EEOC: Requiring High School Diploma Can Violate the ADA

The EEOC recently published additional “guidance” concerning an issue it raised last Fall while addressing a question about GED testing. In November, the EEOC published a letter in response to a question which indicated that an employer could violate the ADA by requiring job applicants to have a high school diploma if that requirement screened out individuals with learning disabilities who could not obtain the diploma and if the employer could not demonstrate that the requirement was job related and consistent with business necessity:

Under the ADA, a qualification standard, test, or other selection criterion, such as a high school diploma requirement, that screens out an individual or a class of individuals on the basis of a disability must be job related for the position in question and consistent with business necessity. A qualification standard is job related and consistent with business necessity if it accurately measures the ability to perform the job’s essential functions (i.e. its fundamental duties). Even where a challenged qualification standard, test, or other selection criterion is job related and consistent with business necessity, if it screens out an individual on the basis of disability, an employer must also demonstrate that the standard or criterion cannot be met, and the job cannot be performed, with a reasonable accommodation. . . .

Thus, if an employer adopts a high school diploma requirement for a job, and that requirement “screens out” an individual who is unable to graduate because of a learning disability that meets the ADA’s definition of “disability,” the employer may not apply the standard unless it can demonstrate that the diploma requirement is job related and consistent with business necessity. The employer will not be able to make this showing, for example, if the functions in question can easily be performed by someone who does not have a diploma.

Even if the diploma requirement is job related and consistent with business necessity, the employer may still have to determine whether a particular applicant whose learning disability prevents him from meeting it can perform the essential functions of the job, with or without a reasonable accommodation. It may do so, for example, by considering relevant work history and/or by allowing the applicant to demonstrate an ability to do the job’s essential functions during the application process. If the individual can perform the job’s essential functions, with or without a reasonable accommodation, despite the inability to meet the standard, the employer may not use the high school diploma requirement to exclude the applicant. However, the employer is not required to prefer the applicant with a learning disability over other applicants who are better qualified.

In 1971, the Supreme Court similarly held that it would violate Title VII to require a high school diploma for janitorial positions if such a requirement disproportionately screened out otherwise qualified African-American applicants (some of whom had been unable to obtain a diploma during school segregation when some counties closed all public schools rather than integrate them). The EEOC is taking the same position under the ADA and in 2003 found an employer to have discriminated against a nurse aide who had been performing the job successfully for four years, but then was terminated after she could not meet the employer’s new diploma/GED requirement because of her learning disability. The employer settled the dispute rather than litigate it.

In the 2012 guidance, the EEOC sought to clarify its November letter as follows. First, it is not illegal for an employer to require a high school diploma. “However, an employer may have to allow someone who says that a disability has prevented him from obtaining a high school diploma to demonstrate qualification for the job in some other way.” Second, the employer may still select the best and most qualified individual for the job; the ADA does not create a hiring preference. Finally, individuals who choose (for personal or other reasons) to not get a high school diploma are not automatically protected by the ADA; only individuals whose mental or physical impairments made it impossible to get a diploma would be protected.

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 Circuit: Failure to Pay Any Salary to Exempt Employee Can Violate the FLSA

This morning the Sixth Circuit issued an interesting, yet concise, FLSA decision, which is no small feat. Orton v. Johnny’s Lunch Franchise, LLC, No. 10-2044 (6th Cir. 2-22-12). In this case, the plaintiff former-executive alleged in his complaint that his former employer and the company’s president (also deemed an employer under the FLSA) failed to pay him any salary or reimburse him for expenses in the last five months that he worked in 2008 because of cash-flow problems. The defendants moved to dismiss the complaint on the grounds that the president was not an employer and on the grounds that the plaintiff was exempt. Ultimately, the district court dismissed the complaint and refused the plaintiff leave to amend on the grounds that he was an exempt employee and cannot assert a claim for back wages under the FLSA. The court held that the employer’s failure to pay any salary to the plaintiff for five months was insufficient to convert him to a non-exempt employee (who was owed minimum wages and overtime). The Sixth Circuit reversed and remanded on the grounds that the district court improperly placed the burden of proving the exemption on the plaintiff and that the employer was required to prove under the 2004 FLSA regulations that its deductions from salary actually received were permissible under the salary-basis regulations. This obviously could not be done at the 12(b)(6) stage without an evidentiary record.

