On February 1, 2019, the U.S. Equal Employment Opportunity Commission (“EEOC”) announced that the agency is giving employers two additional months to file their EEO-1 workforce data surveys, extending the deadline from March 31, 2019 to May 31, 2019. The extension comes as a result of the EEOC’s partial lapse in appropriations and closure during the recent shutdown of the federal government. According to the EEOC website, detailed instructions for submission of EEO-1 data will be forthcoming.

Each year, the EEOC requires private employers who are subject to Title VII with 100 or more employees[1] and federal contractors and subcontractors with 50 or more employees and at least $50,000 in contracts, to file an Employer Information Report, commonly known as an EEO-1. The EEO-1 is a compliance survey mandated by federal statute and regulations that requires employers to break down their workforces by race/ethnicity, gender and job title. The EEOC represents that it uses the data “to support civil rights enforcement and to analyze employment patterns, such as the representation of women and minorities within companies, industries or regions.” A sample copy of the EEO-1 survey and instruction booklet are available here.

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[1] Also subject to the EEO-1 requirements are employers who are subject to Title VII and have fewer than 100 employees, but the company is owned or affiliated with another company, or there is centralized ownership, control or management (such as central control of personnel policies and labor relations) so that the group legally constitutes a single enterprise, and the entire enterprise employs a total of 100 or more employees.

On June 4, the Supreme Court voted 7-2 in favor of a Christian Colorado baker and owner of Masterpiece Cakeshop, who had refused to create a custom wedding cake for a gay couple due to his religious objections to gay marriage.

Although the case previously had been litigated on free speech grounds, the Court’s opinion largely avoids this constitutional question, and does not address whether Title VII prohibits discrimination based on sexual orientation. Instead, the decision focuses on the Colorado Civil Rights Commission’s decision finding against Masterpiece Cakeshop and, more specifically, what Justice Kennedy described as the Commission’s “impermissible hostility” as to the baker’s religious beliefs.

In the underlying administrative proceeding that preceded the Masterpiece Cakeshop lawsuit, the Commission found that Masterpiece Cakeshop engaged in religious bias in violation of the First Amendment’s free exercise clause. In its impassioned decision, one of the Commission members rejected the breadth of the free exercise clause as a justification for Masterpiece Cakeshop’s actions, noting that “freedom of religion and religion has been used to justify all kinds of discrimination throughout history, whether it be slavery, whether it be the Holocaust.” In dissent, Justice Ginsburg, joined by Justice Sotomayor, wrote that such comments in the Commission’s decision should not be “taken to overcome” Masterpiece Cakeshop’s conduct, given the “several layers of independent decision-making” throughout the various hearings leading up to the Supreme Court decision. Justice Ginsberg added that unlike other cases addressing freedom of religion (for example, where religious customers have requested anti-gay messages from secular bakers), here, the circumstances were fundamentally different because Masterpiece Cakeshop regularly made the kind of cake the couple requested and refused to sell it to them simply because of their sexual orientation.

The Court’s decision is narrowly tailored, however, and leaves open the broader constitutional issues of sexual orientation discrimination and free exercise of religion. In addition, the ruling’s effect on employers may be limited due to the extremely fact-specific nature of the decision. In fact, while the scope of Title VII, has recently been expanded by Circuit Courts to include LGBT workers, has not been considered by the Supreme Court and therefore all lower court precedents still apply. For example, the U.S. Supreme Court has refused to take any action in a pending case involving a Washington florist who refused to provide arrangements for a same-sex wedding, which presented similar constitutional issues as Masterpiece Cakeshop. Stay tuned for any further updates addressing these important issues.

The first quarter of 2018 has already stirred up an array of legal matters that employers in the hospitality industry should be conscious of, both in their day-to-day operations and long-term planning. In February alone, the U.S. House of Representatives passed legislation to curb lawsuits focused on the inaccessibility of brick-and-mortar business establishments and a federal appeals court ruled that discrimination based on sexual orientation violates Title VII of the Civil Rights Act of 1964 (“Title VII”). Earlier this month, the U.S. Department of Labor announced a pilot program that will allow employers to avoid potential penalties for overtime and minimum wage violations. In addition, the #MeToo movement continues to be top of mind across all industries, and hospitality employers should be vigilant in their training and employee awareness efforts. Due diligence in change-of-ownership transactions should include labor relations issues, especially with unionized employees.

