Wednesday, July 27, 2011

Not A Happy Chanukah - EEOC Sues "Menorah House" For Religious Discrimination

A Baca Raton nursing and rehabilitation facility violated federal law by firing an employee over Sabbath-keeping issues, the U.S. Equal Employment Opportunity Commission (EEOC) charged in a lawsuit it filed today. According to the EEOC’s suit (EEOC v. Menorah House, case no. 9:11-cv-80825) filed in the U.S. District Court for the Southern District of Florida, that Boca Group LLC, doing business as Menorah House, denied a religious accommodation to Philomene Augustin and fired her because of her religious beliefs. Augustin, who worked at Menorah House as a certified nursing assistant, is a Seventh-Day Adventist, and her Sabbath is from sundown on Friday to sundown on Saturday evening. Menorah House had accommodated Augustin’s request not to work on her Sabbath for over ten years until management instituted a new policy requiring all employees to work on Saturdays, regardless of their religious beliefs. Such alleged conduct, if proven, would violate Title VII of the Civil Rights Act of 1964, which prohibits religious discrimination and requires employers to make reasonable accommodations to employees’ sincerely held religious beliefs so long as this does not pose an undue hardship. According to the EEOC, “[t]he law seeks to strike a balance between reasonably accommodating religious beliefs and respecting legitimate business concerns ... [u]nfortunately, in this case the employer refused its legal obligation to pursue a solution that’s fair for all concerned.” The EEOC filed suit after first attempting to reach a pre-litigation settlement through its conciliation process. The agency is asking the court to grant a permanent injunction enjoining Menorah House from further engaging in any employment practice that discriminates against employees because of their religious belief and requiring the company to reasonably accommodate the religious beliefs of employees. The suit also asks the court to order Menorah House to reinstate Augustin, grant back pay, provide compensatory and punitive damages and award any other relief the court deems necessary and proper.

Tuesday, July 26, 2011

EEOC Examines Criminal Background Checks

The Washington Post reports that the United States Equal Employment Opportunity Commission ("EEOC") is holding a hearing today on whether arrest and conviction records are a hiring barrier for minorities. According to the Post article, an increasing number of employers are seeking background checks out of security concerns. Federal policy currently prevents companies from using criminal records to screen out job applicants unless the criminal conduct is job related. The EEOC and other anti-discrimination advocates argue that because African Americans and Hispanics have higher rates of arrest and convictions than whites, they could suffer discrimination if companies do blanket criminal background checks that eliminate them from consideration for a job. The article also reports that credit background checks, which are permitted under federal law, are not up for reconsideration. See for the full article.

Employers Cutting Workplace Benefits

There is an interesting article in today's Chicago Tribune on the decline of workplace benefits. According to the article, traditional pension plans, paid family leave, and even the company picnic are all on the decline, as employers have significantly cut many of the benefits they offer to workers over the past five years. Here is a look at the workplace perks that have significantly declined since 2007. Some of the traditional workplace perks that have declined over the past few years include:

Traditional (i.e., defined benefit) pension plans. Traditional pensions were offered at 40 percent of the companies surveyed in 2007. Now just 22 percent of firms provide access to a retirement plan that guarantees payments for life.

Retiree health care coverage. The proportion of companies offering retiree health insurance declined from 35 percent in 2007 to 25 percent in 2011.

Long-term care insurance. Just over a quarter of employers provide long-term care insurance for workers, down from 46 percent in 2007.

HMOs. The number of companies with HMOs decreased from 48 percent in 2007 to 33 percent today.

Paid family leave. A third of companies offered paid family leave in 2007, but now only a quarter of companies provide paid time off for births, deaths, and other significant family events.

Adoption assistance. Adoption assistance is another waning employer benefit, with just 8 percent of companies helping with adoption costs, down from 20 percent five years ago.

Professional development opportunities. While nearly all (96 percent) companies paid for professional development opportunities in 2007, only 87 percent will in 2011.
Life insurance for dependents. About half (55 percent) of companies provide life insurance for children and other dependents, down from 65 percent in 2007

Incentive bonus plans. Incentive bonus plans for high-level employees are down 10 percentage points since 2007.

Casual dress day. Only about half (55 percent) of employers say they encourage or allow employees to dress casually one day per week, down from 66 percent in 2007. Legal assistance. One in five companies provides legal assistance or services to workers, down from a third of employers five years ago.

The company picnic. Only about half (55 percent) of firms scheduled a company picnic in 2011, down from 64 percent in 2007.

See,0,7928170.story for the full article.

Friday, July 22, 2011

Supreme Court Issues Significant ERISA Remedies Decision

In CIGNA Corp. v. Amara, the United States Supreme Court vacated a federal district court's decision that had ordered CIGNA Corp. to reform its cash balance pension plan to remedy the company's violations of its ERISA notice obligations. In so ruling, the Court had cause to interpret two frequently litigated sections of ERISA - Sections 502(a)(1)(B) and Section 502(a)(3).

