Compensation Records Concerning Non-Profit Employees Can Be Public Records in Ohio

Last week, the Ohio Supreme Court issued a unanimous public records decision involving a private non-profit organization/joint insurance pool for 66 counties. State ex rel. Bell v. Brooks, Slip Opinion No. 2011-Ohio-4897. The plaintiff had submitted a public records request to the entity seeking a wide variety of records. The entity responded that it was not subject to Ohio’s Public Records Act because it was not a public office. It was a private, non-profit that was exempt from federal taxation as a governmental instrumentality. 88% of its funding came from contributions from the member counties. However, its governing board consisted only of nine individual county commissioners. Examining a number of factors, the Court had no trouble concluding that it was not the functional equivalent of a public office, was not the alter ego of a governmental entity and did not perform traditional government functions.

However, one provision of Ohio’s Public Records Act applies to private, non-profit entities which receive more than 50% of their funding from government entities. With certain exceptions for confidential client/patient records, Ohio Revised Code §149.43 provides in relevant part that:

Any governmental entity or agency and any nonprofit corporation or association, except a corporation organized pursuant to Chapter 1719 of the Revised Code prior to January 1, 1980 or organized pursuant to Chapter 3941 of the Revised Code, that enters into a contract or other agreement with the federal government, a unit of state government, or a political subdivision or taxing unit of this state for the provision of services shall keep accurate and complete financial records of any moneys expended in relation to the performance of the services pursuant to such contract or agreement according to generally accepted accounting principles. Such contract or agreement and such financial records shall be deemed to be public records as defined in division (A)(1) of section 149.43 of the Revised Code and are subject to the requirements of division (B) of that section, . . . .

Any nonprofit corporation or association that receives more than fifty per cent of its gross receipts excluding moneys received pursuant to Title XVIII of the “Social Security Act,” 49 Stat. 620 (1935), 42 U.S.C. 301, as amended, in a calendar year in
fulfillment of a contract or other agreement for services with a governmental entity shall maintain information setting forth the compensation of any individual serving the nonprofit corporation or association in an executive or administrative capacity. Such information shall be deemed to be public records as defined in division (A)(1) of section 149.43 of the Revised Code and is subject to the requirements of division (B) of that section.

(italics emphasis added by Court).

Because the respondent entity arguably fit within this statutory section, the Court remanded the matter back to the trial court to determine whether the plaintiff was entitled to financial
and employee compensation records under the Ohio Public Records Act.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth and Third Circuits Address Employment Discrimination Against Gay and Lesbian Employees.

At the end of August, the federal Sixth and Third Circuit Courts of Appeal both addressed the same issue: whether gay and lesbian employees could pursue religion discrimination claims under Title VII against employers who discriminated against them on account of their sexual orientation. In both cases, the Courts refused to permit the employees to pursue religion discrimination claims under Title VII on the grounds that they were not being discriminated against because of their religious or other voluntary beliefs, but rather, because of who they were. However, in both cases, the Court found possible alternative theories of relief for the plaintiffs. In the Sixth Circuit, the Court found the plaintiffs could maintain a constitutional First Amendment claim against the non-profit employer on account of legislative appropriations to that specific agency. Pedreira v. Kentucky Baptists Homes for Children, Inc., No. 08-5583 (6th Cir. 8/31/09). In the Third Circuit, the court found the plaintiff could pursue a sex-stereotyping claim on the grounds that he was being discriminated against for not being a stereotypical macho, blue-collar man. Prowel v. Wise Business Forms, Inc., No. 07-3997 (3rd Cir. 8/28/09).

Title VII Claims

The Pedreira plaintiff was terminated from her position with the non-profit children’s home “because her admitted homosexual lifestyle is contrary to Kentucky Baptist Homes for Children core values.” After her termination, the employer announced a policy of refusing to employ any homosexuals. She brought a claim under the Kentucky Civil Rights Act, which was analyzed as a Title VII claim. The Court, however, found that she failed to state a claim for relief: “Pedreira does not allege that her sexual orientation is premised on her religious beliefs or lack thereof, nor does she state whether she accepts or rejects Baptist beliefs. While there may be factual situations in which an employer equates an employee’s sexuality with her religious beliefs or lack thereof, in this case, Pedreira has “failed to state a claim upon which relief could be granted.” See also Vickers v. Fairfield Med. Ctr., 453 F.3d 757, 762 (6th Cir. 2006) (Title VII does not encompass discrimination on account of sexual orientation). In short, the plaintiff did not allege that her sexual orientation was a voluntary decision akin to religious beliefs and practices. Another plaintiff brought a failure to hire claim on the grounds that she did not apply for a social worker opening because of the employer’s homophobic policy. The court surprisingly dismissed that claim on the grounds it was speculative (in that she never applied for a job) instead of on the grounds that such discrimination is not actionable under either Title VII or the KCRA. Thus, the possibility remains that the Sixth Circuit could recognize a case of sexual orientation discrimination under Title VII under a different factual situation.

The Prowell plaintiff was involuntarily laid off after he complained about workplace harassment on account of his sexual orientation. He filed suit, claiming that he was unlawfully discriminated against in violation of Title VII on account of his sex and religion. Like the Pedreira case, the Third Circuit dismissed the religion discrimination claim because his testimony showed that he was discriminated against on account of his sexual orientation, not his beliefs or the religious beliefs of others. Like the Sixth Circuit, the Third Circuit had previously determined that Title VII did not encompass discrimination on account of sexual orientation. Bibby v. Philadelphia Coca Cola Bottling Co., 260 F.3d 257 (3d Cir.2001).


