In January, a New York federal district court denied a retailer’s bid to dismiss a former regional manager’s lawsuit alleging that workplace rumors spread by three female co-workers that she showed her breasts to the company’s CEO by wearing a revealing blouse without a bra and that her subsequent termination shortly after she complained about the gossip constituted hostile work environment sex discrimination and retaliatory discharge. Baez v. Anne Fontaine USA, Inc., No. 14-cv-56621 (KBF), 2017 U.S. LEXIS 1630 (S.D.N.Y. Jan . 5, 2017).


Baez, who normally dressed without a bra, was employed as the East Coast Regional Manager for Anne Fontaine USA, Inc. (“AFUSA”), a clothing retailer that operates 25 stores nationwide.

In September 2013, AFUSA began looking for candidates to replace Baez because of alleged unsatisfactory job performance.  On September 27, 2013, AFUSA extended an offer for Baez’s position to a candidate who declined the job.

In late December 2013, Baez heard that two female managers who reported to Baez and the company’s retail operations manager (also female) were spreading a rumor that Baez had worn a revealing blouse and no bra at a meeting with the CEO, thereby showing him her breasts. On December 27, 2013 Baez reported the rumor to the company’s Controller who, after conferring with the retail operations manager, advised Baez not to write-up one the managers because Baez had already given her a verbal warning and not to terminate the other manager because she was a top performer.

On the 27th, Baez also sent an email to the CEO complaining that one of the managers was telling her team that Baez would soon be terminated. Baez did not, however, mention the rumor about her revealing blouse.

On January 14, 2014 the Controller responded in writing to Baez’s complaint about the rumor advising her “[R]garding the content of the rumor/gossip, you either need to be strong and say ‘so be it, I make my own fashion and life choices…’ Or, if the content bothers you, you need to adjust what you are doing to prevent such rumors/gossip, but you can’t prevent people from having their opinions.” The Controller reiterated that she did not recommend escalating the matter to a written warning.

On January 30, 2014, however, at the direction of the CEO the Controller and Baez met with one of the managers to issue her a written warning. Baez disagreed with the wording of the warning and the manager refused to sign it.

In the meanwhile on January 6, 2014 a week after Baez’s emailed complaints, AFUSA went back to the candidate who had turned them down in September and arranged for her to meet with the CEO. On January 27, 2014 AFUSA offered and the candidate accepted the position of “North America Director,” to start on February 10, 2014.

Thereafter, on February 7, 2014, the CEO and the Controller terminated Baez’s employment. In the termination meeting, which Baez unilaterally taped, the CEO gave Baez three reasons for her discharge: (1) unsatisfactory management of an employee at one of the stores under her supervision; (2) problems associated with the opening of a store; and (3) that she was connected with “too much drama.”  Baez sued AFUSA, the CEO and the Controller alleging violation of Title VII of the Civil Rights Act of 1964 (“Title VII”), the New York State Human Rights Law (“NYSHRL”) and New York City Human Rights Law (“NYCHRL”).

The Court Rulings

The district court found that Baez’s complaint about the gossip regarding her going bra-less and allegedly showing her breasts to the CEO constituted protected conduct and a “very weak claim of discrimination.” The court noted that “if comments on bra-less attendance at a meeting were made by a man, plaintiff’s case would be much stronger[,]” but found “no legal reason why the gender” alters the analysis. The court opined that “even ‘a single comment that objectifies women . . . made in circumstances where that comment would, for example, signal views about the role of women in the workplace [may] be actionable.”

The district court also held that the short time frame between Baez’s December 27, 2013 Complaint and her February 7, 2014 discharge, in part, for being associated with “too much drama” created a sufficient factual dispute to preclude summary judgment on the retaliation claim. The district court acknowledged that AFUSA had articulated two legitimate business reasons for Baez’s discharge, i.e., alleged poor management of an employee and alleged problems with a store opening. Citing Second Circuit precedent, however, the court stated that retaliation need not be the only reason for the adverse job action, but “only that the adverse action would not have occurred in the absence of the retaliatory motive.”

