Equal Employment Opportunity Commission (EEOC)

In prior posts, we have noted that HR professionals should acknowledge the tension between making hiring decisions based on an applicant’s criminal history and avoiding Title VII liability, if refusing to hire certain individuals based on these prohibitions results in disparate treatment of or disparate impact on protected classes of individuals under Title VII (e.g., race, national origin, gender). In recent years, the “Ban the Box” Movement has gained traction in an effort to place restrictions on the types of criminal conduct that employers may consider and how they may consider it, with the stated goal of affording persons with histories of criminal conduct opportunities for gainful employment. At the federal level, the EEOC complemented these efforts when it issued its 2012 Enforcement Guidance entitled, “Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964.” In this Guidance, the EEOC emphasized that criminal background check practices may have a disparate impact on, for example, African American and Hispanic men who have a statistically higher arrest and incarceration rate than other classes of individuals. Accordingly, the EEOC’s Guidance outlined what it believes to be an employer’s best practices for complying with Title VII when handling an applicant’s criminal history. In 2015, the Obama Administration adopted a “ban the box” policy in federal employment by modifying certain rules to delay inquiries into an applicant’s criminal history until later in the hiring process.

At the state level, according to the National Employment Law Project, 25 states have adopted policies that prohibit inquiring into or considering an applicant’s criminal history until after consideration of the applicant’s qualification, largely in the public employment sector. In nine of those states, private employers also are prohibited from requesting criminal history information until later in the hiring process. South Carolina currently is not one of those states.  However, if any one of the four bills (H. 3059, H. 3062, S. 191, S. 192) currently pending before the South Carolina General Assembly is passed, “ban the box” could be a statutory, statewide policy in South Carolina.

Collectively, all 4 bills propose to codify in statute the following general concepts:

  • “Conviction of crime”   The types of criminal history that an employer is permitted to consider is specifically defined. The House bills seek to limit criminal convictions to felonies, “gross misdemeanors” and misdemeanors involving possible incarceration. The Senate bills involve convictions, guilty pleas, nolo contendere pleas and bond forfeitures for crimes involving possible incarceration. All of the bills specifically exclude consideration of any arrests that did not result in a conviction, expunged convictions and/or charges that were not pressed or dismissed.
  • Ban the Box         No public or private employer may inquire, consider or require disclosure of an applicant’s criminal record until after either (1) the applicant is selected for an interview, or (2) if interviews are not conducted, a conditional offer of employment is made to the applicant. Employers exempt from this prohibition include the S.C. Department of Corrections, financial institutions (H. 3062 only) and employers with a statutory duty to conduct a criminal background check or otherwise inquire into an applicant’s criminal history.
  • Denial of Employment or Licensure       No public employer or professional licensing authority[i] may deny employment or licensure on the basis of the applicant’s criminal conviction unless the crime “directly relates” to the position or occupational license sought. Factors that an employer must consider to determine whether a crime “directly relates” to the position or license sought are: (1) the nature and seriousness of the crime; (2) the relationship between the crime and the purposes of regulating the position of public employment or occupation for which licensure is sought; (3) the relationship between the crime and the ability, capacity and fitness required to perform the duties of the position or occupation; and (4) the amount of time since the crime was committed.
  • Opportunity to Demonstrate Rehabilitation      For public employment, even if a crime is “directly related” to the position, the applicant has an opportunity to present “competent evidence of his sufficient rehabilitation and present fitness to perform the duties of employment.” The bills enumerate several types of evidence, including U.S. Department of Defense Form 214 indicating an honorable discharge or separation under honorable conditions following a criminal conviction, and a statement from a correctional institution at least one year after release showing compliance with all terms and conditions of probation or parole. The public employer must also consider other individualized assessment factors, including all circumstances surrounding the crime and conviction and the applicant’s age at the time the crime was committed.
  • Grievance Rights and Enforcement       Under the House bills, if an applicant for public employment or occupational licensure ultimately is denied based on his or her criminal history, the applicant may pursue a grievance process under the Administrative Procedures Act. In addition, violations of the “ban the box” provisions by private employers will be enforced by the South Carolina Human Affairs Commission through the imposition of monetary penalties.
  • Tax Incentives     Under S. 191, an employer is eligible for a state income tax credit for hiring a “qualified ex-felon” for certain threshold amounts of hours. A “qualified ex-felon” is an individual who was convicted of any felony codified under state law and if hired less than 2 years after release from prison, has not been convicted of another criminal offense. At this time, it is difficult to determine whether or when any of the bills will move forward during the Legislative Session, either in their current versions or modified. Although the bills are an attempt to further the goal of gainful employment of individuals with criminal histories, the bills as written appear to be an overreach into the discretion that an employer – whether public or private – exercises in the hiring process. The codification of an employer’s hiring processes and procedures, and the factors that the employer can – and importantly, cannot – take into consideration appear to impose a one-size-fits-all approach to hiring. What’s more, if the proposed requirements are passed primarily in the context of public employment, there is a risk that those requirements will be extended to private employers in the future.