However, the Third Circuit found that the Prowell plaintiff could pursue a sex stereotyping claim to the same extent that a woman could. The plaintiff described himself as an “effeminate man” and claimed he did not fit in with his other male co-workers because he did not conform to gender stereotypes. Because the facts of the harassment showed that the plaintiff had been harassed about his non-macho mannerisms and lifestyle even before his sexual orientation became public knowledge, he could show that his discrimination was related to the fact that he did not conform to societal stereotypes about how a “real” man is supposed to act. Title VII has for some years now prohibited discrimination against women who did not fit societal stereotypes of “ladies.”

First Amendment Claims

In Pedreira, the plaintiffs also brought a taxpayer suit challenging state support of a non-profit with a religious mission on the grounds that it violated the Establishment Clause of the First Amendment. “In their amended complaint, they refer to the Kentucky statutes authorizing the funding of services such as KBHC. However, nowhere in the record before the district court did the plaintiffs explain what the nexus is between their suit and a federal legislative action. The district court found that the plaintiffs’ allegations were more akin to those in Hein, which raised a general Establishment Clause challenge to federal agencies’ use of federal money to promote the President’s faith-based initiatives.” In the end, the Court determined that the plaintiffs lacked standing as federal taxpayers, but not as state taxpayers.

“As with federal taxpayer standing, the plaintiffs must demonstrate “a good-faith pocketbook” injury to demonstrate state taxpayer standing . . . . The plaintiffs point to the alleged $100 million received by KBHC from Kentucky as the requisite “pocketbook” injury . . . . the Kentucky legislature also appropriated sums of money specifically to KBHC. 2005 Ky. Laws Ch. 173 (HB 267) (H)(10)(5), available at http://www.lrc.ky.gov/record/05RS/HB267.htm. Unlike in the federal taxpayer analysis,the plaintiffs have alleged a “concrete and particularized” injury.”

In addition, “the plaintiffs have sufficiently demonstrated a link between the challenged legislative actions and the alleged constitutional violations, namely that Kentucky’s statutory funding for neglected children in private childcare facilities knowingly and impermissibly funds a religious organization. As discussed above, the plaintiffs have pointed to Kentucky statutory authority, legislative citations acknowledging KBHC’s participation, and specific legislative appropriations to KBHC. Through these specifications, the plaintiffs have demonstrated a nexus between Kentucky and its allegedly impermissible funding of a pervasively sectarian institution.”

Insomniacs can read the full court decisions at http://www.ca6.uscourts.gov/opinions.pdf/09a0316p-06.pdf and http://www.ca3.uscourts.gov/opinarch/073997p.pdf.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

DOL Issues Opinion Letter Explaining Coverage of FLSA Over Non-Profit Organizations

Today, the Department of Labor issued an Administrator Opinion Letter (FLSA2008-8) from September addressing the FLSA’s enterprise coverage of non-profit organizations. In short, the DOL reminded non-profit employers that the DOL does not consider charitable donations to be “sales made or business done” for purposes of reaching the $500,000 threshold for enterprise coverage. (The threshold under Ohio law is $150,000 under Ohio Revised Code § 4111.03). However, revenue from services provided for a fee to customers/clients which compete with businesses would be counted towards the threshold, as would interest and dividends on investments. The Opinion Letter does not address how grants would be characterized. The DOL also reminded employers that even if the organization is not covered by the FLSA as an enterprise, individual employees may still be covered if – on a non-isolated basis -- they engage in interstate commerce (such as making/receiving interstate telephone calls, shipping materials to another state and/or transporting persons or property to another state). Moreover, organizations covered by Ohio’s minimum wage and overtime statutes are still de facto subject to the white collar exempt status tests under the FLSA because the Ohio statute incorporates them by reference.

As explained in Opinion Letter 2008-8, the FLSA applies to employees of covered enterprises (i.e., enterprise coverage) and to individual employees engaged in interstate commerce (i.e., individual coverage). Enterprise coverage applies to government agencies, hospitals, residential care facilities, schools and colleges, and “enterprises with a business purpose with an annual dollar volume of sales made or business done of $500,000 or more and at least two employees engaged in commerce or the production of goods for commerce.” (In contrast, Ohio Revised Code § 4111.03 provides that “Employer” means the state, political subdivisions, “any individual, partnership, association, corporation, business trust, or any person or group of persons, acting in the interest of an employer in relation to an employee, but does not include an employer whose annual gross volume of sales made for business done is less than one hundred fifty thousand dollars . . . “).

The FLSA and its implementing regulations “are silent” regarding whether charitable donations, service fees, membership dues and dividends and interest earned by a non-profit “should be included as “sales made or business done” in calculating FLSA enterprise coverage. Nonetheless, the DOL explained that enterprise coverage typically does not extend to the charitable, religious, educational or similar activities of non-profit organizations when those activities are not in substantial competition with other businesses. However, “where such organizations engage in ordinary commercial activities, . . . the business activities will be treated under the [FLSA] the same as when they are performed by the ordinary business enterprise.” 20 C.F.R. §779.214. Thus, “[i]ncome from contributions, membership fees, or dues (except any part which represents the value of a benefit, other than of token value, received by the payor), or donations (cash or non-cash) used in the furtherance of eleemosynary activities, does not come within the phrase “sales or business done” in the FLSA. “Services provided for a fee to customers, such as for spaying/neutering or for pet adoption, are provided for a business purpose to the general public in competition with other businesses (pet stores, kennels, etc.) and thus do not qualify as eleemosynary activities.”

Insomniacs can read the full Opinion Letter at http://www.dol.gov/esa/whd/opinion/FLSA/2008/2008_09_29_08_FLSA.htm.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.