The district court also concluded that there was an issue of material fact over whether the controller adequately investigated the rumor and whether AFUSA responded with the appropriate discipline.  The court granted summary judgement as to the CEO finding no evidence that he directly participated in or abetted any violation of law.

In sum, the content of the gossip, which concerned Baez’s sex; the remedial nature of discrimination statutes and in particular the expansive nature of the NYCHRL; and the use of the word “drama”- a term more likely to be applied to a woman’s behavior – as a reason for Baez’s discharge following her complaints, combined to create enough of a factual dispute to preclude summary judgment.

Lessons For Employers

Retail employers, especially those operating in New York City, should ensure that employees are counseled about the employer’s anti-discrimination and anti-harassment policies, fully investigate all complaints that potentially implicate anti-discrimination laws, and, when appropriate, discipline offending employees.

Retail employers should also ensure that adverse employment actions are based solely upon legitimate non-discriminatory factors which, preferably, are documented. Employers should be careful to avoid ambiguous or potentially charged language, which might undermine the employer’s legitimate reasons for discharge or discipline, when speaking with the employee.

A New Year and a New Administration: Five Employment, Labor & Workforce Management Issues That Employers Should MonitorIn the new issue of Take 5, our colleagues examine five employment, labor, and workforce management issues that will continue to be reviewed and remain top of mind for employers under the Trump administration:

Read the full Take 5 online or download the PDF. Also, keep track of developments with Epstein Becker Green’s new microsite, The New Administration: Insights and Strategies.

The Age Discrimination in Employment Act (“ADEA”) protects individuals who are at least 40 years of age from discrimination in the workplace. As such, the outcome of disparate-impact claims under the ADEA hinges, ordinarily, on whether or not an employer’s facially neutral-policy has a disparate impact on employees who are 40 years of age or older.  On January 10, 2017, the Third Circuit, in Karlo v. Pittsburgh Glass Works, LLC, 2017 BL 6064 (3d Cir. 2017), issued a precedential ruling, holding that disparate impact claims under the ADEA are not limited to comparisons of the impact an employer’s policy has on employees over 40 with the impact to employees under 40. Rather, the Third Circuit found that claims premised on an allegation that an employer’s policy impacted workers over the age of 50 are cognizable under the ADEA even when the policy had no disparate impact when employees in their forties were considered.

The defendant employer in Karlo terminated approximately 100 employees through a series of reductions in force (“RIFs”). While the impact of the RIFs did not have a disparate impact when comparing employees under the age of 40 with those over the age of 40, the plaintiffs in Karlo, all 50 years of age or older, asserted an ADEA claim premised on the allegation that the RIFs had a disparate impact on employees who were 50 or older.  Rejecting the defendant employer’s argument that the disparate impact claim failed because no evidence of disparity existed when the younger members of the protected category (employees between the age of 40 and 50) were considered with the employees over the age of 50, the Third Circuit opined that: “The ADEA prohibits disparate impact based on age, not forty-and-older identity,” and that “requiring the comparison group to include employees in their forties has no logical connection to that prohibition.”

The Third Circuit’s decision creates a split among the federal appeals courts on whether the ADEA permits disparate impact claims by subgroups of workers in the “40-and-over” protected category when the alleged bias disproportionately impacts older workers within that protected class. The ruling rejects the view of the Second Circuit (Lowe v. Commack Union Free Sch. Dist., 886 F.2d 1364 (2d Cir. 1989)), Sixth Circuit (Smith v. Tenn. Valley Auth., 924 F.2d 1059 (6th Cir. 1991)), and Eighth Circuit (E.E.O.C. v. McDonnell Douglas Corp., 191 F.3d 948 (8th Cir. 1999), that such claims are not allowed.