[i]              Only the House bills address occupational licensing authorities.

The Equal Employment Opportunity Commission (“EEOC”) just released an updated EEO-1 reporting form that requires employers to provide employee pay data beginning in March 2018. A sample of the proposed form can be found here.

Importantly, many companies are not required to complete an EEO-1 form. With limited exceptions, only private employers with one hundred (100) or more employees and federal contractors with fifty (50) or more employees must make the filing each year.

This is the first time that pay information will be reported on the EEO-1 filing. According to the EEOC, collecting pay data from the EEO-1 Form will help improve investigations into pay discrimination based on gender, race, and ethnicity. Critics argue that the data will not serve the agency’s intended purpose and will increase administrative costs on employers.

These changes highlight the EEOC’s current focus on equal pay issues. Employers should be proactive and consider conducting an internal audit to determine whether you have pay disparities that need to be addressed. Identifying pay disparities in advance can help companies decide whether a pay adjustment should be made or whether the disparities can be explained through legitimate justifications.

On Monday, September 19, the U.S. District Court for the Eastern District of Wisconsin issued an opinion finding that penalizing an employee by requiring the employee to pay the entire premium for participation in an employer’s healthcare plan if the employee refused to complete a voluntary health risk assessment to participate in the employer’s wellness program did not violate the Americans with Disabilities Act (ADA). E.E.O.C. v. Orion Energy Systems, Inc., C.A. No. 14-CV-1019. The Equal Employment Opportunity Commission (EEOC) takes the position in this case and generally that incentives or penalties can convert voluntary participation in completing a health risk assessment or participating in a wellness program to involuntary or mandatory participation in violation of the ADA, which prohibits an employer from demanding that an employee complete medical examinations or inquiries that are not job-related or consistent with business necessity.  The Court held that the employee was faced with a choice of taking the penalty or participating and, while that was a hard choice, it was nonetheless a choice.

The Court also issued other findings, most notably that voluntary wellness programs are not protected by the ADA’s “safe harbor” provision. The Court held that the EEOC acted within its authority in publishing a regulation that excludes wellness programs from the “safe harbor” provision relating to insurance under ADA which permits employers to draft their health insurance plans as they see fit as long as the plan is not a subterfuge for discrimination.

In holding that wellness programs are unrelated to the basic underwriting and risk classification protected by the ADA’s safe harbor, the Court declined to adopt the holdings of Seff v. Broward County, 691 F.3d 1221 (2012) and EEOC v. Flambeau, Inc., 131 F. Supp. 3d 849 (W.D. Wis. 2015).  The Court reasoned that Orion did not use any information obtained through the wellness program to impact its underwriting such that Orion could not contend that its wellness program fell within the ADA’s safe harbor.  Assuming Orion had done so, using information obtained from its wellness program to impact the underwriting of its healthcare plan would have surely violated a number of federal laws, including Genetic Information Nondiscrimination Act (GINA), the Health Insurance Portability and Accountability Act (HIPAA), and the ADA.  However, the Court stated, “[b]y applying the safe harbor provision to employer wellness programs, the ADA would not prevent employers from requiring medical examinations as a condition to participate in its wellness programs so long as the exams pertain tangentially to health.” Id. at p. 17.

The Court’s opinion was issued after hearing both parties’ cross motions for summary judgment. Although the Court granted summary judgment to the employer on the EEOC’s claim that the wellness program violated the ADA because it was not voluntary, other causes of action alleged, such as the former employee’s retaliation claim for being terminated, were not dismissed and, thus, the case will proceed on those causes of action.

