) 691 F.2d 873.

[3] As Defendant Jim Yovino was sued in his official capacity as the Fresno County Superintendent of Schools, the Ninth Circuit utilized the word “County” when referring to the Defendant. For simplicity, we utilize the same term.

[4] To determine a candidate’s salary using “Standard Operating Procedure 1440,” the County applies a 5% increase to an individual’s most recent prior salary, then places the candidate on a “step” of the County’s salary schedule based on that calculated amount. This schedule consists of twelve “levels,” each of which contains ten “steps.”

[5] Under the EPA, a wage disparity is permissible if an employer can plead and prove an affirmative defense based on one of the following exceptions: (i) a seniority system; (ii) a merit system; (iii) a system which measures earnings by quantity or quality of production; or (iv) a differential based on any other factor other than sex.

Our colleague Steven M. Swirsky, a Member of the Firm at Epstein Becker Green, has a post on the Management Memo blog that will be of interest to many of our readers in the retail industry: “OSHA Withdraws ‘Fairfax Memo’ – Union Representatives May No Longer Participate in Work Place Safety Walkarounds at Non-Union Facilities.”

Following is an excerpt:

On April 25, 2017, Dorothy Dougherty, Deputy Assistant Secretary of the Occupational Safety and Health Administration (“OSHA”) and Thomas Galassi, Director of OSHA’s Directorate of Enforcement Programs, issued a Memorandum to the agency’s Regional Administrators notifying them of the withdrawal of its previous guidance, commonly referred to as the Fairfax Memorandum, permitting “workers at a worksite without a collective bargaining agreement” to designate “a person affiliated with a union or community organization to act on their behalf as a walkaround representative” during an OSHA workplace investigation. …

Read the full post here.

On May 15, 2017, New York City’s Freelance Isn’t Free Act (“FIFA”) will take effect. FIFA requires parties that retain “freelance workers” to provide any service where the contract between them has a value of $800 or more to reduce their agreement to a written contract.

FIFA defines a freelance worker as “any natural person or any organization composed of no more than one natural person, whether or not incorporated or employing a trade name, that is hired or retained as an independent contractor by a hiring party to provide services in exchange for compensation.” Importantly, the law does not cover organizations or more than one natural person.

The $800 threshold is reached either by itself or when aggregated with all contracts for services during the preceding 120 days.  The contract must include, at a minimum, the following information:

  • the name and address of both the hiring party and the freelance worker,
  • an itemized list of the services that will be provided and the value of those services,
  • the rate and method of compensation, and
  • the date on which payment is due or the mechanism by which such date will be determined.

If no payment due date is indicated in the contract, the hiring party must pay the freelance worker within 30 days of the completion of services.

A hiring party is also prohibited from threatening, intimidating, disciplining, harassing, denying a work opportunity, or discriminating against a freelance worker who exercises his or her rights under FIFA.

The law establishes penalties for violations of these rights, including statutory damages, double damages, injunctive relief, and attorney’s fees.

In anticipation of May 15, 2017, employers should ensure that contracts entered into with freelance workers (or existing contracts that are renewed) with a value of $800 or more comply with FIFA.

Amid challenges regarding Philadelphia’s upcoming law prohibiting employers from requesting an applicant’s salary history, the City has agreed not to enforce the upcoming law until after the court has finally resolved the injunction request.

The law, which was set to become effective May 23, 2017, has been challenged by the Chamber of Commerce for Greater Philadelphia (the “Chamber”). The Chamber’s lawsuit alleges that the pending law violates the First Amendment by restricting an employer’s speech because, among other reasons, “it is highly speculative whether the [law] will actually ameliorate wage disparities caused by gender discrimination.” It is also alleged that the law violates the Commerce Clause of the U.S. Constitution, the Due Process Clause of the Fourteenth Amendment, and Pennsylvania’s Constitution as well as its “First Class City Home Rule Act” by allegedly attempting to restrict the rights of employers outside of Philadelphia.

On April 19, a judge for the Eastern District of Pennsylvania stayed the effective date of the law, pending the resolution of the Chamber’s motion for a preliminary injunction. Prior to resolving the injunction, the parties will first brief the court on the Chamber’s standing to bring the lawsuit. This issue, regarding whether the Chamber is an appropriate party to bring this lawsuit, will be fully briefed by May 12, 2017, before the law is set to become effective. However, there are several other issues to be resolved as part of the lawsuit. The City’s decision to stay enforcement of the pending law until all issues are resolved is intended to help employers and employees avoid confusion during the pendency of the lawsuit.

Although the City of Philadelphia will not enforce this law in the interim, employers with any operations in Philadelphia should review their interviewing and hiring practices in case the lawsuit is decided in favor of the City. Further, employers in Massachusetts and New York City will also be subject to similar restrictions on inquiring about an applicant’s salary history when those laws go into effect. Massachusetts’ law is scheduled to become effective in July 2018, and New York City’s law will become effective 180 days after Mayor de Blasio signs the law, which may occur as soon as this week.