First, the Sixth Circuit noted that an employee’s exempt status is an affirmative defense that must be plead in the employer’s answer and proven by evidence. Although the court was critical of the district court for overlooking this significant issue, there may have been some confusion in that the plaintiff may have conceded that his position would be exempt in normal circumstances and did not challenge the court’s finding on appeal.

Second, the Court found the 2004 amendment to the FLSA regulations modified the law on whether a failure to pay any salary is actionable under the FLSA. The former regulation provided in relevant part that:

“An employee will be considered to be paid ‘on a salary basis’ within the meaning of the regulations if under his employment agreement he regularly receives each pay period . . . .” 29 C.F.R. § 541.118(a) (1973) (emphasis added).

However, the 2004 regulation changed this to:

An employee will be considered to be paid on a “salary basis” within the meaning of these regulations if the employee regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of the employee’s compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed . . . . 29 C.F.R. § 541.602(a) (2004) (emphasis added).

The Sixth Circuit previously addressed the impact of the 2004 changes on the salary-basis test in Baden-Winterwood v. Lifetime Fitness, Inc., 566 F.3d 618, 627-28 (6th Cir. 2009). “The new regulation now “focus[es] on pay received,” rather than the terms of the employment agreement, but the regulation still requires that a defendant show that the plaintiff was paid: “(1) a predetermined amount, which (2) was not subject to reduction (3) based on quality or quantity of work performed.” The district court improperly relied on decisions applying the pre-2004 regulation, which had made the employee’s employment agreement the starting place for any analysis.

The new (2004) regulations, which all parties correctly agree are applicable in this case, establish that employment agreements are no longer the relevant starting point for whether an employee is paid on a salary basis. Baden-Winterwood, 566 F.3d at 627. The question is therefore not what Orton was owed under his employment agreement; rather, the question is what compensation Orton actually received.

In this case, the plaintiff alleged that he was not paid any salary or wage from August until he was laid off in December 2008. The complaint also mentioned that this was because the defendants had trouble making payroll. “Whether Orton’s allegations “suggest” one reason for the deduction in salary is irrelevant; his allegations do not preclude multiple reasons for the deduction, and it was the defendants’ burden—not the plaintiff’s—to establish that the reason for the deduction was proper.” In any event, this allegation does not meet the employer’s burden for proving that the alleged deduction was permissible under the FLSA.

For example, a company experiencing cash-flow issues cannot claim the exemption if the company prevents an otherwise salaried employee from coming in three days a week and then pays him less accordingly. Such a deduction in pay would undeniably be due to an absence occasioned by the employer, see 29 C.F.R. § 541.602(a), even though the employer decided to take the action due to cash flow problems. The regulation makes no exception for deductions in pay just because they were motivated by cash flow shortages. . . ..

That is not to say a company with cash flow issues is left with no recourse. Nothing in the FLSA prevents such an employer from renegotiating in good faith a new, lower salary with one of its otherwise salaried employees. The salary-basis test does not require that the predetermined amount stay constant during the course of the employment relationship. Of course, if the predetermined salary goes below a certain amount, the employer may be unable to satisfy the salary-level test, which explicitly addresses the amount an employee must be compensated to remain exempt.

The Court also found no legal significance in a complete reduction in pay rather than a partial reduction – as existed in pre-2004 case law because of a focus on the terms of the employment agreement. “ Therefore, to the extent these cases are at all instructive regarding the new regulations, they support the general principle that the reasons for the reductions in pay are dispositive, not the amount.”

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 Circuit: Many Ways to Defeat an Age Discrimination Claim

Last month, the Sixth Circuit affirmed the dismissal of an age discrimination claim that had been filed in 1999. Lefevers v. GAF Fiberglass Corp., No. 00-5567 (6th Cir. 1/11/12). The case had been around so long because it had been stayed during the employer’s bankruptcy proceedings. In it, the Sixth Circuit methodically rejected each argument that the plaintiff asserted in favor of finding direct evidence of discrimination and pretext. Moreover, it started with an interesting Tolstoy quotation: “We do not beat the Wolf for being gray, but for eating the sheep.” In other words, firing an older worker is illegal when it is based on age, not when it is based on another reason (such as a reduction in force and/or inadequate job performance).