The EEOC recently issued Proposed Enforcement Guidance to address national origin discrimination, which noted that 11% of the charges of discrimination received from the private sector allege national origin discrimination. The guidance is meant to assist EEOC’s staff investigating national original charges and EEOC lawyers instituting litigation, as well as to assist employers and employees. Once adopted, the guidance will supplant the section in the EEOC Compliance Manual addressing national origin discrimination.

National origin discrimination is discrimination against an individual because he or she (or his her ancestors) are from a certain place, and includes discrimination based on physical, cultural or linguistic characteristics of a particular national origin group or against a particular national origin group that shares a common language, culture, ancestry, race or other “social characteristics.” National origin discrimination can also apply to discrimination based on one’s citizenship. The protection extends to anyone who associates with a national origin group and includes discrimination based upon one’s perception of an individual’s national origin, even if incorrect.

The place of origin may be a country, a former country or a geographic region. The EEOC identified the United States as a country whose citizens are protected in its guidance.

Title VII protects “intersectional” discrimination or discrimination which occurs from a combination of two or more protected classes usually fused together, such as discrimination targeting Hispanic women or Asian women. Employer’s threats to report immigration status to those employees who engage in any protected activity, such as complaining of any illegal harassment, or some other form of whistleblowing, could be seen as retaliation.

The EEOC notes that the requirement of a certain language or languages for a job position should be closely scrutinized because such requirements are closely associated with national origin. Fluency should only be required if the employee must be fluent to perform job duties. Such a policy must be job related, consistent with business necessity, and narrowly tailored. Rules requiring employees to speak English in the workplace at all times are presumed discriminatory.

Employers should avoid basing employment decisions on an employee’s accent and those that do must provide evidence of a legitimate business reason to support the decision. The EEOC uses a two-pronged test to determine if the accent “interfered materially with job performance:” 1) effective spoken communication is required to perform job duties; and 2) the individual’s accent materially interferes with his or her ability to communicate in English.  The employer should be prepared to show documented workplace mistakes in these kinds of cases, and may not rely on customer preferences to support employment actions based on accent.

Foreign employers in America may discriminate in favor of its own citizens when permitted by treaty or international agreement. Title VII does not protect foreign employees working outside the U.S. for a foreign company, although U.S. citizens employed by an American company outside the U.S. are protected.

The EEOC’s proposed guidance analyzes national origin under the traditional concepts of disparate impact, mixed motive, harassment, discrimination and retaliation. The guidance also discusses human trafficking in the context of forced labor. It further explains where the EEOC has agreed with courts’ interpretations of Title VII and where it has not.

The EEOC identifies “promising practices” that it encourages employers to adopt: 1) recruit in a way to attract a diverse workforce by using a variety of recruitment tools; 2) establish written criteria for hiring, promotion and assignment, as well as discipline, demotion and discharge; and 3) adopt effective harassment policies and practices.

The EEOC seeks comments on the proposed guidance by July 1, 2016. Click here to view the proposed enforcement guidance: https://www.eeoc.gov/eeoc/newsroom/release/6-2-16a.cfm

The EEOC issued its Final Rules on how the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) apply to wellness programs employers offer that request health information from employees and their spouses.[1] The main issue at stake was whether such wellness programs, that require disability-related inquiries and/or genetic information as part of a wellness program, are still voluntary and not mandatory if they offer employees incentives for participating.  (If the information is mandated, then it will be in violation of the ADA and GINA.)

Although the EEOC’s Final Rules are very similar to the proposed rules issued in 2015, the most notable changes are the following:

  • All wellness programs must comply with GINA and the ADA whether part of a group health plan or not (addressing the interpretation that the Proposed Rules applied only to group health plans).
  • The insurance safe harbor is not available to wellness programs. (The ADA contains a safe harbor provision for bonafide benefit plans based on underwriting, classifying or administering risks as long as the safe harbor provision is not used as a subterfuge to evade the purposes of the ADA. The purpose of the safe harbor provision is to permit development and administration of benefit plans using accepted principles of risk assessment.)
  • Notice requirements apply to wellness programs separated from a group health care plan if the program solicits disability-related information or requires medical exams. The Notices must inform employees that the program is voluntary, and advise them what medical information will be obtained, how it will be used, who will receive it, and the restrictions on disclosure. (effective for plan years beginning on or after January 1, 2017). The EEOC published a sample Notice form – https://www.eeoc.gov/laws/regulations/ada-wellness-notice.cfm.