The Third Circuit correctly recognized that its decision “may very well require employers to be more vigilant about the effects of their employment practices.” The ruling that disparate impact claims may be asserted by subgroups within the protected category of employees over the age of 40 most definitely complicates employers’ ability to effectuate workforce reductions. Before approving a proposed RIF, retail employers concerned with avoiding potential disparate impact claims cannot simply satisfy themselves that employees over and under the age of 40 are treated fairly.  Retail employers now need to check for age-based impacts across different strata of their employees over the age of 40.

Our colleagues Judah L. Rosenblatt, Jeffrey H. Ruzal, and Susan Gross Sholinsky, at Epstein Becker Green, have a post on the Hospitality Labor and Employment Law Blog that will be of interest to many of our readers in the retail industry: “Where Federal Expectations Are Low Governor Cuomo Introduces Employee Protective Mandates in New York.”

Following is an excerpt:

Earlier this week New York Governor Andrew D. Cuomo (D) signed two executive orders and announced a series of legislative proposals specifically aimed at eliminating the wage gap in gender, among other workers and strengthening equal pay protection in New York State. The Governor’s actions are seen by many as an alternative to employer-focused federal policies anticipated once President-elect Donald J. Trump (R) takes office. …

According to the Governor’s Press Release, the Governor will seek to amend State law to hold the top 10 members of out-of-state limited liability companies (“LLC”) personally financially liable for unsatisfied judgments for unpaid wages. This law already exists with respect to in-state and out-of-state corporations, as well as in-state LLCs. The Governor is also seeking to empower the Labor Commissioner to pursue judgments against the top 10 owners of any corporations or domestic or foreign LLCs for wage liabilities on behalf of workers with unpaid wage claims. …

Read the full post here.

On December 9, 2016, Los Angeles Mayor Eric Garcetti signed ordinances no. 184652 and 184653, collectively referred to as the “Fair Chance Initiative.” These ordinances prohibit employers and City contractors (collectively “Employers”), respectively, from inquiring about job seekers’ criminal convictions until after a conditional offer of employment has been made. Both ordinances will go into effect on January 22, 2017 and will impact all employers in the City of Los Angeles and for every position which requires an employee to work at least an average of two hours per week within the City of Los Angeles and all City contractors and subcontractors, regardless of their location.

No Criminal Inquiry Until After Offer

Specifically, these ordinances prohibit Employers from inquiring about a job applicant’s criminal history, at any time or in any manner, unless and until a Conditional Offer of Employment has been made to the applicant. Following the Conditional Offer of Employment, Employers are permitted to request information regarding the applicant’s criminal history. However, Employers can only withdraw or cancel the conditional offer as a result of the applicant’s criminal history after engaging in the “Fair Chance Process.”

New “Fair Chance Process” Required

The “Fair Chance Process” requires Employers to prepare a written assessment highlighting the specific aspects of the applicant’s criminal history that pose an inherent conflict with the duties of the position sought by the applicant. Employers must provide the applicant with written notification of the proposed withdrawal of the conditional offer, a copy of the written assessment regarding the risks posed by the applicant’s criminal history, and any other relevant documentation. The applicant is then given an opportunity to provide the Employer a response to the written assessment, including any supporting documentation. Employers must wait at least 5 business days after the applicant is informed of the proposed withdrawal before taking any action, including filling the position for which the applicant applied.

New Posting and Recordkeeping Requirements

Additionally, Employers’ job postings must now include a notice stating that they will consider all qualified applicants regardless of their criminal histories, in compliance with these ordinances. Employers must also conspicuously post a notice regarding the “Fair Chance Initiative” in a location in the workplace visible to all job applicants; this notice must also be sent to each union or workers’ group with which the employers have any agreement that governs over employees. Further, Employers must retain all job application documents for three years. Penalties for violations of these ordinances may be assessed at up to $500 for the first violation, up to $1,000 for the second violation, and up to $2,000 for subsequent violations. The City may then, at its discretion, distribute a maximum of $500 from that penalty directly to the applicant. The penalty provision of the ordinances will not go into effect for employers in Los Angeles City until July 1, 2017. However, the penalty provision for City contractors is effective immediately.