By way of background, in February 2008, the U.S. District Court for the District of Connecticut ruled that CIGNA violated ERISA's notice and disclosure requirements when it issued SPDs and summaries of material modifications that did not explain that participants' benefits would be subject to “wear away." In June 2008, the District Court issued a decision addressing the remedies available to the participants for CIGNA's violation of the notice and disclosure requirements of ERISA. The District Court specifically said that the remedies would fall under ERISA Section 502(a)(1)(B), and the court shied away from determining whether the remedies would qualify as equitable remedies under Section 502(a)(3). The district court said the participants were “likely harmed” by the SPDs' failure to mention that benefits would be subject to “wear away” and rejected CIGNA's contention that the participants needed to show they detrimentally relied on the SPDs. In October 2009, the U.S. Court of Appeals for the Second Circuit affirmed the lower court's decision without giving an explanation for its rationale. CIGNA then filed a petition for Supreme Court review, urging the high court to adopt a detrimental reliance standard. The Supreme Court granted review of the case and heard oral arguments last November.

Once the case reached the Supreme Court, CIGNA argued that the only remedy available to the participants for a deficient SPD would be under the equitable remedies provision of ERISA Section 502(a)(3). Thus, CIGNA argued that the District Court's remedies decision should be vacated because it was premised on ERISA Section 502(a)(1)(B). The Supreme Court accepted this argument and ruled that it was an error for the District Court to base its remedies on Section 502(a)(1)(B). According to the Court, although Section 502(a)(1)(B) allows courts to enforce the “terms of the plan,” nothing in Section 502(a)(1)(B) grants district courts the power to change plan terms. Interpreting Section 502(a)(1)(B), the unanimous Court held that the District Court erred when it issued remedies under this provision of ERISA. According to the Court, Section 502(a)(1)(B) cannot be used to enforce the terms of summary plan descriptions, as SPDs do not qualify as “plan terms.”

The Court’s decision did not stop there, a fact that has created a fair amount of controversy in the legal community. The Court went on to find that while Section 502(a)(1)(B) did not authorize the relief issued by the District Court, ERISA Section 502(a)(3)‘s equitable remedies provision conceivably could provide a source of relief. Cigna had argued that, in order for the participants to obtain relief under Section 502(a)(3) for SPD disclosure violations, they had to demonstrate detrimental reliance. The Supreme Court rejected this argument – sort of – stating that ERISA sets out no particular standard for determining whether participants have been harmed by a faulty SPD. According to the Court, although courts of equity traditionally required a plaintiff to prove detrimental reliance when they brought estoppel claims, equity courts did not insist upon a showing of detrimental reliance in other cases that would be analogous to the participants' case against CIGNA. The Court went on to state that other types of equitable remedies, such as surcharge, only required a showing of actual harm. “[A]ctual harm may sometimes consist of detrimental reliance, but it might also come from the loss of a right protected by ERISA or its trust-law antecedents. In the present case, it is not difficult to imagine how the failure to provide proper summary information, in violation of the statute, injured employees even if they did not themselves act in reliance on summary documents—which they might not themselves have seen—for they may have thought fellow employees, or informal workplace discussion, would have let them know if, say, plan charges would likely prove harmful. We doubt that Congress would have wanted to bar those employees from relief.” The Court said that for the plan participants to obtain relief for CIGNA's violations of ERISA's SPD disclosure requirements, they would need to show that they were actually harmed by the violation, but they would not need to prove detrimental reliance.

Justices Scalia and Thomas joined in the Court's decision, stating they agreed with the court that Section 502(a)(1)(B) does not authorize relief for misrepresentations in SPDs. But the two justices said the Court should have gone no further than to find that Section 502(a)(1)(B) provided no remedy. “Nothing else needs to be said to dispose of this case. The District Court based the relief it awarded upon ERISA §502(a)(1)(B), and that provision alone,” Scalia wrote. Scalia asserted that it was not the Court’s usual practice to decide issues that a lower court did not decide. Here, the District Court did not decide whether remedies would be available under Section 502(a)(3) and thus the Supreme Court should not have delved into that issue. Scalia said the Supreme Court had “guessed” that the District Court would have issued remedies under both Section 502(a)(1)(B) and 502(a)(3) had the District Court not been hesitant about the availability of equitable remedies under Section 502(a)(3). “This speculation upon speculation hardly renders our discussion of §502(a)(3) relevant to the decision below; it is utterly irrelevant.” Scalia also said that the Court’s discussion of the Section 502(a)(3) remedies was “purely dicta” and would not be binding on the Supreme Court in future cases, or on the District Court on remand. “The District Court need not read any of it—and, indeed, if it takes our suggestions to heart, we may very well reverse.”