The plaintiff first complained about a number of age-related comments made by managers (other than, of course, the decision-maker). One comment referred to “old” Bob Dole running against “dumb” Bill Clinton. Another concerned an inquiry into retirement plans. An HR manager inexplicably said that something needed to be done in the next year with the older supervisors. Yet another manager denied any plan to eliminate older supervisors because they were needed to run the plant. “Statements by nondecisionmakers, or statements by decisionmakers unrelated to the decisional process itself [can not] suffice to satisfy the plaintiff’s burden . . .’ of demonstrating animus.” The Court had no trouble finding that the statements were too unrelated in time and place to have influenced the individual who ultimately decided to terminate the plaintiff. Moreover, “questions concerning an employee’s retirement plans do not alone constitute direct evidence of age discrimination.” (emphasis added).

Next, the Court had no difficulty accepting the employer’s explanation that the plaintiff had been selected for termination during a reduction in force because of his inadequate performance. Among other things, he was not the only individual to lose his job, open jobs went unfilled and, obviously, the employer had ultimately sought bankruptcy protection (a drastic step if it was just to hide illegal discrimination against one employee). There were also numerous documents reflecting the employer’s opinion of his job performance, even if the plaintiff disagreed with those assessments. His “disagreement with GAF’s “assessment of his performance . . . does not render [GAF’s] reasons pretextual.” Moreover, poor job performance coupled with a reduction in force is a legitimate reason to terminate employment.

In addition, the Court found that the employer was actually motivated by his performance evaluations because three of the remaining peer supervisors were older or close in age to the plaintiff. Finally, it was insufficient to show that a younger supervisor absorbed some of his former job duties (on top of his existing job duties) when no one had been hired to replace him.

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.

Ohio’s Minimum Wage Increases for 2012

On Sunday, Ohio’s minimum wage (for non-tipped employees) increased to $7.70 per hour – which is more than the federal minimum wage of $7.25/hour. As described by the Ohio Department of Commerce:

“Non-Tipped Employees” includes any employee who does not engage in an occupation in which he/she customarily and regularly receives more than thirty dollars ($30.00) per month in tips from patrons or others.
“Employers” who gross under $283,000.00 shall pay their employees no less than the current Federal Minimum wage rate.
“Employees” under the age of 16 shall be paid no less than the current federal minimum wage rate.
“Current Federal Minimum Wage” is $7.25 per hour.

Tipped employees are entitled to $3.85/hour plus tips. According to the DOC:

“Tipped Employees” includes any employee who engages in an occupation in which he/she customarily and regularly receives more than thirty dollars ($30.00) per month in tips from patrons or others. The tips are proven if indicated by the employee’s declaration for the purposes of the federal insurance contribution act. Including when tips are added to the employee’s wage, his/her hourly pay cannot be less than the regular minimum wage of $7.70 prescribed by law.

Other employees who are exempt from Ohio’s minimum wage include the following:

1. Any individual employed by the United States;
2. Any individual employed as a baby-sitter in the employer’s home, or a live-in companion to a sick, convalescing, or elderly person whose principal duties do not include housekeeping;
3. Any individual employed as an outside salesman compensated by commissions or in a bona fide executive, administrative, or professional capacity, or computer professionals;
4. Any individual who volunteers to perform services for a public agency which is a State, a political subdivision of a State, or an interstate government agency, if
(i) the individual receives no compensation or is paid expenses, reasonable benefits, or a nominal fee to perform the services for which the individual volunteered; and
(ii) such services are not the same type of services which the individual is employed to perform for such public agency;
5. Any individual who works or provides personal services of a charitable nature in a hospital or health institution for which compensation is not sought or contemplated;
6. Any individual in the employ of a camp or recreational area for children under eighteen years of age and owned and operated by a non-profit organization or group of organizations.
7. Employees of a solely family owned and operated business who are family members of an owner.

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

NLRB Again Delays Imposition of New Notice Requirements

Just in time for Xmas, the NLRB announced on Friday that it was delaying again the new requirement for employers to post notice of employees' rights under the National Labor Relations Act. The new requirement is being challenged in federal court and the court requested the NLRB to postpone the new requirement. The new deadline is April 30, 2012.

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.