Exceptions from these ordinances include: (1) employers who are required by law to seek a job applicant’s criminal history; (2) positions for which an applicant would be required to possess or use a firearm; (3) positions which, by law, cannot be held by an individual with a criminal history; and (4) employers who are prohibited, by law, from hiring persons with criminal convictions.

Employers with operations in the City of Los Angeles should:

  1. Remove questions regarding criminal history from job applications;
  2. Ensure future job postings include required equal employment notices;
  3. Defer inquiries regarding criminal history until making conditional job offers; and
  4. Ensure the Fair Chance Process is followed before denying employment based on criminal history.

Employers Under the Microscope: Is Change on the Horizon?

When: Tuesday, October 18, 2016 8:00 a.m. – 4:00 p.m.

Where: New York Hilton Midtown, 1335 Avenue of the Americas, New York, NY 10019

Epstein Becker Green’s Annual Workforce Management Briefing will focus on the latest developments in labor and employment law, including:

  • Latest Developments from the NLRB
  • Attracting and Retaining a Diverse Workforce
  • ADA Website Compliance
  • Trade Secrets and Non-Competes
  • Managing and Administering Leave Policies
  • New Overtime Rules
  • Workplace Violence and Active-Shooter Situations
  • Recordings in the Workplace
  • Instilling Corporate Ethics

This year, we welcome Marc Freedman and Jim Plunkett from the U.S. Chamber of Commerce. Marc and Jim will speak at the first plenary session on the latest developments in Washington, D.C., that impact employers nationwide.

We are also excited to have Dr. David Weil, Administrator of the U.S. Department of Labor’s Wage and Hour Division, serve as the guest speaker at the second plenary session. David will discuss the areas on which the Wage and Hour Division is focusing, including the new overtime rules.

In addition to workshop sessions led by attorneys at Epstein Becker Green – including some contributors to this blog! – we are also looking forward to hearing from our keynote speaker, Former New York City Police Commissioner William J. Bratton.

View the full briefing agenda here.

Visit the briefing website for more information and to register, and contact Sylwia Faszczewska or Elizabeth Gannon with questions. Seating is limited.

Our colleague Linda B. Celauro, Senior Counsel at Epstein Becker Green, has a post on the Financial Services Employment Law blog that will be of interest to many of our readers in the retail industry: “Seventh Circuit Panel Finds That Title VII Does Not Cover Sexual Orientation Bias.

Following is an excerpt:

Bound by precedent, on July 28, 2016, a panel of the U.S. Court of Appeals for the Seventh Circuit held that sexual orientation discrimination is not sex discrimination under Title VII of the Civil Rights Act of 1964. The panel thereby affirmed the decision of the U.S. District Court for the Northern District of Indiana dismissing the claim of Kimberly Hively, a part-time adjunct professor at Ivy Tech Community College, that she was denied the opportunity for full-time employment on the basis of her sexual orientation.

The importance of the Seventh Circuit panel’s opinion is not in its precise holding but both (i) the in-depth discussion of Seventh Circuit precedence binding it, the decisions of all of the U.S. Courts of Appeals (except the Eleventh Circuit) that have held similarly, and Congress’s repeated rejection of legislation that would have extended Title VII’s protections to sexual orientation, and (ii) the multifaceted bases for its entreaties to the U.S. Supreme Court and the Congress to extend Title VII’s prohibition against sex discrimination to sexual orientation discrimination.

The Seventh Circuit panel highlighted the following reasons as to why the Supreme Court or Congress must consider extending Title VII’s protections to sexual orientation …

Read the full post here.

New York City Enacts Law Requiring Gender-Neutral Restrooms On June 28, 2016, New York City Mayor Bill de Blasio signed legislation passed earlier this month by The New York City Council to amend the City’s administrative code, plumbing code and building code to require gender-neutral single-occupant restrooms. The new law applies to businesses and other establishments in the City’s five boroughs with existing single-occupancy, publicly-accessible restrooms. The law does not require businesses to build new single-occupant restrooms, nor does it affect larger restrooms with multiple single-stalls.