The EEOC specifically stated that the courts wrongfully applied the ADA’s safe harbor provision to two wellness programs in two cases, Seff v. Broward Count[2]y and EEOC v. Flambeau, Inc[3]., because neither employer used the wellness program data to determine insurability or calculate insurance rates, nor was there any evidence that the surcharge employed in both cases was based on actual risks that non-participating employees imposed. The Florida District Court in Seff held that the wellness program requiring completion of health risk assessments and biometric testing offered by the employer at issue did not violate the ADA and, in fact, fell under the ADA’s safe harbor provision.  The Wisconsin District Court granted summary judgment against the EEOC in Flambeau, holding that the employers’ requirement that employees complete health risk assessments and biometric testing if they desired to participate in the group healthcare plan fell within the ADA’s safe harbor and did not violate the ADA.

The EEOC did not change its position that wellness programs requesting disability-related information or medical exams must be voluntary. Programs are voluntary if the employer does not require employees to participate; does not deny or limit coverage under any of its plans to non-participating employees; does not take adverse action, interfere with or retaliate against the non-participating employee; and provides notice to employees about what information is collected, how it will be used and with whom it will be shared, how it will be kept confidential, explains the restrictions on uses and disclosures, and explains the methods employed to prevent improper disclosure.  A participant cannot be required to share medical information in order to participate in the wellness program.

The programs also must be reasonably designed to promote health and must not be a subterfuge for disability discrimination, meet certain notice requirements to employees, and limit the amount of incentives that may be offered for participation. In order to be reasonably designed, the collected information must address conditions identified through follow-ups with the participating employees, whether by providing information or advice, or creating programs to address the conditions identified and improve health.

Incentives up to 30% of the total cost of self-only coverage under the health care plan may be offered for participation in a wellness program. The Final Rules include guidance on how to calculate the cost of health care coverage for purposes of complying with the limitations on incentives effective for plan years beginning on or after January 1, 2017. If the employee does not participate in the group health plan, the employer may use the cost of single coverage if there is only one plan or the cost of the least expensive plan if there is more than one plan.  If an employer has no health care plan, then the employer must calculate wellness program’s incentives to be 30% or less of the cost of self-only coverage for a 40 year old non-smoker under the second lowest cost Silver plan available through the Marketplace in the same location as the employer’s principal place of business.

GINA will be violated if an employer imposes a penalty on the participating employee or spouse for failing to achieve a certain health outcome. The maximum incentive for spousal participation is $1800, effective January 1, 2017.

Other useful information on these new rules can be found here:

Small Business Fact Sheets:
https://www.eeoc.gov/laws/regulations/facts-ada-wellness-final-rule.cfm https://www.eeoc.gov/laws/regulations/facts-gina-wellness-final-rule.cfm

EEOC Q&A: https://www.eeoc.gov/laws/regulations/qanda-ada-wellness-final-rule.cfm



[1] Unless otherwise indicated, the rules apply effective immediately.

[2] Seff v. Broward County, 2011 U.S. Dist. LEXIS 44807 (S.D.Fla., April 11, 2011).

[3] E.E.O.C. v. Flambeau, Inc., 2015 WL 9593632, *1 (W.D. WI., December 31, 2015).  See our blog titled “A Win For Wellness” posted on February 9, 2016.

The U.S. Equal Employment Opportunity Commission’ (EEOC) commissioned a Select Task Force on the Study of Harassment in the Workplace which concluded that the past 30 years of corporate training has had no effect on preventing workplace harassment. As a result, two EEOC Commissioners are calling for the EEOC and all employers to “reboot” workplace prevention efforts to include proposing that employers launch an “Its on Us” campaign in their workplaces to end harassment by, in part, implementing bystander intervention. Commissioner Victoria Lipnic noted that the problem with current harassment training is its focus on legal liability, recommending that the training instead needs to “be part of a holistic, committed effort to combat harassment, focused on the specific culture and needs of a particular workforce.” Commissioner Lipnic also stated that, “above all, employees must have faith in the system.”  The Commissioners’ Report contains a number of recommendations, many of which employers already employ, but some that are new and make good sense, such as shifting the focus to workplace civility and deploying bystander intervention.  The Report contains a chart of risk factors that could create harassment in the workplace as well as highlights of effective policies and training.