This edition of Epstein Becker Green’s Take 5 addresses important and evolving issues confronting employers in the hospitality industry:

  1. Will Congress Slam the Breaks on ADA “Drive By” Lawsuits?
  2. Expanding Sex Discrimination Protection to LGBT Employees in the Hospitality Industry
  3. Effective Compliance Training in the Hospitality Industry in the Wake of #MeToo
  4. Transactional Due Diligence Should Include Labor Relations Issues
  5. Voluntary PAID Program Permits Employers to Escape Potential High Penalties for Self-Reported FLSA Violations—but at What Risk?

Read the full Take 5 online or download the PDF.

Our colleagues , at Epstein Becker Green, have a post on the Health Employment and Labor blog that will be of interest to many of our readers in the hospitality industry: “Sixth Circuit Finds Title VII Covers Discrimination Based on Transgender Status.”

Following is an excerpt:

In a significant decision on Wednesday, March 6, 2018, the U.S. Court of Appeals for the Sixth Circuit held in EEOC v. R.G. &. G.R. Harris Funeral Homes that discrimination against a worker on the basis of gender identity or transitioning status constitutes sex discrimination that violates Title VII.

In R.G. & G.R., the funeral home’s owner fired funeral director Aime Stephens after she informed him she intended to begin a gender transition and present herself as a woman at work. In finding gender identity to be covered by Title VII, the Sixth Circuit also upheld the EEOC’s claim that the funeral home’s dress code, which has different dress and grooming instructions for men and women, discriminates on the basis of sex. …

Read the full post here.

Featured on Employment Law This Week: Second Circuit: Title VII Covers Sexual Orientation Discrimination.

“Legal doctrine evolves.” Those words from the Second Circuit spoke volumes as the court ruled that Title VII of the Civil Rights Act prohibits sexual orientation discrimination, overturning their own long-standing precedent. The court ruled in favor of a skydiving instructor who claimed he was fired for telling a client he was gay.

The majority opinion began by looking at whether sex is a motivating factor in the alleged unlawful practice. And, in this case, looking at sexual orientation discrimination, the court concluded that sex is a factor and inextricably linked to sexual orientation, and therefore sexual orientation acts as a proxy for sex. The Second Circuit now joins the Seventh Circuit in finding that Title VII does protect against sexual orientation discrimination, and deepens a circuit split with the Eleventh Circuit, which went the other way last year.

Watch the segment below and read our recent post.

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 hospitality 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.

My colleagues Nancy L. Gunzenhauser, Kate B. Rhodes, and Judah L. Rosenblatt at Epstein Becker Green have a Retail Labor and Employment Law blog post concerning a recent EEOC modification to employment discrimination protection: “EEOC Rules Discrimination Based On Sexual Orientation Illegal Under Title VII.”

Following is an excerpt:

The EEOC held that “[s]exual orientation discrimination is sex discrimination because it necessarily entails treating an employee less favorably because of the employee’s sex.”  The EEOC noted that sex-based considerations also encompassed gender-based considerations under Title VII. This ruling, if accepted by federal courts, would extend protection under Title VII to decisions made on the basis of sexual orientation. While only the Supreme Court can issue a final, definitive ruling on the interpretation of Title VII, EEOC decisions are given significant deference by federal courts.

Read the full original post here.

Our colleague Julie Saker Schlegel at Epstein Becker Green recently posted “Supreme Court Holds That Only Employees Who Have Authority to Take Tangible Employment Actions Constitute Supervisors for the Purpose of Vicarious Liability Under Title VII” on the Retail Labor and Employment Law blog, and we think hospitality employers will be interested. Following is an excerpt:

In a 5-4 decision the dissent termed “decidedly employer-friendly,” the Supreme Court held on June 24, 2013 that only employees who have been empowered by the employer to take tangible employment actions against a harassment victim constitute “supervisors” for the purpose of vicarious liability under Title VII. Per the holding in Vance v. Ball State University, employees who merely direct the work activities of others, but who lack the authority to take tangible employment actions, will no longer be considered supervisors under Title VII.

Under long-standing precedent (Faragher and Ellerth), whether an employer can be found vicariously liable for harassment perpetrated by its employees is dependent on whether the harasser is a supervisor or merely a co-worker of the victim …

Read the full post here.

By Matthew Sorensen and Dana Livne

One of the major ways in which American employment law has traditionally differed from its British counterpart has been its entrenched employment “at-will” doctrine. The “at-will” employment doctrine provides employers with the right to terminate their relationships with their employees at any time, with or without notice or cause.  UK companies doing business in the US are often relieved to be advised that they become “at-will” employers to their US-based employees. In the US, unless an employer has entered an employment contract or collective bargaining agreement that expressly limits the employer or employee’s rights to terminate the employment relationship, employment is considered “at-will.” 