Instead, the law prohibits the labelling of single-occupant restrooms as gender-specific. Beginning January 1, 2017, signs designating single-person restrooms for one gender, i.e., “men” and “women,” must be removed and replaced with signs for all sexes.  Employers with establishments in the City that may be affected should take advantage of the lead time to ensure compliance.

Several states have recently passed laws (California, Maryland,[1] and New York) or have bills currently pending in their state legislatures (California,[2] Colorado, Massachusetts, and New Jersey) [3] seeking to eliminate pay differentials on the basis of sex (and, in some cases, other protected categories) (collectively, “Equal Pay Laws”).

Among other provisions, most of the Equal Pay Laws contain four components. They aim to (i) strengthen current equal pay standards, (ii) create pay transparency rules, (iii) expand equal pay protections beyond gender, and (iv) redefine the geographic reach of existing equal pay laws.

Strengthening of Current Equal Pay Standards

The Equal Pay Laws modify the standards required for plaintiffs to prevail on equal pay claims. Previously, these laws tracked the federal Equal Pay Act, which permits exceptions to equal pay for equal work, “where such payment is made pursuant to (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.” The Equal Pay Laws, however, each modify the fourth prong, so that they now permit pay differentials based on a “bona fide factor other than sex” (emphasis added). This additional language allows plaintiffs to bring claims alleging that a neutral factor produced a wage differential that disparately impacts employees based on their sex, and notwithstanding this impact, the employer did not adopt an alternative business practice that would serve the same purpose without resulting in the wage differential. The new standard also broadens a plaintiff’s ability to allege a prima facie case of wage disparity.

Pay Transparency

Many of the Equal Pay Laws include pay transparency provisions, meaning that employers cannot create policies or enforce rules that would restrict an employee’s ability to discuss his or her wages with co-workers. The Massachusetts bill, which is still in the state legislature, has another unique twist (one that actually passed the legislature in California earlier this year but was vetoed by the governor). The Massachusetts equal pay law would prohibit employers from asking about an applicant’s salary history on an application or during interviews for employment. This would mean that an employer could no longer ask applicants how much they earned at their past jobs when considering making an offer of employment to an applicant. This twist aims to ensure that prior pay discrepancies are not compounded when an applicant’s pay rate with a new employer is based on unequal pay rates that the applicant received in the past.

Expanding Beyond Pay Equality Based on Gender

While the Equal Pay Laws were initially intended to ensure that women received equal pay in relation to men, some of the Equal Pay Laws seek to expand equal pay protection to other protected categories. The proposed California law, which is intended to amend the recently amended equal pay law in that state, would expand protections to race- and ethnicity-based pay differentials. Further, Maryland’s recently enacted law requires equal pay based on gender identity.

Geographical Reach

Finally, the Equal Pay Laws differ as to their geographical scope. For example, the New York law limits the reach of pay differentials to “no larger than a county.” In other words, women cannot compare themselves to other employees outside the county where they work. Some of the other Equal Pay Laws have significantly broader reach, such as California, which has no geographic limit. The New Jersey law, which was vetoed on May 2, 2016, but may be reintroduced in the state legislature, would permit wage comparisons based on compensation rates “in all of an employer’s operations or facilities.” This could mean that New Jersey employees could base their equal pay claims on the pay differential between their own compensation and that of employees of the employer in other jurisdictions (even in locations where the standard of living is considerably higher). Unlike New Jersey, the law proposed in Massachusetts would permit employers to base pay differentials on geographic location if one location has a lower cost of living based upon the Consumer Price Index.


As a result of the Equal Pay Laws, employers should consider whether to perform an internal audit (with the assistance of counsel) in order to identify and address any potential pay disparities. Indeed, in light of the recently published regulations on the overtime exemption status of various employees, this summer may be a good time for employers to review their pay practices for all employees.