The finding is an interesting one in light of federal courts’ findings that components required for an effective anti-harassment include annual training. However, the Commissioners’ comments on the training format make good sense.  Routine legal training likely would not be as effective as training meant to unify employees and address real issues occurring in the workplace.  Of course, with any such training done in a group setting, employers should remember not to run afoul of any federal or state privacy laws, or conduct the fact-specific training in a way that could be seen as retaliation against any whistleblower raising complaints.  Likely, true diversity training may be a necessity to address the issue, in addition to the annual legal aspects of harassment and discrimination.



The Equal Employment Opportunity Commission (EEOC) has been busy this spring, issuing guidance left and right! On May 9th, it issued guidance to employers about leave as an ADA accommodation.  On May 16th, it issued its Final Rule on wellness programs.  Then, on June 2nd, it issued proposed guidance on national origin discrimination.  We will highlight each of these in posts throughout the remainder of June.

May 9, 2016 – Employer-Provided Leave and the Americans with Disabilities Act

The EEOC issued guidance on leave as an accommodation under the Americans with Disabilities Act (ADA) because it receives charges of discrimination indicating that employers do not understand that leave can be an accommodation for individuals with disabilities. The EEOC guidance requires employers to provide individuals with disabilities with access to leave on the same basis of all similarly-situated employees.  It requires that employers consider granting unpaid leave as an accommodation even when leave would not otherwise be available or granted.  Also, an employer may not penalize an employee for using leave as a reasonable accommodation.

Specifically, the EEOC suggested employers should: 1) offer leave as an accommodation even when an employer would not offer leave to other employees; 2) modify leave policies to offer additional leave as an accommodation; 3) offer additional leave as an accommodation beyond maximum leave policies; 4) offer light duty or temporary reassignment of position to accommodate an employee who can return to work but with restrictions rather than requiring employees be “100% healed” to return. In the case of reassignment, the employee must be placed in a vacant position for which he or she is qualified and not be required to compete with other applicants for the position.

The EEOC does acknowledge that it is up to the employee with a disability to first request the accommodation for leave or additional leave. If the employer can grant the request under some already-existing leave program, then the employer should do so.  However, if no other leave policy applies, then the employer should engage in an “interactive process” with the employee to determine what accommodation can be made.  The employer is permitted to ask about the specific reason for the leave, whether the leave will be taken in a block of time or sporadically, and when the need for leave will end.  An employer may obtain additional information from the employee’s medical provider, with the employee’s permission, although the request should be limited to confirming the need for leave, whether accommodations other than leave could resolve the issue, and how long the leave will last.

Although an employer can inquire about how long leave will last, the EEOC guidance suggests that an employer should consider granting leave even if the length of time needed is initially unknown. An employer who has granted leave with a fixed return date cannot ask for periodic updates, and an employer must not use form letters to tell an employee his or her leave is ending and he or she must return to work or be terminated.

Employers will be glad to know that the EEOC did say they can require employees to provide information from their provider to assist in the process and that employees must be responsive to questions the employer asks and obtain medical documentation quickly from his or her provider.

The EEOC acknowledged that an employer could deny leave but only upon showing of an undue hardship on its business operations or finances. Undue hardship involves consideration of the following factors: 1) amount or frequency of leave requested; 2) whether there is any flexibility with respect to what days the leave is taken; 3) whether the days of leave are predictable or unpredictable; 4) the impact of the employee’s absence on coworkers; 5) whether the employee’s absence has an effect on specific job duties being performed in an appropriate and timely manner; and 6) the impact on the employer’s operations and its ability to serve customers and clients appropriately and in a timely manner, taking into account the size of the employer.

I am so often advising employers who struggle to determine how much additional leave is required in order to comply with the ADA, and they are understandably frustrated that there is no definite guidance on how much is enough. This is one of the biggest “gray area” issues with  accommodations that employers face and, unfortunately, the guidance doesn’t specifically address that issue with any certainty.