In the UK, on the other hand, under the Employment Rights Act 1996 (ERA), every employee must be provided with a written statement of the terms and conditions governing their employment within two months of commencing work. In fact, under the Common Law, some changes to working conditions cannot be made without the employee’s consent.  The controversial Beecroft Report, commissioned by the UK government, has recently called for changes in the dismissal procedures in Britain to mimic the American “at-will” doctrine.  The theory is that if employers are permitted to terminate workers with more ease and less “red tape,” it will encourage the UK’s financial growth, support business, and boost the economy. Indeed, according to the Institute of Directors, the UK business community is supportive of these measures, with a third of companies surveyed claiming that it would lead them to hire more workers.

However, the experience of “at-will” employers in the US has been not without its challenges. Although employers in the US who are not parties to employment contracts or collective bargaining agreements have a significant amount of discretion in determining whether and how to discharge an employee, the freedom afforded by “at-will” employment has been eroded in many respects by robust anti-discrimination laws.  Even in the context of “at-will” employment relationships, employers must remain cautious when disciplining and terminating employees.  A misstep can potentially lead to costly discrimination claims.

The US has developed a comprehensive body of law that places a number of limitations on employers’ rights to terminate “at-will” employees.  Title VII of the Civil Rights Act of 1964 (“Title VII”) prohibits employment discrimination on the basis of the individual’s race, color, sex, religion, or national origin (the “protected classes”).  The Age Discrimination in Employment Act (ADEA), prohibits discrimination against individuals that are older than 40 years old on the basis of their age.  Individuals with disabilities are protected under the Americans with Disabilities Act (“ADA”), and the Genetic Information Nondiscrimination Act of 2008 (GINA) prohibits discrimination on the basis of genetic information. In addition to the protections established by these federal laws, many US states have also enacted their own state-specific statutes that provide additional protections to employees, such as prohibiting discrimination on the basis of sexual orientation, political affiliation, and physical appearance.  Enforcement of these statutes has led to a long line of cases in which state and federal courts in the US have found that employers wrongfully terminated “at-will” employees based on protected characteristics.  Even layoffs or termination policies that seem neutral on their face have been found to be discriminatory when they had a disproportionately negative impact on a “protected class” of employees. 

Charges of discrimination can be damaging to workplace morale, public relations, productivity and the company’s bottom line.  Indeed, even in cases involving baseless claims of discrimination, employers may be forced to expend significant resources to defend themselves in administrative and court proceedings.  Employers in the US must implement creative strategies to thwart potential claims of discrimination before they arise, and to best position themselves to defend any claims of discrimination that do arise. The first step in protecting against claims of discrimination related to termination decisions is to ensure that the employer has a clear policy governing employee conduct and discipline that specifically reminds employees that their employment remains terminable “at-will.” The policy should provide a uniform and fair manner to respond to performance failures and misconduct by employees. For example, it may be appropriate to implement a progressive discipline policy.  Such policies typically establish a schedule of progressively severe disciplinary sanctions for performance failures or acts of misconduct, often beginning with oral warnings and ending in termination. However, entities that establish progressive discipline policies should reserve their rights to short-circuit the progressive disciplinary process and immediately terminate the employment relationship or take other appropriate disciplinary action as they deem necessary.

In addition, employers must ensure that they follow their discipline and termination policies consistently.  Those companies that do not consistently apply their rules to similarly situated employees can frequently encounter problems in discrimination lawsuits where it can be essential to have evidence that a worker was treated the same as other employees holding his or her position who are not members of the worker’s “protected class.” Companies are advised to maintain clear and consistent documentation of all disciplinary actions. A trail of properly documented disciplinary actions is always the best evidence to defend against allegations that an employee was terminated or subjected to other disciplinary action for discriminatory reasons. Employers should also conduct periodic anti-discrimination training for their employees and managers. For managers, particular attention should be given to reinforcing the need for consistent and non-discriminatory application of the company’s disciplinary policies.

In a competitive economy, the benefits to an “at-will” employment setting are clear.  Employers can quickly dismiss workers who fail to comply with the company’s disciplinary rules or who do not add the expected value to business operations.  However, to protect against charges of discrimination, companies operating in the US should carefully craft their discipline and termination policies and ensure that their managers are properly trained in the application of those policies. A proactive approach to planning and implementing uniform and fair procedures governing discipline and discharge will help companies avoid costly discrimination claims and focus on the continued success of their business in the US.