A version of this article originally appeared in the Take 5 newsletter Five New Challenges Facing Retail Employers.”

[1] Maryland’s equal pay law was signed by Governor Larry Hogan on May 19, 2016, and becomes effective October 1, 2016. New York’s and California’s laws are currently effective.

[2] California has introduced a second equal pay amendment addressing wage disparity based on race and ethnicity. The first equal pay amendment became effective on January 1, 2016.

[3] Louisiana’s equal pay bill was recently rejected in the state House committee, despite passing the Senate and having strong support from Governor John Bel Edwards.

On May 31, 2016, the Fourth Circuit Court of Appeals denied en banc review of an April decision permitting transgender students to use sex-segregated facilities that are consistent with their gender identity.  The Fourth Circuit encompasses North Carolina; thus, the case G.G. v. Gloucester County Public School Board (“Gloucester County”), although it arose in Virginia, creates a conflict between federal law and North Carolina’s House Bill 2 (“HB2”), which requires transgender individuals to use public bathrooms that match the gender listed on their birth certificates.  Although Gloucester County applies on its face to students and public schools, the decision impacts retailers who provide bathroom facilities to employees and customers and who must navigate conflicting laws regarding transgender protections.  Of additional importance, plaintiffs in sex discrimination lawsuits will likely use the decision as support for the view that a person’s “sex” includes “gender identity.”

In Gloucester County, a sixteen-year-old transgender high school student who was born a biological female filed suit to use the boys’ restroom at school.  G.G. and his mother contended that the school’s policy of providing separate restrooms and locker rooms based upon a student’s biological sex constituted sex discrimination under Title IX—the federal law that prohibits sex-based discrimination in federally funded educational programs and activities.  On April 19, G.G. prevailed in a two-to-one decision of a three member panel of the Fourth Circuit, which deferred to the U.S. Department of Education’s interpretation that the reference to “sex” in Title IX includes “gender identity.”

Following the panel’s ruling, the school board asked the Fourth Circuit to rehear the case with the full panel of 15 active judges.  On May 31, the en banc panel denied the school board’s request.  Circuit Judge Paul V. Niemeyer, widely considered the most conservative member of the Fourth Circuit, filed the lone dissent, stating the issue “deserves an open road to the Supreme Court to seek the Court’s controlling construction of Title IX for national application.”

Regardless whether the case proceeds to the Supreme Court, the decision signifies the first time a federal appeals court has found that federal law protects the rights of transgender persons to use sex-segregated facilities that are consistent with their gender identity.  Although decided under Title IX with regard to student rights, the decision may have ramifications in the area of employment law, inasmuch as Title VII, like Title IX, prohibits discrimination based on “sex.”  Retailers and other employers should be alert to the issue and may expect that future litigants will seek to expand the Gloucester County ruling to Title VII and other sex discrimination claims.

Given the political and legal climate surrounding HB2 and related laws that affect the rights of transgender persons, we recommend that retailers proactively accommodate the needs of transgender workers rather than reactively respond to potential claims of discrimination.  Retailers, particularly those operating in states with anti-discrimination laws that cover sexual orientation and gender identity, should implement a policy designed to foster workplace inclusion.  In particular, retailers are encouraged to provide transgender employees access to bathrooms that correspond to their gender identity and, where possible, provide employees with additional options, including single-occupancy gender-neutral (unisex) facilities and use of multiple-occupant, gender-neutral restroom facilities with lockable single occupant stalls.  Furthermore, retailers in the clothing industry with dressing/fitting rooms should accommodate their employees and patrons alike by permitting them to use the dressing/fitting room that corresponds to their gender identity.  These recommendations apply equally to those retailers in North Carolina because, although HB2 remains in effect in that state, the law applies only to places of public accommodation, and, in any event, the Fourth Circuit’s recent decision signals that the controversial law may not withstand judicial scrutiny.  In general, retailers should beware that engaging in discriminatory practices may have negative business as well as legal ramifications.