However, the guidance does offer help to employers because the EEOC states that undue hardship is satisfied (and thus no accommodation is needed) if an employee is unable to say whether or when the employee will be able to return to work. This is a common problem for employers when they request a return date after FMLA leave has been exhausted and an ADA accommodation period has been granted.  The EEOC also makes it clear that employees must cooperate with employers who seek to verify the disabling condition and obtain information about the accommodation from the employee’s medical provider.

Click here to view the guidance.

If you have been following the news the last few weeks, you probably heard about North Carolina’s controversial new law that blocks local governments from allowing transgender individuals from using public restrooms that correspond with their gender identity. House Bill 2, the Public Facilities Privacy & Security Act, is the latest development in the culture war currently taking place over transgender rights in this country. The law was passed in response to a Charlotte ordinance which allowed transgender individuals to use the public bathroom. LGBT advocacy groups across the country rushed to condemn the law. Paypal announced that it was pulling a new global operations center (roughly 400 new jobs) from North Carolina because of the bill.  The National Basketball Association announced it was reconsidering its decision to have the NBA all-star game in Charlotte.

Senator Lee Bright of South Carolina has introduced a similar bill in the South Carolina General Assembly. However, this bill is not expected to gain any traction at this point in time. This blog will continue to monitor the progress of this bill in the coming months.

What does all of this mean for employers? It is important to note that these laws apply only to public restrooms. Private employers remain free to make their own decisions regarding bathroom use. However, the EEOC interprets Title VII’s prohibition on sex discrimination to forbid discrimination based on gender identity. This protection applies regardless of any state or local law. Therefore, if you are an employer covered by Title VII, restricting bathroom use to an individuals’ biological sex could lead to a discrimination claim.

Finally, the Occupational Health and Safety Administration (“OSHA”) has published “A Guide to Restroom Access for Transgender Workers.” The guide provides in part that “regardless of the physical layout of a worksite, all employers need to find solutions that are safe and convenient and respect transgender employees.” A copy of the full guide can be found at https://www.osha.gov/Publications/OSHA3795.pdf.

Last week, the EEOC initiated two separate lawsuits against private employers alleging that the employers discriminated against employees on the basis of sexual orientation. Both cases involve allegations of sexual harassment and hostile work environment against homosexual employees.  The first case, EEOC v. Scott Medical Center, was brought against a health care provider in Pennsylvania, alleging that the provider did not take prompt and effective action to prevent or alleviate an intolerable work environment for a gay male employee who is alleged to have been constructively discharged.  The second case, EEOC v. Pallet Companies, was brought against a Maryland employer, alleging that a lesbian employee was subjected to continuous harassment by a male superior and that she was terminated in retaliation for complaining about his conduct.  In both cases, the harassing comments and conduct were based on the employees’ status as gay or lesbian.  The initiation of these lawsuits by the EEOC is historic in that it is the first time the EEOC has brought an action against a private employer for Title VII discrimination on the basis of sexual orientation.

Interestingly, for many years the law has been unsettled as to whether or not Title VII’s prohibition against discrimination “based on sex” included discrimination based on sexual orientation. In fact, since the 1990’s various members of Congress have unsuccessfully attempted to pass some form of federal legislation that would explicitly identify sexual orientation, and more recently, gender identity, as bases for impermissible employment discrimination.  In July 2015, however, the EEOC issued an agency decision clarifying that, at least from the EEOC’s point of view, discrimination based on sexual orientation falls within the scope of Title VII. See Baldwin v. DOT, EEOC Appeal No. 0120133080 (Jul. 15, 2015) (http://www.eeoc.gov/decisions/0120133080.pdf). In its 17-page final agency decision, the EEOC engaged in an exhaustive analysis of prior court rulings and their support of the ultimate conclusion that sexual orientation is a basis for discrimination under Title VII.  This analysis included the following:

  • Title VII’s prohibition against an employer’s reliance on sex-based considerations, or other consideration of gender, when making employment decisions applies equally to claims brought by lesbian, gay, and bisexual individuals under Title VII.
  • Sexual orientation discrimination falls within the scope of Title VII sex discrimination “because it necessarily entails treating an employee less favorably because of the employee’s sex.” It further discriminates against employees on the basis of sex because the employee is penalized for associating romantically with a member of the same sex.
  • In 1989, the U.S. Supreme Court in Price Waterhouse v. Hopkins established that Title VII prohibits discrimination based on an employee’s noncompliance with sex stereotypes and gender norms.