By:      Mark M. Trapp

In these challenging economic times, many private clubs are finding it increasingly difficult to attract new members, or to retain existing members.  Over the last few years many clubs have lost members, and many more are facing substantial drops in revenues due to a decline in money spent by members on activities such as golfing or dining out.  Many golf, country and social clubs are finding it difficult to sustain their amenities and level of service. 

Because the economic situation is decreasing the potential membership pool, many clubs are offering incentives to join, such as reducing initiation fees, while some are even exploring other more drastic options to generate revenue, such as opening their doors to the general public, moving toward a semi-private status or creating public/private hybrid clubs.

Economically, such decisions may or may not make sense. But allowing virtually anyone into an ostensibly “private” club can have other than strictly economic ramifications. In addition to making the club’s members wonder just how exclusive the club really is (which could itself lead to loss in membership and decreased revenues), a decision to accept virtually anyone as a member could actually open up a private club to potential legal liability for discrimination from which it would otherwise be exempt.

This seemingly paradoxical result stems from the fact that under both Title VII of the Civil Rights Act of 1964, as amended (which prohibits discrimination based upon race, color, religion, sex and national origin) and Title I of the ADA (Americans with Disabilities Act), private membership clubs enjoy an exemption from liability.  Both the ADA and Title VII expressly state that the definition of “employer” found in each statute “does not include” a bona fide private membership club which is exempt from taxation under section 501(c) of the Internal Revenue Code.

In order to qualify for this statutory exemption, a club must be tax exempt and it must be “a bona fide private membership club.” Because tax exempt status is relatively straightforward, the court battles over this exemption usually hinge on whether or not the club meets the criteria of being a bona fide private membership club. 

Generally, courts have defined a private membership club as “an association of persons for social and recreational purposes or for the promotion of some common object (as literature, science, political activity) usually jointly supported and meeting periodically, membership in social clubs usually being conferred by ballot and carrying the privilege of use of the club property.” Quijano v. University Federal Credit Union, 617 F.2d 129, 131 (5th Cir. 1980). While country clubs, fraternal lodges, swim clubs and the like usually fit comfortably within this definition, the decision to open the use of the club’s facilities and/or membership to anyone from the general public could lead to the loss of the otherwise-available statutory exception.  In deciding whether a club is private, the EEOC and courts consider how selective it is in choosing its members. See EEOC Compliance Manual § 2-11(B)(4)(a)(ii) (among the three factors considered is whether there “are meaningful conditions of limited membership.”); and Quijano, 617 F.2d at 131 (noting that “in order to be exempt” a private club “must require some meaningful conditions of limited membership.”). 

In construing whether a club meets the requirement of “meaningful conditions of limited membership,” courts have commonly focused on factors such as:

  • whether the club allows members of the public full access,
  • whether the club limits its total membership and how restrictive or stringent its requirements are for membership, and
  • whether applicants for membership must be personally recommended, sponsored or voted on by other members. 

See e.g. EEOC v. University Club of Chicago, 763 F.Supp. 985 (N.D. Ill. 1991)(concluding that a club was not private because it gave both members and guests essentially the same privileges); and Bommarito v. Grosse Pointe Yacht Club, 2007 U.S. Dist. LEXIS 21064 at *30-31 (E.D. Mich. 2007)(finding requirements of a written application, sponsorship of three current members, posting of the candidacy at the clubhouse, consideration by the board of directors, and a secret ballot to constitute “meaningful limitations on membership.”).  As stated by one leading opinion, “selective membership practices are the essence of private clubs.”  EEOC v. The Chicago Club, 86 F.3d 1423, 1436 (7th Cir. 1996).

Based on the foregoing, it should hardly come as a surprise that a “private” club which opens itself up to the public, or which accepts virtually every applicant meeting minimal criteria or without recommendation or some form of personal screening may be placing its statutorily-afforded exemption in jeopardy.  Because a carefully structured and properly run private club should be able to meet the requirements for exemption from the ADA and Title VII, clubs should be careful that in their push for additional revenues and/or members, they do not open themselves up to potential forms of liability.  It should be noted that depending upon the jurisdiction, there may be applicable state, local or municipal discrimination laws which provide similar protections, and which may be construed as covering private clubs.

Simply stated, in the private club industry, a little “discrimination” can go a long way in avoiding potential lawsuits based on discrimination!