South Carolina employers who have relied on the uncertainty of the law with respect to whether Title VII covers sexual orientation, or who have not examined this issue in detail when developing non-discrimination policies and procedures, should take note of last week’s filings by the EEOC. The Pallet Companies case should be especially noted by South Carolina employers because it is a Maryland case that could ultimately be considered by the U.S. Court of Appeals for the Fourth Circuit, which also governs South Carolina. In addition, other recent decisions by the Maryland federal district court indicate that transgendered status should also be included within the scope of Title VII. See, e.g., Finkle v. Howard County, 12 F.Supp.3d 780 (D.Md. 2014) (“Plaintiff’s claim that she was discriminated against ‘because of her obvious transgendered status’ is a cognizable claim of sex discrimination under Title VII.”).

The EEOC’s thwarting of otherwise compliant wellness programs under the auspices of the Americans with Disabilities Act (ADA) is a bone of contention for many in our industry, me included. So I was intrigued to learn that a Wisconsin federal district court recently ruled that an employer may require mandatory participation in its wellness program as a condition of participating in the employer’s group health plan under the ADA’s safe harbor provision.

The employer, Flambeau, Inc., required participants to complete a health risk assessment and engage in biometric screenings in order to be eligible to participate in the company’s group health plan. The health risk assessment requested information about medical history, diet, mental, social health and job satisfaction. The screenings included blood draws, blood pressure screenings, and height and weight measurements, and other tests similar to a routine physical examination. The data gathered was used to design the plan and determine premium levels. When an employee who was previously enrolled failed to undergo the required testing, his insurance was discontinued and he was offered COBRA coverage. (The employee declined COBRA because it was too expensive and filed a complaint with the EEOC and the DOL.  He was later permitted to enroll after negotiations with the DOL, but he was required to undergo the screenings to do so.)

The EEOC brought suit against Flambeau in September 2014 under the ADA’s prohibitions against requiring employees to undergo medical testing, alleging that the program violated the ADA because the health risk assessment and screenings were mandatory instead of voluntary. As a reminder, the EEOC sued two other employers back to back in 2014, Orion Energy Systems, another Wisconsin company, and Honeywell International.  EEOC’s August 2014 suit against Orion contended its wellness program violated the ADA by requiring an employee to participate in the wellness program, charging a higher monthly health insurance premium and fining the employee $50 for any refusal to participate.  EEOC’s suit against Honeywell in October of the same year alleged its wellness program violated the ADA because it required employees participating in the group health plan to complete biometric screenings and refrain from tobacco use or complete a tobacco cessation program.  Failure to do so resulted in surcharges to the employee.  The EEOC’s suit against Flambeau was the second of three suits filed by EEOC in 2014 challenging employers’ wellness programs under the ADA. See prior HSB Blogs, “Wellness Programs, Part One and Part Two” and “Long Awaited Guidance from the EEOC Regarding Wellness Programs.”[1]

Flambeau defended the EEOC’s claims, contending the ADA’s safe harbor provision protected its wellness program. The safe harbor provision permits bona fide benefit plans to underwrite, classify or administer risks as they see fit as long as the safe harbor provision is not used as a subterfuge to evade the purposes of the ADA.[2]  The purpose of the safe harbor provision is to permit development and administration of benefit plans using accepted principles of risk assessment.  Flambeau moved for summary judgment and the district court granted the motion, dismissing the EEOC’s case on the grounds that the ADA safe harbor protected Flambeau’s wellness program.  The court held that the safe harbor exemption was a separate exemption from the ADA’s voluntariness standard such that it applied regardless of the mandatory nature of the requirements. Specifically, the court stated, “the protections set forth in the ADA’s safe harbor enable employers to design benefit plans that require otherwise prohibited medical examinations as a condition of enrollment without violating the ADA.”[3]  The federal appellate court upheld the district court’s ruling.

The Flambeau case is a comforting balm to employers who use wellness programs to address rising healthcare costs and wellness program providers. However, it is one of several cases in a fluid area of the law.  Employers are well-advised to keep abreast of and tread carefully around these developing issues.

[1] https://www.scemployersblog.com/category/wellness/

[2] 42 U.S.C.S. §12201(c).

[3] E.E.O.C. v. Flambeau, Inc., 2015 WL 9593632, *1 (W.D. WI., December 31, 2015).